Written by Deyah El-Azhari | Edited by Hosanna Rubio
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The History of AB942:

‍In Newsom’s recent Executive Order (EO), N-5-24, he gave utilities the onus to pick the programs they want to cut to reduce rates at a time when California utility customers face among the highest bills in the nation. Utilities claim that rooftop solar users aren’t paying their fair share to maintain the grid — a talking point known as the “cost shift narrative.” But this talking point overlooks key facts: NEM 2.0 customers already pay non-bypassable charges (NBCs) to support grid infrastructure, rooftop solar delivers measurable savings to the grid, and much of the cost pressure comes from utilities’ overspending.

California faces two hard truths: First, the lack of adequate battery storage continues to strain the grid as solar adoption grows. Second, despite the state’s strong clean energy commitments, it sets a troubling precedent by allowing utilities to penalize solar adopters who are participating in the energy transition the state has mandated. Rather than giving utilities power to influence high-impact energy decisions, California has the opportunity to address climate concerns with data-backed solutions – in this case, rapid battery installation and storage – to meet the needs of the grid.

In response to the EO, a report written by the California Public Utilities Commission (CPUC) proposed reducing credits for rooftop solar – this proposal launched the development of AB 942. The original version of AB 942 threatened to cancel solar contracts for people who invested in solar during NEM 1.0 and 2.0, forcing them off more financially beneficial structures after just 10 years despite the state's previous guarantee of 20-year terms. California would be placing itself in a double bind by betraying the trust of Californians who made significant financial investments based on guaranteed terms while ignoring the particularly severe impacts on low-income communities and cash-strapped nonprofits.

‍A Significant Victory: Amendments

‍Thanks to strong advocacy from rooftop solar supporters, significant amendments were made to AB 942 on May 5th, 2025. The most harmful provision has been removed, which would have forced existing solar customers forced from their  NEM 1.0 and 2.0 contracts after 10 years.

This amendment is a major victory for the millions of California ratepayers who invested in solar energy with the understanding they would remain on their contract terms for 20 years.
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‍Remaining Concerns with AB942

‍Despite this important improvement, AB 942 still contains provisions that could harm California's clean energy transition:
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1. New homebuyers lose out: The bill requires that when a solar home is sold, the new owner must switch to the current, less favorable NEM 3.0 tariff instead of inheriting the original contract terms. This would:
-Reduce property values for current solar homeowners
-Create an unfair two-tier system for identical solar systems
-Discourage the secondary market for solar homes

Ben Schwartz, Policy Manager at the Clean Coalition, explains the stakes this way: “Part of the reason many invested in solar is that it increases the value of a property. This bill would eliminate that property value increase and mean that future owners will be paying higher electricity bills, adding to the existing affordability crisis. Many NEM 1.0 and 2.0 customers financed the purchase of solar (especially early adopters) with mortgage-backed loans. These loans were based on 20-year compensation from NEM 1.0 or 2.0. Breaking contracts will create insolvency and make selling a home far more difficult.”
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2. Ongoing industry impacts: The California solar industry has already suffered significant setbacks under NEM 3.0. According to the California Solar & Storage Association, "As many as 17,000 solar workers in California might have lost their jobs by the end of last year [2023], according to industry estimates." Further restrictions could deepen these economic losses.

3. The utility profit motive: Mounting evidence suggests that the cost-shift narrative is part of a broader effort to undermine support for rooftop solar in favor of large-scale utility-owned solar projects, which would allow utilities to profit from transmission. Contrary to the cost-shift narrative, some experts argue that rooftop solar has provided a net savings to ratepayers. For example, the cost of transmission infrastructure for large, utility-scale energy projects is higher than using distributed energy resources (DERs) ; but unlike large infrastructure, utility companies don’t view DERs as profitable investments “In fact, the closer a generation source is located next to where that energy is used, the less infrastructure is needed, and the less expense is incurred.” (Clean Coalition).
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‍Redwood Energy’s Position

‍While the amendments made to AB942 are a step in the right direction, the remaining provisions undermine solar property rights and the long-term viability of rooftop solar as a consumer choice.

We urge lawmakers to vote NO on AB942 to fully protect the rights of all solar adopters, both current and future. California's path to clean energy hinges on policies that support, rather than restrict, consumer participation in the renewable energy transition.

‍Pro AB 942:
- Assemblymember Lisa Calderon (bill author)
- Public Advocates Office
- UC Berkeley Energy Economist Severin Borenstein
- Edison International‍

‍Against AB 942:
- Redwood Energy
- Solar Rights Alliance
- Environmental and Consumer Coalition (includes 15 pages of sign-ons)
- Boden Energy Solutions
- Energy Economist Ahmad Faruqui
- The California Association of REALTORS® (C.A.R.)

‍*Some of the listed positions were taken prior to the most recent amendment to the bill. However, I have confirmed that many opponents have maintained their stance despite the changes, and (C.A.R.) has newly expressed opposition following the amendment.

‍Further References:‍

- California Assembly Bill 942 (AB 942), via Legiscan
- Proposed state bill sparks debate over impact on property value of homes with solar panels, KRCR News
- New California bill would undo some 20-year rooftop solar contracts, Canary Media
- Summary of concerns with AB 942 (Calderon), Solar Rights Alliance
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