The California Public Utilities Commission (CPUC) has issued a proposed decision rejecting a solar industry-backed Net Value Billing Tariff (NVBT) for community solar programmes, and instead advancing a compensation framework based on the Avoided Cost Calculator (ACC).
The decision, issued by Administrative Law Judge Valerie Kao, comes as California continues to grapple with high electricity prices and aims to reform distributed energy compensation mechanisms. Industry groups argue the move will undermine new community solar development, particularly projects targeting low-income subscribers.
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The NVBT proposal would have tied compensation for exported solar electricity to the hourly value of energy delivered to the grid. However, the CPUC opted instead for the ACC methodology, which estimates the utility’s avoided cost of procuring equivalent power from other sources.
Alongside the pricing framework decision, the CPUC also signalled a broader restructuring of California’s community solar programs. The commission plans to consolidate existing initiatives, discontinue the Community Solar Green Tariff (CSGT) for new projects, and redirect capacity into the Disadvantaged Communities Green Tariff (DAC-GT), with a requirement that 51% of program capacity be reserved for low-income subscribers.
The proposal also leans on federal support, including a US$249 million “Solar For All” grant from the US Environmental Protection Agency (US EPA), as part of its justification for the revised structure. The decision maintains the commission’s long-standing focus on preventing “cost-shifting” to non-participating ratepayers.
Criticism from the solar industry has been swift in coming. The Coalition for Community Solar Access (CCSA) said that reliance on federal funding is not a substitute for a durable market framework capable of attracting private capital at scale. The group argued the proposal fails to establish the foundational mechanics required for program success, including customer enrolment processes and savings pathways.
The Solar Energy Industries Association (SEIA) was even more critical, warning that the decision “virtually ensures” no new community solar projects will be built in the state.
“With this proposed decision that crushes any chance of a viable community solar program in the state, the California Public Utilities Commission has wasted a golden opportunity to help lower utility bills for Californians in desperate need of relief from skyrocketing electricity prices,” said Stephanie Doyle, California state affairs director at SEIA.
She added that the proposal disregards legislative intent under AB 2316 and undermines efforts to expand equitable solar access, concluding: “California’s ratepayers deserve better.”
The CPUC, however, said the proposal represents a step toward aligning programs with state affordability and reliability goals. The proposed decision is not yet final and is scheduled to be considered at the Commission’s 14 May 2026 Business Meeting at the earliest.
