“There is a very good chance it will pass, but we won’t know for sure until the end of the legislative session in October.”

While it would be inaccurate to say California is turning against environmentalism, the growing alignment between the state’s energy policy and utility interests raises concerns, Sterns said.

“Rooftop solar remains immensely popular with the public,” he said. “However, utility companies are among the largest political donors in the state, and their dollars can influence outcomes that run counter to the broader push for decentralized, customer-driven, sustainable energy solutions.

“Investor-owned utility (IOU) companies in California have long sought to eliminate customer choice in power, including options for rooftop solar, community choice aggregators, and direct access power programs that reduce dependency on traditional utility services.

“This threatens the IOUs’ monopoly, which relies on building and maintaining the power grid to generate shareholder returns. When customers generate and use their own power, it reduces the need for grid upgrades, and in turn, limits profits for utility companies.”

Law Written by Former SoCal Edison Executive

Bill author Lisa Calderon was a longtime executive at Southern California Edison, one of the state’s major IOUs, which underscores the close alignment of the bill with utility interests.

“By undermining past solar contracts, it would discourage future adoption of solar power and other power-generating initiatives that don’t bring money into the pockets of the IOUs,” according to Sterns.

The properties affected by this bill’s passage are those located in the service territories of the state’s three IOUs: PG&E, SCE, and SDG&E. These are multifamily rental properties that signed up for solar under California programs promising long-term savings and regulatory stability.

“While the bill directly targets those under IOU regulation, it also would set a precedent that could affect broader markets across the state by undermining trust in California’s clean energy commitments,” Sterns said.

Customers Handling Majority of Costs

Customers are still paying many solar costs, particularly for grids, as it's effectively impossible to zero out your bill.

In NEM2, for example, solar customers pay for non-bypassable charges, such as nuclear decommissioning, public purpose programs, and wildfire mitigation.

“None of these early adopters are being compensated by having solar panels on their properties – they invested a large amount of money upfront, and now that these systems are cheaper, this bill would render their investments invalid," Sterns noted.

“Additionally, the millions of solar systems, and now increasingly battery systems, have actually reduced the overall grid's cost for all ratepayers. Without all those panels on roofs, the utilities would have needed to build more infrastructure (e.g., wires, poles, transformers, and transmission lines), on which they would have made their guaranteed rate of return. You must create the grid to handle the peak, or the maximum amount of electricity that will ever flow through it, even if that occurs only once per year.

“All those solar systems on roofs have made that peak far smaller, so the utilities don't have to build as much. Of course, they don't like this, since they only make money on approved spending on the grid, so they want as much of that as possible.

Plus, Sterns touted the land benefits that come with solar projects before the bill, which has led to job creation and saving communities money.

Net Energy Metering Homes Targeted

AB 942 would not apply to all solar rental homes in California. It targets explicitly properties with solar systems that qualify under Net Energy Metering (NEM) 1.0 and 2.0 within the service areas of the three major IOUs.

“It’s not just rentals, either; it’s every kind of property – from homes and businesses to public agencies and schools,” Sterns said.

Properties on the newer NEM 3.0 system aren’t exempt either; they’re already under the current rules, so that they wouldn’t default into a different system at the time of a sale.

“That said, the bill could allow for future rule changes, such as a hypothetical NEM 4.0, which would impact those properties and raise significant concerns about the long-term stability of clean energy commitments in the state,” Sterns said.