A bill currently making its way through Sacramento could do more harm than good to many of California’s renters and low-income households.

Assembly Bill 942 (AB 942), as currently written, would retroactively revoke solar energy benefits for customers who signed up under California’s earlier Net Energy Metering (NEM) programs. This includes tenants in multifamily housing, low-income CARE and FERA customers, and even affordable housing providers who invested in clean energy with a clear set of promises from the state.

Authored by Assemblymember Lisa Calderon, a longtime Southern California Edison utility executive, the bill would retroactively take away solar benefits from multifamily renters enrolled in the original Net Energy Metering (NEM), Virtual Net Energy Metering (VNEM) or affordable housing solar programs such as Solar on Multifamily Affordable Housing (SOMAH) and Multifamily Affordable Solar Housing (MASH). This group would be stripped from benefits not by any action they have taken, but simply because the property they live in has changed ownership.

Thousands of renters currently benefit

Given that 63% of Los Angeles residents currently rent, and 33% of Californians rent in multifamily properties, the group we are talking about is not small. According to state data, more than 101,000 multifamily rental units currently benefit from NEM, VNEM, or affordable housing solar incentive programs like MASH and SOMAH. Based on the average California household size of 2.86, that’s approximately 300,000 California renters who stand to lose access to the energy savings they have come to rely on and their protection from future cost increases.

Beyond that, this bill would invalidate the 20-year legacy period California promised to over 2 million homes, businesses, schools, water agencies, farms and others who answered the call to install solar on the NEM 1 and 2 programs, wiping away deal terms upon a property sale. For multifamily renters, who are not in control of their buildings’ ownership changes, this could mean abruptly losing access to energy savings, increasing their cost of living. The same would happen for single-family renters and CARE/FERA customers who have solar, many of whom have some of the lowest incomes in California.

According to CoStar data, of the 117,000 multifamily rental properties in the California database, 94,000 (80%) have traded hands in the past 20 years. Of those 94,000 properties, the average hold period is 6.6 years, meaning AB 942 would disenfranchise renters more than single family homeowners, whose periods between sale are both longer and fully at their own discretion. California has only had a mandate to install solar in multifamily since 2020 and SOMAH just launched in 2019, so most renters are only a few short years into their NEM timelines.

California wants to protect renters

The California Public Utilities Commission (CPUC) has already ruled to protect renters on this issue since multifamily residents do not have control over the sale of the property. The CPUC elected to keep the legacy regulatory rules with the solar system, rather than with the sale of property or with the residents themselves, as they move more frequently than buildings are sold. But AB 942 now seeks to undo this ruling.

Passage of AB 942 would be a disproportionate blow to low-income Californians who have solar – including those in Los Angeles, where the majority of federal funding to build affordable multifamily housing is deployed. CARE and FERA customers qualify for electricity bill discounts because of their income level, and many of them live in multifamily housing and benefit from shared solar through VNEM, MASH or SOMAH.

If approved, AB 942 would increase electricity bills for those customers by stripping away solar credit savings. In turn, this would also increase the amount ratepayers pay into that CARE subsidiary program. Programs like VNEM, SOMAH and MASH that help deploy solar to low-income populations save California ratepayers roughly 35 cents for every $1 saved by a low-income resident through their solar programs.

According to CPUC’s own findings, residents who share solar through a single delivery point pay more than their fair share of grid costs. These residents have effectively been subsidizing the grid for decades. With AB 942, they would lose the benefits they had been granted through existing solar programs.

This bill would also cause a serious economic impact on housing providers who invested in rooftop solar with the understanding that their tenants, along with their property’s value, would benefit from stable and predictable solar compensation for 20 years. If approved, this bill would upend that contract, reduce the value of solar assets at the point of sale, and undermine the financial case for any multifamily property looking to install solar going forward. That could be mitigated by adding batteries, but that is costly and not always possible.

Passage of this bill could also make Californians, including developers and building owners considering clean energy investments, wary of investing in systems if they can’t trust the state to honor its own policies.

This proposed law contradicts past CPUC rulings, disproportionately impacts low-income Californians, undermines investment in clean energy and would destabilize the clean energy economy, harming those least able to absorb rising costs. As written, AB 942 disenfranchises some of California’s most vulnerable residents.

At a time when the Federal government seems ready to retreat from the generational challenge of the clean energy transition, we need leadership. If California breaks our clean energy promises today, who will trust our state to lead the way into a brighter, more sustainable future?

Patrick Sterns is vice president of policy and regulatory affairs at PearlX. The company, which has 15 years of experience in the solar energy industry, focuses on driving regulatory advancements, improving opportunities to provide grid resilience and enabling new pathways for multifamily properties and their tenants to access affordable clean energy.