CPUC Votes To Change The Way California Will Compensate Rooftop Solar Energy

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

CPUC Votes To Change The Way California Will Compensate Rooftop Solar Energy

Yesterday the California Public Utility Commission (CPUC) voted unanimously to enact sweeping changes to the way the state will compensate rooftop solar energy. The decision, which came after more than three hours of public comment in which rate payers, environmental advocates, and solar industry workers voiced their near-universal opposition to the policy change, will effectively reduce how much money new solar customers can expect to recoup by 75% or more.


At a time when California is attempting to transition to clean energy, opponents argued that the change to the net energy metering program (NEM) would cripple the rooftop solar industry and hamper the state’s progress on clean energy in favor of supporting the utility company’s monopoly on energy. In comments that were occasionally emotional to the point of being vitriolic, callers attempted to shame CPUC and cast them as shills for the corporate interests of Pacific Gas & Electric and Southern California Edison.

In fact, for many Californians who called into the vote today, the conversation seemed to have far less to do with how to make the transition equitable, and instead hinged upon the perception that the decision would be an economic windfall to utility companies and harm grid resilience. Rate payers railed against the utility company’s record-setting profits and negligent business practices that have cost the state billions in fire damages in addition to human lives. For many callers, the debate hinged on reducing reliance on monopolistic corporations rather than equitable decarbonization strategies.

Still, three hours of desperate pleading for a “no” vote did not sway the Commission. And the future of rooftop solar will look considerably different in California going forward. The new plan will tie the rates that solar customers receive to the time that they sell then energy back to the grid, thereby massively incentivizing investment in battery storage to complement solar systems.

The decision was destined to be controversial no matter the specifics. Back in 2021, the CPUC announced its intent to change the NEM rates with an even more drastic plan that included rate reductions and also essentially levied a $50 monthly tax on rooftop solar users. The backlash sent CPUC back to the drawing board to craft a more modest proposal. But early versions of today’s ruling were still cast as far too drastic by the solar industry and by opponents of the program.

The debate surrounding the changes is complex, but at its heart, the controversy boils down to two problems, according to the CPUC. One, the prior structure placed the cost of rooftop solar unfairly onto lower income residents. And two, the prior structure had become outdated, and rooftop solar owners were being overpaid for the energy their panels produced.

The Inequality Issue

Under the old NEM system, residents with rooftop solar were allowed to use any energy from their system to pay for their own energy costs instead of buying from the utility companies. Any extra energy they generated could be sold back to the grid at the standard rate that the Utility Company would charge to customers–between 23 and 35 cents per kilowatt-hour. At the end of the billing period, solar customers only pay for the energy they use minus what they sell back, hence the “net” in net energy metering.

But the utility companies don’t simply eat that cost. In fact, they don’t take a financial hit at all. In California, utility companies are paid a fixed amount for the service they provide. The companies charge a fixed rate for electricity that’s multiplied by how much energy is used by a household (or company or church etc). When less electricity is used, like in the case of rooftop solar, the utility companies respond by increasing the rate to ensure they’re paid their full amount. The more rooftop solar that gets added, the higher the rate goes. (This is an oversimplification, and the Utilities Commission technically has to approve any rate hikes on the basis of whether they’re warranted or not, but it captures what’s happening here nonetheless.)

This policy heavily incentivized residents to install rooftop solar so they use less electricity from the grid. But in doing so, it left those that can’t afford solar to pay the difference. An analysis by the Public Advocates Office at the CPUC showed that residents without rooftop solar were paying an extra $67 to $128 per year due to the cost of the old NEM programs. With the average cost of rooftop solar installation hovering around $12,000-$16,000, the prior policy was criticized as a regressive cost shift that functionally taxed the poor and gave to the rich. The CPUC and the utility companies argued that today’s decision is about rectifying that inequality.

Aligning Payouts with the Value of Energy

In addition to improving the inequality for lower income residents, the CPUC also claims that their new net energy metering policy (dubbed NEM 3.0) will modernize the incentive structure to align with the needs of the grid.

As mentioned above, under the previous version of NEM, residents typically received between 25 and 35 cents per kWh of energy they sold back to the grid, because that’s what the utility companies would’ve charged. In other words, the retail price. But for utility companies, that price also includes money spent on grid hardening, infrastructure, maintenance, vegetation management, R&D, and myriad other fixed costs.

Couple that with the fact that adding energy to the grid,n the middle of the day, when the grid is ripe with solar and other renewables, the value of adding more energy to the system can drop to basically zero. “Retail net energy metering was a good way to get industry started,” says Matt Baker, the Director of the CPUC's Public Advocates Office. “It's a terrible way to try to decarbonize after we've already gotten started.”

Which is why under NEM 3.0, solar customers will be compensated based on when they export their energy to the grid, with different values assigned to each hour of the day, each month, and weekdays versus weekends. These rates also vary by utility company, but on average, solar customers can expect to receive about five to eight cents per kilowatt-hour starting in April 2023, which obviously constitutes a major reduction.

Batteries Take the Limelight

Due to the increased importance of timing in the new export rates under NEM 3.0, batteries have become a major pillar of the new policy since they let owners store their solar energy and sell it back to the grid when demand and export rates are higher. In fact, the new policy effectively makes it economically untenable to install rooftop solar without one. “So whereas before, you would get 30 cents a kilowatt-hour in the middle of the day, now that will be paid at avoided costs–five, six, seven cents, depending on where you are,” says Baker. “But in the evening, you can earn 20 times that amount. You can earn a dollar or more [per kilowatt-hour] depending on where you are.” The idea, says Baker, is to incentivize customers to sell their energy back when the grid is low on renewables and energy demand is highest. But even the CPUC admits that the proposed changes will make rooftop solar less profitable for residents overall. The goal, the Commission says, is to have solar systems pay for themselves within nine years, versus the four or five that most customers experienced under NEM 2.0.

Industry Frustrated by Short “Glide Path”

It’s important to note that all of these changes in NEM 3.0 will only affect new rooftop solar projects. Existing NEM 1.0 and 2.0 customers will retain their current rates for 20 years. NEM 3.0 also includes provisions that add extra money–a few cents per kilowatt-hour–to the rates that customers will receive for the next several years as the transition plays out.

But opponents argue that’s simply not enough and that the plan’s aggressive export pricing reductions will cripple the solar industry. “All the good innovation and progress that we want to see in California will be severely hampered if they go forward with what's on paper right now,” said Bernadette Del Chiaro Executive Director, California Solar & Storage Association (CALSSA) in the lead up to the vote this week. Del Chiaro agrees that the grid needs more batteries and that the current model unfairly places the cost of rooftop solar onto lower-income residents. But she says NEM 3.0 is too drastic, and the changes should come more gradually. “We all want to see more energy storage, but you can't get there overnight. And what the commission wants to do is make the future appear on April 15, 2023, when these new regulations would go into effect,” said Del Chiaro earlier in the week. “That simply will just throw the whole market over a cliff. It's too drastic, it's too extreme, and it runs counter to everything California wants to see.”

Del Chiaro and many other solar industry representatives have begged the Commission for a longer “glide path” towards its goals. They argue that battery technology is still too expensive–it typically increases the cost of a solar system by about a third–and regulators should wait for the technology to mature and come down in cost before essentially mandating its adoption. The CPUC points to the many government incentives at both the state and federal level that are targeted at reducing the cost of battery installation. But again, Del Chiaro and CALSSA counter that timing is the problem and many of these programs are not yet online and will likely still not be available when NEM 3.0 goes into effect in April.

The solar industry also wants to see the export rate reduction occur more gradually. Walker Wright, the Vice President of Public Policy at Sunrun, one of the nation’s largest rooftop solar providers, said he thought an initial 35% reduction in export rates would’ve been much more reasonable than the 75% that the CPUC pushed through today. “It all goes back to the timeline on how we can get there so that the industry doesn't see damage,” said Wright earlier in the week. “I just think it needs to be less drastic at the beginning.”

If NEM 3.0 does drive solar adoption downward, which seems likely, it will slow California’s progress on achieving its ambitious renewable energy goals and likely allow companies like PG&E to retain their monopoly on the energy market for longer. The CPUC is keenly aware of the tradeoffs, but their vote today seems to indicate that they consider them worthwhile.

The New Face of Live Shopping: Whatnot’s $5B Journey

🔦 Spotlight

Hello Los Angeles,

This week has been a challenging one for many in our city as we continue to face the aftermath of the recent wildfires. Recovery efforts are in full swing, and as always, the strength and resilience of our community shine through.

If you or someone you know has been impacted, there are resources available to help navigate this difficult time:

  • Pacific Palisades Fire Damage Maps: View here

These tools can provide support, whether you’re looking for financial assistance, housing resources, or updates on affected areas.

While our community focuses on recovery, we’re also reminded of what makes LA unique: its unrelenting drive to build, create, and innovate. A great example this week comes from Whatnot, the live shopping platform co-founded in 2019 by Grant LaFontaine and Logan Head, which has just achieved a major milestone.

Whatnot announced it raised $265 million in Series E funding, valuing the company at an impressive $5 billion.

For those unfamiliar, Whatnot combines shopping and entertainment through live-streamed auctions. Think of it as a vibrant, interactive marketplace where sellers showcase everything from trading cards and collectibles to fashion items, all in real time. Buyers can bid during the stream, creating a sense of excitement and connection that feels more personal than traditional online shopping.

The company’s new funding—co-led by Greycroft, DST Global, and Avra Capital—will drive expansion into markets like Australia and bring improvements to seller tools, from inventory management to advanced analytics. But what stands out most is Whatnot’s focus on its people. CEO Grant LaFontaine announced plans to buy back $72 million in shares for long-term employees, a move that underscores the company’s dedication to sharing its success.

As we move forward, let’s celebrate stories like these that show how innovation thrives in LA—even amid challenges. Whether it’s supporting wildfire recovery, building the next great startup, or simply connecting with others, we each play a role in shaping the spirit of our city.


🤝 Venture Deals

LA Companies

  • Phase Four, a leader in advanced in-space propulsion systems, announced the first close of its Series C funding round, securing nearly 60% of the target raise, led by Artemis Group Capital, to ramp up production of its Valkyrie Hall Effect Thrusters to at least 250 units annually and develop cutting-edge propulsion technologies for defense and national security needs. - learn more
  • Proper, a next-generation supplement brand launched by fitness entrepreneur Amanda Kloots, secured investment from Ben Bennett's Beauty Accelerator, The Center, to redefine the supplement industry with innovative, nutrient-focused wellness solutions tailored for modern lifestyles. - learn more
LA Venture Funds
  • Sound Ventures participated in a $17M funding round for Reshop, a platform simplifying the returns process for consumers and merchants, with plans to use the funds to enhance their technology and expand their services. - learn more
  • LFX Venture Partners participated in a $30M strategic funding round for Shippeo, a Paris-based company specializing in real-time multimodal supply chain transportation visibility; the funds will support Shippeo's global expansion, particularly across North America and the Asia-Pacific region. - learn more
  • Amboy Street Ventures participated in a $15M Series A+ funding round for Granata Bio, a biotechnology company focused on developing advanced gene therapies; the proceeds will be used to accelerate the development of their pipeline and expand their research capabilities. - learn more
  • BAM Ventures participated in a $700,000 seed funding round for MX Locker, an online marketplace for buying and selling motocross gear and parts; the company plans to use the proceeds to enhance its platform and expand its user base. - learn more
  • Crosscut Ventures participated in a $7.15M seed funding round for SoloPulse, an Atlanta-based company developing advanced radar technology; the funds will be used to enhance their product development and expand market reach. - learn more
  • Starburst Ventures participated in Loft Orbital’s $170M Series C funding round, bringing the San Francisco-based satellite infrastructure provider’s total capital raised to $280 million, with the funds aimed at accelerating their "condosat" missions to simplify and expand access to space. - learn more
  • Overture VC participated in a $100M Series B funding round for Harbinger, a Southern California-based electric vehicle company specializing in medium-duty EVs; the funds will be used to accelerate the production of their electric vehicle platforms. - learn more
  • Muse Capital and Time BioVentures participated in an $18M Series A funding round for Conceivable Life Sciences, a New York-based biotech company developing the world's first AI-powered automated IVF lab; the funds will support their ongoing commercial pilot program in Mexico City and preparations for a U.S. launch targeted for early 2026. - learn more
  • B Capital Group participated in a $25M Series B funding round for Labviva, a Boston-based AI-driven procurement platform for life sciences; the funds will be used to accelerate product development, enhance marketing and customer support, and expand internationally. - learn more
  • Focalpoint Partners participated in a seed funding round for Kerna Labs, a San Francisco-based AI biotechnology company focused on advancing mRNA payload design for new therapies, with the funds supporting operational expansion and development efforts. - learn more

LA Exits

  • Intracom Systems, a pioneer in software-based communication solutions, has been acquired by IPC, a global leader in trading communications technology, to enhance IPC's SaaS communications offerings for the financial services industry. - learn more
  • Adexa, a provider of advanced supply chain planning solutions, has been acquired by Eyelit Technologies to enhance its Manufacturing Operations Management (MOM) and Manufacturing Execution Systems (MES) offerings and expand its market presence. - learn more
  • Caramel, a platform specializing in simplifying online vehicle transactions, has been acquired by eBay to enhance its offerings for secure and streamlined automotive buying and selling experiences. - learn more
  • ImaginAb, a biotechnology company specializing in antibody-based imaging and therapeutic solutions, has been acquired by Telix Pharmaceuticals to expand its next-generation therapeutic assets and biologics technology platform. - learn more
  • Sleepypod, a global leader in crash-test-certified safety harnesses and carriers for pets, has been acquired by Paw Prosper to enhance its commitment to pet well-being and expand its portfolio of innovative pet safety solutions. - learn more

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Standing Together Through the Flames

🔦 Spotlight

To our Los Angeles family,

This week’s wildfires have brought immense pain and hardship to our beloved city. Many of our friends, neighbors, and colleagues have faced evacuations, power outages, and the devastating loss of homes and livelihoods. Our hearts go out to everyone affected by this tragedy.

At dot.LA, we want to express our deepest sympathy to those suffering in this moment. We see your resilience and stand with you during this challenging time. This community has always been defined by its strength and compassion, and now is the time to come together in support.

If You or Someone You Know Has Been Impacted, Resources Are Available:

Evacuation Shelters:

  • Calvary Community Church: 5495 Via Rocas, Westlake Village, CA 91362
  • Ritchie Valens Recreation Center: 10736 Laurel Canyon Blvd., Pacoima, CA 91331
  • Pan Pacific Recreational Center: 7600 Beverly Blvd., Los Angeles, CA 90036
  • Westwood Recreation Center: 1350 Sepulveda Blvd., Los Angeles, CA 90025
  • Pasadena Civic Auditorium: 300 East Green Street, Pasadena, CA 91101
  • Pomona Fairplex: 1101 W McKinley Ave, Pomona, CA 91768
  • Stoner Recreation Center: 1835 Stoner Ave, Los Angeles, CA 90025

Animal Shelters:

Small Animals:

  • Agoura Animal Care Center: 29525 Agoura Rd, Agoura Hills, CA 91301
  • Baldwin Park Animal Care Center: 4275 Elton St, Baldwin Park, CA 91706
  • Carson Animal Care Center: 216 W Victoria St, Gardena, CA 90248
  • Downey Animal Care Center: 11258 Garfield Ave, Downey, CA 90242
  • Lancaster Animal Care Center: 5210 W Ave I, Lancaster, CA 93536
  • Palmdale Animal Care Center: 38550 Sierra Hwy, Palmdale, CA 93550

Large Animals:

  • Pomona Fairplex: 1101 W McKinley Ave, Pomona
  • Industry Hills Expo: 16200 Temple Ave, City of Industry, CA 91744
  • Antelope Valley Fair: 2551 W Avenue H, Lancaster, CA 93536
  • Los Angeles Equestrian Center: 480 W Riverside Dr, Burbank, CA 91506
  • Pierce College Equestrian Center: 7100 El Rancho Dr, Woodland Hills, CA 91371

Disaster Relief Information:

  • LA County Assessor: Information for property owners and FAQs about disaster relief.

Mental Health Support:

  • Los Angeles County Department of Mental Health: Crisis counseling and support for those affected. Access services through their website or call their hotline at (800) 854-7771.

Temporary Housing Support:

  • Airbnb: In partnership with 211 LA, offering free temporary housing for displaced residents. Spaces are limited; complete the form to be notified of availability.

Transportation Support:

  • Uber: Use promo code WILDFIRE25 for 2 free rides up to $40 each to/from active shelters.
  • Lyft: Code CAFIRERELIEF25 offers 2 rides up to $25 each for up to 500 riders, valid until 1/15.
  • Metro: Fare collection is suspended systemwide.

Staying Informed:

  • Watch Duty App: Provides real-time wildfire tracking, evacuation warnings, and updates.
  • Los Angeles Fire Department Alerts: Visit their website for the latest information on fire status and safety guidelines.

Safety Precautions:

  • Ready, Set, Go!: Personal Wildfire Action Plan by the Los Angeles County Fire Department.

To those in our community who are volunteering, donating, or offering aid in any form—thank you. Your efforts embody the spirit of LA: strong, compassionate, and unstoppable.

At dot.LA, we’re committed to amplifying stories of resilience and support. If you’ve seen inspiring acts of kindness or have resources to share, please let us know. Together, we can shine a light on the incredible ways this community is stepping up during these trying times.

In the days ahead, let’s hold tight to the bonds that unite us and remember that we are stronger together. The fires may scar the land, but they cannot dim the collective spirit of Los Angeles.

We’re here for you, and we’re with you.

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    A Strong Finish to 2024 for LA Tech: Crosscut Ventures Leads the Way

    🔦 Spotlight

    Happy Friday LA!

    As we close the book on 2024, Los Angeles has had a remarkable year in tech and venture capital. From groundbreaking funding rounds to industry-defining innovations, the city’s tech ecosystem has showcased its ability to adapt and thrive. Among the year’s final highlights was the announcement that Crosscut Ventures, one of LA’s premier early-stage venture capital firms, has added Jon Ylvisaker as its newest Partner.

    Crosscut Ventures’ Bold New Direction

    Announced in late December, Jon Ylvisaker’s appointment reflects Crosscut Ventures’ commitment to advancing its focus on the energy transition. Ylvisaker brings decades of experience in driving investments in energy technologies and digital infrastructure. As the founding partner and managing director of Yield Capital Partners, he led investments in startups and established companies shaping the future of sustainability. At Wolfacre Global Management, a Tiger Management hedge fund, he further honed his expertise in supporting impactful climate-focused solutions.

    Brian Garrett, Managing Director and Co-Founder of Crosscut Ventures, said, “Jon's extensive experience in climate and digital infrastructure investments, coupled with his impressive track record of bringing groundbreaking technologies to market, makes him the ideal partner to help lead our focus.”

    Since its founding in 2008, Crosscut has played a key role in shaping LA’s tech landscape. Ylvisaker’s addition reinforces the firm’s commitment to addressing global challenges like energy transition and sustainability, further solidifying its leadership in venture capital innovation.

    What’s Next for LA Tech in 2025

    The momentum from 2024 has set the stage for an even bigger year ahead. Entrepreneurs, investors, and innovators in LA are poised to take on new challenges and create meaningful change across industries.

    As we step into 2025, we want to thank everyone who helped make 2024 such a standout year. Here’s to another year of progress, innovation, and success. From all of us at dot.LA, Happy New Year!

    🤝 Venture Deals

    LA Companies

    • First Resonance, a company specializing in digital manufacturing software through its ION Factory OS, has raised a $20M funding round led by Third Prime with participation from Blue Bear Capital and others. This brings its total funding to $36M and will be used to accelerate product development, grow its customer base, and enhance support for advanced manufacturing sectors like aerospace, robotics, and clean energy. - learn more
    LA Venture Funds
    • Finality Capital Partners led a $17M Seed funding round for ChainOpera AI, a California-based company developing blockchain networks for AI-powered agents and applications, to accelerate product development, expand its team and enhance its blockchain and AI integration capabilities. - learn more

    LA Exits

    • Thirteen Lune, an inclusive beauty e-commerce platform, has been acquired by SNR Capital, marking a significant milestone in the platform's mission to amplify underrepresented beauty brands while fueling its next stage of growth. - learn more
    • Ergobaby, a leading brand in juvenile products known for its high-quality baby carriers, has been acquired by Highlander Partners. The acquisition aims to bolster Ergobaby’s growth, expand its product offerings, and strengthen its position in the parenting solutions market. - learn more

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