There are some changes coming to how solar credits work that you need to know if you are a homeowner with solar, plan to buy a home with solar, or plan to install it in the future, so read on to make sure you are aware of these changes.
California Assembly Bill 942 (AB 942) will amend the Public Utilities Code as it applies to net energy metering (NEM) and tariffs for eligible customer-generators. This changes will impact how electrical utility companies compensate homeowners who generate their own electricity. Here are the key changes we can expect under the bill:
1. Changes to Net Energy Metering (NEM) – Upon the sale or transfer of title to a home, the new owners will be required to switch to NEM 3.0, which will result in less credits for the energy they generate.
2. Electric Bill Increases – Due to the NEM 3.0 changes homeowners will see higher electric bills, with an estimate of $63 a month extra per household.
3. Arguments For and Against the Changes – Those in favor of the bill argue that it will reduce utility rates overall, but those opposed say it will make electricity cost more for those with solar and will complicate real estate sales and transfers, which could feasibly lead to fewer people installing solar; this goes against the renewable energy goals that have been established in California.
4. When this Will Take Place if Bill Passes and What You Can Do – If this bill passes, which according to the status it looks like it will, these changes will take affect on January 1, 2026, and will apply to new generators only (those who buy or are transferred property after this date). Please contact your state representatives to voice your opinion.
During the escrow period there will be more information that must be disclosed regarding the solar, such as verifying NEM contracts and tariffs. This may lead to confusion when it comes to certain types of property transfers, like inheritance, income properties or in the case of divorce.
If you are shopping for a home make sure you understand the ramifications of purchasing a home with solar under AB 942, so that you have an understanding of what you might have to pay for that solar system – this bill could have a big affect on real estate transfers.
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