Reassurance about the effect of potential PG&E bankruptcy on the solar industry. Essentially, all the required functions that make net-metered solar possible are protected under state law from any bankruptcy activity. From the CALSSA (California Solar and Storage Ass’n.; our excellent industry trade organization)
“CALSSA Statement Regarding
PG&E’s Bankruptcy Announcement
This morning PG&E announced its intention to file for Chapter 11 bankruptcy protection by the end of the month. Members have been contacting us with questions about how this development could affect current and future solar and storage projects. There are several potential impacts that we have identified, but broadly speaking, we do not anticipate a significant impact on the solar and storage market in PG&E territory. The programs that affect solar and storage customers operate under state law and CPUC decisions that remain in force regardless of PG&E’s bankruptcy status.
Below we respond to specific questions we’ve received. Of course, all this said, the bankruptcy of the state’s largest utility is no small matter and ultimately will impact all of our advocacy and programmatic work going forward. This development will create both challenges and opportunities for the distributed energy community. We will share more of our thoughts on the bigger context to this bankruptcy news in the days and weeks ahead.
How will this affect net energy metering or net surplus compensation?
We do not see any potential impact to NEM or NSC for existing or future solar installations. PG&E has an obligation under state law and CPUC decisions to continue calculating customers’ credits under the approved NEM and NSC formulas. Similarly, PG&E is required to continue offering the NEM successor tariff and to make NSC payments to solar customers. PG&E’s bankruptcy status will not affect PG&E’s NEM and NSC commitments under state law.
Could PG&E suspend SGIP incentive payments?
Because the funds used for the incentives and the administration of SGIP are collected by a separate adder on utility bills and the funds are reserved under state law for the purposes of SGIP, we do not foresee any impact on the program. Suspension of the program would not help PG&E cover any of its general debt obligations because PG&E cannot redirect SGIP funds for that use. It is possible that staffing of the program could be affected, which may delay processing of SGIP documentation and incentive payments, but this is entirely speculative.
“Are existing contracts for demand response, renewable energy, and other grid services at risk?
As PG&E explains, under Chapter 11 PG&E will continue to pay all invoices submitted after PG&E files the bankruptcy petition. However, any remaining unpaid debts incurred prior to the filing cannot be paid until the court approves a Reorganization Plan. Since most contracts for energy, capacity, and other grid services are structured with monthly payments, there may be a window between the last paid invoices and any invoices filed before PG&E files its petition with the court that may be at risk of coming under the purview of the bankruptcy process. However, in his statement, Governor Newsom specifically sought to assure the market that energy suppliers will continue to receive payment for their services, stating that “[PG&E] should continue to honor promises made to energy suppliers…”