New California Bill Seeks to Break 20-Year Agreement Made with Solar Energy Consumers

 What AB942 means for homeowners who have a solar system.

May 16, 2025 | by Caleb Kennedy

On April 30th 2025, the California State Assembly's Utilities & Energy Committee voted 10-4 to pass Assembly Bill 942, which would break net metering agreements with solar users when they sell or transfer their home.

Originally, the bill was slated to end net energy metering (NEM) for homeowners who installed solar under the NEM 1.0 and 2.0 within a 10-year window, forcing these customers onto NEM 3.0.*

When that didn’t pass, assembly members amended the bill to remove the 10-year sunset for all customers but are now lobbying to require all sold or transferred homes to be shifted to NEM 3.0.

Unfortunately for many current solar consumers, it seems that AB942 has gained momentum and is likely to be enacted.

Here’s our quick breakdown of what it means, who it impacts, and why it matters.

What does AB 942 mean to do?

The bill aims to change the original terms of the NEM agreements prior to April 2023, so that anytime a home with a rooftop solar system is sold or transferred, the solar system would be placed on NEM 3.0.

This would drastically reduce the credit rate the new homeowner receives for their solar exports, consequently cutting into the bill savings they could expect, and making the solar system of less value.

Estimates predict the average electricity bill would increase about $63 per month after the sale or transfer of the home, potentially muddying real estate transactions.

Brad Heavner, executive director of the California Solar and Storage Association (CALSSA), has stressed that the bill “breaks contractual promises with millions of solar users”, in that the original NEM agreements were supposed to have been attached to the solar system itself, and not the property owner.

It’s a gray area at best, and if the bill were to pass, we expect there to be numerous long and ugly legal battles.

Who does AB 942 impact?

If you purchased a roof mounted solar system prior to April of 2023, this bill has the potential to impact you.

The reason I say potential is that you would only feel the pain of it if you were to sell your home.

Again, Heavner asserted that, “Reducing net metering compensation when homes are sold or transferred means solar users – who are mostly middle and working class households – would no longer be able to capture the value of their solar investment when their property is sold. AB 942 backers claim it is intended to lower energy rates, but it is actually designed to protect utility profits.”

Many homeowners go solar with the understanding that a renewable energy system adds to the overall value of their property.

In the short-term going solar increases your net worth, and down the road it should make your home more attractive and any possible sale more lucrative.

Well, if you’re looking to sell your home, AB 942 would likely cut your returns, and reallocate these into the pockets of the state’s largest utility companies.

Why does it matter?

The potential passing of AB 942 matters because it’s counter to California’s outspoken initiative to “go-green” and lead the way for the United States’ development of renewable energy resources.

And it spits in the face of millions of customers who literally bought in to the agenda with their own finances.

The main incentive in going solar has always been utility bill savings, but the reality is these savings compete with the interests of the state’s utility companies.

It’s no wonder that Pacific Gas & Electric supports the bill under the guise that it would lower electric bills for all customers.

Let’s just say we’re not hopeful for this outcome.

Should AB 942 go into effect, there’s a chance we could see slower price-hikes on electricity (and with PG&E prices having more than doubled in the last ten years, we would hope so), but the likelihood of it decreasing utility rates is a long shot.

*NEM 3.0 is the latest version of the state’s billing tariff, which went into effect April of 2023, and pays about 80% less for electricity exported to the grid than the previous iterations, slashing the month-to-month payback on solar investments, making them less financially viable.