California Supreme Court Gives Hope to Solar Customers in NEM 3.0 Ruling

• 03 Oct, 2025
• Solar energy news

The sun (and the California Supreme Court) is shining upon homeowners with solar. The court has ruled the cuts to the export rates that solar customers have been dealing with since 2022 must be reviewed by a lower court. This update explains the California ruling, what it means, and what might come next. 

NEM 3.0 Case and Decision

In June 2025, the California Supreme Court heard a case regarding net metering. Under previous versions of NEM, homeowners were entitled to the retail rate when they sold unused electricity back to the grid. However, in 2022, NEM 3.0 slashed the export rate by roughly 75%. In August 2025, California’s highest court held that this decision to cut rates must be reconsidered by the lower court, opening up the possibility that the higher rates could be reinstated. 

Importantly, the California Supreme Court did not make a ruling in regard to the legality of the rate cuts. Instead, it punted the case back to the Court of Appeals to rule on if the changes made to the program in 2022 were legal. 

What It Means for Homeowners

Should the Court of Appeals determine that the reduction in compensation to homeowners with solar was illegal, homeowners may stand to save over $60 a month in electric bills, which could equate to thousands of dollars over the lifetime of the solar power system. However, if the previous decision is upheld, the reduced rates would remain in place. 

A critical point for detractors of the change was that the lower rates reduced the incentive for homeowners to invest in residential solar. The ability to sell excess energy is a key value proposition for homeowners interested in solar. 

What’s Coming Next? 

There is no deadline for the Court of Appeals to make a ruling. However, some legal experts believe it could take 3 to 4 months for the court to hear the case. Until it does, NEM 3.0 is in legal limbo and homeowners will have to wait to see how the court rules. 

Even so, switching to solar energy is still a great choice for consumers. Contact Plug It In to learn about how you can help your wallet and the environment when you invest in residential solar.