On July 15, 2025, California’s Senate Energy, Utilities and Communications Committee approved key amendments to AB 942, ensuring that existing net energy metering (NEM) contracts remain intact—even when a property changes ownership. This decision represents a significant win for solar homeowners and reflects the state’s commitment to honoring long-standing energy agreements.
Why the Change Matters
Originally, AB 942 proposed provisions that would terminate NEM agreements after ten years or upon the sale of a property. These changes would have disrupted the legal foundation of contracts signed under NEM 1.0 and NEM 2.0. In addition, the bill initially included clauses to revoke cap-and-trade climate credits—benefits directly tied to consumers’ solar investments.
Industry Voices Praise the Amendments
Brad Heavner, Executive Director of the California Solar & Storage Association (CALSSA), praised the revised version of AB 942, stating it upholds the “state guarantee” that California families and businesses relied on when adopting solar energy.
Broad, Bipartisan Opposition
More than 100 organizations representing real estate, housing, business, and environmental interests opposed the original version of AB 942. Notable opponents included the California Association of Realtors, California Building Industry Association, Los Angeles Business Council, and several national environmental groups.
Critics argued that the bill would have undermined consumer trust, created instability in real estate transactions, and broken long-standing contractual obligations—particularly those involving 20-year NEM agreements.
The Cost-Shift Debate
Supporters of AB 942 claimed it would address an alleged $8.5 billion “cost shift” in 2024, in which non-solar customers were said to subsidize the grid costs for solar users. However, independent studies from M.Cubed and CALSSA countered that claim, showing rooftop solar may actually save money for all ratepayers—estimating $1.5 billion in system-wide benefits for 2024 alone.
What Comes Next
While the most harmful provisions of AB 942 have been removed, some concerns remain. Future amendments may still attempt to revoke NEM benefits upon the sale of a home or disqualify users from cap-and-trade climate credits.
Stakeholders like CALSSA are continuing to monitor the bill closely. If future provisions conflict with existing legal contracts or constitutional protections, affected parties may pursue legal challenges.
Legal Perspective from SolarLawFirm.us
- Contract Security: Existing NEM agreements remain valid, even after a home is sold, thanks to this legislative win.
- Remaining Risks: Clients should stay informed about any new amendments that could affect their solar benefits or eligibility for climate incentives.
- Legal Guidance: SolarLawFirm is here to help homeowners and solar businesses navigate contract law, legislative changes, and future disputes related to AB 942.
