Consumer Solar’s Fight to Survive Eclipsing Forces

Can Anti-Trust Laws Stop the Dismantling of Consumer Choice to Own Solar in California?

In 2022, Pacific Gas and Electric (“PG&E”) and the International Brotherhood of Electrical Workers Local Union No. 1245 (“IBEW 1245”) struck an agreement forming a Strategic Opportunities Committee, with equal representation from both PG&E and IBEW 1245. The Committee’s task: to ensure that PG&E remains the “provider of choice” and address “the reality that customers’ choices continue to grow.”[1] This combined effort reveals the unambiguous truth that consumer solar ownership is viewed as a direct threat to the IOU energy monopoly in California. This agreement is just one of many examples of the efforts to suppress consumer solar choice.

Legal actions are mounting in response to PG&E’s increasing influence, including a recent anti-trust lawsuit filed by Michael Boyd on December 16, 2024 (the “Boyd Case”),[2] and an ongoing case, Center for Biological Diversity (CBD) v. Public Utilities Commission (“CBD v. PUC”) to overturn the California Public Utilities Commission (CPUC) “NEM 3” decision waiting to be heard at the U.S. Supreme Court. [3]  As the California Legislature and regulatory agencies are viewed as run by IOUs, many groups are seeing litigation as their last option to preserve consumer access to solar energy. 

Over the course of the next few articles, we will be examining the potential for antitrust laws to resist the IOU energy monopoly in California. Using the Boyd Case as a starting point, we will explore whether state and federal anti-trust laws can be used to protect individual solar ownership rights. We will show that while the Boyd Case accurately identifies the problem, it will likely be dismissed early in the proceedings. Taking an alternative approach to this type of antitrust lawsuit, however, could save solar ownership rights in California. 

Boyd Case: Right Problem, Wrong Approach

The Boyd Case names PG&E, Southern California Edison (SCE), San Diego Gas & Electric (SDG&E), the CPUC, Governor Newsom, and other public officials as defendants, accusing them of conspiring to suppress rooftop solar through regulatory manipulation. The core argument in the case is that the CPUC’s Net Billing Tariff (“NBT”), also known as “NEM 3.0,” which became effective as of April 15, 2023, created a solar utility billing rate for consumers designed to hinder the adoption of distributed solar by slashing financial credits for solar owners’ energy sent to the grid.[4] The NEM 3.0 decision is also central to the claims in the CBD v. PUC pending at the California Supreme Court, which claims the regulatory solar rate changes were unlawful.[5] 

The Boyd Case accurately highlights a significant economic market harm resulting from NEM 3.0. The NEM 3.0 rate reduced the compensation that California solar system owners receive for excess solar generation sent to the grid by approximately 75%.[6]  This dramatic decrease in compensation significantly extends the payback period for both residential and commercial rooftop solar investments.[7] The change shifted solar owners’ bill credits from retail rates to wholesale rates, making solar energy economically unfeasible for many homeowners and small businesses. Since the NEM 3.0 rate became effective, the California solar industry sharply declined with residential solar applications plummeting by 70-80% and over 17,000 jobs lost in the sector. [8] Over 100 solar companies, including major players like SunPower, have shut down or filed for bankruptcy, citing the hostile regulatory environment as a primary cause. 

The Boyd Case’s mistake, however, is to attribute California solar market decline solely to NEM 3.0. A much wider range of actions -- before and after NEM 3.0 -- have collectively harmed the California distributed generation (DG) solar market, stalling what was once a booming industry. A few examples of the harms stemming from anti-competitive activities designs to make the IOUs the “provider of choice” are, as follows:

• False claims and propaganda that non-solar ratepayers are subsidizing solar ratepayers.[9]
• The elimination of the option for solar customers to net consume on multi-meter properties (VNEM/NEMA), which dramatically impacts larger solar customers’ ability to afford making a solar investment.[10]
• A new requirement as of January 1, 2024 that every solar installation for a business be regulated as a full public works project, that is decimating the solar market for small business owners of all sizes.[11]
• Repeated obstructions to developing community solar programs.[12]
• The restriction of solar contractors from working on energy storage systems (C-46 licensing dispute) (currently subjected to litigation).[13]
• The vetoing of a bill passed through the full Legislature that would have restored the ability of multi-meter properties like farms and school to install solar.[14]
• A proposal to reduce existing solar customers’ 20-year NEM grandfathering term.[15]

It is clear that the actions and results of the IOU’s anti-competition efforts are much broader than can be attributed to the NEM 3.0 decision alone. 

The Boyd lawsuit also gets it right in critiquing the CPUC’s alignment with PG&E and other IOUs. The suit claims that the CPUC no longer functions as an independent regulatory body, but rather as a captive entity serving the interest of the utilities it is supposed to regulate. This is a widely accepted belief by solar experts, and does, as the suit alleges, helps shield the IOUs from competition.

In sum, a collection of activities and resulting harms must be taken into consideration when examining whether the cumulative impact of the IOUs’ anti-competition efforts have violated anti-trust laws so that IOUs can remain consumers’ “provider of choice.”

A Consideration of the Challenges with the Boyd Case’s Strategy

While the Boyd Case identifies the right problem, the approach possesses significant weaknesses that create a likelihood the case will be dismissed early. First, the plaintiffs’ apparent lack of resources puts them at a disadvantage in what will be a David versus Goliath battle.  To succeed in an anti-trust case of this size would cost approximately $1 million per month in legal fees alone.[16] Second, legal challenges related to the types of defendants named, the state immunity doctrine, federal and state anti-trust laws, the Noer-Pennington Doctrine, and procedural hurdles all make this case a long-shot.  

-State Immunity

The Boyd Case targets state agencies and politicians, which introduces complex legal barriers. Principles of judicial deference are often provided to state regulatory decisions and the politicians overseeing them. Courts typically avoid second-guessing state policies, especially those made by agencies like the CPUC, unless there is clear evidence of corruption or bad faith. Parker v. Brown established this doctrine of state action immunity, which protects state actions from federal antitrust challenges.[17] The Parker v. Brown ruling recognized that, under the 10th Amendment, states are immune from federal interference in their regulatory functions, even if those actions might otherwise seem to limit competition or restrain trade.

Although this Parker v. Brown immunity is not absolute, it is difficult to overcome. Subsequent cases have limited the scope of the Parker v. Brown decision. For instance, in Cantor v. Detroit Edison Co., the Supreme Court found that a regulated utility could be liable under antitrust laws despite state approval of its actions, indicating that state action immunity has limits to its application. E.g., see Fairfax v. Fairfax Hospital Asso., 562 F.2d 280. This decision holds that if a state exceeds its authority, or if the action is a result of private conduct disguised as state action, then the immunity may not apply, and antitrust scrutiny could still occur.

Under these doctrines, in the case of the NEM 3.0 decision by the CPUC, if it was made under the authority of state law and within the scope of the state's regulatory powers, the named agencies and politicians would likely be protected from federal antitrust challenges unless there is evidence that the state overstepped its authority or acted unlawfully. If the California Supreme Court decides against the PUC in the CBD v. PUC NEM 3.0 case, this could make it easier to prove that state immunity should not apply.  For now, the potential lack of ability to provide evidence of corruption or bad faith, combined with an unlikely outcome in the CBD v PUC case make it is unlikely a court would find an antitrust violation occurred with respect to the CPUC NEM 3.0 decision alone or the conduct of the political figures involved.

-Federal & State Anti-Trust Laws 

Two key statutes are applicable in anti-trust cases: the Federal Sherman Act (15 U.S.C. § 1331) and California’s Cartwright Act (Cal. Bus. & Prof. Code §§ 16720 et seq.). Challenges exist with respect to each law, and differ based on the defendants involved and the scope of their activities. 

Federal Sherman Act

An antitrust lawsuit under the Federal Sherman Act against the IOUs and state regulators for suppressing competition from rooftop solar would require proof that the alleged actions had a substantial impact on interstate commerce. The Sherman Act prohibits restraints of trade or commerce and monopolistic practices, but it only applies to conduct that a has a substantial impact on interstate commerce. Section 1 of the Sherman Act deals with restraints of trade, while Section 2 addresses monopolization.

Here, the state level conduct at issue would need to affect interstate commerce based on an argument that the market itself is interstate in nature.  If solar equipment is produced in one state and sold or installed in another, this can create an interstate economic effect.  The impact must also be substantial – meaning conduct must have a significant effect on trade, competition, or pricing that crosses state lines. If solar technologies are made, sold, or installed across state lines, the suppression of competition in the solar market could meet this requirement due to having broader impact on interstate commerce by limiting the ability of interstate businesses to compete. This interstate commerce impact could also be shown by demonstrating that the anti-competitive conduct is likely to harm the national economy.  If the alleged actions by the IOUs and state regulators reduce competition in a market that is connected to national industries (e.g., the solar panel industry), this could be seen as having a substantial effect on interstate commerce. For example, limiting access to solar may impact national solar panel suppliers or interstate trade in solar-related goods and services. 

In addition to establishing that a substantial effect on interstate commerce exists, there would also need to be tangible evidence of an alleged conspiracy between PG&E, the CPUC, Governor Newsom and others to suppress rooftop solar.  In Bell Atl. Corp. v. Twombly (2007), the U.S. Supreme Court ruled that for antitrust claims to survive a motion to dismiss, it must be supported by direct evidence of an agreement to restrain trade, rather than mere allegations of parallel conduct or interdependence.  Simply asserting that decisions favor utilities is insufficient. Tangible evidence—such as internal communications, financial records, or explicit agreements— must exist showing the formation and operation of a conspiracy that shows a coordinated efforts to eliminate competition. 

California’s Cartwright Act

The Cartwright Act is California’s primary antitrust statute. It is modeled after the federal Sherman Act with a few difference nuances and hurdles related to California’s legal and regulatory environment. A high degree of particularity in pleading violations is required to demonstrate the formation and operation of a conspiracy, the wrongful acts committed pursuant to it, and the resulting damages. Standing under the Cartwright Act necessitates showing an antitrust injury, which means it must demonstrate that the injury suffered is the type of the antitrust laws were intended to prevent. This involves proving that the alleged conduct had an anticompetitive effect on the market, which can be complex and require substantial evidence. It would need to be shown that the conduct of the IOUs and regulators was not just restrictive but unreasonable and anticompetitive. See e.g., Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363. 

Thus, to succeed on claims under either federal or state antitrust laws requires overcoming significant hurdles related to pleading specificity, proving antitrust injury, demonstrating unreasonable restraint of trade, and navigating potential immunities for regulatory actions. All the impacts can potentially be proven, but, doing so, would be an expensive and lengthy process.

-Noerr-Pennington Doctrine

Even if the requirements to establish state and federal antitrust violations occurred are met, a significant question is whether the activities at issue are shielded from antitrust laws based on protected lobbying activities.  The Noerr-Pennington doctrine, established by the U.S. Supreme Court, provides that joint efforts to influence public officials do not violate antitrust laws, even if the intent is to eliminate competition. This principle was affirmed in United Mine Workers v. Pennington, 381 U.S. 657, where the Court held that such lobbying activities are not illegal under antitrust laws, even if they are part of a broader scheme that violates the Sherman Act.

Here, the question is whether the activities of influencing regulatory decisions at the CPUC and CSLB, creating propaganda to mislead the public, influencing elections, agreeing to form an anti-competition task force, and more, especially in light of the IOUs role in administering the very grid their competitors rely upon, would be protected as “lobbying activities.” 

Also, the statutory and non-statutory exemptions to antitrust laws do not protect concerted actions or agreements between unions and non-labor parties. In Telecom Plus of Downstate New York, Inc. v. Local Union No. 3, International Brotherhood of Electrical Workers, 719 F.2d 613, the court noted that while some union activities are exempt from antitrust regulation, concerted actions between unions and non-labor parties are not protected. Similarly, in Local 210, Laborers' International Union v. Labor Relations Div. Associated General Contractors, etc., 844 F.2d 69, the court emphasized that statutory exemptions do not cover concerted activities between a union and an employer unless they are intimately related to wages, hours, and working conditions and result from bona fide, arm's length bargaining. 

So, while lobbying activities by a union and an employer may generally be protected under the Noerr-Pennington doctrine, other collusive activities that directly restrain competition and do not fall within the statutory or non-statutory exemptions could still be subject to antitrust actions. Here, it is possible that an exception to the Noerr-Pennington doctrine could apply.  

-Procedural Hurdles

In regard to the Boyd Case, PG&E filed a motion on February 6, 2025, to move the case from the Santa Cruz Superior Court to the federal U.S. District Court for the Northern District of California.[18] PG&E argued that federal antitrust claims should be heard in a federal court. Federal courts tend to offer considerable deference to state regulatory decisions, making it harder for Boyd to challenge the CPUC’s actions. If the federal court accepts PG&E’s argument that CPUC’s policies are serving a legitimate regulatory purpose, Boyd’s case could be dismissed early, potentially before any significant motions are even filed. 

A Different Anti-Trust Strategy Could Save Solar Rights in California

The Boyd Case flags the existence of a real problem: monopolistic efforts designed to end consumers’ choice to own solar in California. In the next article, we will examine how the potential of crafting a different anti-trust case against the combined efforts of PG&E and IBEW 1245, could potentially overcome the problems inherent in the Boyd Case.  We will look at whether a suit aimed at a different subset of defendants with sufficient direct evidence of an agreement to suppress solar competition, and the combined subsequent actions taken to further the anti-competition efforts, can be established without the defendants’ hiding under the shield of protected lobbying activities.  

Our goals is to analyze how antitrust laws could be leveraged to save consumers’ access to solar ownership. Later articles will explore whether the sham exception to Noerr-Pennington immunity can pierce the shield of what otherwise may be considered protected lobbying activities, how employer-union collusion statutes may apply, and what legal strategies could hold these monopolistic forces accountable. By unpacking the full scope of these efforts, we aim to highlight real legal pathways to restoring a fair and competitive solar market in California.

Credits:

This article was made possible thanks to the dedicated research and writing support provided by Kye Gorosave.