NEM 3.0 Is Now Permanent. The California Supreme Court Just Closed the Door.

NEM 3.0 Is Now Permanent. The California Supreme Court Just Closed the Door.

For three years, California homeowners stuck in solar leases and PPAs with shrinking bill savings had one thread of hope: the courts might still reverse NEM 3.0. Environmental groups, solar advocates, and consumer attorneys all pointed to active litigation as a reason the policy could change.

That thread is gone.



In June 2026, the California Supreme Court declined to hear a second appeal of the Net Billing Tariff — what everyone calls NEM 3.0. The court's refusal to take the case is the end of the line. The California Court of Appeals ruling from March 2026 stands. The California Public Utilities Commission's 2022 decision to slash rooftop solar export credits by roughly 75% is now settled law with no further avenue for challenge.

If you signed a solar contract in California after April 15, 2023, the economics your salesperson projected — and the policy those projections relied on — are now permanently locked in against you.

What Did the California Supreme Court Actually Decide in June 2026?

The court declined to review the second Court of Appeal ruling upholding NEM 3.0, ending the litigation entirely. The legal fight over NEM 3.0 had already run an unusually long course. The Environmental Working Group, the Center for Biological Diversity, and the Protect Our Communities Foundation originally filed suit in 2023 after the CPUC cut export credits from retail rates — roughly $0.30/kWh — down to avoided-cost rates averaging $0.05–$0.08/kWh.

In August 2025, the California Supreme Court had ordered the Court of Appeal to rehear the case, finding it had applied the wrong legal standard. That gave advocates a second shot. The Court of Appeal reconsidered — and sided with the CPUC again in March 2026. When advocates petitioned the Supreme Court a second time in April, the court in June 2026 refused. No further judicial review is available.

The policy that gutted California's residential solar economics is now as permanent as California law gets.

Why Does the Final Ruling Matter for Homeowners Already in Contracts?

If you're already in a solar lease or power purchase agreement (PPA), you might wonder why a court ruling about export rates matters to your situation. The answer is what some homeowners were told — explicitly or implicitly — when they signed.

From 2023 through early 2026, some sales representatives and installers told customers that NEM 3.0 was "being challenged in court" and that the policy might be reversed. Some used this as reassurance: don't worry about the lower export credits, the old rates might come back. Some built it into savings projections that hedged toward better future policy. Some said nothing at all, presenting projected savings that only made sense if courts fixed what the CPUC broke.

The June 2026 Supreme Court denial makes every one of those representations false — and they were always legally questionable, because a pending appeal is not a guarantee of reversal. California installers are required under Business and Professions Code §§ 7169–7170 to provide homeowners with accurate, current information about the billing policy their system would operate under. Projections built on hoped-for judicial relief were not accurate representations of NEM 3.0 as it existed at the time of signing.

What Did Homeowners Lose When NEM 3.0 Took Effect?

The numbers are not abstract. When the CPUC implemented the Net Billing Tariff in April 2023, it fundamentally changed the return on any solar-only system for customers of Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E).

Under NEM 2.0, excess power pushed to the grid was credited at close to full retail rate — a kilowatt-hour out was worth nearly as much as a kilowatt-hour in. Under the Net Billing Tariff, that same export is compensated at avoided-cost rates that track the grid's real-time economics. Mid-day exports, when residential solar systems push the most power, receive the lowest compensation of the day because the grid is already flooded with cheap solar at noon. Evening consumption — when California's TOU rate plans hit peak pricing — is billed at rates that can exceed $0.45–$0.55/kWh at PG&E and SCE.

The spread is what destroys the promised savings. You produce when power is cheap. You consume when power is expensive. Without battery storage, a solar-only system under NEM 3.0 can leave a homeowner in a worse net billing position than they were in before installation — even as their salesperson's projection showed thousands in annual savings.

The industry felt it immediately. More than 17,000 California solar jobs were lost following NEM 3.0's implementation. Numerous solar installers filed for bankruptcy. Market demand declined sharply through 2024 and 2025. The companies that survived pivoted hard to battery-plus-solar configurations, where storage lets homeowners capture the self-consumption value NEM 3.0 still preserves.

Were Solar Homeowners Told This Before Signing?

This is the legal question — and the answer varies by installer, by region, and by how recently the contract was signed.

California Solar Exit has reviewed contracts from homeowners across Los Angeles, Orange County, the Inland Empire, the Central Valley, and the Bay Area. Across that review set, the same misalignment appears repeatedly: savings projections that don't match NEM 3.0 economics, solar-only systems sold with bill-zeroing promises in a market where battery attachment was climbing toward 70%, and disclosure documents missing or improperly completed under the solar-specific requirements of B&P Code §§ 7169–7170.

Some of those installers are still operating. Many are not — the wave of solar company bankruptcies that followed NEM 3.0's implementation wiped out a significant portion of the market. (We covered that installer collapse and what it means for contract rights in our California solar installer bankruptcy guide.)

Whether your company is still around or not, the contract obligation it created — and the misrepresentations it may have made — didn't disappear when the installer did.

Does the Final Court Ruling Change Your Legal Options?

Not in the way some homeowners hoped. A court overturning NEM 3.0 was never going to unwind signed contracts or restore savings retroactively. What it might have done is improve the economics of solar going forward — including for homeowners still locked into long-term leases and PPAs.

That avenue is now closed. What remains are contract-level remedies under California consumer protection law — and those are unaffected by the Supreme Court's June 2026 decision either way.

The Home Solicitation Sales Act, the Consumers Legal Remedies Act, and Business and Professions Code §17200 all create grounds for challenging solar contracts where the sales process involved misrepresentation — whether about savings projections, export credit rates, tax credit mechanics, or required disclosures. Those statutes apply to the conduct at the time of signing, and they aren't diminished by subsequent changes in regulatory or judicial outcomes.

What the Supreme Court's final ruling does change is this: the argument that you should "wait and see" what happens with NEM 3.0 litigation is no longer available. There's nothing left to wait on. If your solar contract isn't delivering what you were promised, the policy fight is over and the contract fight is the only path that remains.

For context on the underlying NEM 3.0 economics and which contract patterns are most likely to have qualifying misrepresentation grounds, see our earlier deep-dive: NEM 3.0 Killed Your Solar Savings? Your CA Exit Options in 2026.

Frequently Asked Questions

Is NEM 3.0 now permanent in California?
Yes. The California Supreme Court declined to review the second Court of Appeal ruling upholding NEM 3.0 in June 2026. No further judicial challenge to the policy is available. The Net Billing Tariff — with its avoided-cost export compensation structure — is settled California law for customers of PG&E, SCE, and SDG&E.

Does the Supreme Court's June 2026 ruling affect my existing solar lease or PPA?
It doesn't change your contract terms directly, but it closes the litigation avenue some homeowners were waiting on. The economic conditions your contract operates under are now permanent. If your projected savings don't match what NEM 3.0 delivers, the path forward is contract-level review under California consumer protection law — not waiting for a regulatory reversal.

Can I cancel my solar contract now that NEM 3.0 is confirmed permanent?
Regulatory permanence doesn't create a cancellation right on its own. What creates cancellation grounds is whether your installer misrepresented the NEM 3.0 rules, skipped required disclosures under B&P Code §§ 7169–7170, or sold you a solar-only system with savings projections that only worked under NEM 2.0 economics. California Solar Exit reviews contracts at no charge to assess whether those grounds exist.

What if my installer told me NEM 3.0 might be reversed by the courts?
If a sales representative or contract document suggested the policy might be overturned and used that as reassurance about your projected savings, that was a misrepresentation at the time it was made — courts do not guarantee reversals. Now that the litigation has definitively ended with NEM 3.0 intact, the falseness of that representation is fully established. Document anything your installer told you about the pending litigation.

Does NEM 3.0 apply to LADWP customers?
No. NEM 3.0 only applies to the three investor-owned utilities — PG&E, SCE, and SDG&E. Customers of LADWP, SMUD, and other municipal utilities operate under separate net metering programs that were not affected by the CPUC's 2022 decision or the subsequent court rulings.

What happened to the solar companies that caused these problems?
Many of the installers most active in the 2023–2025 California residential market have since filed for bankruptcy or ceased operations. That includes companies that serviced contracts for Sunnova, Vivint Solar, and others. Bankruptcy doesn't void the contractual rights California homeowners hold against those entities — it complicates them. Our installer bankruptcy guide covers what your options look like when the company that sold you the system no longer exists.

The fight over NEM 3.0 is over. The policy California homeowners were promised their solar would work around is now permanent. If your contract was built on projections that assumed a different outcome, the only path to addressing that is the one California consumer protection law provides.

California Solar Exit reviews solar contracts at no charge — leases, PPAs, and loans — across all of California. Remote consultations available.

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