No Go on Neighborhood Microutilities in California

April 12, 2023
California regulators rejected Sunnova's proposal, but the company says it's not done pushing for a "more competitive energy market that prioritizes the needs of the people over the interests of monopolistic utilities."

California regulators have given their answer on Sunnova’s proposal to build microutilities, and it is, “No.”

The state public utilities commission voted against the plan last week without comment.

The vote was in keeping with an administrative law judge's decision in February that called for the rejection of the plan, which would have allowed the creation of public utility microgrids for new neighborhoods.

Meghan Nutting, Sunnova’s executive vice president of government and regulatory affairs, said the decision was disappointing, but the company remains “resolute” in its commitment to innovations that enhance the grid and provide affordable and reliable energy.

“As utility rates continue to soar and grid instability worsens, the end user bears the brunt of the consequences, and the urgency of this reality is not lost on us,” Nutting said. “As we move forward from here, we will continue to work tirelessly on future applications to advocate for consumer choice and to push for a more competitive energy market that prioritizes the needs of the people over the interests of monopolistic utilities."

Sunnova’s proposal drew strong sentiments from opposing camps, with microgrid developers, clean energy advocates and social justice groups in support, and utilities and the California Public Advocates’ Office opposed.

The plan appeared in jeopardy when Administrative Law Judge Colin Rizzo called for its rejection on February 14. Supporters, however, still held out hope that the commission might take a different stand.

It is often difficult to form community and neighborhood microgrids in California — and other states — because of rules that let only utilities deliver power to multiple homes or buildings located on different properties. Sunnova’s solution was to become a utility, or rather a microutility, which is a codified entity in the state for those utilities that serve fewer than 2,000 California customers.

“While this dismissal represents a major missed opportunity, we are encouraged by the amendments to the proposed decision, which recognize the importance of allowing future site-specific third-party community microgrid applications, and we are grateful for the overwhelming support from our coalition of supporters,” Nutting said.

Supporters of Sunnova’s plan saw it as a way to push forward what they see as slow progress on another effort, SB 1339, a law enacted in 2018 that requires public utilities to find ways to commercialize microgrids. To date, the commission has taken several actions, including last week’s approval of a $200 million microgrid incentive program. But critics say the commission needs to act faster in removing obstructions to multicustomer microgrids.

Learn more about Sunnova’s latest business model innovations at Microgrid 2023, May 16-17, in Anaheim, California. See the full conference agenda here.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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