SIDE-STEP CALIFORNIA’S PREVAILING WAGE BY SUBMITTING YOUR APPLICATION SOON
With the new year quickly rising on the horizon, so will labor costs for all commercial solar projects.
If your business or nonprofit organization is looking to make the switch to solar, there’s still time to save your place and avoid the significant increase in labor costs. Effective January 1, 2024, all new commercial solar projects will have to abide by the new requirements from AB 2143.
WHAT IS AB 2143?
Assembly Bill 2143, signed in Sept 2022, expanded California’s definition of “public works” to include the installation of any renewable electrical generation systems sized over 15kW.
This means any commercial-scale net energy metered (NEM) solar project, including any energy storage, that produces 15kW of power or more will be considered a public works project.
A few exceptions to AB 2143 include a residential facility generating less than 15kW, a single-family home, a facility that serves only a modular home, a modular home community, or a multifamily housing development under 2-stories.
The largest impact of the bill is projected to increase labor costs on commercial solar projects. Because these projects will now be classified as public works projects, they will be subject to the state’s prevailing wages.
WHAT IS PREVAILING WAGE?
A prevailing wage is the basic rate of wages and benefits paid to workers for various trades in specific regions in California as determined by the Department of Industrial Relations (DIR).
Under AB 2143 contractors will be responsible for paying the prevailing wages for all its project workers and apprentices. Additionally, the contractors must submit payroll records every six months to the California Public Utilities Commission (CPUC) to verify compliance.
As the project owner, businesses and non-profit organizations need to ensure the contractor complies with AB 2143 requirements otherwise your systems will not be eligible to receive electricity services under NEM.
WHAT ABOUT YOUR PROJECT?
Luckily, AB 2143 applies only to projects that start after January 1, 2024. But what defines your project's “start date”?
On August 2, the CPUC made a proposed decision stating a solar project’s “start date” is determined by the submission date of the interconnection application.
This means that if your application is submitted before January 1, 2024, your project will not be subject to the changes made by AB 2143. It’s better to submit your application sooner, rather than later.
Keep in mind that if major adjustments are needed, a new application will have to be submitted. This will change your “start date” which could fall in 2024 putting the commercial solar project under the new requirements set by AB 2143.
Another reason to move quickly is that changes to the CPUC’s proposed decision may occur any time before or on Nov. 2, 2023, when a finalized decision is expected to be made.
Green Convergence strongly recommends any commercial business to submit their application as soon as possible to avoid these challenges.