June 4, 2025
California’s SURGE (Solar-Utilities Reporting, Guidance, and Education) Act is reshaping how prevailing wage rules apply to distributed energy projects in the state.
The SURGE Act refers to prevailing wage provisions established by Assembly Bill 2143 (AB2143). AB2143 created Public Utilities Code §769.2, which took effect on January 1, 2024, to require prevailing wages on large customer-sited renewable generation installations (and associated battery storage) that participate in net metering or net billing programs. The prevailing wages must be paid (at a minimum) to all construction workers and apprentices involved in relevant projects.
Net metering is a process where customers with on-site energy generation, like solar panels, send excess electricity back to the grid in exchange for credits that reduce their utility bills.
Electrical generation facilities that receive any of the following applicable net metering tariffs listed below will be subject to AB 2143. The following tariffs are listed by utility:
• PG&E: NEM, NEM2, NBT, NEMVMASH, NEM2VMSH, NEMV, NEM2V, NEM2VSOM
• SCE: NEM, NEM-ST, NBT, MASH-VNM, MASH-VNM-ST, NEM-V, NEM-V-ST, SOMAH-VNM
• SDG&E: NEM, NEM-ST, NBT, VNM-A, VNM-A-ST, NEM-V, NEM-V-ST, SOMAHVNM
There are several exceptions to the prevailing wage requirements:
(1) Residential facilities with a maximum generating capacity of 15 kW or less, or any facility that is installed on a single-family home.
(2) Any projects that are already a "public work" under existing law.
(3) Facilities that serve a modular home, modular home community, or multiunit housing that has two or fewer stories.
According to the California Public Utilities Commission (CPUC) website, contractors for eligible projects are required to adhere to the following compliance guidelines:
(1) Pay, at the minimum, the appropriate prevailing wage to all construction workers and apprentices involved in the project.
(2) Maintain certified payroll records and submit digital copies for all workers to CPUC twice annually (on July 1st and December 31st of each year).
If "willful wage violation" is enforced against a contractor for failing to comply with the guidelines listed above, then the relevant electrical generation facility will become ineligible for all net metering tariffs.
If a construction worker, apprentice, or joint labor-management committee files a prevailing wage complaint within 18 months of project completion, and the claim is found valid, the contractor will face the following penalties:
(1) Ineligible for all Net Metering Tarrifs. If "willful wage violation" is enforced against a contractor for failing to comply with the guidelines listed above, then the relevant electrical generation facility will become ineligible for all net metering tariffs.
(2) Back Wages Plus Interest. The contractor must pay employees back wages plus interest at a rate of 10% per year (according to Section 1741 of the Labor Code and Section 3289 of the Civil Code) starting from the day the wages were initially owed.
(3) Daily Fines for Willful Violations. The contractor may be fined up to $200 per day for each worker who was not paid prevailing wages. This penalty applies if the violation is determined to be a willful or intentional disregard of the law. However, if the contractor promptly corrects the issue once notified and has no prior history of similar violations, the failure may be considered a good-faith mistake and the fine may be waived.
(4) Debarment from Bidding on Public Work Contracts. Non-compliant contractors can be barred from bidding on public work contracts for up to 3 years.
