California regulators looked into the solar abyss that is now Nevada and said “no thanks” yesterday.

In a narrow 3-2 vote, the Public Utilities Commission decided yesterday to keep current rooftop solar incentives basically as they are, with relatively minor tweaks.

Like many states, including Nevada, California has been grappling with how to reform its net metering program, which is the critical incentive for homeowners to go solar.  Under net metering, customers get retail credit for any surplus solar energy they produce on-site but don’t consume.

Nevada, on the other hand, in a stunning display of holiday Grinch-ness this past December, killed the incentive, even for customers who had already bought the panels expecting 20-year returns (Nevada regulators are now revisiting the order for these customers). The move effectively killed the in-state solar industry, which pulled out en masse.

California regulators could have done the same, as utilities were itching to kill rooftop solar, at least of the solar lease variety.  By imposing high monthly fees, utilities would be able to erase the savings margin on many systems.

But yesterday’s decision [PDF] puts the issue to bed in California until 2019.  Utilities did secure a one-time interconnection fee for new solar customers, as well as a minimum monthly charge.  But they didn’t secure their bigger objective to raise rates significantly on solar customers.

In the long run, these incentives will need to ratchet down.  Costs are decreasing on solar panels, and higher penetration will bring new costs associated with integrating the intermittent power.  But by staying the course, California regulators send a strong message that the industry needs continued support, and California is committed to providing it.

And as a potential postscript, Nevada voters may soon have the opportunity to overturn their regulators’ move, if a backlash measure qualifies for the ballot this year.  That will be a fun story to follow.