Michael R. Peevey is the assigned Commissioner and Dorothy J. Duda is the assigned ALJ in this portion of the proceeding.
Findings of Fact
1. The California Solar Initiative offers both upfront incentives and performance based incentives to qualifying solar systems.
2. The California Solar Initiative is characterized by ten "incentive steps" reflecting progressively lower incentives as the total amount of capacity subscribed under the program increases.
3. The performance based incentives are paid out on a per kWh basis to qualifying systems over a five year period.
4. The performance based incentives were calculated to ensure equivalency on a net present value basis with the upfront incentives through the incorporation of an annual 8% discount rate.
5. In D.06-08-028, the Commission adopted higher incentive rates at every incentive step level for tax-exempt entities such as government and non-profit institutions because government and nonprofit applicants are not eligible for federal tax credits to help offset installation costs.
6. The budgetary impact of PBI payments is greater than the equivalent EPBB incentive and was not anticipated in the incentive steps and MW allocations adopted in D.06-08-028 and D.06-12-033. PBI payments have a budget impact that is approximately 22% higher than the corresponding EPBB incentive on a nominal basis.
7. When the CSI was adopted, the Commission expected it would be able to use accumulated interest on customer collections to increase the funds available for the program.
8. There are various sources of uncertainty that impact the program's budget position including the number of systems receiving PBI payments, the performance of systems receiving PBI payments, the number of program drop-outs, and the relative participation of projects receiving government/non-profit incentives.
9. Collectively, staff estimates that considering both those factors that reduce the program's budget liabilities and those factors that increase the program's budget liabilities, could result in a potential budget shortfall of approximately $170 million if the program continues as is.
10. Reducing the differential offered to government/non-profit applicants by 50% could reduce the anticipated budget liability by an estimated $45 million.
11. The state has received a $640 million allocation of Clean Renewable Energy Bonds, which provide government entities with access to low interest financing for qualifying renewable energy facilities including solar.
12. Third party PPAs may not be a viable or reasonable option for all government/non-profit entities that may be interested in solar.
13. Pub. Util. Code § 2851(e)(1) states that the CSI program cannot exceed $2.1668 billion in total spending.
14. Interest earned on customer collections for CSI counts toward the total spending cap pursuant to Pub. Util. Code § 2851(e).
15. In D.06-12-033, the Commission adopted a CSI program administration budget of $189.71 million and an incentive budget of $1,707.41 million.
16. In D.06-08-028, the Commission required that one-third of the MWs in each incentive step be reserved for residential applications.
17. The $100.8 million set forth in D.10-01-022 for electric-displacing solar thermal incentives is available on a first-come, first-served basis to applicants, and represents the maximum available for these solar thermal incentives rather than a set-aside.
Conclusions of Law
1. In order to continue to reward solar system performance, the Commission should not reduce PBI payments at this time.
2. The CSI PAs must adhere to CSI Handbook project deadline requirements so that incentive funds reserved for inactive and cancelled projects can be made available to other projects before the total spending cap is reached. The CSI PAs should effectively manage their program budgets to ensure they do not exceed the CSI statutory spending cap of $2.1668 billion.
3. The CSI PAs must stop issuing additional incentive reservations to a given customer segment (i.e. residential or commercial) if doing so will result in budget liabilities exceeding the amount available for incentives for that customer segment, as shown in Table 7.
4. Reducing CSI incentive levels to government/non-profit entities would jeopardize participation by these entities that are already vulnerable given the current budgetary challenges faced by the state.
5. It is reasonable to shift $20 million from the M&E budget and
$20 million from the unallocated portion of the overall administrative budget to the incentive budget.
6. An allocation of the CSI incentive budget between residential and non-residential applicants is necessary to preserve budget funds so that one-third of total MWs installed are residential.
IT IS ORDERED that:
1. The California Solar Initiative program administration budget adopted in Decision 06-12-033 is reduced from $189.71 million to $149.71 million, and the incentive budget adopted in Decision 06-12-033 is increased from
$1,707.41 million to $1747.81 million.
2. The California Solar Initiative Program Administrators, namely Pacific Gas and Electric Company, Southern California Edison Company, and the California Center for Sustainable Energy, will collectively shift $20 million from their measurement and evaluation budgets, and $20 million from the unallocated portion of the administration budget into the incentive budget as detailed in Table 6 of this decision.
3. The California Solar Initiative Program Administrators shall effectively manage their program budgets as set forth in Tables 6 and 7 of this decision, and Tables 1 and 2 of the Appendix, to ensure they do not exceed the statutory spending cap of $2.1668 billion in Pub. Util. Code § 2851(e)(1).
4. The California Solar Initiative Program Administrators shall stop issuing additional incentive reservations to a given customer segment (i.e. residential or commercial) if doing so will result in budget liabilities exceeding the amount available for incentives for that customer segment.
5. Within 90 days of the effective date of this decision, the California Solar Initiative Program Administrators shall on a weekly basis post and make publicly available information on their remaining incentive budget, including how much funding and how many megawatts remain available in each sector, and an estimate of how far the remaining budget will last through the step table.
6. On a quarterly basis commencing October 20, 2010, the California Solar Initiative Program Administrators shall file in this or any successor proceeding a report indicating all dollars encumbered by the program by residential and non-residential customer segments, including total incentives paid and reserved. This report should include the full amount of monies that are anticipated to be required for performance-based incentive payments to systems subscribed under the program as well as an estimate of the monies that will be needed for that Program Administrator to reach its megawatt program goals. The report should include incentives paid and reserved by step level to the extent possible. The first report should include data through September 30, 2010. The report should be filed quarterly thereafter. The California Solar Initiative Program Administrators shall coordinate with Energy Division to ensure consistency in report formatting.
7. The California Solar Initiative (CSI) Program Administrators, working in consultation with Energy Division staff, shall submit an Advice Letter no later than January 15, 2011, containing proposed CSI Handbook revisions regarding administrative details including but not limited to mechanisms to forecast remaining budget funds, cease processing reservations when funds are no longer available, reallocate funds from applications that drop out, and create a waiting list of applicants should additional funds become available.
8. The California Solar Initiative (CSI) Program Administrators, working in consultation with Energy Division staff, shall ensure that the energy output of systems supported by the CSI is included alongside other metrics used to report on the CSI program's progress and achievements.
9. The assigned Commissioner may, after appropriate notice to the parties and an opportunity for comment, shift program administrative budget dollars between program administration subcategories and/or from program administration activities to the incentive budget, but not vice versa.
10. The temporary postponement in issuing confirmed reservations (which is now rescinded) for new government/non-profit and performance-based incentive applicants in the time period between the July 9, 2010 and the July 29, 2010 Assigned Commissioner Ruling is ratified.
11. The assigned Administrative Law Judge may modify the dates set forth in this order as needed and for good cause to ensure effective program implementation.
This order is effective today.
Dated September 23, 2010, at San Francisco, California.
MICHAEL R. PEEVEY
DIAN M. GRUENEICH
TIMOTHY ALAN SIMON
NANCY E. RYAN
Commissioner John A. Bohn, being
necessarily absent, did not participate.