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COM/MP1/ALJ/KLM/hkr Mailed 1/17/2006

Decision 06-01-024 January 12, 2006


Order Instituting Rulemaking Regarding Policies, Procedures and Incentives for Distributed Generation and Distributed Energy Resources.

Rulemaking 04-03-017

(Filed March 16, 2004)


The California Public Utilities Commission (CPUC or Commission) recently underscored its commitment to solar resources for assuring the reliability of the state's electricity system in Decision (D.) 05-12-044, which increased funding for incentives to solar projects by $300 million in 2006. That order stated our intent to develop additional policies and program elements designed to promote solar development. This order accomplishes that, by making a commitment to provide $2.8 billion of incentives toward solar development over 11 years. Of this, $2.5 billion is for Commission-managed programs and the remainder is related to programs managed by the California Energy Commission (CEC). We also herein develop complementary policies and rules, set new incentive levels, and address program administration. We refer to the program as the "California Solar Initiative" (CSI).

I. Procedural Background

To explore ways to promote an expanded solar program, the Commission issued two rulings in this proceeding soliciting ideas regarding program design, funding levels and sources, and an implementation schedule. After receiving the comments, the Commission directed CPUC and the CEC staff to "draft a joint report to the Commission on all related issues that will take into account the parties' comments." That report, issued in June 2005, developed an analysis of key issues related to implementing what the staff has called the CSI. In summary, their report proposed to consolidate existing and anticipated residential and commercial solar incentives into one program by June 2006. Eligible technologies would include photovoltaic (PV) and concentrated solar power up to one megawatt (MW), and solar water heaters. The report proposed that initially, Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), Southern California Gas Company (SoCalGas), San Diego Gas & Electric Company (SDG&E), and the San Diego Regional Energy Office (SDREO) would administer the CSI. The program would be funded through 2016 using gas and electric distribution rates. Tariff and metering requirements would be coordinated with the Commission's demand response and distributed generation proceedings.

The Assigned Commissioner and Administrative Law Judge (ALJ) subsequently issued a ruling soliciting comments on the staff's report and stated their intent to work together to propose a decision for the full Commission's consideration. We received comments from PG&E, SCE, SoCalGas, SDREO, the Office of Ratepayer Advocates (ORA), Energy Innovations, Inc., PV Now, Vote Solar, Americans for Solar Power (ASPv), California Large Energy Consumers Association (CLECA), California Manufacturers & Technology Association (CMTA), Southern California Generation Coalition, Environment California, S.O.L.I.D.US, Inc., and California Solar Energy Industries Association. The CEC has worked collaboratively in this proceeding on all of its aspects, co-authored the staff report on CSI, and consulted with the ALJ and the Assigned Commissioner on the issues resolved in this order.

Although the Commission received comments on the CEC/CPUC staff solar report in late July, the Commission delayed action on this matter while the California Legislature considered Senate Bill (SB) 1, which would have increased funding for solar technology incentives by $1.8 billion over 10 years. The bill was not adopted by the Legislature, although the Governor has stated his commitment to increased incentives for solar energy development.

On December 15, 2005, the Commission issued D.05-12-044 increasing the budget for solar incentives as part of the Commission's Self-Generation Incentive Program (SGIP). The order modified existing solar incentive levels and directed our staff to provide recommendations on future program elements.

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