4. Treatment of SGIP Carryover Funds
A secondary and important SGIP budget issue involves what direction the Commission should give to the IOUs regarding unspent and previously authorized budgets from prior years, which have been "carried over" from previous SGIP budget years.
Previous Commission decisions have directed that SGIP authorized budgets that remain unspent or uncommitted in any given year should be "carried over" for use in future budget years. (See D.08-01-029, D.08-04-049, and D.09-01-013.) 2 On June 1, 2009, the four IOUs supplied the SGIP budget information requested by D.09-01-013 regarding carryover funds and program participation. The data supplied is current through May 1, 2009, and indicates different accounting methods for each utility regarding SGIP funds, and significant carryover funds, i.e., authorized budgets, that are unspent. Some IOUs have reserved funds for projects, but not yet collected the money from ratepayers or only collected as incentives need to be paid out. Thus, these IOUs may be under-collected. Other IOUs have collected their authorized budgets on a consistent basis, but not yet committed them to a project. Thus, these IOUs are over-collected.
The Energy Division reviewed the information supplied by the four IOUs in their June 2009 filings. Based on the information supplied, the Energy Division summarized the budget and collections information from each utility in a uniform format, as shown in the table below. The terms in this table are defined as follows:
· Total Authorized Budget - the amount of funds a utility has been authorized by the Commission to collect for its SGIP budget, including incentives, administration, and program evaluation.
· Total Spent and Reserved - Actual Expenditures (i.e., the amount of funds which have been spent) plus Pending Reservations (i.e., projects that have applied for and are anticipated to collect funds, but have not yet received incentive payments).
· Total Authorized Carryover - Authorized Budget minus Actual Expenditures and Pending Reservations. This is the amount an IOU should theoretically have available for SGIP.
· Ratepayer Collections - the actual dollar amount collected from ratepayers for SGIP.
· Collected Carryover - the actual dollar amount of funds collected from ratepayers minus Actual Expenditures and Pending Reservations.
· Uncollected Carryover - Total Authorized Carryover minus what remains unspent and unreserved from ratepayer collections.
SGIP Budget Status ($ in millions) through May 1, 2009
IOU |
Total AuthorizedBudget3 (a) |
Total Spent and Reserved (b) |
Total Authorized Carryover (c) = a - b |
Total Ratepayer Collections (d) |
Collected Carryover (e) = d - b |
Uncollected Carryover (f) = c - e |
PG&E |
$463.2 |
$373.9 |
$89.3 |
$427.7 |
$54.2 |
$35.1 |
SCE |
276.4 |
62.7 |
113.7 |
240.9 |
78.2 |
35.5 |
SDG&E |
128.7 |
82.9 |
45.8 |
90.4 |
7.5 |
38.3 |
SoCalGas4 |
153 |
91.6 |
61.4 |
106.3 |
14.7 |
46.7 |
Total |
$1021.3 |
$711. |
$310.2 |
$865.3 |
$154.6 |
$155.6 |
As seen in the table above, there is a large discrepancy of approximately $310 million between the Total Authorized Budget and Total Spent and Reserved by each IOU for SGIP. Though each IOU has collected funds in a unique manner, none has collected the full amount of funds authorized for the program. Thus, as of the date that Energy Division collected and reviewed this data, it appears that $310.2 million in Total Authorized Carryover has accrued. Further, Energy Division's analysis indicates that of this Total Authorized Carryover, $154.6 million has been collected from ratepayers, and it appears that $155.6 million remains uncollected.
The ALJ Ruling proposed that:
· The SGIP PAs may reserve and spend the Total Authorized Carryover from prior years authorized SGIP budgets.
· If all SGIP funds are expended prior to December 31, 2015, the program will end early.
· Any funds that are collected and unallocated on January 1, 2016 shall be returned to ratepayers.
In other words, the ALJ ruling proposes to continue to track the Total Authorized Carryover and use it to augment the SGIP authorized budgets for 2010 and 2011. Given that SB 412 extends the program through January 1, 2016, the Total Authorized Carryover could also fund SGIP activities until that date. A final accounting of program expenditures as of January 1, 2016 would then occur, and any funds collected but unspent or uncommitted would be returned to ratepayers.
Several parties - namely SoCalGas, SDG&E, SCE, CESA, CCDC, UTC Power, Bloom, FuelCell Energy, and the U.S. Fuel Cell Council - support the ruling's proposal to allow expenditure of prior year's carryover funds. UTC Power contends the long sales cycle for fuel cell projects makes it important for the Commission to show a sustained funding commitment. Bloom notes that the addition of new technologies in SGIP, including projects fueled by pipeline delivered biogas, will increase future demand for these funds. FuelCell Energy maintains that the addition of advanced energy storage to SGIP will increase demand for program funds in future years. The U.S. Fuel Cell Council asserts that the commitment of carryover funds will drive job creation in the DG sector.
In contrast, PG&E objects to the continued tracking and spending of carryover funding. It requests that it be allowed to "clear the budget slate" and no longer track its uncollected SGIP funds from 2001 through 2005, which it calculates at $148.3 million, as opposed to the $35.1 million that Energy Division calculates.5
DRA recommends applying the Total Authorized Carryover to adjust budget and ratepayers collections for each utility. Specifically, DRA suggests that because SCE has a high level of collections, SCE should suspend future collections until SCE's expenditures and reservations increase. DRA further suggests the Commission monitor collection levels and in the event of excess overcollections, the Commission should suspend collections. DRA also recommends a cap on ratepayer collections of $70 million annually.
TURN agrees with DRA that additional collection of money is not necessary at this time for SGIP. TURN recommends the Commission balance SGIP goals to promote clean DG with the important need to prevent rate hikes at this time of economic upheaval in California due to rising unemployment and reduced household incomes. However, if the Commission does authorize collections in 2010 and 2011 to preserve future years funding for SGIP in light of SB 412, TURN urges the Commission to allow the utilities to reserve and spend only the Collected Carryover in 2010 through 2015. This would provide approximately $320.66 million in total funding for SGIP until January 1, 2016. According to TURN, any Uncollected Carryover should be removed from the SGIP budget and no longer carried forward. Moreover, TURN asserts that any attempt by the IOUs to collect the Uncollected Carryover would violate the language in SB 412 which limits collections to no more than the amount authorized in 2008.
We will adopt the proposal from the ALJ ruling that the PAs may reserve and spend the Total Authorized Carryover from prior years authorized SGIP budgets until January 1, 2016. These unspent funds were authorized in prior SGIP budget years, and we find they should continue to be committed for this program to augment the $83 million annual budget we authorize in this decision for 2010 and 2011. As TURN notes, SB 412 limits collections in 2010 and 2011 to the amount "authorized for the [SGIP] in the 2008 calendar year." The amount authorized by the Commission in 2008 included "any unspent SGIP non-[photovoltaic (PV)] funds from prior budget years." (D.08-01-029 at 7.) We find that use of the carryover is especially important given the program eligibility changes in SB 412 as well as recent Commission decisions.
The ALJ Ruling estimated the Total Authorized Carryover at $310.2 million as of May 1, 2009. The utilities responses to the ALJ Ruling indicate that continuing accounting discrepancies as well as ongoing activity in 2009 may cause the actual Total Authorized Carryover to differ slightly from this estimate.
We will direct PG&E, SCE, SoCalGas, and SDG&E, in coordination with its program administrator CCSE, to each do the following:
· On January 31, 2010, submit, as a Tier 2 Advice Letter, final accounting data as of December 31, 2009 of all prior years' SGIP Total Authorized Carryover, using the format contained in Appendix A. Once approved, this information shall be posted on the website of each PA and updated monthly thereafter.
· Annually submit by advice letter in their appropriate ratemaking proceedings, until December 2015, for Commission review in order to collect from ratepayers the amount of previously authorized carryover funding committed, reserved and/or spent in that calendar year, for collection in rates the following calendar year. PG&E, SCE, SoCalGas and SDG&E shall ensure that notice of any requests by advice letter for collection of SGIP carryover funding be served on the service list of this rulemaking, or any successor proceeding and that the amount requested does not exceed the Total Authorized Carryover approved as described above.
· Submit an advice letter by January 30, 2016 indicating the SGIP funds that were collected and unallocated on
January 1, 2016, so that those funds can be returned to ratepayers by June 30, 2016.
As to the issue raised by PG&E, we recognize there is some confusion over the amount of PG&E's SGIP carryover balance. In fact, in late 2005, the Commission authorized an additional $300 million for SGIP to fund solar PV projects in advance of CSI in 2007, with $132 million of this amount authorized for PG&E. (See D.05-12-044.) PG&E maintains that it has a total authorized carryover of $148.3 million, and $118.3 million of its carryover is from its PV (i.e., Level 1) budget, and would be transferred to CSI if collected. Thus, PG&E calculates its uncollected carryover at $30 million ($148.3 million minus $118.3 million). We clarify that PG&E's SGIP carryover should not include the electric ratepayers' portion of any unspent funds, whether collected or not, from the money the Commission authorized for solar PV, i.e., Level 1 projects in D.05-12-044. In D.06-12-033, the Commission directed that the electric ratepayers' pro rata share of these funds should be transferred to CSI, while the gas ratepayers' share of these funds should be carried over to the 2007 SGIP renewable (i.e., Level 2) budget. Since PG&E never collected these funds from electric ratepayers, PG&E apparently never removed these funds from its SGIP carryover accounting. PG&E should not count these funds as part of its SGIP carryover. The exact amount of the IOUs' Total Authorized Carryover will be determined by the compliance filing directed above.
2 D.09-01-013 also specified that "unspent funds related to [photovoltaic] applications that drop out should transfer to CSI as directed in D.06-12-033." (See D.09-01-013 at Conclusion of Law 3.)
3 The authorized budget amounts do not include additional solar (i.e., Level 1) funds added to each IOU's SGIP budget by D.05-12-044 for solar incentives in 2006, which were later transferred to CSI. (See D.06-08-028 at 106, and D.06-12-033 at Ordering Paragraphs 11 and 12.)
4 The amounts shown for SoCalGas do not account for the fact that in Resolution E-4251, issued September 10, 2009, the Commission authorized SoCalGas to transfer $3 million from its SGIP Memorandum Account to make the funds available to its Gas Assistance Fund Customer Assistance Program.
5 PG&E contends the Energy Division figure is not accurate because PG&E includes in its calculation of total authorized carryover those funds that would have been transferred to CSI, as directed by D.06-12-033, if PG&E had collected them. (PG&E comments, 9/28/09 at 3.)
6 TURN calculates this as follows:
$83 million annually x 2 = $166 million + $154.6 million Collected Carryover = $320.6 million.
