8. Assignment of Proceeding

President Michael R. Peevey is the assigned Commissioner and Dorothy J. Duda is the assigned ALJ for this portion of the proceeding.

Findings of Fact

1. SB 412 allows the Commission to authorize the annual collection for SGIP in 2010 and 2011 of not more than the amount authorized for SGIP in 2008.

2. In D.08-01-029, the Commission authorized the SGIP budget for 2008, which included unspent SGIP non-PV funds from prior budget years.

3. SB 412 limits SGIP eligibility to DG resources that achieve reductions in greenhouse gas emissions.

4. In D.08-04-049, the Commission permitted expansion of SGIP incentives beyond the prior 1 MW limit to payments up to 3 MW.

5. In D.08-11-044, the Commission allowed energy storage technologies to receive SGIP incentives of $2 per watt when coupled with SGIP eligible projects.

6. In D.09-09-048, the Commission expanded SGIP eligibility to DG projects that use pipeline delivered biogas as their renewable fuel.

7. The four IOUs have used different collection and accounting methods for SGIP, wherein some IOUs have reserved funds for projects but not yet collected the funds from ratepayers, whereas other IOUs have collected their total authorized budget but not yet committed the funds to specific projects.

8. There is a large discrepancy between the Total Authorized Budget for SGIP and the Total Spent and Reserved under SGIP, which leads to a Total Authorized Carryover of approximately $310 million.

Conclusions of Law

1. The Commission should budget the maximum allowed for SGIP under SB 412 due to recent Commission decisions designed to increase program participation and to allow these funds to be used until January 1, 2016 to achieve SGIP goals.

2. The SGIP budget for 2010 and 2011 should be set at $83 million per year and allocated across the four IOUs in the same percentages as in 2008.

3. The SGIP PAs should reserve and spend the $166 million collected in 2010 and 2011 through December 31, 2015.

4. The SGIP PAs should reserve and spend the Total Authorized Carryover from prior years' authorized SGIP budgets through January 1, 2016, in addition to the $166 million budgeted for 2010 and 2011.

5. It is reasonable to allow the Total Authorized Carryover to be reserved and spent through January 1, 2016 given recent SGIP eligibility expansions in SB 412 and Commission decisions.

6. The SGIP PAs should perform a final accounting of program expenditures as of January 1, 2016 so that any funds collected but unallocated can be returned to ratepayers.

7. PG&E's SGIP total authorized carryover should not include its electric ratepayers' pro rata share of any unspent funds from the money authorized by the Commission for solar PV in D.05-12-044.

8. The SGIP PAs should obtain an independent audit of SGIP ratepayer collections and expenditures to ensure expenditures do not exceed the authorized budget and the proper management of carryover funds.

9. It is reasonable to continue to allow projects up to 5 MW in size to qualify for incentives up to 3 MW, with tiered rates as set forth in D.08-04-049.

10. The SGIP administrators should continue to implement SGIP in accordance with all previous Commission direction, including but not limited to budget allocations, administrative budget, and allocation of funds between renewable and non-renewable projects.

ORDER

IT IS ORDERED that:

1. The Self-Generation Incentive Program budget for 2010 and 2011 is $83 million annually, and Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, and Southern California Gas Company shall collect $83 million in 2010 and again in 2011 according to the allocation adopted in Decision 09-01-013.

2. Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and the California Center for Sustainable Energy may reserve and spend the $166 million that was collected in 2010 and 2011 for the Self-Generation Incentive Program budget through December 31, 2015.

3. Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and San Diego Gas & Electric Company, in cooperation with the California Center for Sustainable Energy, shall do the following:

a) On January 31, 2010, each submit a Tier 2 advice letter containing final accounting data as of December 31, 2009 indicating all prior years' Self-Generation Incentive Program Total Authorized Carryover, using the format contained in Appendix A. Once approved, this information shall be posted on each program administrator's Self-Generation Incentive Program website and updated monthly.

b) Each submit an annual advice letter request in their applicable ratemaking proceeding, until December 31, 2015, for Commission review in order to collect from ratepayers the amount of previously authorized
Self-Generation Incentive Program carryover funding committed, reserved and/or spent in that calendar year, for collection in rates the following calendar year. Each utility shall ensure that notice of any request by advice letter for collection of carryover funding is 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 pursuant to Ordering Paragraph 3.a above.

c) Each submit an advice letter by January 30, 2016 indicating the Self-Generation Incentive Program funds that were collected and unallocated on January 1, 2016, so that those funds can be returned to ratepayers by June 30, 2016.

d) Jointly issue a Request for Proposals no later than April 1, 2010, after consultation with Energy Division, to obtain an independent entity to conduct an audit of Self-Generation Incentive Program expenditures and ratepayer collections to ensure expenditures do not exceed authorized budgets and the proper management of carryover funds. The audit shall review the status of program applications, including confirmed reservations and applications that have dropped out, to determine the total amount of funds spent and reserved and the total authorized carryover available for the program. The audit should include an assessment of any interest earned on Self-Generation Incentive Program memorandum account balances over the course of the Program, to more accurately reflect account balances and funds remaining, and recommendations for adjustments to reconcile any discrepancies found by the audit between the Self-Generation Incentive Program account balances reported by the utilities in January 2010 and the audit. Energy Division should oversee the scope of audit to ensure it meets the goals described in this decision. The audit shall be completed by October 1, 2010, and submitted to Energy Division within seven days of its completion, with a copy to the service list of this proceeding.

4. Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and the California Center for Sustainable Energy may reserve and spend the Self-Generation Incentive Program Total Authorized Carryover, as determined in Ordering Paragraph 3(a), through December 31, 2015.

5. Any Self-Generation Incentive Program funds collected and unallocated on January 1, 2016 shall be returned to ratepayers.

6. Distributed generation projects up to five megawatts in size may qualify for tiered incentives up to three megawatts, as set forth in Decision 08-04-049, with payment from either Self-Generation Incentive Program carryover funds or the current year's budget.

7. Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and the California Center for Sustainable Energy shall continue to implement the Self-Generation Incentive Program in accordance with all previous direction from this Commission including but not limited to allocation of funds between renewable and non-renewable projects and a 10% on administrative expenses.

8. For good cause, the assigned Commissioner or Administrative Law Judge may modify the due dates set forth in this decision.

9. Rulemaking 08-03-008 remains open.

This order is effective today.

Dated December 17, 2009, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

(END OF APPENDIX A)