7. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner and Dorothy J. Duda is the assigned ALJ in this proceeding.
1. Pacificorp's retail electric rates are lower than electric rates in other California utility territories.
2. The solar industry is not developed in the Pacificorp territory.
3. Pacificorp's IRR analysis indicates that lower incentive levels lengthen the IRR and payback periods for solar investments.
4. Residential customers are 48 percent of Pacificorp's forecasted total sales in 2011.
5. Pacificorp serves several northern California counties.
1. The Commission should approve the uncontested program features agreed to by Pacificorp and DRA in their stipulation of August 2 and establish a solar incentive program for Pacificorp.
2. Pacificorp should develop an incentive calculator utilizing the same variables and data used by the CSI program calculator.
3. It is reasonable to allow Pacificorp to offer a $0.75 per watt additional incentive for tax-exempt entities, limited to 10 percent of the total non-residential program capacity. To qualify for the higher rate, tax-exempt entities must own the solar energy system and certify they are not receiving the benefit of tax credits through financing arrangements.
4. Pacificorp's program should be funded through a surcharge allocated on an equal percentage basis between all customer classes, with the exception of CARE customers.
5. Applicants with existing residential and small commercial buildings should complete an energy efficiency survey as part of the solar incentive application process.
6. To promote energy efficiency, incentives under the program for systems above five kW should be capped at 90 percent of the customer's average usage over the previous 12 months.
7. Pacificorp should evaluate the costs and benefits of a low-income program and report to the Commission if it seeks to extend its solar incentive program beyond the four years authorized in this decision.
8. Pacificorp should collaborate with the CSI program administrators on marketing and outreach.
9. Incentive levels in the Pacificorp territory should not be significantly higher than those offered in the rest of the state, although a higher incentive may be necessary in the Pacificorp territory to provide Pacificorp's customers with a reasonable payback period on solar investments.
10. It is reasonable to adopt starting solar incentives at $2.00 per watt, but reduce incentives 25% in each step to bring Pacificorp's incentives in line with the CSI program.
11. Pacificorp may seek an increase in incentives of no more than 25 cents per watt if participation is less than 25 percent of step 1 capacity after the first
six months of the program.
12. Pacificorp's program should allocate 33 percent of program capacity to residential customers.
13. Commercial incentives should be capped at 250 kW per site.
14. Pacificorp's solar program budget should be recovered from all ratepayers on an equal percentage basis through a cents per kilowatt hour surcharge, except CARE customers should be exempt. The surcharge should be designed to collect one-fourth of the $4.3 million budget in each year.
15. Pacificorp should establish a balancing account to track program collections, capped at approved total costs, and expenditures. Any unspent collections should be rolled over annually for the first four years.
16. Pacificorp should issue an RFP within 12 months of the date of this decision soliciting a local entity to administer the program and Pacificorp should transition to a local administrator to the extent such administration is available and cost-effective.
IT IS ORDERED that:
1. Pacificorp's solar incentive program is authorized as set forth in Appendix A of this decision.
2. Within 60 days of this order, Pacificorp shall file three compliance advice letters. The first advice letter shall be a Tier 1 advice letter containing a revised Schedule E-70 with Net Energy Metering Program tariffs that incorporate the solar incentive program. The second advice letter shall also be a Tier 1 advice letter containing Schedule S-190 regarding the solar program surcharge and tariff revisions to establish a balancing account to track program collections and expenditures. The third advice letter shall be a Tier 2 advice letter containing Pacificorp's solar incentive program handbook, and shall become effective no earlier than 30 days after the date it is filed.
3. Pacificorp's solar incentive program budget shall be recovered from all ratepayers, except California Alternative Rates for Energy customers, on an equal percentage basis through a cents per kilowatt hour surcharge. The surcharge shall be designed to collect one-fourth of the $4.3 million budget in each year. Unspent collections shall be rolled over annually for the first four years until further order of the Commission either directing use of the funds or return of the money to Pacificorp's ratepayers.
4. Pacificorp may file an advice letter, no sooner than 180 days after the start of its program, seeking to increase incentive rates by up to 25 cents per watt if, after six months and a successful program launch that includes adequate staffing and marketing of the program as set forth in Appendix A, Pacificorp has received program applications that total less than one-quarter of the 300 kilowatts capacity for commercial and tax-exempt incentives in Step 1 or less than one-quarter of the 148 kilowatts capacity for residential incentives in Step 1. This advice letter shall contain a revised program budget, revised tariffs and surcharge adjustments, and detailed information on the applications received including the number of applications, customer type, system size, system cost, incentive sought, and any other information requested by the Commission's Energy Division. If incentives are increased based on such an advice letter, the higher rates will apply to all applications received from the start of the program and the program budget is authorized up to $4.65 million. Pacificorp may not request to increase tax-exempt customer incentives.
5. Pacificorp may request continued funding of the solar program in its next general rate case application as long as it conducts and reports on an evaluation of the program as discussed in Appendix A.
6. Pacificorp may file a Tier 2 advice letter to request interim authority to extend the program in the event a general rate case decision is not issued prior to the end of the program authorized in this decision.
7. Application 10-03-002 is closed.
This order is effective today.
Dated March 10, 2011, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
Commissioners
APPENDIX A
Appendix A
Pacificorp Solar Incentive Program
The Pacificorp Solar Incentive Program offers rebates for solar photovoltaic installations on new and existing homes and businesses. The program will provide rebates to residential, commercial, industrial and irrigation customers that install solar energy systems on their premises.
The program has a capacity goal of 3.54 megawatts.
The program is funded through a new surcharge, Schedule S-190, calculated to collect the annual program budget on an equal percentage basis between all customer classes. The surcharge is designed to collect one-fourth of the program budget in each year. Customers under the California Alternative Rates for Energy program are exempt from any program surcharge.
General Program Requirements
The program is open to Pacificorp, d.b.a. Pacific Power's (Pacificorp) residential, commercial, industrial and irrigation customers. Residential new construction may participate in the program by reserving an incentive during the construction period. Incentives would be paid upon receipt of a certificate of occupancy.
Rebates are paid up front and are based on the expected performance of the solar energy system. A one-time "Expected Performance Based Incentive" would be paid upon completion and inspection of approved projects. Pacificorp shall develop an incentive calculator to adjust rebate levels according to the expected performance of a solar energy system, utilizing the same variables and data used by the California Solar Initiative (CSI) program calculator.
Installations shall meet CSI system sizing requirements and may be sized to offset part or all of the estimated energy use at the project site and are required to be completed by a licensed contractor. The program includes an inspection process that follows the same guidelines as the CSI program in the territories of Southern California Edison Company (SCE), San Diego Gas and Electric Company (SDG&E), and Pacific Gas and Electric Company (PG&E).7
Commercial incentives are capped at 250 kilowatts (kW) per site.
The program offers $0.75 per watt additional incentive for tax-exempt entities. The availability of this additional incentive is limited to 10 percent of the total non-residential program capacity. To qualify for this higher incentive, tax-exempt entities must certify in their applications they are tax-exempt and not receiving the benefit of tax credits through financing or third party owner arrangements.
Incentive Levels
Incentives will decline in seven steps based on the capacity installed through the program. Pacificorp shall reserve 33 percent of its solar program capacity for residential customers, which leaves 67 percent of program capacity for commercial and tax-exempt facilities. Based on a total program goal of 3542 kW, this translates into capacity allocations of 1169 kW for residential customers and 2373 kW for commercial and tax-exempt customers.
Table 1: Adopted Incentive Structure and Capacity Allocations per Step
Step |
Total kW Installed per Step |
Residential kW 33% |
Commercial kW 67% |
Residential/ Commercial Incentives ($/watt) |
Tax-Exempt Incentives ($/watt) |
1 |
448 |
148 |
300 |
$2.00 |
$2.75 |
2 |
483 |
160 |
323 |
1.50 |
2.25 |
3 |
520 |
172 |
348 |
1.13 |
1.88 |
4 |
467 |
154 |
313 |
0.84 |
1.59 |
5 |
501 |
165 |
336 |
0.63 |
1.38 |
6 |
540 |
178 |
362 |
0.47 |
1.22 |
7 |
583 |
192 |
391 |
0.36 |
1.11 |
Total |
3542 kW |
1169 kW |
2373 kW |
Pacificorp may submit a Tier 2 advice letter, no sooner than 180 days after the start of the program, to increase Step 1 residential and commercial customer starting incentive rates by as much as 25 cents per watt if participation is low after the first six months of the program. In the advice letter, Pacificorp must explain the efforts it took to successfully launch the program with adequate staffing and marketing. Pacificorp should confer with and follow guidance from the Commission's Energy Division regarding initial promotion efforts, which should include but are not limited to all of the following:
· A press release that attracts widespread coverage in local media;
· A program name and a brand identity, perhaps using or built-upon the Go Solar, California! brand e.g. "The Northern California Solar Initiative" or "Go Solar, Northern California!";
· A free and ongoing installer training to assist installers with the application process, including calculators and system design, advertised to prospective professionals;
· A free and ongoing consumer class to promote going solar, advertised to homeowners and businesses;
· A toll-free number that customers can call to get program information and that also serves as a "solar hotline" for installers with questions related to the application process;
· A functional web site (preferably with links to the Go Solar California web site) with all program-specific resources such as handbook, tariff/NEM information, application tool, EPBB calculator and, if available, consumer decision-making resources; and
· Printed materials describing the program, distributed throughout the territory, that contractors can give to prospective customers.
The new rates, if adopted by the Commission, would then decrease at 25% per step, per the table below. Pacificorp may not request to increase tax-exempt incentives.
Table 2: Maximum Incentives if Increase Approved after Six Months
(Dollars per watt)
Step |
Residential/ Commercial Incentives |
1 |
$2.25 |
2 |
1.69 |
3 |
1.27 |
4 |
0.95 |
5 |
0.71 |
6 |
0.53 |
7 |
0.40 |
Participation will be considered low if, after six months, Pacificorp has received applications that total less than one-quarter of the 300 kW capacity for commercial and tax-exempt incentives in step 1 (i.e., less than 75 kW), or less than one-quarter of the 148kW capacity for residential incentives (i.e., less than
37 kW). If Pacificorp requests higher incentives, and they are approved, the higher rates will apply to all applications received from the start of the program.
Energy Efficiency
Program applicants are required to meet certain energy efficiency requirements. Applicants with existing residential and small commercial buildings are required to complete a free energy efficiency survey to identify cost-effective measures the customer could undertake to increase the efficiency of their home or business. Commercial buildings larger than 100,000 square feet are required to implement cost-effective energy efficiency measures until the building reaches energy efficiency benchmarks. (See the CSI Program Handbook, Section 2.3.1.1.)
To provide an additional incentive to applicants to conserve energy and install systems with high performance factors, incentives under the program are capped at 90 percent of the customer's average usage over the previous 12 months. This requirement only applies to systems above five kW in capacity.
Renewable Energy Credits
The owner of any solar facilities installed under the program retains ownership of any renewable energy credits associated with generation of electricity from that facility.
Metering
Pacificorp will provide a meter capable of measuring non-interval system generation to participants with systems under 30 kW. Pacificorp will provide monthly production data from these systems to the Commission in its annual report. The participant will pay for an additional meter base near the existing utility meter to accommodate the Company's solar energy production meter. For systems 30 kW and above, the participant will be required to provide all necessary metering to measure the generation in intervals and provide the interval meter data to a Performance Monitoring and Reporting System supplier.
Program Budget
Pacificorp's solar incentive program is authorized for four years. The total program budget of $4.3 million is authorized as follows:
Table 3: Adopted Budget
Step |
Total kW Installed |
Commercial and Residential Incentive ($/watt) |
Tax-Exempt Incentive ($/watt) |
Incentive Budget |
Administrative Budget8 |
Total Budget |
1 |
448 |
$2.00 |
$2.75 |
$917,692 |
$201,9009 |
|
2 |
483 |
1.50 |
2.25 |
749,701 |
$164,250 |
913,951 |
3 |
520 |
1.13 |
1.88 |
611,258 |
$164,250 |
775,508 |
4 |
467 |
0.84 |
1.59 |
417,498 |
$164,250 |
581,748 |
5 |
501 |
0.63 |
1.38 |
342,214 |
0 |
342,214 |
6 |
540 |
0.47 |
1.22 |
283,424 |
0 |
283,424 |
7 |
583 |
0.36 |
1.11 |
236,819 |
0 |
236,819 |
Total |
3542 |
$3,558,606 |
$694,650 |
$4,253,256 |
If Pacificorp seeks to increase incentives by up to 25 cents per watt and the Commission approves this increase, the maximum budget for the Pacificorp incentive program may increase to $4.65 million.
If the program capacity is not fully subscribed within the first four years, Pacificorp may request continued funding of the solar incentive program in its next general rate case (GRC) application. If Pacificorp's four-year authority runs out before its future GRC application is resolved by the Commission, meaning the four years has passed and funds remain from the originally approved budget, Pacificorp may request interim authority for authorization to continue the program with the authorized budget until its GRC is finalized. Pacificorp may file a Tier 2 advice letter requesting authority to continue the program until the Commission decision resolving the next GRC.
If Pacificorp seeks continuation of the program in its GRC application, Pacificorp should conduct a program evaluation, or "lessons learned" exercise, to provide information outlining the status of the initial program along with suggestions for improvements, additions, or alterations to the program. In addition, Pacificorp should evaluate the costs and benefits of a potential low-income incentive program and report its findings as part of the "lessons learned" exercise.
Pacificorp shall establish a balancing account to track collections and expenditures under the program. Collections in the balancing account should be capped at the approved total program costs, and unspent collections would be rolled over annually for the first four years. If there is a positive balance remaining at the end of four years, the Commission may order the disposition of any remaining balance, including that it be returned to customers.
Program Administration
Pacificorp has contracted with California Center for Sustainable Energy to administer the program. Within 12 months of the Commission decision authorizing Pacificorp's solar incentive program, Pacificorp will issue a request for proposals soliciting a local entity to administer the program to consider competing proposals for local administration.
Pacificorp should collaborate with the administrators of the CSI to seek methods of leveraging existing energy efficiency and CSI materials, including use of the existing statewide website www.GoSolarCalifornia.org that provides consumer information on solar energy systems.
Pacificorp will create a Program Handbook, and submit it to the Commission by Advice Letter for approval. The Handbook shall specify where Pacificorp's incentive program will follow or deviate from the Program Handbook for the CSI which operates in the territories of PG&E, SCE and SDG&E. Unless specific deviations from CSI have been adopted by the Commission, Pacificorp's program will follow the CSI Program Handbook and may simply reference that document.
Reporting
Pacificorp will provide an annual report to the Commission on the number and total capacity of projects applied for, accepted, and completed during the year, the estimated saved energy, collections, incentive payments, and other expenses under the program. Pacificorp will consult with and follow guidance from the Commission's Energy Division on the format and contents of this report.
(END OF APPENDIX A)
7 These guidelines can be found in Section 2.8 of the CSI Program Handbook, available online at www.cpuc.ca.gov/PUC/energy/Solar/handbook.
8 The Administrative Budget figures in lines 1 through 4 of this table are annual estimates of the total administrative budget authorized in this decision.
9 The Step 1 Administrative Budget is comprised of $164,250 for administration plus $37,650 for one-time program development costs.
