Background
The Commission established the California Solar Initiative (CSI) Program in 2006 in Decision (D.) 06-01-024, and later that year, the program was implemented in D.06-08-028. A budget for the CSI Program was initially established in D.06-01-024, was modified several times thereafter, and was most recently modified in D.10-09-046. The Commission adopted the most recent CSI revenue requirement to collect the funds needed for the CSI Program in
D.11-07-031.
In D.06-08-028, the Commission established incentive levels for the program, including Performance-Based Incentives (PBI) to reward larger solar energy installations based on system production. As the Commission stated in D.06-08-028, it wanted to ensure equivalency between up-front incentives paid to smaller solar energy systems, known as Expected Performance Based Buydown (EPBB) incentives and PBI incentives, which are paid out on a per kilowatt hour (kWh) basis over five years. Thus, the Commission assumed an 8% discount rate as part of the PBI payments.
In 2010, the Commission became aware that a budget shortfall in the CSI Program was occurring because of increased production, which resulted in higher PBI payments to systems that qualified for PBI. As the Commission noted in D.10-09-046:
"the budgetary impact (i.e., cash flow) of PBI payments is greater than the equivalent EPBB incentive....[A] system receiving PBI payments has a budgetary impact that is approximately 22% higher than the corresponding EPBB incentive. [footnote omitted.] .... The impacts of the difference between EPBB and PBI payments on the budget are significant, and were the program fully subscribed, could result in a budget shortfall of around $260 million."
(D.10-09-046 at 6.)
In an effort to address the budget shortfall noted by the Commission in D.10-09-046, the Legislature passed Senate Bill (SB) 585 and increased the cost limit of the total CSI Program by $200 million dollars. Despite this new and higher CSI cost limit, the bill requires the Commission to use interest accumulated from customer collections prior to collecting additional funds from Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) ratepayers.
In addition, SB 585 adds Pub. Util. Code § 2851.11 regarding a "discount rate" incorporated into PBI payments. The bill defines a discount rate as a financial mechanism to provide interest representing the time value of money to solar projects that receive PBI payments. SB 585 sets a discount rate of 4%, unless the Commission determines the rate should be reduced.
Following the passage of SB 585, the Administrative Law Judge (ALJ) in this proceeding issued a ruling (ALJ Ruling)2 requesting comments from parties on specific modifications to the CSI Program to implement SB 585. Comments on the ruling were filed by the California Center for Sustainable Energy (CCSE), the Community Environmental Council, PG&E, SCE, and the Solar Alliance. Reply comments were filed by the Community Environmental Council, the Interstate Renewable Energy Council, SCE, and the Solar Alliance.
In the sections that follow, this decision addresses the specific proposals in the ALJ Ruling for modification of prior CSI orders in order to implement SB 585.
1 All statutory references are to the California Public Utilities Code unless otherwise noted.
2 See "ALJ's Ruling Requesting Comment on Modification of Decision 10-09-046,
Decision 11-07-031 and Decision 06-08-028 to Implement Senate Bill 585,"
Rulemaking 10-05-004, September 27, 2011.
