Modifications to CSI Budget
As noted above, SB 585 increases the cost limit of the CSI Program by $200 million dollars. As the legislation notes in Section 2851.1(b), the CSI Program is currently running a budget shortfall for nonresidential solar incentives in incentive step levels 8, 9, and 10. For this reason, Section 2851(e)(1) is amended by SB 585 to increase the total cost of the CSI Program funded by customers of PG&E, SCE and SDG&E from $2.1668 billion to $2.3668 billion. These funds are allocated between the three CSI Program Administrators (PAs).3
The ALJ Ruling states that given the passage of SB 585, the Commission should modify the CSI budget to reflect the new cost limit of $2.3668 billion. The ALJ Ruling proposed allocating the increased $200 million in budget to the portion of the CSI Program experiencing a shortage of funds, namely the nonresidential incentive budget for Steps 8, 9 and 10, to cover the shortfall in nonresidential incentives identified both in SB 585 and in D.10-09-046. (See
D.10-09-046, at 4-5, and Finding of Fact 6 at 29.) The ALJ Ruling also proposed that the additional $200 million would be allocated to PG&E, SCE and SDG&E using the same allocation percentages previously adopted in D.10-09-046. Specifically, PG&E would receive 43.7%, SCE would receive 46.0% and SDG&E would receive 10.3% of the additional $200 million.
SCE agrees with the allocation proposed in the ALJ Ruling. It notes that this allocation was initially adopted in D.06-12-033 based on each utility's share of total electric sales. In contrast, CCSE, PG&E, the Solar Alliance, and the Community Environmental Council all propose that the Commission instead allocate the additional $200 million based on current budget shortfalls and funding needs in each utility territory. According to Solar Alliance, an allocation using existing percentages ignores the reality that PG&E has 57% of the current projected budget shortfall, while SCE has 32% and SDG&E has 11%. PG&E contends that if existing allocations are used, as proposed in the ALJ Ruling, it will still have a budget shortfall of $24.4 million, while SCE and CCSE would each have excess funding. Solar Alliance proposes the allocation shown in Table 1 below, claiming these allocation percentages ensure funding will be available to complete the non-residential portion of the CSI Program.
Table 1:
Solar Alliance Proposed Allocation of Additional $200 Million
Utility |
Percentage |
Additional Budget Allocation ($ in millions) |
PG&E |
57% |
$114 |
SCE |
32% |
$64 |
SDG&E |
11% |
$22 |
Total |
100% |
$200 |
SCE responds that the Commission should not adjust the allocation methodology adopted in D.06-12-033 at this time, but should wait until a later program stage because budget shortfall amounts can vary substantially year to year. SCE notes that its budget shortfall increased $22 million from the first quarter of 2011 to the end of the third quarter of 2011, largely due to increases in PBI payments. Thus, it asserts that current shortfall trends may reverse and it is premature to reallocate CSI funds based on today's program shortfall percentages. It suggests the Commission wait to see how changes in the PBI discount rate affect existing budget shortages.
We agree with CCSE, PG&E and the Solar Alliance that we should use current estimates of the CSI Budget progress to allocate this additional $200 million. Publicly available CSI Budget data provided by the CSI PAs and reviewed by Energy Division4 indicates that Solar Alliance's proposed allocation will better allow each utility's CSI program to achieve its megawatt (MW) goals. If we were to allocate the additional $200 million based on the allocations in D.06-12-033, as SCE urges, it is unlikely, based on current budget projections, that PG&E and CCSE will attain their CSI MW goals. The change in allocation adopted in this decision applies only to the additional $200 million authorized by SB 585. The original allocation of the initial CSI budget adopted in
D.06-12-033 is preserved. In other words, each utility retains all of its original CSI funding, but each receives an additional infusion of funding, as authorized by SB 585, based on current budget estimates.
We recognize that the budget shortfall that exists today is a moving target and will no doubt change. The budget shortfall is impacted by the proportion of projects that receive higher governmental/nonprofit incentive rates in each territory, and the proportion of projects that apply for PBI payments versus upfront incentives. The programs administered by PG&E and CCSE are in later incentive steps than SCE. SCE's shortfall could increase as it reaches later stages of the program too.
Therefore, we will direct our Energy Division to continue to monitor the budget situation closely and notify the assigned Commissioner and ALJ should the Energy Division deem it appropriate for the Commission to consider future CSI budget adjustments. If future budget allocation changes are considered, the Commission may also need to change the CSI revenue requirement to ensure that money collected from electric ratepayers in a given utility territory funds the program in that same territory. Further, any changes to the CSI budget allocation would need to be considered before all budget funds are committed.
In summary, we will modify Table 6 of D.10-09-046 to add $200 million to CSI General Market Program Incentives (line 1 of Table 2 below). The $200 million shall be allocated to PG&E, SCE and SDG&E as shown in Row 1A of the table, using the allocation percentages proposed by Solar Alliance. The modifications to the CSI budget are shown in gray shading in Table 2 below.
Table 2:
Modification of Table 6 of D.10-09-046
Revised CSI Budget and Allocation by Utility
Allocation by Utility | |||||
Program Component |
Revised Budget |
PG&E |
SCE |
SDG&E | |
D.06-08-028 allocation5 |
43.70% |
46.00% |
10.30% | ||
General Market Program |
|
||||
1 |
General Market Program Incentives |
$1,747,810,000 |
$763,792,970 |
$803,992,600 |
$180,024,430 |
1A |
SB 585 Budget Increase |
$200,000,000 |
$114,000,000 |
$64,000,000 |
$22,000,000 |
2 |
Program Administration |
$94,860,000 |
$41,453,820 |
$43,635,600 |
$9,770,580 |
3 |
Total Measurement & Evaluation (M&E) |
26,700,000 |
$11,667,900 |
$12,282,000 |
$2,750,100 |
4 |
M&E, except CSI-Thermal Electric M&E |
$25,450,000 |
$11,121,650 |
$11,707,000 |
$2,621,350 |
5 |
M&E, CSI-Thermal |
$1,250,000 |
$546,250 |
$575,000 |
$128,750 |
6 |
Total Marketing and Outreach (M&O) |
21,250,000 |
$7,731,250 |
$7,875,000 |
$5,643,750 |
7 |
M&O, general market CSI6 |
$15,000,000 |
$5,000,000 |
$5,000,000 |
$5,000,000 |
8 |
M&O, CSI-Thermal Electric Only |
$6,250,000 |
$2,731,250 |
$2,875,000 |
$643,750 |
9 |
Unallocated |
$6,900,000 |
$3,015,300 |
$3,174,000 |
$710,700 |
10 |
Subtotal General Market Program |
$2,097,520,000 |
$941,661,240 |
$934,959,200 |
$220,899,560 |
11 |
RD&D Program |
$50,000,000 |
$21,850,000 |
$23,000,000 |
$5,150,000 |
12 |
Low Income Single-family (SASH) Program |
$108,340,000 |
$47,344,580 |
$49,836,400 |
$11,159,020 |
13 |
Low Income Multifamily (MASH) Program |
$108,340,000 |
$47,344,580 |
$49,836,400 |
$11,159,020 |
14 |
SWH Pilot Program (SWHPP) in San Diego |
$2,600,000 |
$0 |
$0 |
$2,600,000 |
15 |
Total CSI Electric Budget |
$2,366,800,000 |
$1,058,200,400 |
$1,057,632,000 |
$250,967,600 |
In addition, we shall modify Table 7 of D.10-09-046 to allocate the additional $200 million for non-residential solar incentives. Modifications to the table are shown in gray shading below in Table 3.
Table 3:
Modification of Table 7 of D.10-09-046
CSI Incentives Budget by Utility Territory and Customer Sector
Non-Residential |
Residential |
Total | ||
PG&E |
$666,164,970 |
$211,628,000 |
$877,792,970 | |
SCE |
$645,225,600 |
$222,767,000 |
$867,992,600 | |
SDG&E |
$152,144,430 |
$49,880,000 |
$202,024,430 | |
Total |
$1,463,535,000 |
$484,275,000 |
1,947,810,000 |
Another issue raised by the parties in comments is whether the Commission should place restrictions on the use of this additional $200 million authorized by SB 585. PG&E and CCSE propose that the Commission restrict the SB 585 funds and allow them to be used only for new projects. In other words, the additional SB 585 funds could not be used to fund "Completed" or "PBI In-Payment" non-residential projects that retroactively seek system capacity increases after the initial reservation or confirmation stage. PG&E and CCSE claim that providing additional incentives for system size increases is not necessary because the projects were able to reach completion with the original incentive amount.
The Solar Alliance agrees with this proposal to the extent that the project proceeded to increase its system size without an incentive. However, it proposes that prospectively, projects should be eligible to apply for incentives at the applicable current rate if they are considering a system size increase.
We agree with restriction proposed by PG&E and CCSE to preclude "Completed" or "PBI In-Payment" projects from receiving SB 585 funds and we will adopt it because it will allow the additional funds to benefit more projects. We decline to adopt the proposal of Solar Alliance as it is unclear and appears to directly contradict what PG&E and CCSE propose.
3 The CSI PAs are PG&E, SCE, and CCSE in the service territory of SDG&E.
4 See http://www.californiasolarstatistics.ca.gov/reports/budget_forecast/.
5 The allocation percents are not applicable to SB 585 budget increase in Row 1A.
6 The CSI General Market M&O budget was adopted in D.11-07-031.
