Modifications to PBI Payments

SB 585 added Pub. Util. Code § 2851.1 regarding a "discount rate" to represent the time value of money on solar projects that receive PBI payments. As noted earlier in this decision, the Commission assumed an 8% discount rate when calculating monthly PBI payment levels in D.06-08-028. (D.06-08-028 at 35.⁹) SB 585 now requires that the Commission reduce this discount rate to 4%, unless the Commission determines the rate should be further reduced.

As the ALJ Ruling acknowledged, the Commission must now revise the PBI payment rates for Steps 8, 9, and 10 for all new CSI applicants (both residential and non-residential) to incorporate a 4% discount rate rather than the 8% rate previously incorporated into PBI payments. The ruling proposed reductions in PBI payment rates for new CSI applicants in Steps 8, 9, and 10, to incorporate the new 4% discount rate, as follows (with proposed new rates shown in gray shading):

Table 5. Proposed Revisions to D.06-12-033, Appendix B, Table 5 Levelized PBI Monthly Payment Amounts per kWh
(at 4% Discount Rate)

Step	MW in Step	Existing Residential/ Commercial Rate	Proposed Residential/ Commercial with 4% Discount Rate	Existing Government/ Non-Profit Rate	Proposed Government/ Non-Profit Rate with 4% Discount Rate
8	250	$.05	$0.04	$0.15	$0.14
9	285	$.03	$0.03	$0.12	$0.11
10	350	$.03	$0.03	$0.10	$0.09

SCE and Community Environmental Council agree with the proposed changes to PBI payments rates, while the Solar Alliance suggests a minor modification to the proposed rates. Specifically, it recommends the Commission adopt a PBI payment rate to the next significant digit, so that instead of $.04 per kWh, the Step 8 rate would be $.044 per kWh, and likewise for the rates in Steps 9 and 10. The Community Environmental Council agrees with this proposal. According to Solar Alliance, this will make the PBI payment declines more gradual and provide a better bridge between the current Step 8 payment ($.05 per kWh) and the end of the program. It proposes rates as follows:

Table 6. Solar Alliance Proposed PBI Monthly Payment Rates

	Residential/Commercial with 4% Discount Rate	Government/Non-Profit Rate with 4% Discount Rate
Step 8	.044	.139
Step 9	.032	.114
Step 10	.025	.088

The proposal by Solar Alliance to adopt new PBI payment rates to a third significant digit is reasonable and we will adopt it. The new rates will reflect the 4% discount rate and will provide a more gradual decline in payment rates over the last three CSI incentive steps.

Finally, we must address details surrounding implementation of these new PBI payment rates. SCE asks for 45 days to implement the new reduced payment rates, claiming this amount of time is needed to make changes to the incentive calculator and online application system for CSI. In contrast, CCSE requests fourteen days to implement the program modifications. PG&E and CCSE recommend that the new PBI payment rates apply for both new reservations submitted after the effective date of this decision as well as all projects that are on the CSI waiting list on the effective date of the new rates.

We agree with PG&E and CCSE that we should apply the new PBI rates as soon as possible both for new applications and waiting list projects as this will use the newly authorized program funds wisely. We will make the new PBI rates effective with the date of this order. This means that all applications submitted to PG&E, CCSE and SCE beginning on the day after the effective date of this decision will receive the new lower PBI rates for Steps 8, 9, and 10. For PG&E and CCSE, the new PBI payment rates will apply to projects currently on the waiting list as well. We understand that the CSI PAs would prefer time to implement the rate changes, but the current budget shortfall does not allow this. PG&E and CCSE may begin processing waitlist applications immediately with the new rates, and should notify applicants on the waiting list that new rates apply. SCE will also need to notify applicants beginning with applications received the day after this decision that new rates have gone into effect.

⁹ See also Table 5 of D.06-08-028 at 41. This table was later modified in D.06-12-033 to adopt new megawatt (MW) levels for each step, but the PBI payment amounts with the 8% discount rate were not modified. (D.06-12-033, Appendix B, Table 5.)