8. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner and Dorothy J. Duda is the assigned ALJ in this proceeding.
Findings of Fact
1. AB 1470 authorized the creation of a $250 million incentive program to promote the installation of solar water heating systems in homes and businesses to displace natural gas usage by 2017.
2. Section 2851(b) of the Public Utilities Code allowed the Commission to allocate $100.8 million of CSI funds to incentives for solar thermal technologies such as solar water heating.
3. D.10-01-022 adopted the CSI Thermal Program as contemplated by AB 1470 and the Public Utilities Code.
4. The CSI Thermal Program established in D.10-01-022 is intended to provide incentives to promote the installation of solar water heating systems and to develop water heating alternatives in California.
5. The program's goals include (a) installing natural gas-displacing SWH systems sufficient to displace use of 585 million therms of natural gas (equivalent to 200,000 single-family systems over the 25-year life of the systems); and (b) installing electric-displacing SWH systems sufficient to displace use of 275.7 million kWh per year (equivalent to 100,800 single-family systems).
6. In 2010, the program began taking applications for single-family, multifamily and commercial SWH systems.
7. CALSEIA did not file its petition within one year of the effective date of D.10-01-022 because CALSEIA believed it was reasonable to wait until there had been sufficient time to evaluate the success of the CSI Thermal Program.
8. The current incentive structure has not provided adequate incentives to promote SWH system installations at a rate sufficient to meet the goals of the program.
9. There is insufficient data to project the exact relationship between incentives and future adoption rates.
10. The CEC successfully addressed a similarly low early adoption rate in the ERBP by increasing incentive amounts.
11. Contractors have told CALSEIA that increased incentive amounts could lead to increased adoption.
12. A cost-effectiveness analysis was performed as part of D.10-01-022 and there is no requirement to perform a new cost-effectiveness analysis.
13. The proposed changes in allocation of incentive funds will increase funds available early in the program, and should boost adoption rates of SWH systems.
14. Single-family residential systems are an essential part of the SWH system incentive program.
15. During the first two years of the program, single-family residential customers did not install SWH systems on pace with the goals set forth in D.10-01-022.
16. The proposed changes to the program will not change the overall budget allocation or the total goal for therm and kWh displacement.
17. There is no indication in this proceeding that the current training program is insufficient.
18. Sufficient funds have been allocated for training in the market facilitation portion of the program budget. The budget is updated annually by advice letter.
19. The marketing campaign launched in April 2012.
Conclusions of Law
1. Because multifamily and commercial installations have greater economies of scale than single-family installations, it is reasonable to provide a higher per kWh and per therm incentive amount to single-family customers.
2. Performing a new cost-effectiveness analysis would delay implementation of necessary changes to the incentive program and create uncertainty in the SWH market.
3. The incentive structure adopted in D.10-01-022 should be modified to encourage adoption of SWH systems at the Step 1 incentive level and to promote the statutory goals of the program, including displacing therms equivalent to 200,000 single-family systems.
4. It is reasonable to use the same incentive step structure to allocate incentives for both natural gas and electric-displacing systems.
5. The program currently provides sufficient training for contractors who wish to participate in the program.
6. The low-income component of the program should not be modified at this time.
7. The new gas-displacing incentive levels set forth in this decision are reasonable and should be adopted.
8. The new electric-displacing incentive levels set forth in this decision are reasonable and should be adopted.
9. We should allocate 45% of the gas-displacing incentive budget to single-family customers, and 55% to commercial and multifamily customers.
10. D.10-01-022 should be modified to adopt the new incentive structure.
11. To reduce disruption in the SWH market, any applications submitted after the date the Proposed Decision mails for comment should be eligible for incentives through CSI Thermal Program if they meet all other program eligibility criteria
12. CALSEIA's petition should be considered although it was filed more than a year after the Commission issued D.10-01-022.
ORDER
IT IS ORDERED that:
1. Decision 10-01-022 establishing the California Solar Initiative Thermal Program is modified as set forth in Appendix A of this decision.
2. Within 30 days of the effective date of this order, the California Solar Initiative (CSI) Thermal Program Administrators (namely, Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and the California Center for Sustainable Energy) shall jointly file a Tier 2 advice letter to modify the CSI Thermal Program Handbook incorporating the changes in this decision and summarized in Appendix A.
3. Upon approval of the revisions to the California Solar Initiative (CSI) Thermal Program Handbook, the CSI Thermal Program Administrators (namely, Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and the California Center for Sustainable Energy) shall apply the new incentive structure to all applications with an "Application Review" status date after the date the proposed decision mailed for comment (July 3, 2012). For multifamily and commercial applications, the "Application Review" status date is the date by which both the Reservation Request Forms and the Incentive Claims Forms have been submitted.
4. This proceeding remains open for consideration of additional issues as set forth in the Scoping Memo Ruling of November 9, 2010.
5. Rulemaking 10-05-004 remains open.
This order is effective today.
Dated August 2, 2012, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
Commissioners
APPENDIX A
Modifications to Appendix A of Decision (D.) 10-01-022
Table 1 of Appendix A of D.10-01-022 should be replaced with the following:
Table 1: Adopted CSI Thermal Gas Displacing Incentive Structure
Step |
Customer Class |
Incentive for Average Single-Family SWH System |
Funding Amount |
Incentive per Therm Displaced |
Therms Displaced Over System Life8 |
1 |
Single-family |
$2,175.00 |
$29,000,000 |
$18.59 |
39,000,000 |
1 |
Multifamily/ Commercial |
N/A |
$34,000,000 |
$14.53 |
58,500,000 |
1 |
Subtotal |
$63,000,000 |
97,500,000 | ||
2 |
Single-family |
$1,533.33 |
$23,000,000 |
$13.11 |
43,875,000 |
2 |
Multifamily/ Commercial |
N/A |
$26,000,000 |
$9.88 |
65,800,000 |
2 |
Subtotal |
$49,000,000 |
109,675,000 | ||
3 |
Single-family |
$900.00 |
$18,000,000 |
$7.69 |
58,500,000 |
3 |
Multifamily/ Commercial |
N/A |
$23,000,000 |
$6.55 |
87,750,000 |
3 |
Subtotal |
$41,000,000 |
146,250,000 | ||
4 |
Single-family |
$378.08 |
$11,000,000 |
$3.23 |
85,100,000 |
4 |
Multifamily/ Commercial |
N/A |
$16,000,000 |
$3.13 |
127,650,000 |
4 |
Subtotal |
$27,000,000 |
212,750,00 | ||
|
Total |
$360,000,000.00 |
|
566,175,0009 |
The fifth paragraph after Table 1 of Appendix A of D.10-01-022 should be replaced with the following:
Incentive dollars will be allocated between single-family residential and commercial and multifamily customers as follows:
· 45% of the total incentive budget is reserved for single-family residential customer SWH systems.
· 55% of funds may be used for incentives to commercial or multifamily SWH systems.
Table 2 of Appendix A of D.10-01-022 should be replaced with the following:
Table 2: Gas Displacing Incentive Structure by Customer Class
Step |
Customer Class |
Incentive per therm displaced |
Budget Allocation |
Annual Therms Displaced (in thousands of therms) |
Equivalent Single-Family Residential Systems10 |
1 |
Single-Family Commercial/Multifamily |
$18.59 $14.53 |
$29,000,000 $34,000,000 |
1,560 2,340 |
13,334 20,000 |
|
Subtotal |
|
$63,000,000 |
3,900 |
33,334 |
2 |
Single-Family Commercial/Multifamily |
$13.11 $9.88 |
$23,000,000 $26,000,000 |
1,755 2,632 |
14,992 22,493 |
|
Subtotal |
|
$49,000,000 |
4,387 |
37,485 |
3 |
Single-Family Commercial/Multifamily |
$7.69 $6.55 |
$18,000,000 $23,000,000 |
2,340 3,510 |
20,000 30,007 |
|
Subtotal |
|
$41,000,000 |
5,850 |
50,007 |
4 |
Single-Family Commercial/Multifamily |
$3.23 $3.13 |
$11,000,000 $16,000,000 |
3,404 5,106 |
29,094 43,647 |
|
Subtotal |
|
$27,000,000 |
8,510 |
72,741 |
|
Total |
|
$180,000,000 |
22,647 |
193,567 |
Table 3 of Appendix A of D.10-01-022 should be replaced with the following:
Table 3: Electric Displacing Incentive Structure
Step Level |
Electric Displacing Incentive ($/kWh) |
Incentive for Average Residential System |
1 Single-family |
0.54 |
$1,467.33 |
1 Multifamily Commercial |
0.42 |
N/A |
2 Single-family |
0.38 |
$1,048.42 |
2 Multifamily Commercial |
0.29 |
N/A |
3 Single-family |
0.22 |
$601.70 |
3 Multifamily Commercial |
0.19 |
N/A |
4 Single-family |
0.10 |
$263.24 |
4 Multifamily Commercial |
0.09 |
N/A |
(END OF APPENDIX A)
8 This analysis assumes a 25-year system life.
9 The 566.1 million in total therms displaced is 97% of the 585 million program goal in the Staff Proposal. Additional therms will be displaced by the low income SWH incentive program.
10 The annual therm displacement in each step is converted to an equivalent number of single-family residential SWH systems based on the assumption an average residential system displaces 117 therms per year.
