IX. Comments on Draft Decision

The draft decision of ALJ Dorothy Duda was mailed in accordance with 311(g)(1) of the Public Utilities Code and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed by ASPv, R. Thomas Beach, CARE, jointly by Cal SEIA, PV Now and the Vote Solar Initiative (Joint Solar Parties), CCSF, CFC, DRA, FST, Michael Kyes, NorCal Solar Energy Association, PG&E, SCE, jointly by SDG&E and SoCalGas, SDREO, jointly by the SGIP Program Administrators, and Sun Light and Power Company. Reply comments were filed by ASPv, CARE, CCSF, FST, the Joint Solar Parties, Michael Kyes, PG&E, SCE, SDG&E/SoCalGas, SDREO, and TURN.

In response to the comments, we make minor modifications and clarifications to the draft decision, but do not make substantive changes to the program design. Minor modifications are noted below, along with the section where the change is discussed.

· Require non-profit organizations to certify their status every year they receive PBI payments. (Section III.A.2 and Ordering Paragraph 3.)


· Clarify all building integrated PV, even on new construction, shall be paid incentives on a PBI basis. (Section III.B.1.)


· Allow PBI payments to be deposited in balancing accounts, not escrow accounts, and require utilities to file tariffs explaining the balancing accounts. (Section III.B.6.)


· Revise the Design Factor for EPBB to clarify the reference system should optimize summer output, consistent with the goal of maximizing peak energy needs. (Section III.C.2.)


· Require program administrators to develop appropriate procedures to address project installers that fail three random inspections for EPBB applications. (Section III.C.3.)


· Revise metering requirements to specify accuracy within 5% for small solar projects (less than 10 kW), and accuracy within 2% for all larger systems above 10 kW based on parties' comments that revenue grade requirements were unclear and onerous for smallest systems (Section V.A.)


· Clarify budget for incentives includes a minimum of 10% for incentives to low income customers and affordable housing projects. (Section VII.B.)


· Allow program administrators to shift unspent SGIP funds. (Section VII.B.2.)

In addition, we make specific note of comments raised by CFC, the utilities, and SDREO.

CFC contends that before the Commission embarks on CSI, it should undertake further strategic planning, including a thorough cost-benefit analysis of CSI. Similarly, SCE suggests the Commission add specific language that the CSI periodic review will include an analysis of CSI cost-effectiveness. The scoping memo for this proceeding provides that a methodology for cost-benefit analysis of distributed generation projects, including solar, will be addressed in Phase 2 of this proceeding. Given that the ALJ will turn to Phase 2 shortly, the concerns of CFC and SCE can be considered there.

SDG&E/SoCalGas provide two areas of comment that warrant discussion. First, they ask for an opportunity to identify additional costs that SDG&E may incur for set-up and maintenance of on-bill PBI payment systems and "any additional costs resulting from the Commission's issuance of its decision on Phase One issues." We will allow SDG&E and the other utilities to track costs for set-up and maintenance of on-bill PBI payments in a CSI memorandum account. The Commission can determine in the utilities' general rate cases whether recovery of these costs is appropriate, or whether the costs can be absorbed within the CSI administrative budget. We will not allow SDG&E to track "additional costs" resulting from this Phase I order. The Commission has previously denied SDG&E's request to recover costs for administering its contract with SDREO.⁴⁸ SDG&E provides no basis to differ from that conclusion and no detail on potential costs it might incur.

Second, SDG&E maintains that since it will not administer CSI programs in its service territory, it should be allowed to "fully participate on an equal basis with other business entities in this program." SDG&E suggests it could own and operate PV systems and receive incentives in the same manner as other program participants. We decline to address SDG&E's request in this order for several reasons. First, several Commission orders have expressly excluded the utilities from qualifying for solar incentives. Most recently, in D.06-01-024, the Commission stated conclusively the utilities will not qualify for CSI funds, but the Commission would reconsider this in the first program review in 2009. (D.06-01-024, p. 15.) In D.01-03-073 and again in D.04-12-045, the Commission expressly prohibited a utility from receiving SGIP incentives. (D.01-03-073, Attachment 1, p. 25; D.04-12-045, p. 23.) Aside from these direct prohibitions on utility participation, the issue was not within the scope of Phase 1 and a proper record on the ramifications of such a proposal was not developed. SDG&E does not provide sufficient detail regarding how it would participate in CSI and how this business enterprise might overlap with its utility business. Even though SDREO will administer CSI in SDG&E's territory, conflicts could arise from SDG&E's role in managing the SDREO contract. As SDG&E itself notes, concerns could arise over SDG&E ratepayers paying twice - once for incentives and again for capital equipment in rate base. As the Commission has previously stated, "If the utilities wish to construct cost-effective large solar projects themselves, such investments are recoverable in utility rate base following general rate case review." (D.06-01-024, p. 15.) If SDG&E desires to pursue its proposal, it should file a separate application with a detailed description so that the legal, policy, and ratemaking concerns surrounding the proposal can be properly addressed.

PG&E and SDREO ask the Commission to direct the participants in the Program Handbook process to address treatment of projects that may be on a waiting list for incentive funds through the existing SGIP program. We agree this issue should be discussed in the Program Handbook process. We also agree that any existing applications should not lose their place in the queue if they must augment or replace their application to meet new program criteria, as long as this is done in a reasonable timeframe.

⁴⁸ See D.04-12-045, p. 19.