X. Total CSI Budget

SB 1 adds Section 2851(e)(1), which specifies that financial components of CSI shall consist of:

Programs under the supervision of the commission funded by charges collected from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company. The total cost over the duration of these programs shall not exceed two billion one hundred sixty-six million eight hundred thousand dollars ($2,166,800,000) and includes moneys collected directly into a tracking account for support of the California Solar Initiative and moneys collected into other accounts that are used to further the goals of the California Solar Initiative.

In D.06-01-024, the Commission adopted a CSI budget of $2.5 billion from 2007 through 2016. Later, in D.06-08-028, the Commission allocated this same budget across the utilities, including SoCalGas. Given the new CSI budget limit set by SB 1 and the prohibition on collections from gas ratepayers, the ALJ ruling proposed modifying D.06-01-024 and D.06-08-028 to reflect the Commission's new lower budget limit of $2.16 billion for 2007 through 2016 and to indicate corresponding reductions in MW goals for the Commission's portion of CSI. Moreover, the ALJ ruling proposed the Commission revise its allocation of the total dollars than can be disbursed in each step of the program. With the new budget limit of $2.16 billion in SB 1, the Commission may now spend only $1.7 billion in direct incentives, as opposed to the $2.1 billion set forth in Table 13 of D.06-08-028. The ALJ ruling proposed a revised budget for CSI, to conform to SB 1, as follows:

Table 1: Revised CSI Budget

We will adopt the total CSI budget as set forth in the table above. Parties generally agreed with the budget table, and most parties asked for only minor clarifications. SCE commented that the administrative budget should be calculated as 10% of the total budget, rather than 10% of the budget after set-asides for low-income incentives, RD&D and the SDREO pilot, because there will be costs to administer low income solar incentives. We have added clarification that administrative costs for low-income incentives must be absorbed within the $216 million for low-income solar programs.

CFC contends that the $1.7 billion figure for direct incentives under CSI is too large because SB 1 requires the total CSI budget to be reduced by charges made to other accounts which further the same goals. According to CFC, the CSI budget must include incentives for energy efficiency. The Joint Solar Parties respond that there is no need to reduce the total CSI budget based on energy efficiency funding because energy efficiency programs are not based on the same goal as enumerated in SB 1, which is to "install solar energy systems." We agree with the Joint Solar Parties and thus, we do not reduce the total CSI incentive budget as CFC suggests. Nevertheless, the Commission's periodic CSI review process can be used to ensure that moneys collected into other accounts that further the goals of CSI are taken into consideration as part of the CSI total budget of $2.1 billion.

Adjustments to MW Goals

In addition to clarifying the new lower CSI budget, the Commission should adjust its total MW goals to reflect that SB 1 has a total solar installation goal of 3,000 MW, which is the combined goal for solar programs by the Commission, CEC, and municipal utilities. The ALJ Ruling proposed adjusting the Commission's MW goal based on the Commission's pro rata share of the statewide CSI budget. The Commission's budget is now $2.16 billion, which is 65% of the total $3.35 billion specified in SB 1. Hence, the Commission's new solar MW goal should be 65% of 3,000 MW, or 1,940 MW. According to D.06-01-024, 10% of program funds are reserved for solar incentives to low income residential and affordable housing projects. Thus, 90% of 1,940 MW, or 1,750 MW, are attributed to the mainstream incentive program.

Several parties agreed with the new lower MW goal and the revised tables to reflect these goals. We will adjust the tables in D.06-08-028 to reflect the new lower budget limit and the corresponding 1,750 MW goal for the CPUC portion of CSI. The impacted tables for both D.06-01-024 and D.06-08-028 have been revised and are attached to this order in Appendices A and B.

SDGE/SoCalGas raise a concern with the allocation of budgets and MW goals across the three utilities. They note that while the budgets and MW goals for SCE and PG&E were reduced, SDG&E's CSI budget did not drop. As a result, SDG&E/SoCalGas claim that SDG&E's ratepayers would bear a greater proportion of program costs than ratepayers of the other electric utilities on a cents per kWh basis. To remedy this, SDG&E/SoCalGas propose an allocation of the total CSI budget based on each utility's share of total electric retail sales rather than gas and electric sales as was used previously in D.06-01-024. They argue this is appropriate because gas ratepayers are specifically prohibited from funding CSI. SCE and SDREO oppose this approach, and maintain the Commission should not change the method it uses to apportion the CSI budget. SCE notes the existing allocation is the same as the allocation of energy efficiency program budgets across the utilities.

We will adjust the allocation of the total CSI budget across the three utilities as SDG&E suggests, based on each utility's share of total electric sales. As a result, PG&E will be responsible for 43.7% of the CSI budget, SCE will bear 46%, and SDG&E will bear 10.3%.16 We find this approach reasonable because the CSI program is now funded solely from the distribution rates of electric ratepayers and this adjustment makes each utility's budget equivalent on a dollars per kWh basis. The tables in Appendix A and B reflect these percentage adjustments.

PG&E requests the Commission revisit the allocation of MW goals between residential and nonresidential categories when the Commission reviews CSI in 2009. We agree that the allocation of program goals across the residential and nonresidential categories is one that we will review during periodic CSI assessments.

In comments on the proposed decision, SCE opposes the new allocation methodology based on electric sales, and suggests we allocate the CSI budget based on the number of customers in each utility's service area. PG&E endorses the concept of using electric sales for budget allocation, but suggests we use utility annual reports for our data on sales rather than FERC Form 1 information. We are concerned that under PG&E's approach, the data reported on annual reports may not be consistently calculated across utilities. We have reviewed the information provided by SDG&E from its FERC Form 1 source, as well as the corresponding FERC data for SCE and PG&E. We are satisfied that our data regarding total electric sales is accurate and appropriate to use in allocating the CSI budget, particularly because it spreads the CSI budget on an equal cents per kWh basis across each utility's ratepayers.

Other CSI Budget Issues

SCE contends that there are inadequate controls on the payout of incentives to ensure the CSI program remains below $2.166 billion. SCE requests the Commission place caps on PBI payments to avoid this problem. We will not revisit the PBI payment cap issue that we considered and rejected in D.06-08-028. As we stated in that order, we will not limit the incentives paid to any one project through PBI, although the program administrators must ensure they operate within their total budgeted CSI funds. (D.06-08-028, p. 33.)

SDG&E/SoCalGas request that D.06-08-028 be modified to allow it to establish a sub-account for PBI within its existing CSI balancing account. This request is reasonable and we will adopt it. We will modify Ordering Paragraph 7 of D.06-08-028 to make this change.

PG&E asks the Commission to clarify the SGIP budget for 2007. PG&E recommends authorizing the four utilities to continue their non-PV SGIP budgets and revenue requirements for 2007, with revenues collected from gas and electric customers as they are now. PG&E asks for clarity that PV incentives are now handled through CSI, while non-PV incentives are handled through SGIP.

We agree that we should clarify the SGIP budget for 2007, which will fund non-solar distributed generation projects now that incentives for solar PV and electricity-displacing non-PV solar projects are handled through CSI. In D.01-03-073, the Commission adopted an SGIP budget of $125 million per year allocated across the four IOUs, with $42 million allocated to the solar portion of SGIP. Given that solar-electric incentives will be funded through CSI in 2007, the four IOUs should collect and spend $83 million ($125 million less $42 million) for their 2007 SGIP. The $83 million should be allocated across the four IOUs according to the percentages adopted in D.06-01-024, Table 2,17 as follows:

Table 2: 2007 SGIP Budgets

The IOUs should make the appropriate changes in their SGIP memorandum accounts to adjust for the lower 2007 SGIP budget, as shown in the table above.

A secondary budget issue involves allocation of unspent solar incentive funds from 2006. In D.05-12-044, the Commission authorized an additional $300 million for the 2006 SGIP program to fund solar incentives, in addition to the $42 million already allocated for solar incentives through SGIP. In D.06-08-028, we directed PG&E, SCE, SDG&E, and SoCalGas to transfer any unspent 2006 SGIP solar funds into their CSI balancing accounts on December 31, 2006. Now that gas ratepayers will no longer contribute to solar electric incentives through CSI, we need to modify this requirement. In principle, we find it reasonable for unspent solar funds collected from gas ratepayers to carryover to SGIP, and unspent solar funds collected from electric ratepayers to carryover to CSI. Therefore, we direct SoCalGas to carryover any unspent 2006 SGIP Level 1 funds to its 2007 SGIP renewable budget. We direct SCE to carryover unspent 2006 SGIP solar funds (i.e., Level 1 funds) into CSI, as previously directed in D.06-08-028. For the combined utilities, PG&E and SDG&E, we direct them to apportion any unspent SGIP solar funds based on the pro rata collection of these funds from their gas and electric ratepayers. The portion deemed collected from electric ratepayers should carryover to the 2007 CSI budget, while the portion collected from gas ratepayers should carryover to each utility's 2007 SGIP renewable budget.

15 The administration budget of $189.71 is based on 10% of the budget for mainstream solar incentives, and does not include administrative costs for low income programs, RD&D, and the SDREO Pilot. Administrative costs for those programs shall be incorporated into their total budgets, which shall not exceed the figures in this table.

16 SDG&E provided these percentages in its comments based on 2005 Federal Energy Regulatory Commission (FERC) Form 1 data. (SDG&E/SoCalGas, 9/25/06, p. 6, n. 1.) SDG&E amended the FERC Form 1 data in an amended filing on 9/28/06, but the amendment did not impact the percentages allocated to each utility.

17 These percentages are based on each utility's energy efficiency budget allocation. Each utility should allocate its funds equally between renewable and non-renewable projects.

18 Each utility should spend no more than ten percent of their total SGIP budget for administration which includes marketing, education, outreach, and measurement and evaluation activities.

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