XIII. Assignment of Proceeding

President Michael R. Peevey is the assigned Commissioner and Dorothy Duda is the assigned ALJ in this portion of the proceeding.

Findings of Fact

1. SB 1 directs the Commission and CEC to implement CSI given specific requirements and budget limits.

2. SB 1 allows the Commission to pay incentives up to the first MW of alternating current generated by solar energy systems.

3. SB 1 directs the CEC to establish eligibility criteria for solar incentives by January 2008, but until that time, it requires the Commission to determine which solar energy systems may receive incentives.

4. According to SB 1, solar incentive levels shall decline each year at a rate of no less than an average of 7% per year, and shall be zero as of December 31, 2016.

5. In D.06-08-028, the Commission adopted an incentive reduction schedule that declines as MW levels of program participation are achieved, and each step reduction is larger than 7%.

6. SB 1 directs a phase-in of performance-based incentives on a faster schedule than the Commission adopted in D.06-08-028.

7. Solar installations on new construction projects are not exempt from the performance-based incentive mandates in SB 1.

8. Effective January 2008, SB 1 directs the CEC to require energy efficiency improvements in existing buildings as a condition of receiving solar incentives.

9. SB 1 mandates time-variant pricing for all ratepayers with a solar energy system.

10. SDG&E's current residential TOU tariff is limited to the first 10,000 customers.

11. According to SB 1, the Commission may not impose charges on natural gas ratepayers to fund CSI.

12. SB 1's goals do not include natural gas displacement.

13. SB 1 contains a total solar installation goal of 3,000 MW, based on the solar programs of the Commission, CEC, and municipal utilities.

14. The Commission's authorized CSI funding is 65% of the total $3.35 billion authorized statewide.

15. The Commission's 65% share of the 3,000 MW statewide goal is 1,940 MW, and 1,750 MW for the mainstream solar incentive program.

16. Allocating the CSI budget based on each utility's share of total electric sales makes each utility's CSI budget equivalent on a dollars per kWh basis.

Conclusions of Law

1. D.06-01-024 should be modified to state that commencing with applications for solar incentives after January 1, 2007, solar projects may be sized up to 5 MW, but may receive incentives only up to the first MW.

2. The Commission should continue CSI implementation as set forth in D.06-08-028, except as modified in this order, and adapt the CSI program to match CEC eligibility criteria once established.

3. The incentive reduction schedule adopted in D.06-08-028 is consistent with the intent of SB 1, as long as the Commission monitors and adjusts incentive levels to ensure they decline no less than an average of 7% per year and are zero by December 31, 2016.

4. To comply with SB 1, D.06-08-028 should be modified to apply performance-based incentives to systems 50 kW and larger beginning January 1, 2008, and to systems 30 kW and larger beginning January 1, 2010.

5. The Commission should monitor whether the total incentives committed or paid through PBI meet the directives of SB 1.

6. D.06-08-028 should be modified to delete any exemptions from PBI for new construction projects.

7. The interim energy efficiency requirements for solar projects set forth in this order should apply until the CEC identifies required energy efficiency improvements.

8. Until CEC requirements are established, an applicant for solar incentives relating to an existing structure shall obtain an energy efficiency audit, either from the utility or from a non-utility provider at the applicant's expense.

9. Applicants should be exempt from audit requirements if they had an audit during the past three years, can prove compliance with current Title 24 energy efficiency standards, or have an energy efficiency certification from LEED or Energy Star.

10. Residential energy efficiency audits performed by non-utility providers shall use existing utility audit protocols for on-line or telephone audits.

11. The CSI Handbook development group, as established by D.06-08-028, should establish a non-residential energy efficiency audit protocol and identify acceptable audit compliance documentation.

12. Applicants for solar incentives as of January 1, 2007 shall take service on applicable existing TOU tariffs.

13. The Commission should explore refinements to TOU tariffs in either the applicable utility's general rate case or other appropriate proceeding.

14. Solar energy systems that apply for solar incentives in 2006 shall follow the 2006 SGIP rules, and projects that apply for incentives in 2007 shall follow the 2007 CSI program rules.

15. Tables 1, 2, and 3 of D.06-01-024 should be modified as set forth in Appendix A to this order to remove the revenue requirements from gas utilities from the CSI budget.

16. Electric customers of PG&E, SCE, and SDG&E are eligible to receive incentives through the Commission's CSI program, but customers who take gas service only are not eligible and may apply to their publicly-owned electric utility for incentives.

17. SoCalGas should no longer serve as a CSI program administrator for applications after January 1, 2007, since it will no longer collect CSI funds from its ratepayers.

18. It is inappropriate to use electric ratepayer funds to subsidize natural gas savings.

19. Solar thermal and solar water heating technologies may receive CSI incentives only to the extent these technologies displace electric usage.

20. We should not prohibit gas displacing technologies from participating in the SDREO solar water heating pilot program, because it is a small pilot program designed to inform us of industry economics.

21. The Commission may consider funding gas-displacing solar thermal technologies through SGIP under the existing process in SGIP for addition of new technologies to that incentive program.

22. Non-PV solar projects that displace electricity should receive the same incentives, either PBI or EPBB, as paid to PV projects.

23. The CSI program administrators should assign or hire technical experts to address estimating, metering, and measuring non-PV solar output that displaces electricity but does not produce it.

24. The Commission should reassess incentives for non-PV solar technologies in its periodic CSI review proceeding.

25. The program administrators may fund incentives for non-PV technologies (i.e., solar thermal) up to each program administrator's pro-rata share of the $100.8 million limit, using the same proportional shares as specified in Table 2 of Appendix A to this order. Each program administrator should inform the ALJ in writing when it is within 10% of its pro-rata limit.

26. The Commission should adopt the revised CSI budget as set forth in Table 1 of this order.

27. The tables in D.06-08-028 should be modified to reflect the Commission's revised solar MW goal of 1,750 MW for the mainstream solar incentive program and each utility's share of this revised MW goal.

28. Each utility's share of the CSI budget should be based on its share of total electric sales because the CSI program is now funded solely from the distribution rates of electric ratepayers.

29. The revenue requirements in D.06-01-024 should be modified based on total electric sales so that each utility bears the following percentage of the total budget: PG&E 43.7%, SCE 46%, and SDG&E 10.3%.

30. D.06-08-028 should be modified to allow the utilities to establish a sub-account for PBI within their existing CSI balancing accounts.

31. The 2007 SGIP budget should be $83 million, allocated across the four IOUs according to Table 2 in this order.

32. SoCalGas should transfer any unspent 2006 SGIP solar funds into its 2007 SGIP renewable budgets.

33. SCE should carryover unspent 2006 SGIP solar funds into CSI, as previously directed in D.06-08-028.

34. PG&E and SDG&E should 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.

ORDER

IT IS ORDERED that:

1. Decision (D.) 06-01-024 is modified as set forth in Appendix A of this order.

2. D.06-08-028 is modified as set forth in Appendix B of this order.

3. The California Solar Initiative (CSI) program modifications relating to incentive limits, the phase in of performance-based incentives, energy efficiency requirements, time variant pricing requirements, incentives to non-photovoltaic solar projects, gas utility involvement in CSI, and the total CSI budget are adopted as set forth in this order.

4. Effective January 1, 2007, Southern California Gas Company (SoCalGas) shall no longer collect funds from its ratepayers for CSI and shall cease all CSI program administration responsibilities for new solar incentive applications received after January 1, 2007. SoCalGas shall continue its administrative duties for solar incentive applications received prior to January 1, 2007.

5. Within five business days of the issuance of a Commission ruling adopting the first version of the CSI Program Handbook, the CSI program administrators shall jointly file and serve draft CSI Program Handbook revisions that are necessary to reflect all program modifications contained in this order, except those relating to non-PV solar projects. Parties may file comments on these revisions 20 days thereafter, and reply comments seven days after the filing of comments, unless these dates are modified by further ruling of the ALJ or assigned Commissioner. The ALJ shall consult with the assigned Commissioner to review and approve the final CSI Handbook through a ruling or Commission order, as deemed appropriate.

6. The CSI program administrators shall coordinate to assign or hire technical experts to address estimation, measurement and metering of non-PV solar projects that displace electricity. The program administrators shall file handbook revisions relating to non-PV incentives no later than April 1, 2007, unless otherwise directed by the assigned Commissioner or Administrative Law Judge (ALJ) for review and approval by the assigned Commissioner and ALJ in a ruling or Commission order, as deemed appropriate. Incentives for non-PV technologies will be available upon Commission ruling or order accepting these revisions.

7. No later than July 1, 2008, and quarterly thereafter until January 1, 2010, the CSI program administrators shall send a letter to the Director of the Commission's Energy Division reporting the percent of total solar incentives committed or paid on a performance basis for systems of 30 kilowatts or greater.

8. The CSI program administrators shall track and report incentive commitments for non-PV technologies as set forth in this order.

9. Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E), and SoCalGas shall adjust their SGIP memorandum accounts to reflect the 2007 SGIP budget adopted in this order.

10. SoCalGas shall carryover any unspent 2006 SGIP Level 1 funds to its 2007 SGIP renewable budget.

11. SCE shall carryover any unspent 2006 SGIP Level 1 funds to its 2007 CSI budget.

12. PG&E and SDG&E shall apportion any unspent 2006 SGIP solar funds based on the pro rate collection of these funds from their gas and electric ratepayers, and carryover gas funds to their 2007 SGIP renewable budget and electric funds to their 2007 CSI budget.

13. Within 30 days from the effective date of this order, SDG&E shall file an advice letter to amend Schedule DR-TOU as set forth in this order.

14. This proceeding shall remain open for consideration of additional implementation issues in Phase II.

This order is effective today.

Dated December 14, 2006, at San Francisco, California.

Appendix A

Modifications to D.06-01-024

Decision 06-01-024 should be modified as follows (additions in underline):

Conclusions of Law

3. The CSI should offer incentives to any solar technology with a capacity rating of less than 5 MW, but as of January 1, 2007, projects may receive incentives only up to the first MW. Solar water heating incentives should be provided only as part of a closely monitored pilot program as set forth herein.

Table 1: IOU Annual Revenue Requirements for CPUC Portion of CSI

(In millions of dollars)

Year

PG&E

SCE

SDG&E

SoCalGas

Total

2007

$140

$147

$33

$0

$320

2008

$140

$147

$33

$0

$320

2009

$140

$147

$33

$0

$320

2010

$105

$110

$25

$0

$240

2011

$105

$110

$25

$0

$240

2012

$105

$110

$25

$0

$240

2013

$70

$74

$16

$0

$160

2014

$70

$74

$16

$0

$160

2015

$70

$74

$16

$0

$160

2016

$2

$2

$1

$0

$5

Total

$946

$996

$223

$0

$2,165

Table 2: IOU Share of CSI Costs

Table 3: Administrative and Evaluation Budgets by Utility Territory19

(END OF APPENDIX A)

Appendix B

Modifications to D.06-08-028

Decision 06-08-028 should be modified as follows (additions in underline):

Conclusions of Law

8. We should transition smaller systems, larger than 50 kW, to a PBI structure in 2008, and larger than 30 kW, to PBI structure in 2010, after we have experience with PBI and to allow sales and financing arrangements to evolve.

Conclusion of Law 11 should be deleted.

Ordering Paragraphs

1. Delete reference to "Southern California Gas Company."

4. Beginning January 1, 2007, the Commission will apply a PBI structure to all systems 100 kilowatts (kW) and larger. Beginning January 1, 2008, the Commission will apply a PBI structure to all systems 50 kW and larger, and beginning January 1, 2010, to any system 30 kW and larger. Any system, regardless of size, may opt for the PBI payment structure in Table

5. The Commission will require all building-integrated photo-voltaic (PV) systems, including those on new construction, to receive incentives through a PBI structure. (Delete the last phrase "but will not require other new construction solar installations to be paid through PBI.")

6. Delete reference to "SoCalGas."

7. PG&E, SCE, and SDG&E (delete "and SoCalGas") shall each file an advice letter to establish an interest-earning PB1 balancing account and amend the preliminary statement of their tariffs to describe the PB1 balancing account and PBI program description and payment criteria. The utilities may create the PBI balancing account as a sub-account of their CSI balancing accounts. On a quarterly basis, each utility shall forecast the total five years expected PBI payment amount for all solar projects completed in that quarter, and deposit that amount into its balancing account to ensure fund security over the five-year payment period.

Table 2

CSI MW Targets by Utility and Customer Class

Table 3

Incentive Levels by MW Step ($/watt)

Step

MW in Step

Gov't/

Non-Profit

Res

Commercial

1

50

$2.80

$2.80

$2.80

2

70

$3.25

$2.50

$2.50

3

100

$2.95

$2.20

$2.20

4

130

$2.65

$1.90

$1.90

5

160

$2.30

$1.55

$1.55

6

190

$1.85

$1.10

$1.10

7

215

$1.40

$0.65

$0.65

8

250

$1.10

$0.35

$0.35

9

285

$0.90

$0.25

$0.25

10

350

$0.70

$0.20

$0.20

Table 5

Levelized PBI Monthly Payment Amounts at 8% Discount Rate

 

  

PBI payments

(per kWh)

MW Step

MW in step

Residential

Commercial

Government

Non-Profit

1

50

n/a

n/a

n/a

2

70

$0.39

$0.39

$0.50

3

100

$0.34

$0.34

$0.46

4

130

$0.26

$0.26

$0.37

5

160

$0.22

$0.22

$0.32

6

190

$0.15

$0.15

$0.26

7

215

$0.09

$0.09

$0.19

8

250

$0.05

$0.05

$0.15

9

285

$0.03

$0.03

$0.12

10

350

$0.03

$0.03

$0.10

Table 6

Maximum EPPB Payment Amounts

Table 10

MW Allocations by Utility

Incentive Step

MWs in Step

PG&E

SCE

SDG&E

1

50

n/a

n/a

n/a

2

70

30.6

32.2

7.2

3

100

43.7

46.0

10.3

4

130

56.8

59.8

13.4

5

160

69.9

73.6

16.5

6

190

83.0

87.4

19.6

7

215

94.0

98.9

22.1

8

250

109.3

115.0

25.8

9

285

124.5

131.1

29.4

10

350

153.0

161.0

36.1

Total

1750

764.8

805.0

180.3

 

Percent

43.7%

46.0%

10.3%

Table 11

CSI MW Targets by Utility and Customer Class

Table 12

CSI MW Allocations by Customer Sector

Table 13

CSI Incentive Levels by Incentive and Customer Class

Step

MW in Step

Gov't/

Non-Profit

Res

Commercial

Total $ Disbursed in Step

($ in millions)

1

50

n/a

n/a

n/a

n/a

2

70

$3.25

$2.50

$2.50

$186

3

100

$2.95

$2.20

$2.20

$235

4

130

$2.65

$1.90

$1.90

$267

5

160

$2.30

$1.55

$1.55

$272

6

190

$1.85

$1.10

$1.10

$237

7

215

$1.40

$0.65

$0.65

$172

8

250

$1.10

$0.35

$0.35

$125

9

285

$0.90

$0.25

$0.25

$108

10

350

$0.70

$0.20

$0.20

$105

       

Total

$1,707

(END OF APPENDIX B)

19 The administrative budget is calculated as 10% of the CPUC overall CSI budget net of the budgets for low-income incentives ($216.68 million), Research Development and Demonstration ($50 million), and the SDREO Pilot ($3 million). Thus, the total administrative budget equals 10% of $1,897 billion, or $189.7 million. The administrative budget includes funding for evaluation, marketing and outreach, and general administrative functions.

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