3.1.4. Program Evaluation

In establishing the CSI program in D.06-01-024, the Commission determined that Commission staff would oversee program evaluation and that evaluation and monitoring protocols should be the same as those specified in R.01-08-028, to the extent possible, for energy efficiency programs. (D.06-01-024, p. 32.) In that same order, we directed the utilities and the San Diego Regional Energy Office (now CCSE) to file a proposed evaluation outline and schedule, so that the utilities and CCSE could issue requests for proposals for program evaluation contractors to be selected and managed by Commission staff. In R.06-03-004 and its scoping memo, the Commission stated its intent to evaluate program effectiveness in Phase II of the proceeding. Moreover, SB 1 added Section 2851(c)(3) to the Public Utilities Code which requires the Commission to submit to the Legislature by June 30, 2009 and every year thereafter, an assessment of CSI program's success, including numbers of installations, incentives awarded, capacity of installed systems, program costs, total electrical system benefits, environmental and reliability benefits, and effects on peak demand.

In D.06-08-028, the Commission indicated it would review major aspects of the CSI program every two years based on new information on solar costs, federal tax credits and other solar market conditions and factors. The review's purpose would be to identify potential improvements in CSI program design and to determine if revisions to CSI incentive mechanisms are warranted. We anticipated that the first evaluation would take place in a new rulemaking in 2009, after two years of experience with the program, and we stated the new rulemaking would determine the elements of the program that should be included in the review.

In that same order, we established mechanisms to provide data for program review. First, we directed the program administrators to create a program database that we could use as a tool for program assessment. (D.06-08-028, p. 63.) Second, we required all CSI incentive recipients to have performance monitoring and reporting services (PMRS), provided by an independent entity not affiliated with solar manufactures or installers, attached to their meters. (Id., p. 79.) In D.08-01-030, we dropped the requirement that PMRS be provided by independent entities, and we established protocols for "performance data providers" (PDPs) to report solar system output information from the customer's meter to the program administrator for performance-based incentive (PBI) payment purposes.

Consistent with the requirements of D.06-08-028 and SB 1, we intend to review the program evaluation outline and schedule filed jointly by the utilities and CCSE in compliance with D.06-01-024 and develop a Program Evaluation Plan in this rulemaking to gather the data we need for our report to the Legislature in June 2009 and for the program review that we intend to conduct later in this rulemaking. Therefore, our first step will be to consider the elements of a Program Evaluation Plan, namely what program data and reports are essential for our program review and legislative reporting obligations and by what deadline. Potential data sources could include but are not limited to the program administrators, the CSI database, and the PDP/PMRS vendors. We intend to draw from our program evaluation experience in both SGIP and energy efficiency as guidance for our CSI Program Evaluation Plan.

After we establish the Program Evaluation Plan, we will implement the plan and use the results for our first review of the CSI program in a later portion of this rulemaking. As indicated in D.06-08-028 and subsequent orders, our CSI review may include, but is not limited to, the following:

· Consider adjustments to CSI incentive rates based on solar costs, market conditions, the status of federal tax credits,⁴ the value of RECs, or other factors

· Assess the need for program modifications or enhancements, and alternative mechanisms to achieve CSI goals

· Review the capacity factor used in the PBI payment calculation

· Review allocation of CSI funds between residential and non-residential customers

· Evaluate the allocations of total budget funds for administration, marketing, evaluation, RD&D and low income programs, and the use of any unspent funds

· Evaluate the participation of non-PV technologies in the CSI program

· Assess the accuracy of data reporting provided by PDP and PMRS vendors

· Compare and evaluate the effectiveness of the three program administrators for the mainstream CSI program

⁴ Current federal tax credits are due to expire on December 31, 2008, unless extended by federal legislation. If the tax credit expires, the Commission may consider incentive changes before other elements of CSI program evaluation are completed.