SGIP Budget and Program Operation issues
The Commission must decide whether to direct the Program Administrators to continue to operate the SGIP through 2011 with essentially the same program parameters as prior years. Parties were asked to comment on continuation of SGIP in accordance with previous Commission direction regarding the annual budget, the carry over of unspent funds, and other program implementation details.
The comments by the parties indicate general consensus regarding the details of the continued operation of SGIP through 2011 with the main debate, or area of disagreement, involving the level of the annual budget and the use of carryover funding for this program. Given the consensus on most operational issues, we will first provide direction to the Program Administrators to continue to implement SGIP in accordance with all previous direction from the Commission, including but not limited to budget allocations between the four energy utilities in the same percentages as in 2008, a 10% administrative budget, and allocation of funds between renewable and non-renewable projects.
We now turn to the debate concerning the annual budget and carryover funding. NAESCO, CCDC, CCSE, PG&E, SoCalGas/SDG&E, UTC, and Bloom/FCE all support the budget of $83 million, along with provisions for carryover of unspent funds to future program years. NAESCO supports the carryover to maintain a reserve fund for use during times of extraordinary or unanticipated demand. UTC Power contends that confidence in the availability of SGIP funding from year to year is essential to customers considering clean energy investments, particularly because the customer decision process for fuel cell investments is generally longer than one year. CCDC and CCSE request that the Commission allow flexibility to increase the SGIP budget if the Legislature modifies the eligible SGIP technologies beyond wind and fuel cells. PG&E supports continuation of the program budget at $83 million as an interim measure for 2009, until the Commission can review the use of carryover funds for projects in the 1 megawatt (MW) to 3 MW range, as allowed by D.08-04-049.
SCE supports the continued operation of SGIP through 2011, but it requests flexibility to return SGIP overcollections to ratepayers. SCE explains that it expects an overcollection of $110 million in its SGIP memorandum account by the end of 2008, due to carryover of unspent funds from prior year's budgets. SCE requests an advice letter process to reduce or delay SGIP collections while current over-collected funds are used to fund the program operation. SoCalGas/SDG&E support SCE's suggestion for a mechanism to provide flexibility and allow the utilities to suspend SGIP collections, if justified based on program demand.3 PG&E states it does not have a large overcollection because it has not actually collected from ratepayers its entire authorized budget from 2001 to the present. PG&E supports the carryover of unspent funds but asks for clarification whether it should carryover budget dollars or dollars actually collected from ratepayers.4
TURN opposes continuing the current budget level of $83 million without a thorough review of program demand. It argues that if the Commission can meet all program obligations while collecting less money from ratepayers, it should do so now. TURN echoes PG&E's comment that the Commission review SGIP budget and eligibility criteria towards the end of 2009, when more information on the demand for carryover funds is available. TURN contends the Commission should gather additional program data on unspent funds from prior budget years, the ratemaking treatment of SGIP revenues, and the status of applications, and wait until the end of 2009 to determine the long-term SGIP budget. SCE disagrees with TURN on the need for further proceedings and data gathering before setting the SGIP budget.
DRA questions why excess funds are accumulating in the SGIP, and whether this is due to lack of demand, technology limitations, or lack of program marketing. DRA supports the concept of truing up the memorandum accounts on an annual basis if balances exceed a Commission determined minimum balance. DRA agrees a positive balance should be kept in the account for the cyclical fluctuations in program demand, but that there should be a limit to the carryover. DRA suggests the Commission adopt an annual true-up a process similar to the one for energy efficiency shareholder incentive claims, as adopted in D.07-09-043.
3 SoCalGas/SDG&E provide no information on whether either utility has an overcollection of SGIP funds.
4 From 2001 to 2005, "PG&E spent more on SGIP incentives than it collected from ratepayers, and it has not yet trued up that difference, since in more recent years, it has collected more than it has spent." (PG&E Comments, 9/30/08, p. 3.) PG&E notes the amounts should be trued up "so ratepayers pay no more and no less than the amounts spent on this program." (Ibid.)
