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COM/JB2/avs Date of Issuance 6/22/2009

Decision 09-06-049 June 18, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison

Company (U338E) for Authority to Implement

and Recover in Rates the Cost of its Proposed

Solar Photovoltaic (PV) Program.

Application 08-03-015

(Filed March 27, 2008)

DECISION ADDRESSING A SOLAR PHOTOVOLTAIC PROGRAM
FOR SOUTHERN CALIFORNIA EDISON COMPANY

TABLE OF CONTENTS

Title Page

DECISION ADDRESSING A SOLAR PHOTOVOLTAIC PROGRAM FOR SOUTHERN CALIFORNIA EDISON COMPANY 22

Findings of Fact 5454

Conclusions of Law 5656

ORDER 5858

DECISION ADDRESSING A SOLAR PHOTOVOLTAIC PROGRAM
FOR SOUTHERN CALIFORNIA EDISON COMPANY

1. Summary

In this decision, we adopt a solar photovoltaic program (SPVP) to install 500 megawatts (MW) of solar photovoltaic (PV) on existing commercial rooftops in the service territory of Southern California Edison Company (SCE or Edison). Under the adopted program, SCE will own, install, operate and maintain 250 MW of distributed solar PV projects primarily in the one to two MW range, located in SCE's service territory, and will seek competitive bids for power purchase agreement (PPA) for electricity from another 250 MW of solar PV rooftops that are owned, installed, operated and maintained by independent power producers (IPPs).

Currently, California has several programs that support the development of renewable energy resources. The Renewables Portfolio Standard (RPS) program, established in 2002 under Senate Bill (SB) 1078, Stats. 2002, ch. 516, and accelerated in 2006 under SB 107, Stats. 2006, ch. 464, requires the investor-owned utilities to procure 20% of their electricity sales from renewable sources by 2010. The RPS program has a variety of procurement vehicles, including competitive solicitations and bilateral contracts. In addition, while the statutes provide for 20% by 2010, a goal of attaining 33% by 2020 has been addressed in other ways. For example, as early as October 2005, the California Energy Commission (CEC) and the Commission jointly adopted the Energy Action Plan II (EAP II) identifying as a key action item the implementation of 33% renewables by 2020. On November 17, 2008, Governor Schwarzenegger established an RPS target of 33% by 2020 for all retail sellers of electricity (Executive Order S-14-08.) On December 11, 2008, the California Air Resources Board adopted a Scoping Plan for implementation of California's Greenhouse Gas Law (Assembly Bill 32) which includes implementing 33% renewable resources in the electricity sector by 2020. The state and the Commission have also identified clean and renewable distributed generation as a priority resource in the loading order.1 The Energy Action Plan I specifically called on the state to "promote customer and utility owned distributed generation."2 Consistent with this objective, in 2007, the California Solar Initiative (CSI) established a goal to install 3,000 MW of solar projects by 2016 via a performance based rebate program. Together, these programs and initiatives are expected to advance the state's renewable energy goals and help lower the cost of solar energy. At the same time, we must continue to embrace innovative programs and new policies that will advance the delivery of renewable energy and support our renewable goals. The adopted SPVP will provide an opportunity for solar projects in the range of one to two MW, which due to the focus of our existing programs have had limited participation in the CSI and the RPS, to contribute to the state's aggressive renewable goals.

Because this is an application of first impression and a new program for utility-owned renewable generation, we will carefully monitor the program's progress, examine ways in which the program can be improved, and fine tune the program when and where appropriate. As discussed in this decision, the evaluation of the adopted SPVP, in particular the role of utility-owned renewable generation, is something that is of ongoing concern to the Commission. Because we approve here the procurement of both utility-owned renewable generation, and a competitive solicitation for the same type of generation, the program we approve should provide us with important information about the comparative costs and benefits of each form of renewable ownership, among other things. SCE will file annual compliance reports on the status of the program and Energy Division will summarize the results of the program in its reports to the legislature on the RPS program. Thus, we seek to ensure that lessons learned during the implementation of the program are quickly identified and applied to future programs. The ultimate forum for this review shall be the general rate case proceeding, where the entire utility operation is reviewed.

We deny SCE's request for an additional 100 basis points above SCE's adopted rate of return for SCE's portion of this program. SCE bases this request on Pub. Util. Code § 454.3.3 For reasons described in more detail below, we disagree with SCE's assessment that the utility-owned generation (UOG) portion of the SPVP program meets the criteria established in § 454.3 necessary to grant an increase in SCE's rate of return. The energy generated from the SPVP projects will be counted towards SCE's RPS goal because the generation will serve SCE's electrical load. However, while the output of the projects from this program will count towards the RPS goal, the process for future RPS solicitations remains unchanged. In other words, solicitations for future renewable projects will continue to be through the existing RPS solicitation process. The output of the projects will not count towards the CSI program goals, nor will the SPVP use any part of the CSI program budget because the CSI and the SPVP are fundamentally different in nature.

1 See, e.g. Energy Action Plan II, p. 3.

2 Energy Action Plan I, pp. 7-8.

3 All section references are to the Public Utilities Code unless otherwise indicated.

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