CSI Program Administration Budget

A third proposal in the ACR recommended shifting $20 million in program administration funds to the incentive budget. As noted above, a CSI general market program administration budget of $189.71 million was adopted in D.06-12-033, representing 10% of total program funds allocated to the general market CSI program. The program administration budget includes application processing, program evaluation, and marketing and outreach. In D.06-08-028, the Commission mandated that the PAs spend only half of the 10% of funds set aside for program administration, or 5% of the total budget, in order to preserve funds for program evaluation and marketing and outreach which have not been fully allocated. (D.06-08-028 at 97.) The ACR proposed that $20 million of those funds reserved for administration be reallocated to cover incentive budget needs. This additional $20 million would not increase the MW goal in any particular step, but would instead extend the total amount of incentives available from $1,707 million to $1,727 million.

The impact of the ACR's proposed modification on the administration and evaluation budgets, as well as the overall CSI general market incentive program budget, is reflected in the tables below.

Table 4: Proposed Administrative and

Evaluation Budgets by Utility Territory13

Utility

Administrative Budget

CSI General Market Program ($M)

PG&E

$74.16

SCE

$78.07

SDG&E

$17.48

Total

$169.71

Note: This table proposes modifications to Table 3 of Appendix A of D.06-12-033.

Table 5: Proposed CSI Budget

Budget Category

($ in millions)

SB 1 CSI Budget

$2,166.80

Low Income Budget (10%)

216.68

    Research Development and Demonstration (RD&D) Budget

50.00

SDREO Pilot Budget

3.00

Budget remaining

1,897.12

Administration Budget14

169.71

CSI Budget for Direct Incentives in general market program

$1,727.41

Note: This table proposes modifications to Table 1 of D.06-12-033 (at 28).

In comments, parties offered qualified support for shifting funds from other parts of the program to provide additional incentive monies. CCSE and ACWA propose taking funds from sources other than the program administration budget, specifically identifying the CSI RD&D program, the Measurement and Evaluation (M&E) budget, and the unallocated portion of the Marketing and Outreach budget (M&O). CCSE also suggested that the program administrators should be given additional flexibility to shift funds as necessary. The Solar Alliance suggests that in lieu of incentive modifications, the Commission should look to other sources in the program to support the incentive budget, including the M&O budget, and the RD&D program budget. The views of Solar Alliance and CCSE are generally shared by PG&E which offers similar suggestions in its comments. SCE supports the fund shift, but believes the PAs should have discretion regarding what component of the administration budget would be affected. SolFocus supports the proposed shift in administrative funds, arguing that any impacts on program administration can be absorbed through streamlining. TURN specifically advocates shifting funds from the M&O budget on the grounds that, in view of the rapid pace of solar applications, it makes little sense to allocate substantial funding to M&O activities. Solar Alliance argues that we can and should seek to use the interest earned on collected funds. CALSEIA is supportive of shifting funds from the administration budget to the incentive budget, provided the shift doesn't adversely impact the ability of program administrators to process program applications. CALSEIA is also concerned that the proposed transfer of funds would have a disproportionate impact on CCSE's ability to administer the program.

Given the near universal support for shifting funds from the administration budget, we adopt the proposal in the ACR with some modifications. First, because we are not adopting the ACR's proposal to reduce PBI payments and government/non-profit incentives, the magnitude of the remaining projected budget shortfall is larger than what it would be if we had adopted those modifications. Given the outstanding projected budget gap, we will need to shift more funds from other parts of the program budget. To that end we will shift $20 million from the M&E budget and an additional
$20 million from the unallocated portion of the overall administrative budget. In addition, the incentive budget is increased by $400,000 because the $3 million set aside in D.06-12-033 for the San Diego area Solar Water Heating Pilot Program was later revised downward to $2.6 million. (See R. 06-03-004, Assigned Commissioner's Ruling, 2/15/07.) The revised administrative and incentive budgets for the program as modified by this decision are shown in the tables below, as well as in Tables 1 and 2 of the Appendix to this decision. The PAs shall ensure they adhere to these revised CSI budgets.

Table 6: Revised CSI Budget and Allocation by Utility15

     

Allocation by Utility

 

Program Component

Revised Budget

PG&E

SCE

SDG&E

     

43.70%

46.00%

10.30%

 

General Market Program

 

      

1

General Market Program Incentives

$1,747,810,000

$763,792,970

$803,992,600

$180,024,430

2

Program Administration

$94,860,000

$41,453,820

$43,635,600

$9,770,580

3

Total Measurement & Evaluation (M&E)

26,700,000

$11,667,900

$12,282,000

$2,750,100

4

M&E, except CSI-Thermal Electric M&E

$25,450,000

$11,121,650

$11,707,000

$2,621,350

5

M&E, CSI-Thermal
Electric only

$1,250,000

$546,250

$575,000

$128,750

6

Total Marketing and Outreach (M&O)

21,250,000

$7,731,250

$7,875,000

$5,643,750

7

Interim M&O, general

market CSI16

$15,000,000

$5,000,000

$5,000,000

$5,000,000

8

M&O, CSI-Thermal Electric Only

$6,250,000

$2,731,250

$2,875,000

$643,750

9

Unallocated

$6,900,000

$3,015,300

$3,174,000

$710,700

10

Subtotal General Market Program

$1,897,520,000

$827,661,240

$870,959,200

$198,899,560

11

RD&D Program

$50,000,000

$21,850,000

$23,000,000

$5,150,000

12

Low Income Single-family (SASH) Program

$108,340,000

$47,344,580

$49,836,400

$11,159,020

13

Low Income Multifamily (MASH) Program

$108,340,000

$47,344,580

$49,836,400

$11,159,020

14

SWH Pilot Program (SWHPP) in San Diego

$2,600,000

$0

$0

$2,600,00017

15

Total CSI Electric Budget18

$2,166,800,000

$944,200,400

$993,632,000

$228,967,600

Table 7:

CSI Incentives Budget by Utility Territory and Customer Sector

($ Millions)

With regard to Table 7 above, the $40 million increase to the CSI incentive budget is allocated between the three CSI utility territories on the same percentage basis as the original CSI budget was allocated between the utilities in D.06-12-033. (See D.06-12-033, Appendix A, Table 2.)  In addition, Table 7 indicates a residential and non-residential allocation of the total incentive budget for each utility. The additional $40 million is allocated to the non-residential customer sector because it is primarily needed to cover PBI payments. Nevertheless, Table 7 establishes a specific residential budget allocation for each utility to preserve our requirement, originally adopted in D.06-08-028, that one third of the total MWs in each incentive step level be reserved for residential solar applicants. (See D.06-08-028 at 99.) We emphasize that our goal is to preserve funds so that one-third of the MWs installed under the general market CSI program come from residential systems, and it should be noted that less than one-third of the total budget is needed to meet this goal. This new allocation of budget dollars between residential and non-residential applicants should ensure that budget funds are preserved to allow installation of 577.5 MWs of residential solar energy systems, which is one-third of the 1750 MW goal for the general market CSI program. (See D.06-12-033, Appendix B, Table 12.) At a future point, if the PAs see the need to modify the non-residential and residential budget allocations in this decision, they may file a petition to modify this decision specifying the reasons they believe such a budget reallocation is warranted.

We decline to adopt the proposal made by various parties to allow the PAs the discretion to shift administrative funds within the three subcategories of administration. The Commission has previously adopted specific CSI administrative budgets based on its determination regarding program priorities and the anticipated budgetary needs to achieve those objectives. It is appropriate for the Commission to determine how to modify these CSI budgets in light of the projected budgetary shortfall. Recognizing the continued uncertainty of the cash flow demands on incentive payments, we will, however, allow the assigned Commissioner, after appropriate notice to the parties and an opportunity for comment, to shift program administrative budget dollars between program administration subcategories and/or from program administration activities to the incentive budget, but not vice versa.

We also disagree with Solar Alliance's arguments that the Commission can augment the total CSI budget with the interest accumulated on previously collected funds. The current statute prohibits us from doing so because Pub. Util. Code § 2851(e)(1) specifies that the total cost for the portion of the CSI program supported by the customers of SDG&E, SCE, and PG&E shall not exceed $2.1668 billion. Therefore, the statute caps total program spending. Any interest earned and spent counts toward the total spending cap, and thus, can only serve to reduce future collections under the program, not expand the overall budget.

13 The administrative budget includes funding for evaluation, marketing and outreach, and general administrative functions related to the general market program.

14 The administration budget of $169.71 does not include administrative costs for low income programs, RD&D, and solar water heating pilot program. Administrative costs for those programs are incorporated into their total budgets, which shall not exceed the figures in this table.

15 This table modifies Table 1 of D.06-12-033 (at 28) and Tables 2 and 3 of Appendix A of D.06-12-033.

16 Row 7 is based on a general market CSI M&O interim budget of $500,000 per year per PA, as set forth in D.07-05-047, and does not adhere to the spending allocations of 43.7%, 46%, and 10.3% used for the rest of the CSI budget in this table. Adjustments to the general market CSI M&O budget will be addressed in R.10-05-004, and allocations may need to be adjusted downward, particularly for SDG&E.

17 The SWHPP in San Diego will be paid for exclusively by San Diego ratepayers.

18 The totals in Row 15 do not match the totals adopted in D.06-12-033 (Appendix A, Table 2), and therefore do not match the revenue requirements being collected by PG&E, SCE, and SDG&E as adopted in Table 3 of D.10-04-017. This minor discrepancy will be addressed in R.10-05-004 as soon as possible.

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