The CPUC Self-Generation Incentive Program

In response to the energy crisis, the Legislature adopted AB 970 (2000), which directed the CPUC to develop an incentive program for super clean and renewable distributed generation. AB 1685 (2004) extended the Self Generation Incentive Program (SGIP) through 2007. The Commission adopted an annual statewide budget of $125 million through 2007, allocated equally among three program levels.

· Level 1: Solar, wind, renewable fuel cells greater than 30 KW.

· Level 2: Fuel cells

· Level 3: Microturbines, gas turbines, internal combustion engines

Today, SGIP solar incentives are $3.50 per watt, and are scheduled to decline to $3.00/watt on January 1, 2006. SGIP program costs are recovered through the gas and electric distribution rates of Pacific Gas and Electric, Southern California Edison, Southern California Gas Company, and San Diego Gas and Electric, proportionate to annual sales revenues. PG&E, SCE, and SoCalGas administer the SGIP in their respective service territories; the San Diego Regional Energy Office is the program administrator for SDG&E. A Working Group comprised of the program administrators and CPUC and CEC staff oversees program implementation to ensure consistent treatment statewide.

As with the CEC's ERP, the majority of SGIP rebates are paid to solar projects. Similarly, funds have been transferred several times from other program budget areas to fund solar projects. A total of about $400 million was paid or reserved for PV systems from 2001 to 2004 with most of the participation in the SGIP occurring in 2003 and 2004. The program currently has a waiting list and is closed to new applications.

By the end of 2004, the SGIP was oversubscribed, and PG&E and SDREO created waiting lists. When the SGIP began accepting new applications at $3.50/watt in February 2005, nearly all applicants on the waiting lists chose to accept $3.50/watt instead of waiting an indeterminate period for the $4.50/watt for which they had originally applied. Reducing the incentive level did not deter projects from moving forward. By March 2005, the SGIP was again fully subscribed, receiving applications roughly equivalent to 10 years of the allocated budget. SGIP incentives for other technologies are not oversubscribed, and participation in the ERP remains robust, even as incentives are reduced.

Table 1 shows a simple comparison of system prices for commercial projects participating in the ERP and SGIP from 2001 through 2004. The median price for systems in the ERP (0 to 30 kW) decreases as system sizes increase. Median system costs for SGIP-funded projects between 30kW and 45kW are $9.00, and then decrease to $7.63 for projects 500kW to 1MW. The number of commercial projects participating in the ERP increased even as rebates declined from $4.50 per Watt to $3.00 per Watt.

Table 1: PV System Prices for Systems Completed And Reserved

2001 to 2004

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CERTIFICATE OF SERVICE

I hereby certify that I have this day served a copy of Assigned Commissioner and Administrative Law Judge's Ruling Seeking Comment on Staff Solar Report by using the following service:

E-Mail Service: sending the entire document as an attachment to all known parties of record who have provided electronic mail addresses.

U.S. Mail Service: mailing by first-class mail with postage prepaid to all known parties of record who did not provide electronic mail addresses.

Dated June 14, 2005, at San Francisco, California.

/s/ Antonina V. Swansen

Antonina V. Swansen

NOTICE

Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.