MP1/KLM/avs 6/14/2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding Policies, Procedures and Incentives for Distributed Generation and Distributed Energy Resources.

Rulemaking 04-03-017 (Filed March 16, 2004)

ASSIGNED COMMISSIONER AND ADMINISTRATIVE LAW JUDGE'S RULING SEEKING COMMENT ON STAFF SOLAR REPORT

The Governor and Senate Bill 1 have proposed to promote residential and commercial solar installations in California and have stated a goal to install one million solar systems or an equivalent of 3,000 megawatts of solar capacity by 2017. These objectives complement those of this Commission and the California Energy Commission (CEC) to improve electric system reliability and reduce greenhouse gas emissions.

To explore ways to promote an expanded solar program, the Commission issued two rulings in this proceeding soliciting ideas regarding program design, funding levels and sources, and an implementation schedule. The Commission directed CPUC and CEC staff to "draft a joint report to the Commission on all related issues that will take into account the parties' comments."

The CPUC and CEC staff has developed an analysis of key issues related to implementing what the staff is calling the California Solar Initiative (CSI). In summary, their report proposes to consolidate existing and anticipated residential and commercial solar incentives into one program by June 2006. Eligible technologies would include photovoltaics and concentrated solar power up to 1 Megawatt, and solar water heaters. The report proposes that initially, Pacific Gas and Electric Company, Southern California Edison Company, and Southern California Gas Company, and the San Diego Regional Energy Office (SDREO) would administer the CSI. The program would be funded through 2016 using gas and electric distribution rates. Tariff and metering requirements would be coordinated with the CPUC's demand response and distributed generation proceedings.

This ruling solicits the parties' comments on the staff's report, attached to this ruling. After receiving those comments, the assigned Administrative Law Judge will work with the assigned Commissioner to draft a proposed decision for the full Commission's consideration.

IT IS RULED that the parties to this proceeding may comment on the attached staff report proposing ways to implement the California Solar Initiative. Opening comments must be filed no later than July 1, 2005. Reply comments must be filed no later than July 14, 2005.

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

/s/ Michael R. Peevey		Kim Malcolm
Michael R. Peevey Assigned Commissioner		Kim Malcolm Administrative Law Judge

Attachment 1

California Energy Commission Renewable Energy Program

California Public Utilities Commission Energy Division

Joint Staff Recommendations To Implement

Governor Schwarzenegger's One Million Solar Roofs Program

June 14, 2005

CPUC AND CEC JOINT STAFF PROPOSAL

TO IMPLEMENT A CALIFORNIA SOLAR INITIATIVE

Introduction and Purpose

Governor Schwarzenegger and legislators propose various mechanisms to aggressively promote residential and commercial solar installations in California. The Governor's proposal and Senate Bill 1 seek to install one million solar systems or an equivalent of 3,000 megawatts of solar capacity, by 2017.

To explore ways to promote the Governor's objectives, two assigned commissioner rulings issued in Rulemaking (R) 04-03-017 on November 29, 2004 and March 7, 2005 respectively, solicited ideas regarding program design, funding levels and sources, and an implementation schedule; and requested CPUC and CEC staff to "draft a joint report to the Commission on all related issues that will take into account the parties' comments."

The CPUC and CEC staff (Joint Staff) developed an analysis of key issues related to implementing what we call the California Solar Initiative (CSI). We propose to:

· consolidate residential and commercial solar incentives into one program, a "one-stop-solar-shop," by June 2006.

· include photovoltaics, solar-thermal electric, and solar hot water heaters as eligible technologies, installed to offset customer load on site.

· initially continue a size limit on incentives for electricity-generating installations of up to 1 MW.

· Initially continue and consolidate day-to-day administration of the program through Pacific Gas & Electric Company (PG&E), Southern California Edison Company (SCE), Southern California Gas Company (SoCalGas), and the San Diego Regional Energy Office (SDREO).

· Fund the program through 2016 via gas and electric distribution rates. Tariff and metering requirements will be coordinated with the CPUC's demand response and distributed generation proceedings.

We also encourage publicly-owned utility districts (PUDs) to develop a similar program for non-IOU customers and to coordinate their efforts with our proposed program to create a statewide program, as much as possible.