XX. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Kim Malcolm is the assigned ALJ in this proceeding.
Findings of Fact
1. Development of solar technologies is consistent with state policy and will provide California with a clean and reliable source of disbursed energy. Because the industry and related markets are still not well-developed, an incentive payment program, such as the one envisioned by SB 1, the Governor and the staff report attached in Appendix A, will benefit California.
2. The existing CEC and Commission solar incentive programs, the ERP and the SGIP, are similar except that they provide incentives to different-sized projects and are funded by different utility rate components.
3. There is no reason to continue the implementation of all or part of the solar incentives in the SGIP if the Commission adopts a CSI program.
4. A 10-year commitment by the state to provide incentives for solar installations may provide a signal to manufacturers and other industry participants that encourages innovation and development.
5. All solar energy technologies have the potential to reduce demand for fossil fuels and investments in more traditional energy resources and provide environmental benefits.
6. SDREO has proposed a way to implement a solar water heating rebate program in our energy efficiency docket and has extensive experience administering the SGIP in the San Diego region.
7. Federal tax credits may affect solar energy investments that may obviate the need for a full CSI rebate for some projects. The record should be augmented to provide adequate information about the likely impact of federal tax credits on decisions to invest in solar projects.
8. Low-income customers are the least likely to be beneficiaries of the CSI program because they are least likely to make investments in solar projects and because solar technology appears to be less cost-effective than other energy resource options.
9. Performance-based incentives should motivate better investments in and maintenance of solar projects than capacity-based incentives, although the record in this proceeding should be developed to design a sensible performance-based incentive program.
10. The Commission's method for changing incentive levels under the SGIP has not been consistently responsive to changing markets.
11. The SGIP has consistently received more applications for rebates than there has been funding available at its previous incentive levels and at the 2005 level of $3.50 per watt.
12. Where the demand for rebates exceeds supply, it is reasonable to assume the incentive levels are higher than they need to be to motivate investment.
13. Application fees may reduce the number of project applications that are ultimately not pursued, and thereby reduce administrative costs and the waiting lists for project rebates.
14. Some projects may need smaller rebates or none if they are provided with financing at low cost or no cost. The record of this proceeding, however, does not yet provide adequate information about whether financing is needed and how a financing program should be designed.
15. Motivating solar investments in affordable housing and by low-income customers may require higher incentive payments than those adopted for other types of customers.
16. Energy efficiency improvements tend to be more cost-effective than solar installations. The record in this proceeding is not adequate to adopt a rule that would require energy efficiency retrofits as a condition of receiving solar incentive payments.
17. Making an energy efficiency audit a condition of receiving incentive payments for solar projects installed on existing buildings may motivate some energy efficiency improvements at those sites.
18. Additional metering requirements for solar installations may permit rate design that improves cost-effectiveness and appropriately recognizes the value of solar electricity production. The record in this proceeding does not permit the adoption of additional metering requirements at this time.
19. Education, marketing and outreach will improve the number and nature of solar investments in California.
20. Program evaluation and monitoring for the CSI program, including the pilot solar water heating program, should be overseen by the Commission staff and/or CEC staff. The utilities shall issue a request for proposal (RFP) for program evaluation consulting and should contract with consultants selected by the CEC and/or Commission staff, who will be responsible for all other contract decision-making and management.
21. The SGIP Working Group would not be an appropriate agent for overseeing the CSI.
22. The SGIP manual provides a reasonable foundation for articulating the rules and requirements of the CSI program.
23. RD&D may assist in tailoring the CSI to promote the development of a robust, self-sustaining solar industry.
Conclusions of Law
24. The Commission has no authority to delegate program decision-making to the CEC.
25. The CSI should provide incentives to all types and sizes of qualifying solar installations. The CSI program should be separate from the SGIP and all solar elements of the existing SGIP should be incorporated into the CSI.
26. The CSI should offer incentives to any solar technology with a capacity rating of less than 5 MW. Solar water heating incentives should be provided only as part of a closely monitored pilot program as set forth herein.
27. SDG&E should be ordered to invite SDREO to administer a pilot program providing rebates for investments in solar water heating in SDG&E's territory, as set forth herein.
28. Allocation of CSI program costs should be decided in ratemaking proceedings that resolve cost allocation issues.
29. Initial CSI incentive levels for solar PV and concentrated solar should be set at $2.80 per watt in 2006, and should be scheduled to be reduced every 12 months or when certain MW targets are met, consistent with the recommendations in Appendix A.
30. The ALJ, in consultation with the Assigned Commissioner and staff, should have the authority to modify incentive payments by up to 10% a year and to bifurcate rebate levels according to project size and type following a showing by CEC and/or Commission staff to justify such changes, as set forth herein.
31. In cases where funding is or would be exhausted before the end of the funding cycle and following consultation with the CEC and Commission staff, the ALJ, in consultation with the Assigned Commissioner, should have the authority to order the utilities to fund the CSI in the current period with up to 15% of the budget allocated to the subsequent funding period.
32. To motivate solar investments by low-income customers and affordable housing projects, 10% of the annual funding should be set aside for their use. The Commission should also consider augmented incentives for such projects.
33. Incentive payments for solar installations in new structures should be contingent on the builder having participated in utility new construction programs. The Commission should also consider augmented incentives for structures with energy efficiency metrics that exceed levels for the basic program, to be determined later in this proceeding.
34. Incentive payments for solar installations in existing structures should be contingent on the completion of an energy efficiency audit.
35. The Commission staff and the CEC staff should oversee the development of a CSI program manual that is based on the SGIP manual with the program modifications we adopt herein.
36. The assigned ALJ and the staff of the Commission and the CEC should work cooperatively to develop a record on the outstanding program issues identified in Appendix A.
37. The Commission should allocate up to 5% of total annual program budgets to RD&D.
INTERIM ORDER
IT IS ORDERED that:
38. The staff report attached as Appendix A to this decision is adopted as set forth herein.
39. Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas), and Southern California Edison Company (SCE) shall implement the program described in the staff report and adopted herein.
40. The assigned administrative law judge, in consultation with the Assigned Commissioner, shall proceed to develop a record and propose resolution of all outstanding issues identified in the staff report in Appendix A.
41. PG&E, SCE, SDG&E, and SoCalGas shall allocate the funds adopted herein to the California Solar Initiative and collect those funds in distribution rates in appropriate ratemaking proceedings.
This order is effective today.
Dated , at San Francisco, California.
Peevey Malcolm Agenda Dec. Appendix A
