California PUC approves $2.9B solar program

California PUC approves $2.9B solar program

Pacific Gas & Electric applauded the California Public Utilities Commission's adoption of the California Solar Initiative, which will provide close to $2.9 billion in incentives to develop 3,000 MW of solar energy for residential, commercial and other customers over the next decade.

The ambitious program, which aims to make the solar industry self-sustaining, largely mirrors Gov. Arnold Schwarzenegger's Million Solar Roofs' bill, S.B. 1, which failed in the Legislature last year. The PUC, which approved the plan on a split vote, will oversee all segments of the program except new residential installations, which the California Energy Commission will manage.

The plan "reflects a broad consensus … that this is the time for California to lead on solar," said PUC President Michael Peevey. The hope is that "solar will become a major part of California's electricity portfolio," he said.

"The California Solar Initiative is a bold step forward and the financial incentives will help California meet its energy needs with the goal of developing a solar industry that is self-supporting and economically sustainable," said PG&E in a statement.

The new program will offer performance-based incentives, which pay for power produced, rather than installed capacity, once details of these rebates are finalized. Ten percent of program funds will be set aside for low-income customers.

The solar initiative cannot change net metering caps, or require developers to install solar systems without legislative approval. It also cannot require municipal utilities to participate in the program.

Rachelle Chong, during her first day as PUC commissioner, cast the crucial vote on the five-member commission for the landmark measure, saying she had arrived in the "nick of time" to vote on the solar initiative.

Commissioner John Bohn recused himself from the vote, citing investments in Chevron and General Electric. Commissioner Geoffrey Brown voted against the measure, expressing many concerns about the cost to ratepayers.

Noting that the Legislature failed to enact S.B. 1, Brown said he is uncomfortable with the notion that the PUC is the "proper body to implement what is effectively a tax" on ratepayers.

California's ratepayers already face among the highest rates in the nation, noted Brown. It is unfair to require customers of investor-owned utilities to pay for the rebates used by muni customers, who still may take some services from IOUs, added Brown.

The estimated average cost to residential electric customers will be about $12 a year, and the average residential natural gas cost will be $1.40 per year, according to the PUC.

The total impact on monthly bills, however, is expected to be minimal because program costs will be largely offset by the expiration, at the end of 2007, of a surcharge on utility bills to repay rate reduction bonds authorized in 1996 for electric sector restructuring, said the PUC.

Schwarzenegger applauded the PUC's move. "Today is a great day for California. When I ran for office, I promised the people of California an affordable, reliable and more environmentally friendly energy supply. Today is a big step towards that goal, and I want to thank President Michael Peevey and the Public Utilities Commission for making a million solar roofs a reality in the years to come," said the governor.

Also at the meeting, commissioners sent several proposals to the Legislature. One proposal would increase the net metering cap from 0.5 % to 2.5%. Increasing the net metering cap is viewed as important to success of the Solar Initiative as it allows customers to get credit for excess power fed back to the grid.

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