Jul 26 - Contra Costa Times (Walnut Creek, Calif.)



The California Public Utilities Commission has stunned public officials and the solar industry by suspending lucrative rebates to school districts, cities and other government agencies that install solar panels on public buildings.

The ruling, which also affects nonprofit groups, was disclosed late July 9 and is reverberating through the state. Commission officials said the suspension is temporary while the agency decides how to deal with its rapidly depleting solar budget, but some public officials said the delay could scuttle plans to install panels.

"That's going to kill us," said Bill Savidge, engineering director for the West Contra Costa Unified School District, which is preparing to install solar panels on two campuses. "Changing the rules in the middle of the game is just crazy."

The commission's decision put on hold the incentives _ which stretch into the millions for larger projects _ while it considers lowering rebates for tax-exempt organizations. Far more of those groups have applied for the rebates than had been predicted before the California Solar Initiative started in 2007, the ruling noted.

 The commission also suspended rebates for any project over 30 kilowatts, including those on businesses.

The initiative's popularity has eaten away at the $1.7 billion set aside for rebates much more quickly than was planned, said Molly Tirpak Sterkel, the commission's supervisor for the program. The agency needs to slow down its spending so the state can reach its goal of installing 1,750 megawatts of capacity by 2016, she said.

"Nobody wants lower incentives," she said. "But we also don't want to run out of money before we reach our megawatt goal."

The suspension, which does not affect residential or commercial projects, will last up to three months while the commission collects comments on the proposed rebate reductions. Some have pledged to use the time to try to change commissioners' minds on the issue.

"The worst thing we can do is have agencies delay (solar projects)," said Sara Birmingham, a policy director for the Solar Alliance, a trade group. "I do understand why the PUC needs to take this step. But we're hoping we can come up with some creative ideas."

Tax-exempt groups have enjoyed significantly higher rebates than others since the initiative started, in part because they are unable to take advantage of federal tax credits. But many of those government and nonprofit agencies have turned to private companies to finance the projects, and those companies have been able to use the tax credits, Tirpak Sterkel said.

The state knew from the beginning that it would be difficult to predict the solar initiative's popularity, said Steve Weissman, a UC Berkeley law professor and former PUC administrative law judge. This year's changes will be an early test for the program, he said.

"You can read this ruling as good news in that it's a logical response to enthusiasm for the program," Weissman said. "But you wonder what's going to happen (to solar installations) when the incentives disappear."

The suspension and, potentially, lower rebates also will test public agencies and solar companies.

California law exempts energy projects from bidding requirements, allowing cities, counties and schools to sign multimillion-dollar contracts with companies without shopping for the best price. The California Solar Incentive reforms should prompt more agencies to seek bids, Weissman said.

"It's easy to imagine that there are a number of entities that will be disappointed," he said. "But it will give them a chance to go back to the bargaining table and get a better deal (on installation contracts)."

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(c) 2010, Contra Costa Times (Walnut Creek, Calif.).

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