California’s landmark solar energy initiative will derail if Congress fails to renew the critical federal investment tax credit for renewable energy projects this year, California Public Utilities Commissioners warned January 31. As Governor Arnold Schwarzenegger toured Solar Integrated Technologies in Los Angeles with Senator John McCain (R-AZ), CPUC president Michael Peevey blasted McCain for not voting to extend the renewable tax credit, which fell just one vote short of passage. “It would have been acted upon if Senator McCain had voted for it—it had 59 votes,” Peevey said. The CPUC lobbied California’s entire Congressional delegation last year to extend the tax credit, which is “high on (House Speaker Nancy) Pelosi’s agenda” this year, he claimed. Schwarzenegger touted McCain’s environmental record in endorsing his Presidential campaign, saying the Republican senator from Arizona believes that a strong economy can be achieved without sacrificing the environment. McCain is the only Republican Presidential candidate to place a high priority on addressing global warming. He co-authored comprehensive legislation with Senator Joseph Lieberman (I-CT) last year to establish a federal cap-and-trade program to curb greenhouse gas emissions. SB 1, the California Solar Initiative, established a statewide goal of 3,000 MW of new solar energy projects by 2016, with 1,940 MW in investor-owned utility territories under CPUC jurisdiction. The law’s overall goal is to foster a self-sustaining solar energy industry in California by 2016. In 2007, the CPUC received 7,541 applications for $558 million of initiative incentives to develop 208.6 MW of new solar energy capacity, predominantly larger non-residential projects, CPUC energy director Sean Gallagher reported. About one-third of these projects have been completed, adding nearly 18 MW of new solar capacity to the state’s generation resources. Solar energy demand is greatest in Pacific Gas & Electric’s service area because both PG&E’s rate structure and northern Californians are more pro-solar energy than the ratepayers in the two southern California utility territories, Gallagher said. Last year 106 MW of new solar capacity came online in PG&E’s area, compared with 82 MW in Southern California Edison’s, and 20.5 MW in San Diego Gas & Electric’s. “Despite our good intentions, much of this will go down the drain if the federal tax deduction program is not renewed when it ends the end of this year,” warned commissioner John Bohn. In other action, in a unanimous decision the CPUC amended the energy efficiency risk/reward incentive program it adopted in October to enable utilities to earn comparable profits from investments in energy efficiency as their supply side investments. The CPUC decision came a day before California’s investor-owned utilities were set to file their joint draft statewide energy efficiency action plan on February 1. However, just before press time, the three utilities asked if the plan’s release could be delayed until February 8. The revised decision will reward utilities for their investments in energy efficiency measures while eliminating the risk of having to repay any overpayments if they fail to achieve the CPUC’s minimum performance standards. To protect ratepayers from the risk of overpayments, the CPUC reduced interim payments to utilities from 70 percent to 65 percent of a total interim claim. The decision also requires utilities to rely on more up-to-date estimates of efficiency performance to more accurately reflect market conditions. Peevey touted the CPUC decision as “the first major effort in the United States to give utilities strong financial incentives for energy efficiency. This will significantly strengthen the motivation the utilities have to aggressively pursue energy efficiency.”
