CPUC Proposes ?CA Solar Initiative,? Higher Returns for Utilities

By Published On: November 18, 2005

An extra $300 million would be added next year to existing funding for photovoltaics and other solar power technologies under a California Public Utilities Commission proposed decision. Another tentative ruling would raise utility rates of return on investment. The proposed funding increase for solar power projects is considered the first step in a “more elaborate program” for solar electricity and solar hot water incentives, according to administrative law judge Kim Malcolm. Her tentative decision released November 15 would set the subsidy at $2.80/watt for capacity through the commission’s self-generation incentive program. Qualifying solar technologies now receive from $3.50/watt. Malcolm’s ruling would also consolidate the commercial and residential incentives into one program by June 2006?allowing the program to reach beyond its current parameters, which limit it to commercial installations. The proposal takes its cue from the failed Million Solar Roofs bill, SB 1. That bill would have funded new installations with a total subsidy of between $1.1 billion and $1.8 billion over 10 years. This proposed decision does not specify a total subsidy amount; instead, it defers a total budget to the ?more elaborate? incentive program it invokes as a secondary process. This year, the incentive program was $42 million, according to the commission, with another $200 million worth of projects on the waiting list. Malcolm’s proposed decision could be voted out by the full commission before the end of the year. Another major proposed decision released November 14 would raise rates of return on utility investments. Stating that “utilities are facing increased interest risk,” the proposal by administrative law judge Michael Galvin would raise Pacific Gas & Electric’s return on equity to 11.35 percent, Southern California Edison?s to 11.71 percent, and San Diego Gas & Electric’s to 10.78 percent. Currently, the utilities are allowed 11.22 percent, 11.4 percent, and 10.38 percent, respectively.

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