Million Solar Roofs Bill Faces Tough Future

By Published On: April 30, 2005

Both Democrats and Republicans on the Senate Energy, Utilities and Commerce Committee expressed strong skepticism about the cost and effectiveness of the proposed Million Solar Roofs bill and insisted that low-income utility customers be protected against its proposed electricity surcharge. A $15 per year average residential bill charge is the key stumbling block, with the issues of cost-effectiveness and photovoltaic ratings not far behind. ?I need to be convinced of the cost being justified,? said committee chair Senator Martha Escutia (D-Montebello) at the April 26 hearing. Escutia, along with The Utility Reform Network, insisted that low-income ratepayers not pay the bill?s proposed surcharge. Senator Dave Cox (R-Roseville) said the measure, SB 1, will cause the cost of electricity to go up in California. He asked for more ?specificity? in requirements for administering the $2.5 billion that bill supporters estimate will be needed to install enough photovoltaic panels over the next 13 years to generate 3,000 MW of power. To help reach the bill?s goal, builders of new housing projects would be required to offer ratepayer-subsidized solar panels to buyers on each new home beginning in 2010. ?I believe the cost savings will overcome the rate increases,? countered bill author Senator Kevin Murray (D-Los Angeles). Bill coauthor Senator John Campbell (R-Costa Mesa) said that solar panels will eliminate the need for more peaker plants in California, as well as saving ratepayers a total of about $1 billion over the next ten years. Escutia, however, voiced doubts that the program would ever meet its goal. ?You?re going to have to kick some major booty? in order to get the bill through because of cost-effectiveness concerns, she said. She demanded that the bill be amended to include a midterm review, which, if unsatisfactory, would end the program as early as 2012. After a contentious hearing that lasted more than two hours, the committee finally approved the bill, but only after Murray and Campbell pledged to develop major amendments before bringing SB 1 to the Senate Appropriations Committee. That committee must act on the bill by May 27. SB 1 sponsors agreed to develop amendments to:<ul><li>Shield low-income customers from the surcharges needed to finance the program.</li> <li>Mandate solar systems on low-income housing units.</li> <li>Make sure that photovoltaic panels meet output efficiency standards before qualifying for incentives under the program.</li> <li>Evaluate the success of the program midterm so that it can be terminated if it is not meeting expectations.</li> <li>Eliminate the state?s two existing solar incentive programs and replace them with the Million Solar Roofs program.</li> <li>Ensure that consumers are protected against fraudulent installers and that systems are installed only by full-fledged electrical contractors.</li></ul>In the month ahead, legislators will discuss the best way to define low-income ratepayers in crafting an exemption from the surcharge. Either customers using 130 percent or less of their electricity baseline or those under the California Alternate Rates for Energy (CARE) program would be exempt. Murray said that using 130 percent of baseline would exempt up to half of ratepayers from the surcharge. Matt Freedman, TURN attorney, argued that unless 130 percent of baseline is used, large numbers of low- and modest-income apartment dwellers will subsidize wealthier homeowners, yet receive no benefit. Using CARE program eligibility as a basis for defining low income includes customers with up to 175 percent of poverty-line income. Pacific Gas & Electric and Sempra, which both backed the bill, have 900,000 and 170,000 customers, respectively, enrolled in the CARE program. Southern California Edison, which opposed the measure, has 900,000 enrolled in CARE. The other major issue the committee insisted that the authors address is solar panels? effectiveness. Senator Debra Bowen (D-Redondo Beach), who voted against the measure, said that solar panels produce only a fraction of their rated capacity. She urged the bill?s authors to start off with more modest goals and ?ramp up? the program if studies show it is cost-effective. The California Building Industries Association opposed the bill on the same grounds. In other action, the panel approved SB 107, by Senator Joe Simitian (D-Palo Alto), amending the state?s renewables portfolio standard (RPS). The bill would advance the 20 percent RPS deadline to 2010. It would require the California Energy Commission to review the feasibility of meeting a 33 percent RPS by 2017. It also would require the commission to make recommendations on how to ?incentivize? the state?s municipal utilities to meet the RPS. The bill would require both investor-owned and municipal utilities to adopt strategies for efficient use of fossil fuels and to minimize carbon dioxide emissions. Because of ongoing controversy about how to structure a renewable energy credit trading market, Simitian voluntarily withdrew provisions dealing with the credits. However, because SDG&E faces transmission constraints and is likely to need credits to meet the RPS requirement, he pledged to try to work out compromise language on credit trading. An ?REC lite? program that would allow credit generation and trading solely within California might break the deadlock, suggested Steven Kelly, policy director for the Independent Energy Producers. The Western Governors? Association is working on a system to track and certify renewable power generation in the West as a basis for a potential regional trading market. Escutia voiced concern about trading based on her experience serving on the advisory committee for the South Coast Air Quality Management District?s pollution credit trading program. The price of air pollution credits in the district?which encompasses greater Los Angeles?went through the roof during the energy crisis.

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