The California Energy Commission and legislators are working he California Energy Commission and legislators are working to head off a potential crisis for the state's new solar initiative. Pacific Gas & Electric is about to hit its net-metering cap - yet it's reluctant to support raising the cap without getting a reduction in the amount it credits customers for solar power. At its March 1 meeting, the CEC adopted a resolution pressuring PG&E to "support legislation" to lift the net-metering ceiling to make way for more photovoltaic systems. According to commissioners, expanding net metering is crucial to the success of the state's solar initiative. Meanwhile, a bill is making rounds in the Legislature that could lift the utility's cap on an urgency basis. The Public Utilities Code does not prevent utilities from offering net metering for solar above their caps. Commissioner John Geesman urged PG&E to follow the example of San Diego Gas & Electric. SDG&E backed legislation to lift its solar net-metering cap from 0.5 percent to 1.5 percent of its energy needs. It's since become what he called the "leading market for solar" in the state. (Net-metering caps are expressed as a percentage of a utility's total need for electricity.) PG&E did not commit to supporting legislation to lift its individual 0.5 percent cap, which amounts to 91.2 MW of capacity. Instead, the utility deferred to the Legislature. "We believe that the Legislature put the cap in place for a reason," said Les Guliasi, PG&E director of regulatory relations, at the commission meeting. "I can't tell you what will happen if the Legislature doesn't raise the cap and we reach the cap." Meanwhile, Guliasi said PG&E will allow customers to continue to take advantage of net metering on new photovoltaic installations at least through the end of the current legislative session to avoid disruptions in the solar program. The company outlined its plan to continue net metering - even if it surpasses its cap or the plan to continue net metering - even if it surpasses its cap or the Legislature does not act - until as late as fall, in a March 1 advice letter to the California Public Utilities Commission. In a separate legislative move to prevent disrupting the solar initiative in PG&E's service territory, which covers more than half the state, Assemblymember Mark Leno (D-San Francisco) introduced a bill, AB 2993, on February 24. It would lift PG&E's net-metering cap to 200 MW upon enactment. The CPUC's solar initiative envisions 3,000 MW of new installations across the state. With PG&E's massive territory, the utility could host a significant portion of that amount. Thus, even the new proposed cap would be a fraction of what could be necessary. The bill would give temporary headroom for solar installations in PG&E territory until the Legislature can deal with the larger issue of lifting the net-metering cap statewide, said Bernadette del Chiaro, Environment California clean-energy advocate. Under net metering, utilities pay their customers for excess electricity produced by rooftop solar panels. The "net-metered" payments are considered essential to the economics of rooftop solar systems. "The long-term solution is to get the economics right through a rate design," said Guliasi. The CPUC could do so, he suggested. At issue is what it costs utilities to provide net metering. Today, utilities pay the retail rate for power produced by rooftop solar systems. PG&E maintains that the retail payments result in the vast majority of its customers, who do not have photovoltaic systems, subsidizing solar energy, said Paul Moreno, company spokesperson. "This is something the Legislature needs to look at," said Moreno. As solar energy is set to make a major leap under the state initiative, he said, those subsidies will become increasingly unfair if PG&E continues to pay the average retail rate of 13 cents\/kWh for electricity from the photovoltaic systems. Instead, he said, the company should pay the same amount it typically pays generators for power under a "gen-to-gen" rate, which is half the retail rate. If the Legislature agrees with the utility, it would adversely affect the economics of solar energy just when it has a chance to take off under the state's initiative, said Les Nelson, executive director of the California Solar Energy Industries Association. "They should pass net metering as it exists today and raise the cap for PG&E," said Nelson. If the cap is not lifted, it would shut down solar installations in PG&E's territory by early 2008, he said. Southern California Edison is nowhere near its solar cap, he added. The Energy Commission expects PG&E to exceed its 0.5 percent cap within a couple of months, considering installed solar systems and 52 MW of already approved solar incentive applications in its area. Once the latter systems are installed, PG&E will have 125 MW of net-metered photovoltaic capacity in its territory, said Gabriel Herrera, CEC attorney. Another 44 MW of incentive applications are pending, he said. They would bring the total net-metered solar capacity within PG&E's system to 169 MW. PG&E told the CPUC that it has 70 MW of systems installed on a net-metered basis and does not expect to exceed its cap until at least September. In other action, the commission officially ended a proceeding to license Mirant's proposed 360 MW Potrero 7 plant in San Francisco. The licensing proceeding began in 2000 but was suspended at the company's request in 2003. The last significant CEC action on the proposal was in 2002. Before the vote, environmental organizations and the city told the commission that other facilities being built in San Francisco have obviated the need for the proposed facility, which became bogged down in environmental issues. "The project is located in a community of color that has been disproportionately impacted by industry," said Jeanne Sol\u00e9, attorney for San Francisco. "We do respect and accept the decision of the commission," said Mike Carroll, a Latham & Watkins attorney representing Mirant. However, he said, the company still asserts that a Potrero project may be needed to maintain reliable electricity service in San Francisco. Mirant emerged from Chapter 11 bankruptcy protection on January 3, 2006.