Increased Electric Sales No Match for Solar Roofs Requirement

With the bipartisan Solar Roofs Initiative set to start working its way through the Legislature this March, the public-goods surcharge on electric bills as currently collected would have to be significantly reallocated?or increased?to cover the subsidies for solar installations. The amount of funds collected for public-goods programs?assuming that a line item on ratepayers? bills will be used for deploying the solar initiative, a.k.a. ?Million Solar Systems??should increase with the amount of electricity being consumed. However, estimates for the 2004 rise in electricity sales are not evident. Despite record electricity use last year, the amount of money collected for public-goods funds appears to be about the same as in 2003. While peak demand exploded last year, when taken as an average, the increase in consumption totaled only 4 percent in the California Independent System Operator?s territory, according to early estimates. When the final numbers tabulating the public-purpose funds collected from customers arrive, that augmentation will be nowhere near enough to underwrite the Legislature?s working estimate of $100 million/year for 10 years to deploy the solar roofs initiative. The cost is uncertain, however. Pacific Gas & Electric, for instance, estimates that at current subsidy levels, it would cost about $500 million/year. Sources at the Legislature say they?re loath to add another charge on ratepayers? bills for solar deployment and are exploring the current surcharge as well as other potential pots of funds. If the governor?s ?State of the State? address is any indication, there will be no general tax levied for the program either?despite the governor?s personal endorsement of the plan. The vehicle for the Million Solar plan is expected to be SB 1, introduced late last year by Kevin Murray (D-Los Angeles) and John Campbell (R-Irvine). The official title is the Reliable Electric Service Investment Act. Although far from certain, it?s assumed that the act would use existing public-purpose program funds. Set up by deregulation legislation in 1996, the public-goods charge is no small sum on ratepayers? bills. For instance, on the electric portion of a 2004 Pacific Gas & Electric bill, the public-goods surcharge totaled about 3.5 percent for a residential baseline customer. Under current funding practices and administration, the solar initiative would consume one-third of the California Public Utilities Commission?s self-generation yearly program funds. Or, if funded through the California Energy Commission, it would take more than two-thirds of that agency?s renewables funds. Both commissions administer solar funds. The CEC attends to smaller residential systems under 30 kW; the CPUC caters to commercial and industrial systems larger than 30 kW. Funding the solar plan could also instigate jurisdictional battles between the two agencies. The Legislature is aware of the potential conflict and, according to one source, wants to ?head it off at the pass.? If there were a direct correlation between increased sales of electricity and the amount turned over to agencies for the renewables portion of the public-goods charge, then that would net less than a $1 million increase?or less than 1/100th of the basic funds expected to be necessary each year to underwrite the solar program. That amount assumes the 4 percent increase in sales noted by CAISO. The grid operator passes through about three-fourths of the state?s total electric consumption. Other municipal control areas have seen similar increases. Accurate amounts for public-purpose programs, such as renewables, reflecting increases or decreases in electric sales, are difficult to pin down. Utilities collect the money and pass it through to agencies on a current-year basis, according to the commissions. However, those who work with utilities on those funds say there is no coordination between utilities, and the funds come through on different schedules with varying underlying data. For the self-generation incentive fund at the CPUC that could be used to subsidize the solar initiative, the CPUC basically doubled the pot of money for 2005 from last year?to $300 million. Other than that fund, the CPUC controls only efficiency programs and low-income assistance out of the public-goods charge levied on ratepayers. On November 29, the commission started soliciting ideas through a rulemaking to find whether its existing process is sufficient for subsidizing the solar rooftops plan. The commission estimates that would translate into 3,000 MW of new photovoltaics in the state. The CEC is known for its support of photovoltaic and other solar installations over the years. Those subsidies?also funded through the public-goods surcharge?are routinely passed through the agency?s renewables budget. In the 2003-04 renewables budget there was $137 million available. The agency expects $138 million in the 2004-05 fiscal year, according to spokesperson Percy Della. That pot of money, however, might not work for funding the solar program ?because it has a different set of guidelines and regulations for operations, which also includes existing and new renewable energy facilities,? according to CEC spokesperson Claudia Chandler. Still, language in SB 1 currently would have the funds passed through the CEC?s renewable resources trust account. Jim Hight also contributed to this report.

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Increased Electric Sales No Match for Solar Roofs Requirement

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