Peevey Grilled on Solar Initiative's Parameters

California Public Utilities Commission president Mike Peevey was taken to task January 17 for the current lack of safeguards in the commission's just-approved solar initiative. A week earlier, the commission voted to provide $3.2 billion in subsidies for solar power. "We simply have 3,000 MW of capacity, which does not bear any resemblance to 3,000 MW of solar power," warned Assemblymember Lloyd Levine (D-Van Nuys), chair of the Assembly Utilities and Commerce Committee. During the committee hearing, Levine reiterated concerns he had raised prior to the measure's January 12 passage (Circuit, Jan. 13, 2006). Those include the regulatory version of the Million Solar Roofs bill's lack of a cost cap and performance-based standards. He also criticized the program for not prescribing a set annual drop in the subsidy, which is now $2.80/watt and expected to decrease 10 percent a year. Those omissions, according to Levine, could cause the program to become an expensive boondoggle. "Admittedly it is a bold initiative," Peevey responded. "We have a lot of work to do to ensure the initiative is up and running within cost constraints and hits the target we seek of 3,000 MW in 10 years." Peevey acknowledged that the CPUC could face pressures to pay out more than $3.2 billion in subsidies in future years. But, he noted, regulators are committed to implementing performance-based standards for the subsidies earmarked for a wide range of large and small solar technologies following a round of workshops. Peevey said the majority of commissioners agreed to extend the program to public power agency customers that receive gas from private utilities to expand the reach of the solar initiative. Complaints about cost impacts for investor-owned utilities' ratepayers were no surprise. And he pointed out that state regulators' authority in the area is limited because they do not have jurisdiction over munis. Peevey also told the committee that direct access was frozen until 2011, when the Department of Water Resources bond charges arising from the energy crisis power contracts end. However, he said that the commission could reinstate contracts between large consumers and nonutility power providers if the DWR contracts were assigned to the investor-owned utilities. Peevey noted that would be very controversial and have a negative effect on utilities' debt-to-equity ratios - a sensitive topic - potentially increasing their borrowing costs.

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Peevey Grilled on Solar Initiative’s Parameters

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