Solar Homeowners Wary of Meager Incentives from Utilities

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On Thursday, December 16th, the California Public Utilities Commission (CPUC) was scheduled to vote on two provisions that will affect current and future solar energy projects in the Coachella Valley. That vote is still delayed, and apparently will remain so until the end of the month.

The CPUC is the regulatory arm that governs operations by California’s utilities, including electricity, natural gas, telecommunications, water, railroad and rail transit, and passenger transportation services.

The first provision – fixing feed-in tariff (FiT) rates, or the amount that solar homeowners can collect from their excess electricity, could have nationwide impact, if only for setting a payment standard. The second, a $6.9-million Palm Desert energy efficiency program, not so much so.

The CPUC is battling a Dec. 31, 2010 deadline, mandated by SB 32 in 2009, to set the rates at which California’s three largest investor-owned utilities purchase even small-scale solar energy.

The utilities in question are Pacific Gas & Electric (PG&E), Southern California Edison and San Diego Gas & Electric, and the rates have to be established in order to go into effect in 2011.

Prior to SB 32, California utilities did not have to pay FiTs, but could instead credit customer’s bills. Under SB 32, even the smallest systems are eligible, with an upper limit of 3 megawatts.

The problem is that SB 32, with its January 1, 2011 deadline, has never been implemented, which apparently provided the CPUC with unwritten permission to drag its feet on the issue until the very last minute. Now that the horses are at the starting gate, a decision must be made. Like most hasty decisions, it is likely to be bad.

That is, if the CPUC adopts PG&E’s solution as rumored – 5 cents an hour for off-peak generation, up to 8 cents per hour during peak usage – the FiT won’t be an incentive to do much of anything. This, even though the agency has been under a mandate since 2009 to develop a payment that benchmarks avoided costs and provides “environmental adders.”

We don’t think 5 cents is going to do it. Nor do we think restricting homeowners to smaller solar systems to prevent their earning more money is the right way to go. Therefore, we can only hope that the CPUC sees the light – sunlight, in this case – and provides incentives worthy of California’s position as solar power leader.

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