BILL NUMBER: SB 585	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 1, 2011
	PASSED THE ASSEMBLY  AUGUST 25, 2011
	AMENDED IN ASSEMBLY  AUGUST 18, 2011
	AMENDED IN ASSEMBLY  JULY 5, 2011
	AMENDED IN SENATE  MAY 31, 2011
	AMENDED IN SENATE  MARCH 29, 2011

INTRODUCED BY   Senator Kehoe

                        FEBRUARY 17, 2011

   An act to amend Section 2851 of, and to add Section 2851.1 to, the
Public Utilities Code, relating to solar energy, and declaring the
urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 585, Kehoe. Energy: solar energy systems: funding.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations. Decisions of the PUC adopted the California Solar
Initiative. Existing law requires the PUC, in implementing the
California Solar Initiative, to ensure that the total cost over the
duration of the program does not exceed $3,350,800,000, and imposes
monetary limits on programs funded by charges collected from
customers of the state's 3 largest electrical corporations and on
programs adopted, implemented, and financed by charges collected by
local publicly owned electrical utilities.
   This bill would increase the cost limit to $3,550,800,000, and
make a corresponding increase in a monetary limit imposed on programs
funded by charges collected from customers of the state's 3 largest
electrical corporations. The bill would require the commission,
before collecting additional ratepayer funds to fund certain program
shortfalls, to first allocate interest accumulated from customer
collections and, for the remainder of the shortfall, to increase
collections from customers of the state's 3 largest electrical
corporations for specified programs. The bill, except as specified,
would set the discount rate for interest at 4%. The bill would
require the commission, within 90 days of the enactment of the bill,
to establish and impose project cost caps for residential and
nonresidential projects under the California Solar Initiative, based
on national and state installed cost data.
   This bill would declare that it is to take effect immediately as
an urgency statute.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 2851 of the Public Utilities Code is amended to
read:
   2851.  (a) In implementing the California Solar Initiative, the
commission shall do all of the following:
   (1) The commission shall authorize the award of monetary
incentives for up to the first megawatt of alternating current
generated by solar energy systems that meet the eligibility criteria
established by the State Energy Resources Conservation and
Development Commission pursuant to Chapter 8.8 (commencing with
Section 25780) of Division 15 of the Public Resources Code. The
commission shall determine the eligibility of a solar energy system,
as defined in Section 25781 of the Public Resources Code, to receive
monetary incentives until the time the State Energy Resources
Conservation and Development Commission establishes eligibility
criteria pursuant to Section 25782. Monetary incentives shall not be
awarded for solar energy systems that do not meet the eligibility
criteria. The incentive level authorized by the commission shall
decline each year following implementation of the California Solar
Initiative, at a rate of no less than an average of 7 percent per
year, and shall be zero as of December 31, 2016. The commission shall
adopt and publish a schedule of declining incentive levels no less
than 30 days in advance of the first decline in incentive levels. The
commission may develop incentives based upon the output of
electricity from the system, provided those incentives are consistent
with the declining incentive levels of this paragraph and the
incentives apply to only the first megawatt of electricity generated
by the system.
   (2) The commission shall adopt a performance-based incentive
program so that by January 1, 2008, 100 percent of incentives for
solar energy systems of 100 kilowatts or greater and at least 50
percent of incentives for solar energy systems of 30 kilowatts or
greater are earned based on the actual electrical output of the solar
energy systems. The commission shall encourage, and may require,
performance-based incentives for solar energy systems of less than 30
kilowatts. Performance-based incentives shall decline at a rate of
no less than an average of 7 percent per year. In developing the
performance-based incentives, the commission may:
   (A) Apply performance-based incentives only to customer classes
designated by the commission.
   (B) Design the performance-based incentives so that customers may
receive a higher level of incentives than under incentives based on
installed electrical capacity.
   (C) Develop financing options that help offset the installation
costs of the solar energy system, provided that this financing is
ultimately repaid in full by the consumer or through the application
of the performance-based rebates.
   (3) By January 1, 2008, the commission, in consultation with the
State Energy Resources Conservation and Development Commission, shall
require reasonable and cost-effective energy efficiency improvements
in existing buildings as a condition of providing incentives for
eligible solar energy systems, with appropriate exemptions or
limitations to accommodate the limited financial resources of
low-income residential housing.
   (4) Notwithstanding subdivision (g) of Section 2827, the
commission may develop a time-variant tariff that creates the maximum
incentive for ratepayers to install solar energy systems so that the
system's peak electricity production coincides with California's
peak electricity demands and that ensures that ratepayers receive due
value for their contribution to the purchase of solar energy systems
and customers with solar energy systems continue to have an
incentive to use electricity efficiently. In developing the
time-variant tariff, the commission may exclude customers
participating in the tariff from the rate cap for residential
customers for existing baseline quantities or usage by those
customers of up to 130 percent of existing baseline quantities, as
required by Section 80110 of the Water Code. Nothing in this
paragraph authorizes the commission to require time-variant pricing
for ratepayers without a solar energy system.
   (b) Notwithstanding subdivision (a), in implementing the
California Solar Initiative, the commission may authorize the award
of monetary incentives for solar thermal and solar water heating
devices, in a total amount up to one hundred million eight hundred
thousand dollars ($100,800,000).
   (c) (1) In implementing the California Solar Initiative, the
commission shall not allocate more than fifty million dollars
($50,000,000) to research, development, and demonstration that
explores solar technologies and other distributed generation
technologies that employ or could employ solar energy for generation
or storage of electricity or to offset natural gas usage. Any program
that allocates additional moneys to research, development, and
demonstration shall be developed in collaboration with the Energy
Commission to ensure there is no duplication of efforts, and adopted
by the commission through a rulemaking or other appropriate public
proceeding. Any grant awarded by the commission for research,
development, and demonstration shall be approved by the full
commission at a public meeting. This subdivision does not prohibit
the commission from continuing to allocate moneys to research,
development, and demonstration pursuant to the self-generation
incentive program for distributed generation resources originally
established pursuant to Chapter 329 of the Statutes of 2000, as
modified pursuant to Section 379.6.
   (2) The Legislature finds and declares that a program that
provides a stable source of monetary incentives for eligible solar
energy systems will encourage private investment sufficient to make
solar technologies cost effective.
   (3) On or before June 30, 2009, and by June 30th of every year
thereafter, the commission shall submit to the Legislature an
assessment of the success of the California Solar Initiative program.
That assessment shall include the number of residential and
commercial sites that have installed solar thermal devices for which
an award was made pursuant to subdivision (b) and the dollar value of
the award, the number of residential and commercial sites that have
installed solar energy systems, the electrical generating capacity of
the installed solar energy systems, the cost of the program, total
electrical system benefits, including the effect on electrical
service rates, environmental benefits, how the program affects the
operation and reliability of the electrical grid, how the program has
affected peak demand for electricity, the progress made toward
reaching the goals of the program, whether the program is on schedule
to meet the program goals, and recommendations for improving the
program to meet its goals. If the commission allocates additional
moneys to research, development, and demonstration that explores
solar technologies and other distributed generation technologies
pursuant to paragraph (1), the commission shall include in the
assessment submitted to the Legislature, a description of the
program, a summary of each award made or project funded pursuant to
the program, including the intended purposes to be achieved by the
particular award or project, and the results of each award or
project.
   (d) (1) The commission shall not impose any charge upon the
consumption of natural gas, or upon natural gas ratepayers, to fund
the California Solar Initiative.
   (2) Notwithstanding any other provision of law, any charge imposed
to fund the program adopted and implemented pursuant to this section
shall be imposed upon all customers not participating in the
California Alternate Rates for Energy (CARE) or family electric rate
assistance (FERA) programs, including those residential customers
subject to the rate cap required by Section 80110 of the Water Code
for existing baseline quantities or usage up to 130 percent of
existing baseline quantities of electricity.
   (3) The costs of the program adopted and implemented pursuant to
this section may not be recovered from customers participating in the
California Alternate Rates for Energy or CARE program established
pursuant to Section 739.1, except to the extent that program costs
are recovered out of the nonbypassable system benefits charge
authorized pursuant to Section 399.8.
   (e) In implementing the California Solar Initiative, the
commission shall ensure that the total cost over the duration of the
program does not exceed three billion five hundred fifty million
eight hundred thousand dollars ($3,550,800,000). The financial
components of the California Solar Initiative shall consist of the
following:
   (1) Programs under the supervision of the commission funded by
charges collected from customers of San Diego Gas and Electric
Company, Southern California Edison Company, and Pacific Gas and
Electric Company. The total cost over the duration of these programs
shall not exceed two billion three hundred sixty-six million eight
hundred thousand dollars ($2,366,800,000) and includes moneys
collected directly into a tracking account for support of the
California Solar Initiative and moneys collected into other accounts
that are used to further the goals of the California Solar
Initiative.
   (2) Programs adopted, implemented, and financed in the amount of
seven hundred eighty-four million dollars ($784,000,000), by charges
collected by local publicly owned electric utilities pursuant to
Section 387.5. Nothing in this subdivision shall give the commission
power and jurisdiction with respect to a local publicly owned
electric utility or its customers.
   (3) Programs for the installation of solar energy systems on new
construction, administered by the State Energy Resources Conservation
and Development Commission pursuant to Chapter 8.6 (commencing with
Section 25740) of Division 15 of the Public Resources Code, and
funded by nonbypassable charges in the amount of four hundred million
dollars ($400,000,000), collected from customers of San Diego Gas
and Electric Company, Southern California Edison Company, and Pacific
Gas and Electric Company pursuant to Article 15 (commencing with
Section 399).
  SEC. 2.  Section 2851.1 is added to the Public Utilities Code, to
read:
   2851.1.  (a) As used in this section,"discount rate" means a
financial mechanism that provides a given amount of interest as an
offset to the loss of the time value of money on solar projects that
receive performance-based incentives under Section 2851.
   (b) Before collecting additional ratepayer funds to fund program
shortfalls identified for incentive step levels 8, 9, and 10 for
nonresidential solar photovoltaic systems, the commission shall first
allocate interest accumulated from customer collections and, for the
remainder of the shortfall, increase collections from customers of
San Diego Gas and Electric Company, Southern California Edison
Company, and Pacific Gas and Electric Company for programs described
in paragraph (1) of subdivision (e) of Section 2851.
   (c) The discount rate shall be set at 4 percent, unless the
commission determines the rate should be reduced.
  SEC. 3.  Within 90 days of the enactment of this act, the Public
Utilities Commission shall establish and impose project cost caps for
residential and nonresidential projects under the California Solar
Initiative, based on national and state installed cost data.
  SEC. 4.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to make additional funding available as soon as possible
for the nonresidential incentives provided under the California Solar
Initiative, which needs the funds before 2012 to remain solvent, it
is necessary for this act to take effect immediately.