Hearing on Public Goods Charge & the Renewable Resources Trust Fund

1. CPUC Responsibilities for Renewable and Energy Efficiency Resource Commitments by Investor-Owned Utilities and Ratepayers Hearing on Public Goods Charge & the Renewable Resources Trust Fund Senate Energy, Utilities and Communications Committee March 29, 2011 Jeanne Clinton, Climate Strategies Manager Molly Tirpak Sterkel, Distributed Generation Programs California Public Utilities Commission (CPUC) Energy Division

2. Cost Components of Electric Rates

3. Electric Public Goods Charge,asurcharge funding: Electric energy efficiency (EE) Public interest electric R&D (PIER) Gas Public Purpose Program, asurcharge supporting: Natural gas energy efficiency (EE) Public interest gas R&D (PIER) Funds collected through Electric Distribution component supports: Self-Generation Incentive Program California Solar Initiative Low Emission Vehicle Program Funds collected through Natural Gas Distribution component supports: Self-Generation Incentive Program California Solar Initiative Thermal program Electricity “Procurement” component (generation and purchased power components of electric rates): Renewable Portfolio Standard (RPS) electric resource commitments Electric Utilities Collect Program Funds through Various Surcharges, Procurement Expenditures, and Distribution Rates 3

4. Total Authorized 2010 Electric and Gas Revenue Collection for PG&E, SCE, SCG, and SDG&E Electric Energy Efficiency (EE): $ 256 million Natural Gas EE* $175 million Electricity Procurement EE $576 million Self-Generation Incentive Program (SGIP):** $ 83 million California Solar Initiative (CSI) electric:*** $ 217 million CSI Thermal natural gas:*** $ 31 million Renewable Power (Electricity Procurement): AMFnot specified; included in total electricity procurement collections Low Emission Vehicle Program: $ 22 million Electric R&D (PIER): $ 69 million Natural Gas R&D (PIER) $ 24 million * For FY 2011-12, Legislative action transfers $155 million to State General Fund for non-efficiency purposes ** Approximately 80% electric, 20% gas; 2011 is final year of authorized collections * ** 10-year average for 2007-2016 for CSI Electric; 8-year average for CSI Thermal 4

5. Investor-Owned Utility 2010-12 Energy Efficiency Program Commitmentsfor Combined Funding Sources 5

6. Renewable Projects Allocated “Above Market Funds” from $750 Million of PGC New Renewable Funds Returned from CEC (SEP) Account (2007-09)

7. RPS Procurement Process CPUC approves RPS procurement plans IOUs hold annual solicitation IOU rank bids pursuant to “least-cost, best-fit” methodology IOUs negotiate bids, execute contracts • Independent evaluator oversees solicitation, bid evaluation, and negotiations • Bilateral contracts (negotiated outside of a competitive solicitation) are also eligible Once the IOU executes contract, submits to the CPUC for approval

8. 1,702 MW of new capacity online since 2003* New 2010 capacity, by region * More projects – over 1,000 MW – have delivered renewable power since 2003 under short-term contracts. CPUC Energy Division generally does not credit the RPS program with having incented the development of these mostly-existing projects.

9. 2009 RPS Procurement by Fuel Type

10. Go Solar California campaign • SB 1 (Murray, 2006) and AB 1470 (Huffman, 2007) set broad solar goals for CA • 3,000 MW of new customer-owned solar DG – electric • A self-sustaining solar industry • 200,000 solar water heating systems – gas Note: The electric budgets are for 2007-2016, and the gas budgets are for 2010-2017. 10

11. CPUC’s California Solar Initiative (CSI) Budget • Program Components: • Various program subcomponents fund solar PV and solar thermal (including solar hot water) technologies from IOU electric and gas ratepayers • Low-income solar programs serve affordable housing Note: CPUC D.06-12-033, FOF 15, p. 28 established goal of the general market program as 1,750 MW. The CPUC decisions on MASH and SASH did not explicitly adopt a 95 MW per program goal; however, the CPUC did adopt a total CSI program goal of 1,940 MW in D.06-12-033. In addition, D.10-01-022 established the CSI Thermal Program pursuant to AB 1470 and SB 1. 11

12. CSI Program Incentives decline as demand grows:CPUC General Market Program has a goal of 1,750 MW PBI: Paid based on actual output over 5 years ¢/kWh $/watt EPBB: Paid upfront based on expected output using installation design characteristics • CSI has installed 500 MW of new solar PV since 2007. • CSI has an additional 400 MW of additional projects in the pipeline. • CSI program installs more MWs each year with less incentive funding. • Average $/watt paid has gone down each year • Incentives offered today are mostly in Step 8 at $0.35/watt. 12

13. Ratepayer Support as a Percent of System Costs • Average systems are down ~20%+ in 3 yrs (now cost $7.50 to $8.00/watt ). • CSI Rebate has reduced faster than system cost, and now covers just 4-5% of system cost, on average. • CSI provides other benefits besides rebate: consumer protection, warranty requirements, equipment and performance standards, data transparency. Ratepayer Support as % of System Costs ($/watt) Date: January 6, 2011

14. Self-Generation Incentive Program (SGIP) • SGIP provides incentives for non-solar Distributed Generation (DG) technologies. • Goals of SGIP • Reduce peak load demand (historical goal from inception in 2001) • Reduce greenhouse gas emissions (per SB 412 in 2009) • Budget • $83 Million program budget per year • $75 Million for incentives, $8 Million for program administration • Incentive budget split 50% for renewable and 50% for non-renewable • Budget allocated across IOUs as % of natural gas sales. • No new budget collection allowed after 12/31/2011 per SB 412. • SGIP Program authorized to operate through 2016. • Incentives Offered on a Capacity basis (not Performance) • Wind = $1.50/Watt • Fuel Cells = $2.50/Watt (+ $2.00/watt if using biogas) • Storage = $2.00/Watt • + 20% incentive adder for California Suppliers (per AB 2667, 2008) • Fuel Cells using biogas with a California Supplier = $5.00/watt 14

15. SGIP Program Data • SGIP Program has completed 1,320 self-generation projects (for 355 MW) • Program has an additional 169 pending projects (for 82 MW). 15 SGIP Program Data is shown as cumulative combined statewide totals (2001-2010), and it consist of PG&E and SCE data thru 11/1/2010, SDG&E (CCSE) data through 12/1/2010, and SCG data as of 12/15/2010.