State Solar Power Proposal Gets OK from Regulators

By David R. Baker
The San Francisco Chronicle

Friday 13 January 2006

California energy regulators placed a $2.9 billion bet on solar power Thursday, backing a landmark plan that environmentalists hope will become a model for the nation.

The California Public Utilities Commission approved pouring money - drawn from a new charge on utility bills - into rebates for residents and businesses that install solar panels during the next 11 years. No state in the country currently spends more.

"Our hope is that solar will become a major part of California's energy portfolio," said commission President Michael Peevey. "This solar program simply offers one more alternative to Californians concerned about a clean energy future."

The move, long sought by Gov. Arnold Schwarzenegger, came with the fervent backing of environmentalists - and some opposition.

Commissioner Geoffrey Brown cast a lone dissenting vote against the program, saying it will raise already-high electric bills. He questioned whether the plan would prove cost-effective in the long run and said the price could swell to $9 billion if the state approves other, related solar measures. He also noted that many of the program's key details have not yet been hammered out.

"We have put our enthusiasm before our prudence," he said.

Other commissioners, however, argued that the plan will bring California much-needed electricity - about 3,000 megawatts, equal to the output of five or six power plants - without increasing carbon dioxide emissions. And because the power will be added one building at a time, it won't require new transmission lines.

"I understand the cost concerns of some, but very frankly, this is the time to be bold," Peevey said.

The plan also received a last-minute boost from the commission's newest member, whom Schwarzenegger appointed to the panel late Wednesday. Commissioner Rachelle Chong joined Peevey and Commissioner Dian Grueneich in approving the plan.

Commissioner John Bohn abstained, citing his investments in two companies that design solar power systems.

The timing of Chong's arrival spurred speculation among environmentalists that Schwarzenegger needed an extra vote to ensure the plan's passage. A commission spokeswoman, however, said the plan could have passed on just a 2-to-1 vote had Chong's seat been left unfilled. Chong, a former Federal Communications Commission member, also dismissed any link between her appointment and the vote.

"The two were not connected," she said. "But it happened to be fortuitous that I was sworn in 1 1/2 hours before the vote."

The program's backers hope the money will spur substantial growth in the state's solar power industry and, as a result, lower the costs of manufacturing, buying and installing solar panels. The industry has been hampered by solar technology's high cost, about $20,000 for an average home system.

The new program will give rebates of roughly $7,000 at first for a typical home system, with the size of the rebates decreasing about 10 percent per year.

Customers of the state's investor-owned utilities will provide the cash, paying an extra $1.12 on their monthly bills. That amount, too, will decline over time.

Many important aspects of the program, however, remain under discussion. The commission has not yet set the rules that will govern how people apply for and receive the rebates.

And because the commission only has authority over California's investor-owned utilities, new legislation would be needed to expand the program to customers of municipal utilities in such cities as Los Angeles and Sacramento.

Brown cited that issue as one reason for what he called his reluctant opposition to the plan. Municipal utility customers will indirectly benefit from the extra electricity generated but won't have to pay for it, he said.

"If the program is in the public interest," he said, "all Californians should share in the costs."