1. 1 CSI Staff Proposal Workshop James Loewen/Melicia Charles California Public Utilities Commission October 25, 2010

2. 2 CSI Staff Proposal Purpose: To recommend CSI Program modifications to improve its ability to achieve its goals July 26, 2010: ALJ ruling setting a PHC and requesting statements on the CSI Staff Proposal August 12, 2010: PHC held to discuss CSI Staff Proposal Where we are now: –CPUC is considering comments from PHC and PHC statements –Scoping Memo is pending

3. 3 Areas of Focus This workshop will cover some, but not all, of the CSI Staff Proposal recommendations –Other issues will be covered in subsequent workshops Issues will not be covered in the same order as presented in the proposal –Recommendations are grouped by related subject area Recommendations covered in today’s workshop: RecommendationStaff Proposal Section Administrative Budgets3.6 Payment Intervals for Performance Based Incentive Payments3.9 Marketing and Outreach Budgeting5.4 Electric Program Rate Collections7.1 Application Processing Timelines3.1 Project Completion Time Requirements3.2 Project Inspections Process3.3 PMRS Cost Cap Exemption for EPBB Systems3.4 EPBB Calculator Integration with Powerclerk3.8 M&E Related Metering Expenses4.6 Total M&E Budget4.2 M&E Plan Annual Review4.3 M&E Expenditures and Reimbursement Requirement4.4

4. 4 Administrative Budgets (Section 3.6) Issue: The CSI PAs appear to be close to exceeding their administrative budget. Recommendations: CPUC should consider whether to allow cost-overruns CPUC should consider increasing the amount of funding available for program administration The CSI PAs should be allowed to charge administrative expenses to cross-cutting functions to the General Market budget CPUC should clarify if there is a need to reserve funds for administration post-CSI CPUC should establish consequences of the PAs exceed their allocated administrative budgets

5. 5 Payment Intervals for PBI (Section 3.9) Issue: Small PV systems that take the monthly PBI payment present a large payment processing burden for the PAs Recommendations: The CPUC should allow Program Administrators to have the discretion to pay solar projects earning incentive payments of less than a specified amount per month on a quarterly or semi-annual basis

6. 6 Marketing and Outreach Budgeting (Section 5.4) Issue: Per D.06-12-033, each CSI PA is authorized to spend $500,000 per year on M&O. No additional funds are earmarked for M&O activities. –The CSI Program needs to spend additional funds to ensure consistency and coordination in M&O activities across program areas. Recommendations: The CPUC should adopt a larger annual M&O budget The CPUC should consider using alternative allocation percentages for the CSI PAs to ensure that CCSE’s budget is not reduced from the current $500,000/year

7. 7 Electric Program Rate Collections (Section 7.1) Issue: The CSI Balancing Account shows a potential net under- collection of $24 - $72 million, posing a risk that will not be enough funding to cover future incentive payments for pending projects. Recommendations: The CPUC should clarify that the utilities should have the goal of ensuring they have enough funds to cover all future payments. The CPUC should affirm that all rate collections must occur before Dec. 31 st, 2016 The CPUC may wish to reduce collections if a utility has over- collected even after pending and PBI projects are accounted for The CPUC should clarify that interest and/or forfeited application fees reduce the amount of ratepayer collections that are needed

8. 8 Application Processing Timelines (Section 3.1) Issue: A significant number of CSI reservations and incentive claim payments have not been processed in a timely manner. ED Recommendation: CPUC should order PAs to meet the following standards for processing applications –95% of all residential reservations should be issued in 30 days or less –95% of all non-residential reservations should be issued in 60 days or less –95% of all residential ICF claims should be processed in 30 days or less (with no inspection) –95% of all non-residential ICF claims should be issued in 60 days or less (with no inspection) –95% of all residential ICF claims should be processed in 60 days or less (with inspection) –95% of all non-residential ICF claims should be processed in 90 days (with inspection) –95% of all projects should be paid within 30 calendar days after the ICF claims are approved.

9. 9 Project Completion Time Requirements (Section 3.2) Issue: Currently, there is not a consistent policy on CSI project extensions for educational institutions and other government entities. Project cancellations aren’t always enforced after the extension period has ended. Recommendations: The CPUC should consider adopting an 18-month extension for all public entities The CSI PAs should be required to pay rebates out of utility shareholder dollars instead of program funds if the rebate is paid past the project’s reservation deadline.

10. 10 Project Inspections Process (Section 3.3) Issues: CSI PAs have incurred significant costs implementing the inspection process for the CSI Program. There are concerns that the 1:7 inspection protocol significantly increases inspection costs. Currently, large-volume contractors (>200 installation/yr) have more inspections, which leads to a higher risk of failures and potential suspension from the CSI Program. Recommendations: The CPUC should review the cost-effectiveness of the inspection requirement, including the sampling rate The CSI PAs should continue to charge inspections to the administrative budget and find efficiencies in the inspection process The CPUC should modify program suspension rules to accommodate large-volume contractors

11. 11 PMRS Cost Cap Exemption for EPBB Systems (Section 3.4) Issue: The vast majority of EPBB systems <15 kW apply for a cost-cap exemption from installing performance monitoring (PMRS) systems if cost of the system exceeds total system cost. –Program applicants routinely file the same exact paperwork to satisfy the program requirement –PMRS providers are inundated with requests for bids to satisfy the program requirement Recommendations: The CPUC should eliminate the EPBB cost-cap exemption The CPUC should require all CSI projects with PMRS systems to report 15- min kWh production data to the CSI PAs on a quarterly basis The CPUC should adopt a clear definition of PMRS service required The CPUC should offer a $100 annual incentive to install PMRS and turn over data to the CPUC for up to five years for EPBB systems <15 kW

12. 12 M&E Related Metering Expenses (Section 4.6) Issues: Due to the cost-cap exemption, there is limited metering data for evaluation purposes, resulting in M&E contractors installing meters for data collection purposes –Installation of meters is costly but benefits both CPUC for M&E purposes and customer for enhanced management of their solar systems Recommendation: The CSI PAs can use M&E budget to fund the installation of PMRS on a sample of systems <15 kW

13. 13 EPBB Calculator Integration with PowerClerk (Section 3.8) Issue: The CSI General Market, MASH, SASH, RD&D, and the CSI-Thermal programs have separate budgets. –Currently, coordinating all M&E efforts is complex. Recommendations: The CPUC should affirm that CSI M&E efforts should be jointly managed across all program areas. If an M&E study crosses over multiple program areas, it should be charged to the General Market M&E budget

14. 14 M&E Plan Annual Review (Section 4.2) Issue: July 2008 ACR requires that the CSI PA’s file an annual Advice Letter to coordinate M&E implementation and budgeting. –The AL process is awkward and unnecessary since Energy Division is expected to provide direction in M&E implementation Recommendations: The CPUC should eliminate the Advice Letter requirement Instead, Energy Division should provide the public with a plan every two years with the status of the CSI M&E efforts

15. 15 M&E Expenditures and Reimbursement Requirement (Section 4.4) Issues: The July 2008 ACR directed most M&E contracting to go through the CSI PAs The 2008 Budget Act gave the CPUC authority to directly contract with M&E consultants contract, contradicting the July 2008 ACR The July 2008 ACR did not budget for CSI PA or CPUC staff time dedicated to M&E implementation Recommendations: The CPUC should confirm (through a decision) that M&E covers M&E evaluation studies, CPUC staff time, PA staff time, and other direct/indirect expenses The CPUC should establish that Energy Division and the CSI PAs are jointly responsible for executing the M&E plan The CSI PA’s should track M&E expenses per program component and report in semi-annual expense reports The CSI PA’s should promptly reimburse the CPUC for any staff and contracting expenses incurred by the CPUC The CSI PA’s should be allowed to charge M&E costs against the CSI Balancing Accounts

16. 16 Next Steps Scoping Memo establishing priorities and timing of the CSI Staff Proposal will be issued in the future Nov. 17, 2010: Second workshop will be held on the following issues: RecommendationStaff Proposal Section Service Delivery Point as the Boundary of Eligibility for VNM Service2.2 Expansion of VNM to all Customers2.3 Expansion of VNM to all Affordable Housing Customers2.4 Create Bill Credit Transfer (BCT) Tariff Option for All Multitenant buildings and Modify CSI Sized to Load Restrictions 2.5 SASH Design Factor Requirement6.3 SASH Inspections6.4 Increasing Incentives Available for Sold Out MASH Track 16.6 Two year Occupancy Requirement for Eligibility for MASH6.7

17. 17 For Additional Information James Loewen: loe@cpuc.ca.gov Melicia Charles: mvc@cpuc.ca.gov