By Marc Lifsher, Times Staff
Writer, May 8, 2007
SACRAMENTO — California
homeowners are rejecting new rebates for solar power equipment, saying the
state has made installing the rooftop panels far more costly than expected.
As a result, Public Utilities Commission reports show a decline of 78% in
rebate requests in the first three months of this year, compared with last
year, and the solar installation industry says it is threatened with collapse
across much of California.
At issue is a requirement the state added Jan. 1 for getting a rebate under
Gov. Arnold Schwarzenegger's Million Solar Roofs program. Applicants must first
sign up for costly pricing plans offered by utilities that charge more for
their electricity during hours of peak demand.
Alfred Cellier had plans to install a $17,000 solar system at his Rancho Palos Verdes home
until he penciled out the cost of the new state requirements and decided
against it.
The retired electronics engineer said he was all for solar power "because
it's green and the right thing to do, but I don't want to be treated
unfairly."
Sue Kateley, executive director of
the California Solar Energy Industries Assn., said the rebate changes
backfired. "It's a mess," she said. "It was everyone's intent to
expand the use of solar in California,
not throw it into the ditch."
Many homeowners quickly decided that it might not be worth going solar under
the new requirements. The costs would be burdensome for those who couldn't
afford or lacked the roof space to buy systems that would supply all of their
electricity needs.
The unintended glitch was created in December, when the PUC moved to implement
the law by requiring that solar users switch to the higher "time of
use" rates for their supplemental electricity.
Industry experts say that with the higher rates, solar power offers less
savings on electricity bills and may not justify the investment of more than
$10,000 in solar panels — even with a rebate of as much as 50% of the cost and
a federal tax credit.
What's worse, some people in the Inland Empire
and the desert might see their bills rise after putting solar panels on their roofs,
the experts add.
"The solar industry in the desert in the Southern California Edison
territory is dead until this thing is fixed," said Pat Conlon, an
energy-efficiency expert with the city of Palm
Desert. "As of Jan. 1, there have been no new installs."
He said a YMCA in Palm
Desert decided against a
solar system after managers concluded that future savings on electricity would
not cover the cost of installing the rooftop panels.
Under the new program, homeowners filed rebate applications for systems
generating 1,415 kilowatts of solar power statewide in the first three months
of this year. A year earlier under the previous program, the state approved
applications totaling 6,417 kilowatts.
Embarrassed state officials are scrambling to fix the problem.
"The fact that some customers may find themselves paying higher
electricity bills if they decide to install solar … is unfortunate and indeed
perverse," California PUC President Michael R. Peevey said in a recent
letter to legislators.
"It's sort of a screw-up," said solar advocate V.
John White, executive director of the Center for Energy
Efficiency and Renewable Technology in Sacramento.
On the hot seat is Schwarzenegger, who in August signed legislation that sought
to provide $3 billion in rebates over 10 years to boost the use of nonpolluting
solar power.
Only last month, he bragged about his California Solar Initiative in an Earth
Day radio address — with no mention of its lack of early success.
Bill Maile, a spokesman for the governor, conceded that the solar program was
flawed. The administration is considering asking the Legislature to quickly
pass a law that would make solar power more affordable, he said.
The governor also asked the PUC to work with the state's three investor-owned
utilities to come up with "a properly designed rate structure" that
doesn't penalize solar owners, Maile said.
Time-of-use
electricity rates are higher during hours of peak demand, such as hot summer
afternoons, and much lower in the early morning, late evening and at night.
The difference between peak and off-peak rates is particularly large in the 11
counties of Central, coastal and Southern California, where Edison
provides electricity service to 13 million customers.
Edison charges summer time-of-use rates that
range from 29.7 to 35.9 cents per kilowatt-hour between 10 a.m. and 6 p.m. on weekdays. It drops to a range of 16.3 to 18.6
cents per kilowatt-hour from 10 p.m.
to 6 a.m. weekdays and all
weekend days and holidays, according to documents filed with the PUC.
Edison's time-of-use rates are a problem for
solar households that can't produce enough energy to make them self-sufficient,
industry experts say.
"We've come to the conclusion that we can no longer sell to a good
percentage of potential clients because they don't have a roof that is big
enough," said Patrick Redgate, owner of Ameco, a Long Beach solar installation company with 33
years in the business. "This is kind of a punishment for people going
solar."
Another installer, Gordon Bloom, executive vice president of GenSelf Corp. in Irvine, said he had been
forced to lay off two employees after doubling his workforce in 2006.
"Residential sales in the Edison
territory are down 75%, and I've only gotten eight new jobs this year," he
said.
The solar industry in March petitioned the PUC to reverse its decision on
rates.
Action can't come soon enough for the already strapped solar installation
industry, said consultant Glenn Harris.
Harris says that the residential market in California could collapse in 100 days if
high electricity rates scare potential customers away from buying rooftop solar
systems.
"If they don't make sales in the next two or three months, they'll have to
lay their guys off and say, 'I'm sorry,' " he said.
For its part, Southern California Edison says a short-term fix would require
that the Legislature and PUC abandon current time-of-use rates. "The only
way that this can be resolved so that nobody gets a higher rate than would
otherwise be the case would be to make time-of-use rates optional," said
Akbar Jazayeri, Edison's vice president for
revenue and tariffs.
Time-of-use rates are constraining solar sales but are less of a problem in the
areas served by California's
other investor-owned utilities, Pacific Gas & Electric and San Diego Gas
& Electric, analysts say. Ratepayers at publicly owned utilities, such as
the Los Angeles Department of Water and Power, are not affected by the PUC rate
ruling and operate their own solar installation incentive programs.
Solar installation firms, environmentalists and government officials are
dumbfounded that the much-lauded solar program has had such a rough start.
"These are very real problems," said Bernadette Del Chiaro, a
lobbyist for Environment California.
"Nobody foresaw the outcome would be a whole set of consumers basically
priced out of the market."
