Details for: SCE's Response to SDGE's Advice Letter 3285-E.pdf

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Gary A. Stern, Ph.D.
Managing Director, State Regulatory Operations

November 1, 2018
Energy Division
Attention: Tariff Unit
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102


Response of Southern California Edison Company to San Diego
Gas & Electric Advice Letter 3285-E, Submittal to Provide
Additional Information Regarding Establishment of a Solar On
Multifamily Affordable Housing Balancing Account (SOMAHBA)
Pursuant to Decision 17-12-022

Dear Energy Division Tariff Unit:
Pursuant to General Rule 7.4.3 of the California Public Utilities Commission’s
(Commission or CPUC), General Order (GO) 96-B, Southern California Edison
Company (SCE) respectfully submits this response to San Diego Gas & Electric
Company’s (SDG&E’s) Advice Letter 3285-E submitted on October 11, 2018.
On October 8, 2015, Assembly Bill (AB) 693 created the Solar On Multifamily Affordable
Housing (SOMAH) Program, which provides financial incentives for the installation of
solar photovoltaic (PV) energy systems sited on qualifying multifamily affordable
housing properties throughout California, and provides annual SOMAH funding of up to
$100,000,000 from the shares of the greenhouse gas allowance auction proceeds of
Pacific Gas and Electric Company (PG&E), SDG&E, SCE, Liberty Utilities Company,
and PacifiCorp (collectively the Investor-Owned Utilities (IOUs)). On December 14,
2017, the Commission approved Decision (D.)17-12-022, which implemented AB 693’s
SOMAH Program.
As required by AB 693, D.17-12-022 caps the available funds for the SOMAH
Program’s administrative costs to 10 percent of the total SOMAH Program funds, i.e.,
$10 million annually for administrative costs or less if the GHG auction revenues are not

P.O. Box 800

8631 Rush Street

Rosemead, California 91770

(626) 302-9645

FAX (626) 302-6396


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Energy Division Tariff Unit California Public Utilities Commission November 1, 2018 Page 2 sufficient.1 Accordingly, the amount available for administrative costs is not known until the GHG revenues for each year are known. D.17-12-022 also directed the IOUs to establish balancing accounts to “track all costs associated with the SOMAH Program, including the initial costs of fielding a Request for Proposal (RFP), as well as the costs of utility administrative activities including, but not limited to, reporting, contributions to PA administrative budgets, and incentive payments.”2 Additionally, D.17-12-022, instructs the Program Administrator (PA) to propose a Marketing and Education budget, which is to be financed from the SOMAH Program’s overall administrative budget. 1. Significant Implementation Costs for the SOMAH Program As described in Advice Letter 3285-E, “[t]he SOMAH Program involves issuing virtual net metering (VNEM) bill credits to participants: both building owners/managers and the tenants in this multi-family building effort.3 The variations of the new SOMAH VNEM schedules, as compared to the existing VNEM tariffs, require significant modification of existing billing systems to ensure the provisions of the program are properly reflected on the bills of SOMAH customers. SCE currently is in the process of converting its outdated legacy billing systems to a new Customer Service Re-Platform Project (CSRP), which is expected to provide customers with a modern, stable, and agile technology-billing platform. The CSRP will directly affect the feasibility and timing for implementing rates for programs such as SOMAH because the initial development of the CSRP, its launch, and its stabilization process will require SCE to avoid major new transactions during the period beginning approximately in 2019 through end of 2020. As such, SCE expects that customers on the SOMAH Program will need to be manually billed, which will lead to higher administrative costs in the earlier years of this Program. Specifically, SCE estimates that the total funds available for the SOMAH Balancing Account (SOMAHBA) through fiscal year 2018 to be approximately $54,077,233 – allowing for approximately $5.4M, i.e., 10 percent, for the administration of the SOMAH Program. Even under the low customer adoption scenario estimated by SCE (if 25 percent or less of eligible properties participate) and shared in Advice 3472-E-A,SCE’s estimated cost of $12.02M for interconnecting, sign-up, and manual billing the customers is expected to exceed the current administration budget contribution by 1 2 3 If, for example, in one program year the available amount of GHG allowance auction proceeds is $40,000,000, the administrative costs for the program cannot exceed $4,000,000 D.17-12-022, p. 37 (Section 3.5.3. - IOU Accounting). See Advice Letter 3285-E at p. 2.
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Energy Division Tariff Unit California Public Utilities Commission November 1, 2018 Page 3 SCE.4 In higher adoption scenarios, the current administration budget contribution by SCE could be depleted by SCE within the first two years, which would leave limited availability of funds to pay the third party administrator. 2. SCE Urges the Commission to Reassess the Scope of the Work Being Performed by the Third Party Administrator To ensure there is no diminution in incentive funds as a result of the potential for an administrative budget shortfall, the Commission should reassess the scope of the work being performed by the third party administrator, Center for Sustainable Energy (CSE). Specifically, the Commission should limit the work only to the features necessary to carry out the program’s objectives, and thereby reduce the administrative budget CSE requires to administer this program. The Commission should assess whether the proposed features of CSE’s work are necessary and appropriate given the small and finite budget for this program. Examples of CSE administrative items that SCE believes could be revisited include, but are not limited to the following: • • • • CSE’s stated 20-year interval data collection requirement for all PV systems (PIP Section VI C) produces undue data housing costs for the administrator (and system owners); CSE’s energy efficiency audit requirements describe a check by CSE of audit results (Handbook, Section 2.4), a step that appears unnecessarily duplicative given that the initial work must be completed by a credentialed auditor; CSE’s Advisory Council (PIP Section IV C; Statement of Work to the Solar on Multifamily Affordable Housing Program Incentives Between Southern California Edison Company and Center for Sustainable Energy, Section 2.8.2) describes a set of activities in excess of program requirements. CSE’s planned post-training employment resource elements (PIP, Section V, parts B, C, and D) are also thought to be in excess of both program requirements and the approach used in the MASH Program. Given the uncertainty of available funds from GHG revenues and the 10 percent annual cap placed for administrative costs for the SOMAH Program, SCE respectfully requests that the Commission reassess the scope of work provided by CSE to bring it more in line with estimated revenues and capped administrative costs. Otherwise, the Commission may need to consider whether to allow the IOUs to use incentive funds for a directed portion of the implementation costs. SCE is committed to implementing the Commission’s vision of the SOMAH Program but recognizes and shares the challenges highlighted by SDG&E concerning the high costs 4 See Advice Letter 3742-E-A, Attachment A. SCE will file its 2019 ERRA Forecast application on November 7, 2018, including an update of GHG funding through 2018 available to the SOMAH program, which may differ from the $54.0 currently set aside.
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Energy Division Tariff Unit California Public Utilities Commission November 1, 2018 Page 4 associated with implementing the SOMAH Program. For these reasons, SCE recommends that the Commission: • • Reassess the scope of the third party administrator to help contain costs; and Consider limited implementation for the first two years of the program while the IT systems are being developed in order to minimize administrative expenses. Conclusion SCE appreciates the opportunity to submit its response. Sincerely, /s/ Gary A. Stern, Ph.D. Gary A. Stern, Ph.D. GAS:ee:jm cc: Clay Faber, SDG&E Edward Randolph, Director, CPUC Energy Division Dorothy Duda, CPUC Energy Division Service List R.14-07-002
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