Concerns from the solar industry about the LADWP's solar incentive program crystallized in the middle of yesterday's 7 1/2 hour LA City Council meeting. With the City Council sending the program back to DWP and back into gear as of September 1, they may not have been answered. A problem is that nothing the city council has asked of the solar industry and the DWP in the last two days of council sessions tells us whether they were.
Ken Button, the president of Verengo, and SunRun's director of government affairs, Ethan Sprague, represented companies that offer lease-based financing of PV rooftop installations. Sprague told the council that "90 percent of the lease market" was objecting to the DWP's new solar rebates. He and Button estimated that people who could have spent little to nothing up front would have to spend four to five thousand dollars under the new program.
Solar City's Sanjay Radshad complained that the new incentive program will treat people who lease their solar panels far worse than people who buy them up front. "It's remarkable because DWP's stated intent is to deliberately treat identical ratepayers differently," he said. "Those who cannot afford a cash purchase are provided a lower rebate level." All three men asked the council and the DWP to reconsider the rebate plan.
But the first member of the public to stand up and comment was Jim Tranquada, Occidental College's director of communications. He made clear immediately that there'd be consequences if the LA City Council paused the solar program now. "The delay involved if the motion passes could end up killing Occidental College's major solar array. We've just pulled the permits," Tranquada said.
Tony Cardenas asked Ron Nichols what...he used the word science but I almost imagined him saying "sorcery"...the LADWP considered. The answer Nichols offered is not short, I will warn you:
We went through a review of just the actual costs. As we've gone through to date, we pay rebates on actual costs so we know what our customers have paid for each of our systems - reported paid for our systems. Ae have our own experience in terms of our purchasing PV systems ourselves. And we periodically have reviewed experience that other utilities in California are seeing so we believe we have a good handle on the cost and the cost trends. We've looked at a range of financial assumptions around that, including cost of capital, interest rate. Tax incentives that apply. Things like debt equity ratios. Obviously looking at what our power rates are cause that's what our customers are avoiding. And looked at the default rates that we would have seen in the market that we expect to see and what the maintenance and overheads are for the organizations that provide these.
So that put all those costs in, calculate what it looks like from the provider side under a sale basis and a lease basis, and then our customer side, both commercial and residential customers on what their monthly costs are relative to those DWP bills. So we've done those analyses and the sensitivities around those analyses; so we're comfortable that based on our experience to date and the information we've got, we've struck that balance that I was speaking to you about earlier.
Nichols offered that LADWP's incentives are the highest in the state, even still. (He didn't add that the reason that's so is because LADWP offers a 40 cent bonus per watt for renewable energy credits that a consumer assigns to the utility.)
After taking the unusual step of grabbing temporary control over the solar incentive program Friday, the council shoved it all back into the LADWP's lap Tuesday. And you're forgiven if you're a consumer who doesn't understand what the politicking is all about, because it's murky what's accomplished by all that, by having the LADWP report back to the council about the program now.
The mayor picked -
- Civic Enterprise Associates planner Jeff Jacobberger, a planner with Civic Enterprise Associates; and
- John Murray, the president of the Southern California Minority Business Development Council Inc.
Council President Eric Garcetti picked -
- Angeleno Group financial advisor Sandra Itkoff; and
- Silver Lake Neighborhood Council's Rusty Millar.
Councilwoman Jan Perry, chair of the Energy and Environment Committee, picked -
- United Commercial Bank's Elaine Gaspard.
You think a ratepayer advocate picked by these folks would ask different questions about solar incentives? And what do you think the city council's process did to improve solar incentives?