Solar Subsidy Plan Is Passed

California regulators directed utilities Thursday to spend nearly $3 billion so that an abundance of sunshine would help relieve a shortage of electricity.

The solar energy plan, approved on a 3-to-1 vote by the California Public Utilities Commission, would dole out subsidies over 11 years to encourage both business and residential customers to install enough rooftop solar energy systems to generate 3,000 megawatts of electricity.

That’s enough power to serve about 2.2 million homes and would eliminate the need for six modern power plants, according to the commission.

Backers hailed the plan -- to be paid for by utility customers -- as a historic commitment that would cut California’s dependence on fossil fuels and make the state one of the world’s largest users of solar power.

“It truly is a landmark decision,” said Bernadette Del Chiaro, clean energy advocate for Environment California, a San Francisco group. “We have a big, bold, meaningful solar program that’s going to reduce costs and make this more than just a boutique technology for millionaires and backward hippies.”

Gov. Arnold Schwarzenegger, whose push to put solar panels on a million California rooftops stalled in the Legislature last year, applauded the commission’s action, calling it “a great day for California.”

The regulators estimated that the average cost to electricity customers of Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co. would be $12 a year, but that most customers would see a “minimal” increase on their bills because the solar subsidy charge would take the place of a bond surcharge set to expire at the end of next year.

The average cost to gas customers, including those at Southern California Gas Co., would be $1.40 a year. Municipal utilities such as Los Angeles Department of Water and Power aren’t regulated by the commission and therefore aren’t included in the program.

Opponents blasted the California Solar Initiative as bad policy and an expensive technology gamble for ratepayers already facing high electricity bills. Severin Borenstein, director of the University of California’s Energy Institute, said the cost to customers would be much higher once metering technology and other costs were added in.

“This is a victory of public relations and popular press over good policy, because solar power right now is massively uneconomic,” Borenstein said. “There are much better ways to spend this money.”

Geoffrey Brown, the commissioner who cast the lone negative vote, said he supported the broad concept of the solar initiative but opposed Thursday’s proposal because of concerns about the cost to ratepayers and whether the price of solar systems would drop as much as hoped. With the solar program, Brown said: “We have put our enthusiasm before our prudence.”

Brown voted last month in favor of an interim plan that set aside $300 million in subsidies for solar energy installations in 2006. The subsidy plan approved Thursday added $2.9 billion in funding for 2007 through 2016.

PUC President Michael Peevey, who pushed the commission plan after the legislative effort failed, voted in favor of Thursday’s solar initiative, along with Dian Grueneich and Rachelle Chong, a former member of the Federal Communications Commission who was named to the state PUC on Wednesday. John Bohn, the commission’s fifth member, recused himself from the vote, citing a possible conflict of interest.

One industry expert said Thursday that the incentive included in the new California plan -- initially equal to $2.80 per megawatt of production capacity -- would not encourage businesses to sign on. Worldwide demand is so strong that solar panel manufacturers have been unable to keep up, boosting the cost of solar systems, according to Patrina Eiffert, president of ImaginIt Inc., a Colorado firm installing solar systems for the Walgreen Co. drugstore chain.

Eiffert said her firm would set up solar systems at 96 Walgreens stores in California, but that the project was worthwhile only because it was funded through earlier versions of the state’s solar program with incentives of $3 and $3.50 per megawatt.

“If they would have left it at $3, it would have been OK,” she said.

But at $2.80, “the numbers are just not going to be there for the commercial projects.”