The temporary hold on accepting new applications is necessary to revise the program guidelines to better serve LADWP customers and align with current solar PV market conditions.  With one of the highest solar photovoltaic (PV) incentive rates in California, generous federal tax benefits and rapidly dropping solar panel prices, the number of solar rebate applications continues to grow each month and has exhausted funding for the next four years at the budget levels established for the program at its outset in 2007.

“It is clearly time to pause and review our program incentive levels. Our rebate levels, while reduced from levels paid in prior years, is about double the minimum level required by SB 1. We fully support and want more renewable energy and we want to foster solar technology, but not at undue expense to our customers who pay for this important program,” said Ronald O. Nichols, LADWP General Manager.  “We need to be smart about how we provide incentives and that starts with ensuring we are doing so in a fiscally responsible manner. This suspension will allow us time to determine the proper rebate level and align it with the current solar PV market.  During the review, we will honor all applications we have received and processed, but we will reset the rebate at a lower level when the program is resumed. This approach will ensure we get the most solar bang for our buck, while continuing to provide a strong incentive for our customers to go solar.”

As of April 1, 2011, the LADWP Solar Incentive Program had confirmed requests for $112 million in solar rebates, but only $30 million is budgeted annually for the program. The State of California program guidelines established by Senate Bill 1 in 2006 require that it be suspended when the amount of confirmed and unpaid rebate reservations exceeds the availability of funds to honor those reservations in a timely manner.

Safety Concerns
The rush for rebates has also contributed to serious safety violations; solar installations are being turned on before LADWP has completed its final inspection and authorized system activation. This situation has occurred in about 20 percent of the solar installations since January. It can create a serious safety hazard for customers and for electric maintenance crews working in the area who do not know the solar system is energized.

“Our solar incentive rebate application clearly indicates that customers need approval of their applications to be assured of receiving LADWP’s rebate, and that inspections are required prior to energizing their systems.  Some customers have informed us that the contractors who installed the rooftop PV systems have indicated there is no need to delay installation while LADWP reviews their applications”, said Aram Benyamin, Senior Assistant General Manager for Power for LADWP. The LADWP program, similar to other SB 1 programs of other utilities, provides for payment upon installation and final inspection. “The result is some customers are apparently misinformed by their installation contractors, have paid in some cases tens of thousands of dollars for PV systems that were installed without confirmation by LADWP, counter to the rules of the program, only to find that they have long waits for rebates due to the deluge of applications”, Benyamin explained.  “We cannot continue to allow this to happen.”

LADWP has taken steps to address the safety issue by mailing safety notices to all customers with pending solar installations, posting a safety advisory on the Web at www.ladwp.com/solar, and contacting solar contractors and vendors directly about the problem.

Solar Rebate Program Review
During the temporary hold on accepting new applications, LADWP will review the program budget and will also review financing options to maintain a steady pace of participation and funding for the duration of the state’s SB 1 program. Mandated by state legislation, SB 1 requires that utilities invest their customers’ money in solar PV systems for their homes and businesses. “In the last four years, the cost of PV systems have fallen by around 50%, but contractors are not passing those savings onto our customers”, LADWP’s power system head, Benyamin notes.  The high level of the LADWP rebates could contribute to this contractor pricing practice. LADWP will review and revise the program to do the following:

• Increase customer outreach and education to promote safety;
• Streamline processing of unconfirmed applications – a current backlog of over 500 requests for rebates;
• Review incentive levels to better serve customers, and reflect current solar PV market conditions;
• Assess options for utility financing of the rebates to smooth out the annual cost of this major PV rebate program to reduce the annual rate effect of the program; and
• Address the oversubscription to provide rebates in a timelier manner.

SB 1 Program Status of Other CA Public & Private Utilities
The issues affecting LADWP’s Solar Incentive Program have similarly impacted other solar programs throughout the state. To read more about the status of other utility’s programs, read more here.

More Information
Program updates, including notification of when LADWP will lift the temporary hold, will be posted on the Web at www.ladwp.com/solar. For further information, email solar@ladwp.com or call the Solar Hotline at (213) 367-4122.

To read additional background information on the LADWP Solar Incentive Program, please click here.