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L.A. City Council takes control of DWP solar program

8/12/2011, 10:19 a.m.

LOS ANGELES, Calif.--The City Council took the rare action today of voting to take control of a popular Solar Incentive Program run by the Los Angeles Department of Water and Power, based on concerns it will benefit businesses more than homeowners.

The council voted 11-1 to assert its authority to overrule the department, which recently made changes to the incentive levels.

The program, which provides rebates to homeowners and businesses for installing rooftop solar systems, was so popular it had to be postponed in April after demand for rebates outpaced the department's $30 million budget.

The department is set to re-launch the program Sept. 1 with a bigger budget of $60 million for the fiscal year, but about a 40 percent lower incentive level for an average residential system.

"The DWP commission has taken aggressive actions to reduce the incentives for homeowners to install rooftop solar panels," Councilman Tony Cardenas said. "I am concerned that the steep cut to the residential incentive can do serious, long-term damage to the city's goal of creating more sustainable energy."

Cardenas said the rates could also "decimate a fledgling industry that we are trying to cultivate in our region."

DWP General Manager Ron Nichols defended the new levels, saying the lower incentives will result in more solar power on rooftops.

Nichols said that under the previous program DWP was overpaying customers to install solar photovoltaic systems. The rebate was about $3.25 per watt under the guidelines earlier this year.

The department lowered the rate for residential customers based on market research to $2.20 per watt, still about 40 percent higher than the $1.55 per watt the state pays.

Nichols said the incentives have been divided almost evenly between residential and commercial customers.

Another reason to keep incentives at market levels is that solar prices are falling, Nichols said.

"If we put all the money out there now, we'll be buying solar at today's rates, and we want a program that has long range, that creates lasting jobs, not just some carpetbaggers that work through our service territory then move on," Nichols said.

Under a 2006 state law, the department was given a goal of adding 280 megawatts of new solar energy and mandated to spend $313 million on the incentive program through 2016.

The department has added 34 megawatts since 2007 and has an additional 36 megawatts set to go online once applications are processed and inspections completed. LADWP hopes to add an additional 25 megawatts through the re-launched incentive by the end of next year.

The department held two public meetings and received input from more than 400 stakeholders, including solar panel installers and interested customers. Nichols acknowledged that some installation companies were upset about the lower incentives.

A coalition of six residential installation companies--Sungevity, Suntech, SolarCity, Verengo Solar Plus, SunRun, and Yingli Solar--released a statement criticizing the program.

"My company was poised to grow and hire and open a whole new facility in L.A., and now all of that is in doubt because of all of these major, not small, but major cuts in homeowner rebates."

Verengo President Ken Button told the council. "This is going to turn back the clock to a time when only the wealthy can afford solar."

Other solar installation companies asked the council to let the program go forward as passed by DWP.

Councilman Paul Krekorian said he was concerned that forcing the department to change its incentives would delay important projects. "When you all get visited by lobbyists for particular solar industry businesses, keep in mind that there's probably somebody on the other side of that equation who's going to be hurt if there's further delay," Krekorian said.

Councilman Tom LaBonge expressed a wider concern that the incentive program goes to private citizens instead of public projects that could benefit the entire city. "If we were really interested, we would do every schoolhouse, every park, every public building, every library first before we give any benefit to others, so we can benefit the greater public," he said.

The council is expected to debate the issue Tuesday and vote whether or not to force the department to change the incentives or allow it to go forward as originally approved.

By Richie Duchon | City News Service