HomeMy WebLinkAboutStaff Report 356-09TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE: SEPTEMBER 21 ,2009 CMR: 356:09
REPORT TYPE: CONSENT
SUBJECT: Adoption of an Ordinance Amending the Budget for Fiscal Year 2010
to Provide an Additional Appropriation of $1,191,238 within the
Electric Fund for Incentives to Palo Alto Utilities' Customers to
Install Photovoltaic Systems
RECOMMENDATION
Staff recommends that Council approve the attached Budget Amendment Ordinance in the
amount of $1,191,238 to provide additional funding for the existing City of Palo Alto Utilities'
(CPAU) "PV Partners" (photovoltaic) program for FY 2009-10. This program provides
incentives to CP AU customers who install a solar electric or photo voltaic (PV) system. The
funds for this BAO are available in the Utilities Department's Electric Public Benefit Reserves.
BACKGROUND
California Senate Bill 1 (signed August 24, 2006) requires all publicly-owned utilities to offer
specified minimum incentives for PV systems, on or before January 1, 2008, for a ten year
period. This mandate also prevents publicly-owned utilities from taking funds previously used
for energy efficiency and low income programs to meet the customer demand for solar
incentives. The budget to meet CPAU's share of the total California PV installation goal is
projected to be $13 million, averaging $1.3 million per year for ten years. The PV Partners
Incentive program is designed to continuously provide incentives based on the rate of PV system
installation up to the ten-year maximum of$13 million. If the demand for customer incentives is
accelerated in the early program years, the program will reach the SB 1 goals in less than ten
years. The ten-year (2017) SB 1 goal for Palo Alto is 6.5 megawatts, of which 1.662 (or 26%)
has been installed.
DISCUSSION
The award-winning "PV Partners" program has experienced significant demand for incentives in
the past few years with more homeowners and businesses installing systems on existing building
stock and greater numbers of developers using solar for their new construction projects. The
"PV Partners" program received awards from the Solar Electric Power Association, the Northern
California Solar Association & Environment of California for its level of involvement. To date,
187 systems with a capacity of 1.662 megawatts, or 26% of the goal have been installed.
CMR: Page lof2
Customers can reserve rebate funds for up to eighteen months prior to the installation of the PV
system. During Fiscal Year 2008-09, in order to meet the demand for the rebates in the
reservation status, $2,240,000 was transferred from the Public Benefit Reserve Fund and from
the Alternative Resources Operating Budget to meet the expected demand. Due to the down-tum
in the economy, many of those projects were delayed. At the end of the fiscal year, the unspent
funds of$I,191,238 allocated for rebates went back to the Public Benefit Reserve Fund. In order
to have those funds available for rebates at the time of project installation, the funds must be
returned from the Reserve Fund to the Public Benefit Renewable Operating Budget.
Funds in the Public Benefit Renewable Operating Budget at the beginning of Fiscal Year 2009-
2010 were $4,540,776 (unaudited balance). For the SBI program, starting January 1, 2007,
through August 10,2009, CPAU has paid $2,659,068 and has pending an additional $3,288,705
in reservations ($1,300,000 is expected to be paid in FY2010 and the remainder 15 to be paid in
FY2011 through FY2015). Therefore, a BAO, transferring the $1,191,238 rolled over from the
operating budget into the Public Benefit Reserve should be transferred back to pay program
incentives.
RESOURCE IMPACT
These additional funding requirements require a $1,191,238 Budget Amendment Ordinance and
will reduce the Public Benefit Reserve from $4,540,776 to $3,349,538.
POLICY IMPLICATIONS
This request does not represent a change in policy.
ENVIRONMENTAL REVIEW
This is not a project under the California Environmental Quality Act.
ATTACHMENT
A: Budget Amendment Ordinance
PREPARED BY:
REVIEWED BY:
Assistant Director Customer Support Services
DEPARTMENT APPROVAL:
Director of Utilities
CITY MANAGER APPROVAL:
CMR: 356:09 Page 2 of2
ATTACHMENT A
Ordinance No.XXXX
Ordinance Of The Council Of The City Of Palo to
Amending The Budget For Fiscal Year 2010 To Provide An
Additional Appropriation Of $1,191,238 Within The
Electric Fund For Incentives To Palo Alto Utili ties'
Customers To Install Photovoltaic Systems.
The Council of the City of Palo Alto does ordain as follows:
SECTION 1. The Council of the City of Palo Alto finds
and determines as follows:
A. Pursuant to the provisions of Section 12 Article III of
the Charter of the City of Palo Alto, the Council on June 15, 2009
did adopt a budget for Fiscal Year 2010; and
B. In August 2006, California Senate Bill 1 (SB1) was signed
and required all publicly-owned utilities to of specified
minimum incentives for photovoltaic (PV) systems on or before
January 1, 2008, for a ten-year period; and
C. SB1 prevents publicly-owned utilities from taking funds
previously used for energy efficiency and low income programs to
meet the customer demands for solar incentives; and
D. The existing City of Palo Alto Utilities' (CPAU) "PV
Partners II program provides incentives to CPAU customers who
install a solar electric or PV system; and
E. Funding for the "PV Partners" program resides within the
Public Benefit Renewable Functional Area of the Electric Fund; and
F. In scal Year 2009, $2,240,000 was transferred to the
Public Benefit Renewable Functional Area from the Public Benefit
Program Reserve and the Alternative Resources Functional Area of
the Electric Fund to meet the expected demand for solar
incentives; and
G. Due to the downturn in economy, many of the expected
installations of PV systems were delayed; and
H. At the end of Fiscal Year 2009, $1,191,238 of the funds
that had been transferred to the Public Benefit Renewable
Functional Area remained unspent and were subsequently returned to
the Public Benefit Program Reserve; and
I. To meet the expected demand for solar rebates scal
Year 2010, it is necessary to transfer $1,191,238 from the Public
Benefit Program Reserve to the Public Benefit Renewable Functional
Area; and
J. City Council authorization is needed to amend the scal
Year 2010 budget to make an addi appropriation of $1,191,238
for demand-side management incentives expense to provide
incentives to CPAU customers who install a solar electric or PV
system.
The sum of One Million One Hundred Ninety-One
Thousand Two Hundred Thirty-Eight Dollars ($1,191,238) is hereby
appropriated to demand-side management incentives expense the
Public it Renewable Functional Area in the Electric Fund.
The Public Benefit Program Reserve is hereby
reduced by One Million One Hundred Ninety-One Thousand Two Hundred
Thirty-Eight Dollars ($1,191,238) to Three Million Three Hundred
Forty-Nine Thousand Five Hundred Thirty-Eight Dol
($3,349,538) .
As specified in Section 2.28.080(a) of the
Al to Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
~~~~~. As provided in Section 2.04.330 of the Palo Alto
Municipal Code, this ordinance I become effective upon
adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
Mayor
APPROVED AS TO FORM:
Manager
or Asst. ty Attorney Director of Utilities
Department
Director of Administrative
Services