Los Angeles Department of Water and Power Solar Program on Hold

14 April of 2011 by

los angeles highway Los Angeles Department of Water and Power Solar Program on Hold

Facing arecord demand for solar rebates, growing safety concerns, and someapparent misinformation to LADWP customers by some solar PV installers,the Los Angeles Department of Water and Power (LADWP) placed a temporary holdon accepting new applications for its Solar Incentive Program, effective at 11:59 p.m. on Friday, April 8, 2011, for a minimum of 90 days.

During this period, LADWP announced it will review and revise theprogram, which has seen the number of applications grow each month toover 2,000 applications currently in process. In addition more and moresolar photovoltaic (PV) systems are being turned on without properinspection, creating a safety hazard, LADWP said in its announcement.

The temporary hold on accepting new applications is necessary torevise the program guidelines to better serve LADWP customers and alignwith current solar PV market conditions. With one of the highest solarphotovoltaic (PV) incentive rates in California, generous federal taxbenefits and rapidly dropping solar panel prices, the number of solarrebate applications continues to grow each month and has exhaustedfunding 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, isabout double the minimum level required by SB 1. We fully support andwant more renewable energy and we want to foster solar technology, butnot at undue expense to our customers who pay for this importantprogram,” said Ronald O. Nichols, LADWP General Manager.

“We need to be smart about how we provide incentives and that startswith ensuring we are doing so in a fiscally responsible manner. Thissuspension will allow us time to determine the proper rebate level andalign it with the current solar PV market. During the review, we willhonor all applications we have received and processed, but we will reset the rebate at a lower level when the program is resumed. This approachwill ensure we get the most solar bang for our buck, while continuing to provide a strong incentive for our customers to go solar.”

HelioPower,one of the state’s largest solar installation firms has completedinstallations in the LADWP jurisdiction.  “Companies installing solarsystems without a rebate reservation secured on their customers’ behalfare committing fraud in my opinion,” said Scott Gordon, VP ofResidential Sales for HelioPower.

As of April 1, 2011, the LADWP Solar Incentive Program had confirmedrequests for $112 million in solar rebates, but only $30 million isbudgeted annually for the program. The State of California programguidelines established by Senate Bill 1 in 2006 require that it besuspended when the amount of confirmed and unpaid rebate reservationsexceeds the availability of funds to honor those reservations in atimely manner.

Safety Concerns

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

“Our solar incentive rebate application clearly indicates thatcustomers need approval of their applications to be assured of receiving LADWP’s rebate, and that inspections are required prior to energizingtheir systems. Some customers have informed us that the contractors whoinstalled the rooftop PV systems have indicated there is no need todelay installation while LADWP reviews their applications”, said AramBenyamin, Senior Assistant General Manager for Power for LADWP. TheLADWP 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 installationcontractors, have paid in some cases tens of thousands of dollars for PV systems that were installed without confirmation by LADWP, counter tothe rules of the program, only to find that they have long waits forrebates due to the deluge of applications”, Benyamin explained. “Wecannot continue to allow this to happen.”

“Energizing systems without authorization is both dangerous andillegal. LADWP should identify these companies and publically suspendthem from their rebate program when it resumes. Shining a light onunscrupulous solar contractors is what my ‘Ugly Side of Solar’ series is all about, “said Gordon.  “The real tragedy here rests with theconsumer as he/she may find themselves holding the rebate bag afterpaying the contractor in full and receiving no reimbursement fromLADWP.”

LADWP has taken steps to address the safety issue by mailing safetynotices to all customers with pending solar installations, posting asafety 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 willreview the program budget and will also review financing options tomaintain a steady pace of participation and funding for the duration ofthe state’s SB 1 program. Mandated by state legislation, SB 1 requiresthat 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 around50%, 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 thiscontractor 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 outthe annual cost of this major PV rebate program to reduce the annualrate 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 similarlyimpacted other solar programs throughout the state. To read more aboutthe status of other utility’s programs, read more here.

More Information

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

Readers can reach Scott Gordon of HelioPower at SGordon@HelioPower.com

 

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