California Renewable Energy Incentives Frozen

California’s Emerging Renewables program, which has been crucial to driving many new solar photovoltaic installations in the state, has been temporarily frozen in response to a new order handed down from Governor Arnold Schwarzenegger.

Sacramento, California – December 11, 2003 [] In an effort to alleviate the state’s hemorrhaging budget deficit, the governor recently issued an executive order prohibiting new state contracts, contract extensions, and non-essential travel. “It is vital to the economic health and prosperity of California that state government be conducted in the most business-like and economical manner, and that the people of this State be assured that their tax dollars be spent wisely,” Governor Schwarzenegger states in the Executive Order. “The State General Fund is facing a significant imbalance between revenues and expenditures, and additional action must be taken to assure that the State lives within its means.” Executive Order S-4-03 prohibits all state agencies and departments from entering into any new contracts or agreements to lease or purchase equipment, from entering into any new services contracts, or from making any changes to an existing contract that would increase the amount or extend the term of such a contract, except as determined by the Director of Finance to be in the best interest of the State. In response to the governor’s order, the California Energy Commission (CEC), has temporarily put any new rebates and incentives on hold in order to evaluate the program’s legal status under the new terms. According to Claudia Chandler, Assistant Executive Director, Media and Communications Office for the CEC, the governor’s order does impact the rebates and the CEC will seek an exemption to be processed later this week. Another source at the CEC, questioned whether allocating monies from an existing account could be considered “new contracts” and felt the current freeze is more of a precautionary pause to allow an evaluation of the fund’s legal status under the new order. “The CEC is wondering whether that program falls into that account,” said a CEC source speaking under condition of anonymity. “Like all agencies, the emerging renewables account is examining its legal statues and how it relates to the executive order.” The Emerging Renewables Program began on September 12, 2002, when Senate Bill 1038 was enacted into law authorizing the CEC to administer the program beginning in 2003 through 2006. The program grants capital cost rebates to assist customers who purchase and install renewable technologies for on-site generation. Increased sales encourage manufacturers and retailers to expand operations, which in turn should lower costs to consumers. Participation in the program is setting record levels in 2003 with over 6,000 applications submitted, according to the CEC. In the first nine months of the new program approximately half of the total funding allocated through 2006 has been paid or reserved. This may only be a temporary setback based on a legal technicality, or it could prove to be something more serious for renewable energy in California. In related news to the Emerging Renewables Account, the CEC’s Renewables Committee is conducting a workshop today to solicit comments on proposed revisions to the Emerging Renewables Program Guidebook (publication # 500-03-001F). Primary consideration is to reduce the rebate to $3/watt to stretch the rapidly depleting funds further. The rebate is currently at $3.80/watt and is scheduled to be reduced to $3.60/watt on January 1, 2004.
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