Article 2. Solar Water Heating Systems of California Public Utilities Code >> Division 1. >> Part 2. >> Chapter 9. >> Article 2.
This article shall be known, and may be cited, as the Solar
Water Heating and Efficiency Act of 2007.
As used in this article, the following terms have the
(a) "Gas customer" includes both "core" and "noncore" customers,
as those terms are used in Chapter 2.2 (commencing with Section 328)
of Part 1, that receive retail end-use gas service within the service
territory of a gas corporation.
(b) "kWth" means the kilowatt thermal capacity of a solar water
heating system, measured consistent with the standard established by
(c) "kWhth" means kilowatthours thermal as measured by the number
of kilowatts thermal generated, or displaced, in an hour.
(d) "Low-income residential housing" means either of the
(1) Residential housing financed with low-income housing tax
credits, tax-exempt mortgage revenue bonds, general obligation bonds,
or local, state, or federal loans or grants, and for which the rents
of the occupants who are lower income households, as defined in
Section 50079.5 of the Health and Safety Code, do not exceed those
prescribed by deed restrictions or regulatory agreements pursuant to
the terms of the financing or financial assistance.
(2) A residential complex in which at least 20 percent of the
total units are sold or rented to lower income households, as defined
in Section 50079.5 of the Health and Safety Code, and the housing
units targeted for lower income households are subject to a deed
restriction or affordability covenant with a public entity that
ensures that the units will be available at an affordable housing
cost meeting the requirements of Section 50052.5 of the Health and
Safety Code, or at an affordable rent meeting the requirements of
Section 50053 of the Health and Safety Code, for a period of not less
than 30 years.
(e) "New Solar Homes Partnership" means the 10-year program,
administered by the Energy Commission, encouraging solar energy
systems in new home construction.
(f) "Solar heating collector" means a device that is used to
collect or capture heat from the sun and that is generally, but need
not be, located on a roof.
(g) "Solar water heating system" means a solar energy device that
has the primary purpose of reducing demand for natural gas through
water heating, space heating, or other methods of capturing energy
from the sun to reduce natural gas consumption in a home, business,
or any building or facility receiving natural gas that is subject to
the surcharge established pursuant to subdivision (b) of Section
2863, or exempt from the surcharge pursuant to subdivision (c) of
Section 2863, and that meets or exceeds the eligibility criteria
established pursuant to Section 2864. "Solar water heating systems"
include multifamily residential, governmental, educational, and
nonprofit solar pool heating systems, but do not include
single-family residential solar pool heating systems.
(h) "SRCC" means the Solar Rating and Certification Corporation.
The Legislature finds and declares all of the following:
(a) California is heavily dependent on natural gas, importing more
than 80 percent of the natural gas it consumes.
(b) Rising worldwide demand for natural gas and a shrinking supply
create rising and unstable prices that can harm California consumers
and the economy.
(c) Natural gas is a fossil fuel and a major source of global
warming pollution and the pollutants that cause air pollution,
(d) California's growing population and economy will put a strain
on energy supplies and threaten the ability of the state to meet its
global warming goals unless specific steps are taken to reduce demand
and generate energy cleanly and efficiently.
(e) Water heating for domestic and industrial use relies almost
entirely on natural gas and accounts for a significant percentage of
the state's natural gas consumption.
(f) Solar water heating systems represent the largest untapped
natural gas saving potential remaining in California.
(g) In addition to financial and energy savings, solar water
heating systems can help protect against future gas and electricity
shortages and reduce our dependence on foreign sources of energy.
(h) Solar water heating systems can also help preserve the
environment and protect public health by reducing air pollution,
including carbon dioxide, a leading global warming gas, and nitrogen
oxide, a precursor to smog.
(i) Growing demand for these technologies will create jobs in
California as well as promote greater energy independence, protect
consumers from rising energy costs, and result in cleaner air.
(j) It is in the interest of the State of California to promote
solar water heating systems and other technologies that directly
reduce demand for natural gas in homes and businesses.
(k) It is the intent of the Legislature to build a mainstream
market for solar water heating systems that directly reduces demand
for natural gas in homes, businesses, schools, nonprofit, and
government buildings. Toward that end, it is the goal of this article
to install at least 200,000 solar water heating systems on homes,
businesses, and other buildings or facilities of eligible customer
classes throughout the state by 2017, thereby lowering prices and
creating a self-sufficient market that will sustain itself beyond the
life of this program.
(l) It is the intent of the Legislature that the solar water
heating system incentives created by this article should be a
cost-effective investment by gas customers. Gas customers will recoup
the cost of their investment through lower prices as a result of
avoiding purchases of natural gas.
(m) It is the intent of the Legislature that this article will
encourage the cost-effective deployment of solar heating systems in
both residential and commercial markets and in each end-use
application sector in a balanced manner. It is the intent of the
Legislature that the commission monitor and adjust incentives created
by this article so that they are cost-effective investments
sufficient to significantly increase markets and promote market
transformation. It is the intent of the Legislature that the
commission ensure that increased, uniform growth in each market
sector is achieved through program incentives or structure
adjustments that prevent overutilization of program resources by any
(a) If, after a public hearing, the commission determines
that a solar water heating program is cost effective for ratepayers
and in the public interest, the commission shall do all of the
(1) Design and implement a program applicable to the service
territories of a gas corporation, to achieve the goal of the
Legislature to promote the installation of 200,000 solar water
heating systems in homes, businesses, and buildings or facilities of
eligible customer classes receiving natural gas service throughout
the state by 2017. Eligible customer classes shall include
single-family and multifamily residential, commercial, industrial,
governmental, nonprofit, and primary, secondary, and postsecondary
(2) The program shall be administered by gas corporations or
third-party administrators, as determined by the commission, and
subject to the supervision of the commission.
(3) The commission shall coordinate the program with the Energy
Commission's New Solar Homes Partnership to achieve the goal of
building zero-energy homes.
(4) The commission shall determine an appropriate division of
funds between solar water heating systems that are and are not solar
pool heating systems.
(b) (1) The commission shall fund the program through the use of a
surcharge applied to gas customers based upon the amount of natural
gas consumed. The surcharge shall be in addition to any other charges
for natural gas sold or transported for consumption in this state.
(2) The commission shall impose the surcharge at a level that is
necessary to meet the goal of installing 200,000 solar water heating
systems, or the equivalent output of 200,000 solar water heating
systems, on homes, businesses, and buildings or facilities of
eligible customer classes receiving natural gas service in California
by 2017. Funding for the program established by this article shall
not, for the collective service territories of all gas corporations,
exceed two hundred fifty million dollars ($250,000,000) over the
course of the 10-year program.
(3) The commission shall annually establish a surcharge rate for
each class of gas customers. Any gas customer participating in the
California Alternate Rates for Energy (CARE) or Family Electric Rate
Assistance (FERA) programs shall be exempt from paying any surcharge
imposed to fund the program designed and implemented pursuant to this
(4) Any surcharge imposed to fund the program designed and
implemented pursuant to this article shall not be imposed upon the
portion of any gas customer's procurement of natural gas that is used
or employed for a purpose that Section 896 excludes from being
categorized as the consumption of natural gas.
(5) The gas corporation or other person or entity providing
revenue cycle services, as defined in Section 328.1, shall be
responsible for collecting the surcharge.
(c) Funds shall be allocated for the benefit of gas customers to
promote utilization of solar water heating systems.
(d) In designing and implementing the program required by this
article, no moneys shall be diverted from any existing programs for
low-income ratepayers or cost-effective energy efficiency programs.
(a) The commission, in consultation with the Energy
Commission and interested members of the public, shall establish
eligibility criteria for solar water heating systems receiving gas
customer funded incentives pursuant to this article. The criteria
should specify and include all of the following:
(1) Design, installation, and energy output or displacement
standards. To be eligible for rebate funding, a residential solar
water heating system shall be certified by an accredited listing
agency in accordance with standards adopted by the commission. Solar
collectors used in systems for multifamily residential, commercial,
government, nonprofit, educational, or industrial water heating shall
be certified by an accredited listing agency in accordance with
standards adopted by the commission. Energy output of collectors and
systems shall be determined in accordance with procedures set forth
by the listing agency, and shall be based on testing results from
accredited testing laboratories.
(2) Require that solar water heating system components are new and
unused, and have not previously been placed in service in any other
location or for any other application.
(3) Require that solar water heating collectors have a warranty of
not less than 10 years to protect against defects and undue
(4) Require that solar water heating systems are in buildings or
facilities connected to a natural gas utility's distribution system
within the state.
(5) Require that solar water heating systems have meters or other
kWhth measuring devices in place to monitor and measure the system's
performance and the quantity of energy generated or displaced by the
system. The criteria shall require meters for systems with a capacity
for displacing over 30 kWth. The criteria may require meters for
systems with a capacity of 30 kWth or smaller.
(6) Require that solar water heating systems are installed in
conformity with the manufacturer's specifications and all applicable
codes and standards.
(b) Gas customer funded incentives shall not be made for a solar
water heating system that does not meet the eligibility criteria.
(c) The commission may adopt consensus solar standards applicable
to products or systems as developed by accredited standards
(a) The commission shall establish conditions on gas customer
funded incentives pursuant to this article. The conditions shall
require both of the following:
(1) Appropriate siting and high-quality installation of the solar
water heating system based on installation guidelines that maximize
the performance of the system and prevent qualified systems from
being inefficiently or inappropriately installed. The conditions
shall not impact housing designs or densities presently authorized by
a city, county, or city and county. The goal of this paragraph is to
achieve efficient installation of solar water heating systems and
promote the greatest energy production or displacement per gas
(2) Appropriate energy efficiency improvements in the new or
existing home or facility where the solar water heating system is
(b) The commission shall set rating standards for equipment,
components, and systems to ensure reasonable performance and shall
develop standards that provide for compliance with the minimum
(a) The commission shall provide not less than 10 percent of
the overall funds for installation of solar water heating systems on
low-income residential housing.
(b) The commission may establish a grant program or a revolving
loan or loan guarantee program for low-income residential housing
consistent with the requirements of Chapter 5.3 (commencing with
Section 25425) of Division 15 of the Public Resources Code. All loans
outstanding as of August 1, 2018, shall continue to be repaid in a
manner that is consistent with the terms and conditions of the
program adopted and implemented by the commission pursuant to this
subdivision, until repaid in full.
(c) The commission may extend eligibility for funding pursuant to
this section to include residential housing occupied by ratepayers
participating in a commission approved and supervised gas corporation
Low-Income Energy Efficiency (LIEE) program and who either:
(1) Occupy a single-family home.
(2) Occupy at least 50 percent of all units in a multifamily
(d) The commission shall ensure that lower income households, as
defined in Section 50079.5 of the Health and Safety Code, and, if the
commission expands the program pursuant to subdivision (c),
ratepayers participating in a LIEE program, that receive gas service
at residential housing with a solar water heating system receiving
incentives pursuant to subdivision (a), benefit from the installation
of the solar water heating systems through reduced or lowered energy
(e) No later than January 1, 2010, the commission shall do all of
the following to implement the requirements of this section:
(1) Maximize incentives to properties that are committed to
continuously serving the needs of lower income households, as defined
in Section 50079.5 of the Health and Safety Code, and, if the
commission expands the program pursuant to subdivision (c),
ratepayers participating in a LIEE program.
(2) Establish conditions on the installation of solar water
heating systems that ensure properties on which solar water heating
systems are installed under subdivision (a) remain low-income
residential properties for at least 10 years from the time of
installation, including property ownership restrictions and income
rental protections, and appropriate enforcement of these conditions.
(f) All moneys set aside for the purpose of funding the
installation of solar water heating systems on low-income residential
housing that are unexpended and unencumbered on August 1, 2018, and
all moneys thereafter repaid pursuant to subdivision (b), except to
the extent that those moneys are encumbered pursuant to this section,
shall be utilized to augment cost-effective energy efficiency
measures in low-income residential housing that benefit ratepayers.
(a) The rebates provided through this program shall decline
over time. They shall be structured so as to drive down the cost of
the solar water heating technologies, and be paid out on a
performance-based incentive basis so that incentives are earned based
on the actual energy savings, or on predicted energy savings as
established by the commission.
(b) The commission shall consider federal tax credits and other
incentives available for this technology when determining the
appropriate rebate amount.
(c) The commission shall consider the impact of rebates for solar
water heating systems pursuant to this article on existing incentive
programs for energy efficiency technology.
(d) In coordination with the commission, the Energy Commission
shall consider, when appropriate, coupling rebates for solar water
heating systems with complementary energy efficiency technologies,
including, but not limited to, efficient hot water heating tanks and
tankless or on demand hot water systems that can be installed in
addition to the solar water heating system.
(a) Not later than July 1, 2010, the commission shall
report to the Legislature as to the effectiveness of the program and
make recommendations as to any changes that should be made to the
program. This report shall include justification for the size of the
rebate program in terms of total available incentive moneys as well
as the anticipated benefits of the program in its entirety. To
facilitate the understanding of how solar water heating systems
compare with other clean energy and energy efficiency technologies,
all documents related to and rebates provided by this program shall
be measured in both kWhth and therms of natural gas saved.
(b) Not later than February 1, 2014, the commission shall complete
a review of whether the rebate levels established by the commission
will be sufficient to spur investment to reach the program goal of
installing 200,000 solar water heating systems in homes, businesses,
and other buildings or facilities receiving natural gas service
throughout the state by 2017, and shall report to the Legislature on
the results of its review. The report submitted pursuant to this
subdivision shall be submitted in compliance with Section 9795 of the
Except for the Solar Water Heating Pilot Program in San
Diego, solar water heating technologies shall not be eligible for
California Solar Initiative (CSI) funds, pursuant to Section 2851,
unless they also displace electricity, in which case only the
electricity displacing portion of the technology may be eligible
under the CSI program, as determined by the commission.
In order to further the state goal of encouraging the
installation of 200,000 solar water heaters by 2017, the governing
body of each publicly owned utility providing gas service to retail
end-use gas customers shall, after a public proceeding, adopt,
implement, and finance a solar water heating system incentive program
that does all the following:
(a) Ensures that any solar water heating system receiving monetary
incentives complies with eligibility criteria adopted by the
governing body. The eligibility criteria shall include those elements
contained in paragraphs (1) to (6), inclusive, of subdivision (a) of
(b) Includes minimum ratings and standards for equipment,
components, and systems to ensure reasonable performance and
compliance with the minimum ratings and standards.
(c) Includes an element that addresses the installation of solar
water heating systems on low-income residential housing. If deemed
appropriate in consultation with the California Tax Credit Allocation
Committee, the governing board may establish a grant program or a
revolving loan or loan guarantee program for low-income residential
housing consistent with the requirements of Chapter 5.3 (commencing
with Section 25425) of Division 15 of the Public Resources Code.
This article shall remain in effect only until August 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before August 1, 2018, deletes or extends