In today's depressed natural gas and power markets, any hopes of a solar building boom have been dashed as evidenced by the latest moves at Edison International's utility. Southern California Edison (SCE) has decided to cut its utility investment in rooftop solar systems in half, according to the parent company CEO Ted Craver, speaking on a conference call Monday in which Edison reported increased profits year over year and flat results for the fourth quarter last year.

The Rosemead, CA-based parent to SCE reported net income for the full year of $1.25 billion ($3.84), compared with $849 million ($2.59) for the full year in 2009. In the fourth quarter last year, net income was $190 million (58 cents), compared to $194 million (59 cents) for the same period in 2009.

Edison officials emphasized that the shrinking in half of its planned utility solar photovoltaic (PV) investments is a positive sign that the market is working, costs for solar equipment are coming down, and thus utility customers will be better served by contracting for more supplies from independent solar PV developers.

Less than two years ago state regulators approved an ambitious 500 MW solar PV program for SCE in which half of the megawatts would be installed and maintained by the utility. Last year in March the utility announced that it would purchase 200 MW of solar PV panels from San Jose, CA-based SunPower, noting at the time that 250 MW of the installations, mostly on unused large warehouse rooftops, would be owned and operated by SCE. That has all been scrapped.

All bets are off since SCE on Feb. 11 filed with the California Public Utilities Commission (CPUC) seeking to pare down the utility-owned rooftop PV installations. "Reduced prices of ground-mounted solar projects have led SCE to propose adjustments that could save customers up to $300 million during the life of the program," a SCE spokesperson said.

In response to questions about Edison's previously aggressive capital expenditure program being scaled back, CFO Jim Scilacci told financial analysts the solar rooftop effort has been "slipping back in time. We have somewhat been struggling with the program."

There is the added concerns about transmission projects, which are capital intensive and take a long time to clear the permitting processes, but they are nevertheless indispensable to many of the major new renewable projects trying to get built in California after obtaining the go-ahead from state regulators.

SCE still needs CPUC approval for the cutback in the utility side of the solar PV program, but the utility has told the regulators that the state's objectives for solar and renewables more broadly can be met with a reduced overall cost for Edison's utility customers. "The commission should grant our petition and approve the modified program we outlined," a SCE spokesperson said.

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