A PSEG-Long Island truck in Hicksville. The switch from LIPA...

A PSEG-Long Island truck in Hicksville. The switch from LIPA to PSEG-Long Island went "very well," said Dave Daly, president and COO of PSEG-Long Island. Credit: Newsday, 2013 / J. Conrad Williams Jr.

PSEG Long Island last week reduced popular solar energy rebates for businesses, schools, municipal entities and not-for-profits following the utility's earlier decision to cut its green-energy budget by $26 million this year.

In a Jan. 17 letter to solar-panel installers, PSEG said it would reduce the commercial rebate to 66 cents per watt down from 99 cents. That means the company will pay up to $66,000 in rebates for the largest 100-kilowatt systems, compared with a prior $99,000.

PSEG also reduced the program for not-for-profit organizations, schools and municipal entities to $1.32 per watt, or a maximum of $132,000. The rebate had been $1.88 per watt, with the utility paying a maximum of $188,000 on the cost for those facilities.

In addition, PSEG is considering a proposal to stop accepting rebate applications each month when the monthly rebate budget is reached, an official said.

The popular residential solar rebate remains unchanged at 66 cents a watt for systems that can reach up to 10 kilowatts, for a maximum rebate of $6,600. Home systems can cost upward of $50,000 but sharply reduce energy bills.

"It's pretty sad, especially with Gov. [Andrew M.] Cuomo touting that we're going in the same direction as California," by adding more renewable energy sources to the mix, said Kevin Creamer, owner of Sunshine Plus Solar, an installer in West Babylon.

Mike Volt, director of energy efficiency and renewables for PSEG LI, said the company has found the 66-cents-a-watt level was best to keep the market active while not burdening ratepayers. He noted the cost of solar panels is declining, helping to offset some lost rebate funds.

"Essentially, we thought we were paying more than we needed to" at the 99-cent level, he said. By paying less, PSEG can fund more systems, he said.

Gordian Raacke, executive director of Renewable Energy Long Island, a green-energy advocacy group which previously worked to promote the Long Island Power Authority's solar and renewable programs, called the reductions "unfortunate." "That's a big drop," Raacke said of the changes, though he added, "I'm not surprised. PSEG Long Island is under pressure to cut costs, and in some cases cut corners."

As for the plan to stop accepting applications when each month's budget is expended, Volt noted, "We don't have an unlimited budget" and must institute some controls. Under LIPA, the rebate was frequently reduced when program funds became low. LIPA twice had to suspend the program entirely when the annual budget ran out.

Raacke argued against the notion of ending rebates each month because of its toll on businesses. "This boom-bust cycle is very damaging to running a business," he said.

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