Nancy E. Ryan was the original assigned Commissioner and Dorothy J. Duda is the assigned ALJ in this proceeding. The case was reassigned to Michael R. Peevey as assigned Commissioner in January 2011.
1. Section 2827 requires the Commission to establish a program to compensate NEM customers for electricity produced in excess of on-site load at the end of a 12-month true-up period, i.e. "net-surplus generation."
2. Under Section 2827, customers may opt to receive either a payment for net-surplus generation or to roll a credit for that generation into the next 12-month period.
3. Section 2827 requires that any compensation for net surplus electricity leave other ratepayers unaffected and not result in a shifting of costs between solar customer-generators and other bundled service customers.
4. According to FERC, a transfer of net surplus energy by a net metering customer to a utility constitutes a wholesale transaction that must comply with either the FPA or PURPA.
5. FERC has found that wind and solar generating facilities of 1 MW can be considered QFs without filing for certification with FERC.
6. NEM customers eligible for NSC must use a solar or wind generating facility of not more than 1 MW.
7. Rule 21 governs QF interconnections.
8. According to Section 2827, net surplus compensation may include either or both the value of electricity and the value of the renewable attributes of the electricity.
9. DLAP prices are hourly day-ahead electricity market prices that a utility pays for a quantity of energy to meet its day-ahead load.
10. The amount of net surplus generation that is likely to be compensated is quite small compared to California's total electricity load.
11. Within the 12-month true-up period, customers will continue to receive a credit at the full retail electric rate up to the amount that offsets their usage, and the NSC rate will only apply to generation in excess of that amount.
12. Sierra Pacific and PacifiCorp have few customers that may qualify for NSC payments.
13. Sierra Pacific is not part of the CAISO, so it has no DLAP prices, and it is unclear if separate DLAP prices exist for PacifiCorp.
14. MPR reflects the construction, operating, and maintenance costs of a new 500 MW central station combined cycle natural gas plant.
15. Net surplus generation by NEM customers has no capacity value because an individual NEM customer has no obligation to provide energy to the utility. Net surplus generation is provided without contract on an intermittent, unpredictable and as-available basis over a 12-month period.
16. The only generation the utility avoids when an NEM customer provides surplus generation is reduced electricity procurement from the short-term wholesale market.
17. Section 399.12 defines a REC as "a certificate of proof, issued through the accounting system established by the [CEC] pursuant to Section 399.13" and Section 399.13 gives the CEC the authority to certify eligible renewable energy resources.
18. According to Section 2827(h)(5)(A), if a utility purchases net surplus electricity, any RECs associated with that net surplus electricity shall belong to the utility.
19. To qualify for RPS compliance, renewable energy generators must be certified as eligible by the CEC, and the REC must be tracked and verified through a CEC-approved accounting system.
20. At this time, the CEC has not certified DG systems as eligible for RPS compliance, except DG systems under AB 1969 tariffs.
21. It is unclear if WREGIS or another CEC-approved system can track and verify RECs that would be split between a utility and a customer.
22. RECs for RPS compliance are accounted for in 1 MWh increments and it is unclear if net surplus generation from multiple small facilities can be aggregated.
23. Section 2827 does not require NEM customers to have a bill credit to be eligible for net surplus compensation.
24. Section 2827 states that an eligible customer-generator's system is intended to primarily offset part or all of the customer's own electrical requirements.
25. NSC payments to individual net surplus generators are likely to be small and any administrative fee assessed on customers for the NSC program could be larger than the NSC payment.
26. ESPs are not electric utilities under Section 2827.
1. The Commission may adopt an NSC rate that does not exceed avoided costs consistent with PURPA.
2. NEM customers may self-certify as QFs.
3. Tariff Rule 21 should continue to govern interconnection between utilities and NEM customers who self-certify to the utility as QFs.
4. Net surplus generation will create exports from NEM customers which will likely result in fewer purchased kWhs of load at the DLAP price.
5. An avoided cost approach to valuing net surplus compensation reflects as closely as possible the costs the utility avoids by receiving surplus generation from NEM customers while leaving other ratepayers unaffected and not shifting costs between customer-generators and other customers.
6. Other ratepayers are unaffected if the utility compensates net surplus generation at the rolling average of the DLAP price between 7 a.m. and 5 p.m. because it represents costs the utility potentially avoids in procuring power during the time period NEM customers are likely to produce excess power.
7. DLAP prices are a reasonable and efficient source for an avoided cost energy value for net surplus generation that has no capacity value and is provided without contract on an intermittent, unpredictable and as-available basis. Net surplus compensation based on DLAP corresponds to the 12-month true-up period for NEM customers as required by Section 2827.
8. Sierra Pacific and PacifiCorp should have the ability to mirror the PG&E DLAP pricing methodology without undue burden.
9. If Sierra Pacific and PacifiCorp do not have DLAP prices within their California territories, they should base their NSC rate on PG&E's DLAP price as set forth in this decision.
10. It is not appropriate to base an NSC rate on the MPR, which includes payment for generation capacity, when NEM customers do not provide surplus generation under long-term contract.
11. An NSC rate based on the full retail electric rate would provide compensation above the value of electricity and shift costs to other ratepayers.
12. The NSC program must be harmonized with existing RPS statutes. Net surplus generators must be certified as RPS-eligible by the CEC and must meet CEC-approved REC tracking requirements for their generation to be counted for RPS purposes.
13. The utilities cannot count net surplus generation obtained from NEM customers toward RPS procurement targets until NEM customer facilities are CEC certified as RPS-compliant and the facilities' RECs are tracked and verified through a CEC-approved system.
14. RECs are the appropriate measure of a generator's renewable attributes.
15. NEM customers should not be compensated for the renewable attributes of their generation in the form of RECs until they actually create RECs and provide them to the utility.
16. Any NEM customer seeking NSC payment for the renewable attributes of its generation must certify it owns the RECs associated with its generating facility.
17. The renewable attribute premium proposed by SCE and based on WECC average renewable premiums is reasonable as an interim renewable adder solely for the purpose of compensating the renewable attributes of net surplus generation, which has no capacity value and is provided without contract on an intermittent, unpredictable, and as-available basis over a 12-month period.
18. Once the CEC establishes RPS eligibility for NEM customers and an REC ownership verification and tracking process, net surplus generators may receive an interim renewable attribute adder calculated using the most recent WECC average renewable premium, based on DOE published data. The Commission should reconsider the renewable attribute adder when RECs are publicly-traded.
19. If the CEC authorizes retroactive RPS certification of net energy metering customer facilities, the utilities should apply net surplus generation that occurred prior to CEC certification toward their RPS targets and compensate the renewable attributes of this net surplus generation, provided that the RECs are also transferred to the purchasing utility.
20. Payments for NSC should be reduced by any amount the customer owes to the utility.
21. If a customer has not generated excess kWhs, the customer is not eligible for NSC.
22. The value a customer receives for net surplus generation should be the same whether the customer chooses immediate compensation or opts to apply net surplus generation to offset future usage. Therefore, the value of net surplus generation should be converted to a monetary credit before being carried forward.
23. NEM customers may maintain NSC bill credits indefinitely and may switch from NSC payment to rollover, or vice versa, on an annual basis.
24. NEM customers should have a one dollar minimum NSC payment to receive a check from the utility, except NEM customers of Sierra Pacific and PacifiCorp should have a $25 minimum NSC payment to receive a check.
25. Systems sized larger than the NEM customer's electrical requirements would not be eligible for NEM and, therefore, are not eligible for NSC.
26. ESPs should not be required to offer NSC.
27. Customers of CCAs and ESPs should not receive NSC payments from a distribution utility because the distribution utility is not their generation supplier.
28. The Commission should not require CCAs to offer NSC to their customers at this time, although CCAs may choose to offer NSC.
29. According to Section 2827(h)(3), small and multi-jurisdictional investor-owned electric utilities operating in California must offer net surplus compensation to their customers.
IT IS ORDERED that:
1. Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company shall each use the simple rolling average of their default load aggregation point price from 7 a.m. to 5 p.m., corresponding to the customer's 12-month true-up period, as the value of the electricity portion of their individual net surplus compensation rates. The rolling average should be calculated on a monthly basis and be applied to all customers with a true-up period in the following month.
2. Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company shall each include a renewable attribute adder to the net surplus compensation rate in Ordering Paragraph 1 above, after the California Energy Commission determines the eligibility of net energy metering customer facilities for the Renewable Portfolio Standard and an ownership verification and tracking system for Renewable Energy Credits created by net surplus generators. The renewable attribute adder shall be calculated using the most recent Western Electricity Coordinating Council average renewable premium, based on United States Department of Energy published data. The renewable attribute adder shall only be paid to those net surplus generators who provide Renewable Energy Credits to the utility.
3. Within 30 days of the effective date of this decision, Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company shall each file a Tier 3 advice letter revising their net energy metering tariffs to include net surplus electricity compensation pursuant to Public Utilities Code Section 2827 and Ordering Paragraphs 1 and 2 above. The advice letter shall contain the initial calculations for a net surplus compensation rate based on each utility's individual default load aggregation point prices and specify the process for monthly updates to the rate. The net surplus compensation rate for each utility shall take effect upon Commission approval of that utility's advice letter and may be used to compensate customers who chose net surplus compensation when notified in January 2010 or thereafter.
4. If Sierra Pacific Power Company (Sierra Pacific, now known as California Pacific Electric Company) and PacifiCorp d.b.a. Pacific Power (PacifiCorp) have default load aggregation point prices in their California territories, Sierra Pacific and PacifiCorp shall each use their individual default load aggregation point price to calculate a net surplus compensation rate in the same manner as described in Ordering Paragraph 1 and 2 above.
5. In the event default load aggregation point prices do not exist within the California territories of Sierra Pacific Power Company (Sierra Pacific, now known as California Pacific Electric Company) and PacifiCorp d.b.a. Pacific Power (PacifiCorp), Sierra Pacific and PacifiCorp shall base their net surplus compensation rate on the net surplus compensation rate adopted for Pacific Gas and Electric Company.
6. Within 30 days of the effective date of this decision, Sierra Pacific Power Company and PacifiCorp d.b.a. Pacific Power shall each file an advice letter in compliance with this order to: a) revise their net energy metering tariffs to incorporate the net surplus compensation rates, terms, and conditions set forth in this decision; and b) either provide their calculations for net surplus compensation rate based on their default load aggregation point prices or notify the Commission they will use the net surplus compensation rate to be adopted for Pacific Gas and Electric Company.
7. Customers opting for net surplus compensation must notify the utility at the time they elect to receive a net surplus compensation payment or to apply their payment toward future usage that they are a qualifying facility exempt from certification filing at the Federal Energy Regulatory Commission.
8. Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, Sierra Pacific Power Company (now known as California Pacific Electric Company), and PacifiCorp d.b.a. Pacific Power shall obtain certification of renewable energy credit ownership from a net energy metering customer prior to compensating that customer for any renewable attributes or counting any renewable energy credits from net surplus generation toward Renewables Portfolio Standard annual procurement targets.
9. If the California Energy Commission (CEC) allows retroactive Renewable Portfolio Standard certification and renewable energy credit (REC) tracking for net surplus generation produced by net energy metering customers, each investor-owned electric utility may: (a) retroactively count RECs associated with net surplus generation it purchased prior to CEC certification and REC tracking, provided that the RECs are transferred to the investor-owned electric utility, and (b) retroactively compensate net surplus generators for the renewable attributes of their net surplus generation using the renewable adder in Ordering Paragraph 2 and subject to the requirements in Ordering Paragraph 8.
10. If a customer chooses to rollover excess kilowatt hours of net surplus generation, the dollar amount of any net surplus compensation must be applied to the customer's account directly rather than drafting a separate check. Once the excess kilowatt hours have been valued in dollars, the kilowatt hour values in all time periods should be reset to zero.
11. Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, Sierra Pacific Power Company (now known as California Pacific Electric Company), and PacifiCorp may offer net surplus compensation to any net energy metering customer, including wind energy co-metering customers, virtual net metering customers, and multiple tariff treatment customers.
12. Within 60 days of the effective date of this decision, small and multi-jurisdictional investor-owned electric utilities operating in California, other than Sierra Pacific Power Company (now known as California Pacific Electric Company), and PacifiCorp, shall either file a Tier 2 advice letter to adopt the net surplus compensation rate of Pacific Gas and Electric Company, Southern California Edison Company, or San Diego Gas & Electric Company, or file an application describing an alternative net surplus compensation rate and a detailed explanation why a deviation from the methodology adopted in this decision is necessary for their operations.
13. This decision shall be served on Bear Valley Electric Service and Mountain Utilities, Inc.
14. Applications 10-03-001, 10-03-010, 10-03-012, 10-03-013, and 10-03-017 are closed.
This order is effective today.
Dated June 9, 2011, at San Francisco, California.
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
/s/ MICHAEL R. PEEVEY