Word Document PDF Document

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

I.D. # 11046

ENERGY DIVISION RESOLUTION E-4481

RESOLUTION

Resolution E-4481. Tariffs Compliant with CPUC Decision 11-07-031, O.P. 2, Relating to Expansion of Virtual Net Energy Metering (VNM) to Apply to All Multi-tenant and Multi-meter Properties.

Proposed Outcome: Within 10-14 days, Pacific Gas and Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE) will re-file tariffs called "Schedule for Virtual Net Energy Metering for Multi-Tenant and Multi-Meter Properties (NEMV)" to comply with this Resolution and CPUC Decision 11-07-031, Ordering Paragraph 2. The original proposed tariffs are adopted with modifications below.

Estimated Cost: $0

By PG&E Advice Letter (AL) 3902-E, filed on September 12, 2011.

By SDG&E AL 2286-E, filed on September 12, 2011.

By SCE AL 2625-E, filed on September 12, 2011.

__________________________________________________________

Summary

In Decision (D.) 11-07-031, Ordering Paragraph (OP) 2 ordered PG&E, SCE, and SDG&E - known collectively, as the investor-owned utilities (the utilities or IOUs) to each file Tier 2 advice letters (ALs) containing modifications to their Net Energy Metering (NEM) tariffs to allow Virtual Net Metering (VNM) to apply to all multi-tenant and multi-meter properties, with the limitation that sharing of bill credits can only occur for accounts served by a single service delivery point.1

D.11-07-031 goes on to state:

The revised tariffs in these advice letters should mirror the tariff created in compliance with Decision 08-10-036 for Multifamily Affordable Solar Housing (MASH) program participants. Any deviations from the MASH VNM tariffs should be explained and supported in the advice letter. The utilities may propose a one-time account set up fee and monthly administrative fee for VNM service. The utilities may seek recovery of VNM implementation and set up costs in their future general rate cases.2

To achieve compliance, the utilities filed three ALs: PG&E's AL 3902-E, SDG&E's AL 2286-E, and SCE's AL 2625-E. These ALs establish utility tariffs which describe the key responsibilities of participating accounts with respect to site-assessment fees, account set-up fees, account change fees, bill credit allocation, and program operation mechanics. The ALs were protested by the Interstate Renewable Energy Council (IREC), Vote Solar, and California Solar Energy Industries Association (Cal SEIA) (collectively, the "Joint Solar Parties"), Division of Ratepayer Advocates (DRA), and Récolte Energy. Based on these protests, the utilities' responses, and discussion at the Public Workshop held December 8, 2011, this Resolution modifies portions of the utilities' ALs.

Background

In May 2010, the Commission initiated a new Order Instituting Rulemaking ("OIR") for the California Solar Initiative, Self-Generation Incentive Program, and other Distributed Generation issues (Rulemaking 10-05-004). In July 2010, the assigned Administrative Law Judge (ALJ) issued a ruling containing recommendations for modifications to the California Solar Initiative (CSI) Program3 from Energy Division staff. The ruling requested parties prioritize the program modifications proposed by Energy Division staff. In November 2010, a Scoping Memo was issued which set forth the modifications that are considered high priority and would be taken up in Phase 1 of this rulemaking.

In July 2011, the Commission adopted D.11-07-031 which modified the CSI Program based on the Phase 1 recommendations. These modifications covered a number of issues, including expanding VNM to all multi-tenant customers.

First established as part of the Multifamily Affordable Solar Housing (MASH) Program4 in D.08-10-036, VNM allows customers to allocate the kilowatt-hour credits from the electricity generated from a single solar energy system on an affordable housing property to multiple customer accounts within that property. VNM was originally limited to MASH customers only, and D.11-07-031, among other directives, expanded both the types of customers and generation technologies eligible for VNM.

Specifically, D.11-07-031 does not limit the expanded VNM to CSI customers. Whereas VNM was previously limited to solar PV technologies, D.11-07-031 now allows all technologies that are eligible for the full retail NEM tariff to participate in VNM. D.11-07-031 also limits the expanded VNM to customers served by a single service delivery point (SDP).5

The decision directed the utilities to file Tier 2 advice letters "containing modifications to their Net Energy Metering tariffs to allow VNM to apply to all multi-tenant and multi-meter properties" within 60 days of the decision, and states that "Energy Division may hold a workshop or direct the utilities to host a workshop to resolve implementation issues that may arise relating to the VNM tariffs."6

On December 8, 2011, Energy Division staff held a workshop to vet various issues raised in the expanded VNM ALs and the subsequent protests. This resolution addresses these issues below.

NOTICE

Notice of PG&E's AL 3902-E, SDG&E's AL 2286-E, and SCE's AL 2625-E were made by publication in the Commission's Daily Calendar. PG&E, SDG&E, and SCE state that a copy of their ALs was mailed and distributed in accordance with Section 43.14 of General Order 96-B.

SUMMARY OF PROPOSED VNM FEES7

Protests

All three ALs were timely protested by the Joint Solar Parties on October 3, 2011. PG&E's AL was timely protested by Récolte Energy on October 3, 2011, and the City of Santa Monica provided comments on the SDG&E AL on October 3, 2011. DRA protested all three ALs on October 28, 2011 following an extension granted by Energy Division.

Summary of the Protests and IOU Responses


The following summarizes the major issues raised in protests and the IOU responses to parties' concerns.

Issue 1: Justification for Site Assessment Fee

In their protest, Joint Solar Parties contend that while the utilities' proposed site assessment fees may be reasonable, their ALs "have not provided enough information to show that this is the case." Moreover, Joint Solar Parties question whether and to what extent such site visits are needed, and therefore whether VNM systems should be charged accordingly.8

DRA likewise requests that the IOUs provide a detailed justification for the proposed setup and monthly service fees including the proposed site assessment fee. (Issues 1 and 2 in this resolution.)

IOU Responses:

SDG&E

No Site Assessment Fee is proposed.

PG&E

In PG&E's response to protests regarding the $550 "Service Delivery Point and NEMV Arrangement Assessment Charge," PG&E asserts that, unlike standard NEM projects, it is often necessary to make site visits to assess the existing customer service panel equipment and to help determine how best to interconnect VNM projects, because "....the original panel was likely installed without the anticipation of a generator tie-in and may have constraints."9

SCE

In their response, SCE states that the $600 "Site Visit and Engineering Review Fee" is designed to recover the cost of a site visit and engineering review. SCE contends that VNM and multitenant systems have more complex service configurations, which require a "Local Service Planner, Distribution Engineer, and Metering Representative to visit the site prior to construction...In addition, other factors may require panel upgrades, modifications, and or relocation."10 The costs of the Site Assessment fee include expenses for verification of the interconnection of all eligible generating facilities at the Service Delivery Point (SDP); as well as confirmation that the combined generators meet applicable size restrictions including:

SCE draws the following distinctions between the VNM and traditional NEM interconnection process to support its argument that VNM requires a site assessment including:

Issue 2: Set-Up and/or Monthly Fees, Modification Charges, and Frequency of Credit Allocation Changes

In their protest, Joint Solar Parties state that it is not clear what the PG&E and SCE set-up fee is intended to cover. While they did not find either fee so high as to deter project development, they assert that SCE's $33 set-up fee per Benefiting Account is more than what would be required to simply set up an entry into a billing system that was already developed through previous investments. Joint Solar Parties state that the utilities were awarded substantial budgets to establish their billing systems under the original MASH program and should already have the capability to bill customers without significant additional cost.

SDG&E was the only utility to propose a monthly billing fee, and Joint Solar parties questioned whether SDG&E provided any justification for a monthly fee or stated what it is intended to cover. On this issue, Joint Solar Parties note that "Solar systems are designed to last 20 years or more, and it is unclear why maintenance of a simple billing system could justify a monthly fee of up to $30."12

With regard to Modification Charges and Frequency of Credit Allocation Change, Joint Solar Parties assert that "it is unclear why it costs SCE nearly four times as much as PG&E to do the same task....with the use of appropriate software, changing the allocations should be an extremely quick task."13

Both Joint Solar Parties and DRA accept that the utilities may charge a reasonable fee for account allocation modifications. Both would accept SDG&E charging a similar modification fee per Benefiting Account provided that SDG&E is required to remove its restriction on the frequency of allocation changes and instead allow allocations to be modified as-needed. Both protests argue that SDG&E's allocation modification policy is unduly restrictive and could unnecessarily hamper the adoption of VNM.

IOU Responses

PG&E

In its response, PG&E argues that the set-up fees represent the incremental costs to set up NEMV accounts due to the added complexity of VNM including: allocating and tracking generator output to multiple Benefiting Accounts, changing allocations, and in some cases multi-month reconciliation over potentially many accounts. Regarding the $3 per Benefiting Account Modification Charge, PG&E believes that this provides flexibility to reallocate credit when tenant units become vacant, which should be a significant benefit to operators. PG&E's AL did not restrict the frequency of account credit allocations.

SCE

Regarding the Modification Charge, SCE states that it is assessed when a customer adds Benefiting Accounts, deletes Benefiting Accounts, or modifies the allocation percentages, and that the charge is based on the staff time required to perform similar work for MASH-VNM networks.

SDG&E

Regarding set-up fees, SDG&E provided the same response as SCE, stating that its proposed service origination fee is based on costs previously approved under Schedule RES-BCT.

Regarding Modification Fees and Frequency of Account Modifications, SDG&E points out that the initial 12 month period was based on "free" changes to the allocation designations and is consistent with CPUC approved provisions in both RES-BCT and VNM-A for minimum 12 month effective periods. If SDG&E is directed to remove the 12-month anniversary limitation, they would instead propose to charge the participants a fee every time a change is made, regardless of the anniversary date.


Regarding the Recurring Monthly Fee (a fee that only SDG&E has proposed

to charge), SDG&E believes that the recurring monthly service fees are appropriate for continued monthly maintenance required for eligible VNM customers. SDG&E acknowledges that its billing system will handle a large part of the VNM monthly processing, but says that exceptions will require manual intervention by an SDG&E billing analyst for tasks such as new customers moving in and moving out of eligible VNM services, customer consumption validation, generation credit validation; meter data validation, and customer- requested updates to allocation percentages for eligible VNM units.14

Issue 3: Allocation of Credits that are not Applied due to Occupant Non-Participation or Inactive Account

Both Joint Solar Parties and DRA are concerned with the equity of SDG&E's tariff language, which states "Credit that is allocated to a particular unit, but not applied to a Qualified Customer's bill due to occupant nonparticipation or unit vacancy (no active account) will be retained by the Utility."15 These parties believe it is unreasonable for the utilities to retain those credits, which they argue rightfully belong to the system owner and/or the other Benefiting Accounts. While PG&E and SCE do not specify in their ALs what will happen to credits in this situation, both protesters propose as a remedy that the "...system owners have the option of designating in their allocation forms what should happen to such credits (i.e. should be evenly allocated amongst the remaining accounts, or credited to the generating account or the common-area account or some other scenario)."

IOU Responses:

Each utility believes that the issue of how to deal with credits from vacancies has been resolved, because each allows the system owner to re-allocate the credits on a going-forward basis at any time using forms provided in their ALs.

SCE cites what it believes is common practice in VNM MASH arrangements: voluntary Owner/Tenant Agreements are often in place that automatically convert the account to the owner as the customer of record when the tenant requests to turn off service with SCE. In these instances, SCE says the VNM credits will be automatically directed to the owner's account and SCE believes this option adequately accounts for vacancies without having to create costly programming or unnecessary manual work.

SDG&E echoed the same point on voluntary "revert to owner" contracts and believes it is justifiable for unallocated VNM credits to revert to SDG&E because it states these credits are "recorded into SDG&E's Energy Resource Recovery Account (ERRA) to benefit the ratepayers providing the program subsidies."

Issue 4: Definition of System Owner or Operator

Joint Solar Parties note that each of the proposed IOU tariffs define system ownership in a different way, and register concern that SDG&E's definition is unnecessarily restrictive as it requires that the system owner be the property owner. They find SCE's definition to be more flexible by allowing for operators as well as owners, and PG&E's tariff to offer the greatest flexibility by not placing any restrictions on the ownership term. Due to the infancy of VNM the Joint Solar Parties believe it is too early to know which ownership structures will work best for participants, financiers or property owners. To facilitate VNM market development, the Joint Parties assert that VNM tariffs should allow a wide range of different ownership scenarios to exist. The Joint Solar Parties request the Commission to require the utilities to ensure that their tariffs do not restrict the types of ownership arrangements that may participate in the VNM tariff.16

IOU Responses

PG&E did not propose a change to the definition of owner. SCE acknowledged the Joint Solar Parties' concern by offering a modification to their definition:

"Qualified Customer: A Qualified Customer is either: (i) the Owner or Operator of the multi-tenant Property with one or more separately metered Bundled Service Accounts; (ii) an entity authorized by the owner to install and operate the generating facility and who will be SCE's customer of record for the Generating Facility; or (iii) a tenant/occupant of the Property with a separately metered Bundled Service Account, which is physically connected to the same SDP, as defined in Rule 16 to which the Eligible Generator is connected."17

SDG&E's VNM-A and Expanded VNM tariffs define Owner as "the Enterprise, or Entity, that owns a multi-tenant or multi-meter property."18 In their reply they maintain that the current language does not limit the applicability of VNM-A or Expanded VNM to only situations where the owner of the property owns the generation system.

Issue 5: Generating Account Holder's Ability to Verify Allocations Made to Benefiting Accounts

In their protest the Joint Solar Parties proposed that the Commission add a provision to ensure that the system owner can properly track the credits being allocated:

We propose that the utilities provide an online system that enables owners to see all of the accounts participating in their system and to track the allocations being made. Alternately, the utilities should issue a summary `statement' to the system owner at the end of each month that details the billing for the participating accounts.19

IOU Responses

PG&E

PG&E supports the idea of providing generation data to the Generating Account Owner and will initiate discussions with the Joint Parties and the Commission to identify data that can be provided to the Generating Account Owner, while protecting the privacy of each of the Benefiting Account Owners' utility accounts. PG&E is concerned that even if there were no privacy concerns, the Generating Account and Benefiting Account details would not line up exactly on a monthly basis unless they were read at exactly the same moment given differences in interval read times between the Generating and Benefiting Accounts.

SCE/SDG&E

SCE and SDG&E each are concerned that due to confidentiality restrictions, neither can provide Benefiting Accounts' customer information to the owner nor publish such information online. They each point out that the generated kilowatt-hour total is presented on the generating account's monthly billing statement, and further point out that the owner establishes the allocation to each account and thus should be able to calculate the amount of the credit from the aggregate information on this statement.

Issue 6: Definition of Service Delivery Point

Tariffs filed to serve MASH program participants initially limited VNM eligibility to a single SDP. The SDP is defined in utility practice as the demarcation between the customer-owned electrical system and the utility distribution system funded by ratepayers.20

The Commission adopted this SDP limitation for VNM eligibility in D.11-07-031 for two reasons: first, in response to the need for a physical boundary for the purposes of determining VNM eligibility and billing; and second, to protect ratepayers from cost shifts associated with wheeling power21 over the utility-owned distribution system.22

At the VNM workshop, PG&E, speaking on behalf of the three utilities, displayed diagrams to illustrate their definition of SDPs and the conditions under which a property with multiple meters would be eligible for VNM. PG&E explained that the SDP is the point of termination in the service panel box where electric service from the utility is delivered to the meters along that meter bank. In essence, one meter or bank of meters where distribution lines terminate equals one service delivery point. PG&E also concluded that if there happens to be multiple buildings on the property, with distribution extensions serving the meter banks located on the property's other buildings, then the property would have multiple SDPs and, accordingly, the meters located on these other buildings would not be eligible for VNM from a system interconnected at another SDP.

The SDP definition has caused significant confusion, and one party, Récolte Energy, criticized PG&E's advice letter for relying on an overly-restrictive definition of SDPs in their advice letter filings:

"The expanded VNM tariff that PG&E has proposed in its advice letter seems to comply with the Commission's decision and intent. However, unless the Commission requires PG&E to expand its current definition of SDP, only a fraction of the intended beneficiaries of VNM will actually be able to participate in VNM."23

IOU Responses

PG&E

In its response to this protest, PG&E states that "[Récolte's] comments are not really a protest of PG&E's advice letter but rather a critique of the Decision."24 PG&E argues that changing the definition of SDP would be equivalent to changing the outcome of D.11-07-031.

Issue 7: Demand Response and Solar Tariffs

The Joint Solar Parties object to PG&E and SDG&E excluding VNM customers from participating simultaneously in demand response and solar tariffs. Given that DR programs complement solar, and given that SDG&E Schedules DR-SES and DGR were created to recognize the value of a customer's investment in solar energy, the Joint Solar Parties argue that SDG&E has not identified why VNM participants should be excluded from participation in these tariffs.

IOU Responses

PG&E

In their response PG&E agreed to allow customers who participate in NEMV to also participate its demand response programs. These programs include E-BIP, E-DBP, E-RSAC and E-CBP25. PG&E already allows such participation in its E-BIP and E-DBP programs but not in its E-CBP and E-PeakChoice programs.26 PG&E also agreed to allow customers participating in its Aggregator Managed Portfolio (AMP) program to be eligible for NEMV at the point in time its contracts are renegotiated. However, PG&E would require that any payments for demand response be limited to the customer's load, and not include excess generation exported to the grid during the hours of a demand response event.

SDG&E

In the VNM Public Workshop SDG&E's slide presentation stated:

"SDG&E's Schedule DR-SES is intended for individually metered customers with solar energy systems. Because many of the tenants do not invest in a solar system, the Commission has approved the exclusion of DR-SES and DGR rates from participation in Schedule VNM-A. The Commission has also allowed the DGR rate option to be excluded from the tenant's subaccounts under RES-BCT.

Expanded VNM would be available to non-residential customers."

Issue 8: VNM Tariff Sunset Dates

PG&E's tariff states the VNM tariff will expire upon reaching the net metering cap (of 5% of the utilities aggregate customer peak demand), on December 31, 2015, or "until all funds available for the incentives have been allocated, whichever comes first."27 SCE's tariff provides that the schedule is only available until the net metering cap is reached or until December 31, 201528. SDG&E's tariff expires upon reaching the net metering cap.

The Joint Solar Parties argue that PG&E's and SCE's proposed VNM tariff sunsets are not in compliance with D.11-07-3129, clarifying that VNM was not limited to CSI-participating projects.

IOU Responses

PG&E

At the Energy Division's request, PG&E has already agreed to remove the incentive program reference language plus the "on December 31, 2015" language and has submitted a supplemental advice letter 3902-E-A to make this change.

SCE

In their reply to the Joint Solar Parties' Protest SCE agreed to remove the December 31, 2015, expiration date from its proposed tariff.30

Summary of Other Issues Discussed at December 8, 2011 Public Workshop

The following summarizes several other issues that were not raised in formal protests, but were brought up for discussion at the public workshop and warrant brief clarification within this resolution.

Issue 9: Clarify Applicability of VNM General Market Expansion


D.11-07-031 expanded VNM to apply to all multi-tenant and multi-meter properties. In the workshop, participants asked if there was a meaningful distinction between a "multi-tenant" and "multi-meter property" in the context of VNM expansion.

Issue 10: Net Generator Output Meters (NGOMs) for VNM Generators

Each IOU tariff requires a net generator output meter (NGOM) to be installed for VNM interconnection. At the VNM workshop, a PV developer asked whether installation of NGOM meters at VNM sites would always be required for CSI participants as it represents additional expense beyond the meter already required by the CSI program to calculate the performance-based incentive (PBI). The developer argued that the CSI Program requires a high degree of metering accuracy to satisfy incentive payment verification standards. In their view, if a meter is good enough for CSI, it could be good enough for VNM as well. The utilities responded that PBI meters perform CSI program specific functions mandated under CSI. NGOMs provide the generation output needed for credit allocation under VNM. Thus participants in CSI need both a PBI meter and an NGOM meter; non-CSI participants in VNM only need an NGOM meter.

Issue 11: Demand Charges for VNM Customers

One workshop participant sought clarification regarding how VNM customers would be treated with respect to demand charges. It could be argued that VNM customers should be treated the same as NEM customers with regard to demand charges.

Issue 12: Fuel Cell Customer Generators Eligibility for VNM

Senate Bill (SB) 489 extends net energy metering to all technologies eligible for the California Renewable Portfolio Standard (RPS).31 Workshop participants requested clarification regarding whether fuel cell customer generators that are eligible for NEM would also be eligible for VNM, under SB 489.

Discussion

Issue 1: Justification for Site Assessment Fee

D.11-07-031 Ordering Paragraph 2 allows utilities to propose a one-time account set-up fee and monthly administrative fee for VNM service, and to seek recovery of VNM implementation and set up costs in future general rate cases. The Decision does not expressly authorize site assessment fees, and the presently effective tariffs for VNM MASH and RES-BCT do not require site assessment fees.

We draw the following conclusions from the justifications provided by PG&E and SCE for their proposed site assessment fees:

Conclusion Issue 1:

We reject the proposed site assessment fees. Utilities shall modify their application forms to collect the necessary technical details from VNM interconnection applications. If after review of the application the IOUs determine a site assessment is essential, the utilities may track the expenses associated with such on-site VNM site assessments for the "complex service configurations" and one year from the effective date of this resolution may request recovery of those expenses and/or address the need for and criteria that would trigger a VNM site assessment going forward.

Issue 2:     Set-Up and/or Monthly Fees, Modification Charges, and Frequency of Credit Allocation Changes

All three IOUs have proposed various Account Set-up Fees and Account Modification Fees on a per-Benefiting Account basis billed to the Generating Account.32 SDG&E is the only IOU to propose a monthly billing fee. 

The PG&E $12 per Benefiting Account set-up fee appears to be reasonable as a discrete value, but in very high -unit VNM arrangements this fee could be sizeable.  SCE's $33 per Benefiting Account set-up fee is high, and will be especially so in high-unit VNM arrangements.  SDG&E's account set-up fee is adjusted according to the number of Benefiting Accounts and is capped at $500.  SDG&E's fee is also consistent with the currently effective RES-BCT tariff's account set-up fee structure, and it "scales" for high-unit arrangements.

SDG&E is the only utility to propose a monthly billing fee.  However, SDG&E is currently working to automate its billing infrastructure to be more cost-effective. Once this system is operational,33 there will be no need to recover billing costs from VNM customers. PG&E and SCE reported at the Workshop that monthly billing is automated and does not represent a significant marginal cost. 

The account modification fees range from a low of $3 to a high of $11.02 per Benefiting Account.  PG&E and SCE propose to charge a modification fee each time an account change occurs.  SDG&E proposes to allow one "free" change per twelve month period and would charge a fee for changes that occur more frequently.  The IOUs reported in the Workshop that changes are relatively infrequent in the MASH VNM program, while developers at the Workshop predicted that changes in the VNM general market could be quite frequent.  Allowing one free modification per account free of charge each twelve months encourages efficient management of the VNM administration, while allowing needed changes to occur more frequently for a reasonable charge.

Based on the ALs, responses to protests, and the extensive workshop discussion on these issues, we conclude:

Conclusion Issue 2:

Issue 3: Allocation of Credits that are not Applied due to Occupant Non-Participation or Inactive Account

The utilities argue that Generating Account holders have two options to prevent the possibility of unallocated credits going unused: VNM operators are able to request a new allocation arrangement going forward with the forms provided in the ALs, and VNM operators are free to enter into "revert to owner" contracts with VNM Benefiting Accounts. The Joint Solar Parties contend that system owners should have the option of designating what should happen to unallocated credits including: evenly allocating such credits amongst the remaining Benefiting Accounts, or crediting them to the Generating Account or the Common-Area Account. In the event of unallocated credits, we agree with the Joint Solar Parties point that there should be a clear default provision, because requests for new allocation arrangements take effect on the proximate billing cycle and will not address the disposition of unallocated credits. SDG&E's proposal that unallocated credits revert to the utility is unfair to VNM customers.

Conclusion Issue 3:

Issue 4: Definition of System Owner or Operator

While each of the IOUs' tariffs define VNM system ownership in a different way, there was general agreement at the Workshop that the IOUs' intent is to not restrict the types of ownership arrangements that may participate in VNM.

SCE's definition allows for operators as well as owners, while PG&E does not restrict or define an owner. At the Workshop, all parties agreed that the intent of VNM should be to enable a range of possible ownership structures, including but not limited to VNM arrangements wherein:


We will not attempt to envision every possible ownership structure. Rather, definitions and terms and conditions of the revised ALs should enable different types of ownership and operational structures without placing restrictions on the types of arrangements possible. SCE's revised language, with one modification (in bold below,) will accomplish this objective:

Qualified Customer: A Qualified Customer is either: (i) the Owner or Operator of the multi-tenant Property with one or more separately metered Bundled Service Accounts; (ii) an entity authorized by the owner to install and/or operate the generating facility and who will be SCE's customer of record for the Generating Facility; or (iii) a tenant/occupant of the Property with a separately metered Bundled Service Account, which is physically connected to the same SDP, as defined in Rule 16 to which the Eligible Generator is connected.36

Conclusion Issue 4:

Issue 5: Generating Account Holder's Ability to Verify Allocations Made to Benefiting Accounts

While PG&E expressed a willingness to work with the parties, none of the IOU ALs sufficiently addresses the concerns expressed in the protest regarding this issue. Generating Account holders have a legitimate interest in verifying that Benefiting Account holders receive the benefits of the VNM arrangement. Developers are putting significant capital at risk and have a financial interest in Benefiting Account holders for project cost recovery. However, maintaining privacy of customer information is a valid concern for the utilities, making the provision of some customer information challenging. As a solution, the IOUs suggested in the workshop that the VNM Generating Account operators seek authorization from each Benefiting Account for access to the data necessary to confirm accurate account crediting. While this arrangement is theoretically possible, VNM proponents argued that it was a cumbersome and imperfect solution.

In the Smart Grid Rulemaking (R.08-12-009), D.11-07-056 directed the utilities to develop proposals by January 30, 2012 that address the terms under which authorized third party service providers may gain access to customer data for legitimate and authorized purposes. It is possible this process will result in a protocol that could cover the data needs discussed above. It is also possible for the utilities to provide accurate and timely aggregated VNM crediting information to the corresponding VNM operator to enable them to compare the aggregate kWh credits to the generation data available to the Generating Account.

Conclusion Issue 5:

Issue 6: Definition of Service Delivery Point

The specific issue raised in both the Récolte protest and at the VNM workshop involved distribution extensions between buildings on a property. It should be clarified here that a distribution extension itself is not the same as a service delivery point, per Rule 16.

However, multiple parties at the workshop suggested that some of the arguments supporting the Commission's intent - to establish an appropriate VNM eligibility boundary and to protect distribution ratepayers - are not valid.

While the Commission established the single SDP as the eligibility point for VNM eligibility in the general market, it acknowledged that alternate proposals for sharing credits across multiple SDPs that minimize cost shifting and other concerns "may be worthy of consideration in the future."37 Parties at the VNM workshop noted that under Rule 15, distribution extensions are paid for by the property owner; thus, distribution costs for wheeling power are not shifted to ratepayers in situations where multiple SDPs on a single property are served via distribution extensions, even if the ownership of such lines has been conveyed to the utility.

Parties also noted at the VNM workshop that since the MASH program now allows for VNM billing across multiple SDPs in a contiguous property under single ownership, meters across multiple SDPs are not difficult to identify or serve in the general market, particularly when any nominal costs associated with the arrangement are borne by the system operator.

While staff acknowledges that at some point it may be useful to revisit the rationale of the single SDP demarcation versus adoption of a site definition similar to that governing VNM eligibility for MASH participants, we nevertheless conclude that the ALs correctly limited VNM account eligibility to single SDPs, as currently defined.

Conclusion Issue 6:

Issue 7: Demand Response and Solar Tariffs

PG&E has agreed to allow VNM customers to participate in DR programs unless the program is about to be eliminated. SDG&E has not made a convincing argument as to why VNM customers should be precluded from participating in DR or solar tariffs. VNM customers should be allowed to manage their remaining load under the same terms as customers who participate in DR or solar tariffs in their corresponding customer class. Further, paragraph (4) of subdivision (a) of PU Code Section 2851 states that:

(4) Notwithstanding subdivision (g) of Section 2827, the commission may develop a time-variant tariff that creates the maximum incentive for ratepayers to install solar energy systems so that the system's peak electricity production coincides with California's peak electricity demands and that ensures that ratepayers receive due value for their contribution to the purchase of solar energy systems and customers with solar energy systems continue to have an incentive to use electricity efficiently.38

For purposes of implementing all laws pertaining to NEM, VNM customers should be treated under the same terms and conditions as NEM customers in their corresponding customer class, i.e. a residential VNM Benefiting Account should be allowed to participate in a solar tariff open to residential solar customers. It is reasonable to require that any payments for demand response be limited to the customer's load, and not include excess generation exported to the grid during the hours of a demand response event, as PG&E has proposed.

Conclusion Issue 7:

Issue 8: VNM Tariff Sunset Dates

At the Energy Division's request, PG&E has already agreed to remove the CSI program reference language and the "on December 31, 2015" language in its tariff, and PG&E has already filed a supplemental advice letter 3902-E-A to formalize these changes. SCE agreed to remove the December 31, 2015, expiration date from its proposed tariff.

Conclusion Issue 8:

Issue 9: Clarify Applicability of VNM General Market Expansion

The intent of the D.11-07-031 is to expand VNM to all multi-tenant and multi-meter properties. This includes all residential (whether rental properties or condominiums), commercial and industrial properties. There are no limitations as to the type of property that can participate in VNM with the exception that sharing of bill credits can only occur for accounts served by a single service delivery point.


Conclusion Issue 9:

Issue 10: Net Generation Output Meters (NGOM) for VNM

The PBI meter performs CSI program specific functions mandated under CSI. NGOM meters provide the generation output needed for credit allocation under VNM. Thus participants in CSI need both a PBI meter and an NGOM meter, while non CSI participants in VNM need an NGOM only.

Conclusion Issue 10:

Issue 11: Demand Charges for VNM Customers

Treatment of NEM customers with regards to demand changes is addressed in PU Code §2827(g) which states:

(g) Except for the time-variant kilowatt hour pricing portion of any tariff adopted by the commission pursuant to paragraph (4) of subdivision (a) of Section 2851, each net energy metering contract or tariff shall be identical, with respect to rate structure, all retail rate components, and any monthly charges, to the contract or tariff to which the same customer would be assigned if the customer did not use an eligible solar or wind electrical generating facility, except that eligible customer-generators shall not be assessed standby charges on the electrical generating capacity or the kilowatt hour production of an eligible solar or wind electrical generating facility. The charges for all retail rate components for eligible customer-generators shall be based exclusively on the customer-generator's net kilowatt hour consumption over a 12-month period, without regard to the eligible customer-generator's choice as to from whom it purchases electricity that is not self-generated.

Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or any other charge that would increase an eligible customer-generator's costs beyond those of other customers who are not eligible customer-generators in the rate class to which the eligible customer-generator would otherwise be assigned if the customer did not own, lease, rent, or otherwise operate an eligible solar or wind electrical generating facility is contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs.39 [Emphasis added].

VNM customers should be treated like NEM customers, thus the same treatment as regards to demand charges is extended to VNM customers.

Conclusion Issue 11:

Issue 12: Fuel Cell Customer Generators Eligibility for VNM

SB 489 extends net energy metering to all technologies eligible for the California RPS, and by extension expands the technologies eligible for VNM,40 which relies on the same definition for eligible generation. Now all types of RPS-eligible generation can receive full retail rate NEM and can participate in VNM.

Existing law establishes a net energy metering program that is available to an eligible fuel cell customer-generator, as defined. SB 489 modifies existing law that requires an eligible fuel cell customer-generator to use technology that meets the definition of an "ultra-clean and low-emission distributed generation." The new law requires an eligible fuel cell customer-generator to use technology that the CPUC determines will achieve reductions in emissions of greenhouse gases and meets emissions requirements for eligibility for funding pursuant to the self-generation incentive program. Therefore, renewable-powered fuel cells get full retail rate NEM, and are thus eligible for VNM; and non-renewable fuel cells that meet the emission performance standard receive NEM at the generation rate only (PU Code § 2827.10), and are thus not eligible for VNM.

Conclusion Issue 12:

COMMENTS

This resolution will be served to the R.10-05-004 service list for a 20 day comment period.

FINDINGS AND CONCLUSIONS:

1. PG&E's AL 3902-E, SDG&E's AL 2286-E, and SCE's AL 2625-E were filed to create tariffs to implement Ordering Paragraph 2 of D.11-07-031.

2. In D.11-07-031, Ordering Paragraph 2 allowed utilities to propose a one-time account set-up fee and monthly administrative fee for VNM service, and permits the utilities to seek recovery of VNM implementation and set up costs in future general rate cases. The Decision did not expressly authorize site assessment fees, and the presently effective tariffs for VNM MASH and RES-BCT do not require site assessment fees. SDG&E did not propose a site assessment fee for VNM in its AL.

3. The services proposed under a site assessment fee are largely services that are already provided to other NEM customers as part of the interconnection application process.

4. All the utilities have established automated billing systems that can handle VNM monthly billing arrangements based on previous investments made to establish billing infrastructure for VNM MASH and RES-BCT.  The fixed costs for VNM billing infrastructure have been expensed to the CSI general market program administration budgets, per D.08-10-036. Costs incurred to this point by the three utilities for automatic billing systems have been recovered from CSI general market administrative budgets. It is assumed that these systems are fully automated and that there will be no further costs; however, if there are reasonable costs associated with VNM billing infrastructure in the future then these should be capitalized and recovered in future rate cases.

5. The utilities will incur marginal costs, such as account set-up costs to establish VNM service for multiple accounts under each VNM arrangement which are recovered from the user set-up fees.

6. The utilities will incur marginal costs when VNM account modifications are required, such as changes to credit allocations or adding/removing VNM service for a Benefiting Account. These are recovered from the user modification fees.

7. For VNM to be practical, necessary account changes should be accommodated at a reasonable cost.

8. The IOUs have not adequately justified why the proposed fees are significantly different for each IOU.

9. In the event of unallocated credits there should be a clear default allocation provision.

10. A range of possible ownership structures may arise to implement VNM.

11. Investors and operators of VNM arrangements have an interest in the owner/operator's ability to verify that Benefiting Account holders receive the proper amount of credits allocated to them in the VNM arrangement.

12. For purposes of the General Market Virtual Net Metering tariff, the SDP identifies the physical location at which the Generating Account, its designated Benefiting Accounts, and the eligible generating facility, are all connected with the utility distribution system.

13. The utilities have not made a convincing argument that VNM customers should be precluded from participating in a DR or solar tariff program.

14. The intent of D.11-07-031 was to expand VNM to all multi-tenant and multi-meter properties, including but not limited to residential (whether rental properties or condominiums), commercial and industrial properties.

15. Net Generator Output Meters are required for VNM credit allocation.

16. SB 489 extends net energy metering to all technologies eligible for the California RPS, and by extension expands the technologies eligible for VNM, which relies on the same definition for eligible generation.

THEREFORE IT IS ORDERED THAT:

The request of PG&E, SDG&E, and SCE to implement D.11-07-031, O.P. 2, as detailed in Advice Letters 3902-E, 2286-E, and 2625-E (respectively) is approved with the following conditions and modifications:

1. All tariffs shall be re-filed within 10 days to comply with the orders herein.

2. We reject the proposed site assessment fees. Utilities shall modify their application forms to collect the necessary technical details from VNM interconnection applications. If after review of the application the IOUs determine a site assessment is essential, the utilities may track the expenses41 associated with such on-site VNM site assessments for the "complex service configurations" and one year from the effective date of this resolution may request recovery of those expenses and/or address the need for and criteria that would trigger a VNM site assessment going forward.

3. The utilities may charge to the Generating Account a one-time set-up fee per VNM arrangement (defined as a Generating Account providing credits for one or multiple Benefiting Accounts.) The fee may be no higher than $25 per Benefiting Account and is capped at $500 per VNM arrangement.

4. The proposed monthly billing fees are denied.

5. The utilities shall allow account modifications as frequently as needed. There shall be no charge for up to one change per Benefiting Account per 12 month period. Subsequent changes per 12 month period may be charged up to $7.50 per account change, billed to the Generating Account.

6. The respective credit allocation forms of each IOU shall provide the system operator the option to designate the disposition of unallocated credits to either the Generating Account, the Common Area Account, or evenly to all Benefiting Accounts.

7. The IOUs shall adopt SCE's revised definition of a Qualified Customer as their standard definition as follows:

8. The IOUs shall work with Generating Account Owners and will initiate discussions with the Joint Solar Parties and the Commission to identify data that can be provided to the Generating Account Owner to enable them to verify that Benefiting Account holders are properly credited. These discussions and subsequent solutions should take into account potential relevant outcomes of the Smart Grid Rulemaking (R.08-12-009). Within six months of this resolution the IOUs shall file Advice Letters with proposed solutions to this issue.

9. Customers that participate in VNM shall not be precluded from participating in DR or solar tariffs for which they would otherwise be eligible.

10. Demand response payments to VNM customers shall be limited to the customer's load, and shall not include excess generation exported to the grid during the hours of a demand response event.

11. The IOU ALs shall be modified to further clarify the applicability of VNM to all multi-tenant and multi-meter properties which includes all residential (whether rental properties or condominiums), commercial and industrial properties.

12. For purposes of calculation of all customer charges, standby charges, and demand charges a VNM customer should be treated identically as a NEM customer, pursuant to PU Code § 2827(g).

13. SCE shall remove the December 31, 2015 sunset language from their VNM tariffs.

14. VNM tariffs shall be updated to reflect the expanded technology eligibility set out in SB 489, which became effective on January 1, 2012.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on March 8, 2012 the following Commissioners voting favorably thereon:

STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

Enclosed is draft Resolution E-4481 of the Energy Division, issued in response to Pacific Gas and Electric Company (PG&E) Advice Letter 3902-E, San Diego Gas and Electric (SDG&E) Advice Letter 2286-E, and Southern California Edison (SCE) Advice Letter AL 2625-E: Proposed Tariffs Compliant with CPUC Decision 11-07-031, O.P. 2, Relating to Expansion of Virtual Net Energy Metering (VNM) to Apply to All Multi-tenant and Multi-meter Properties.

It will appear on the agenda at the next Commission meeting which is at least 30 days after the date of this letter. The Commission may vote on this Resolution at that time or it may postpone a vote until a later meeting. When the Commission votes on a draft Resolution, it may adopt all or part of it as written, amend, modify or set it aside and prepare a different Resolution. Only when the Commission acts does the Resolution become binding on the parties.

Parties may submit comments on the draft Resolution. All comments on the draft Resolution must be received by the Energy Division by February 24, 2012. All reply comments on the draft Resolution must be received by the Energy Division by February 29, 2012.

An original and two copies of the comments, along with a certificate of service, shall be sent to:

Honesto Gatchalian
Energy Division
California Public Utilities Commission

505 Van Ness Avenue

San Francisco, CA 94102

Email: jnj@cpuc.ca.gov

FAX: 415-703-2200

A copy of the comments shall be submitted in electronic format to:

Gabe Petlin and Amy Reardon

Energy Division

California Public Utilities Commission

505 Van Ness Avenue

San Francisco, CA 94102

Email: gp1@cpuc.ca.ca and amy.reardon@cpuc.ca.gov

Those submitting comments on the draft Resolution must serve their comments on the entire service list attached to the draft Resolution and the Director of the Energy Division on the same date that the comments are submitted to the Energy Division.

Comments shall be limited to fifteen pages in length and should list the recommended changes to the draft Resolution.

Comments shall focus on any errors in the draft Resolution.

Late submitted comments will not be considered.

Sincerely,

/s/ Paul Phillips

Paul Phillips, Program Supervisor

Honesto Gatchalian

1 CALIFORNIA SOLAR INITIATIVE PHASE ONE MODIFICATIONS, Decision D.11-07-031, July 20, 2011, at 65.

2 Id.

3 The CSI Program provides financial incentives to residential and non-residential customers of PG&E, SCE, and SDG&E who install rooftop solar photovoltaic (PV) systems.

4 The MASH Program is a component of the CSI Program that provides incentives to multifamily affordable housing residences.

5 Multifamily Affordable Solar Housing (MASH) participants remain the exception to the single SDP limitation in VNM.

6 D.11-07-031 at 17 and 65.

7 PG&E's AL 3902-E at sheet 7, SDG&E's AL 2286-E at sheet 1 and 3, and SCE's AL 2625-E at sheet 1.

8 Protest of Joint Solar Parties, section entitled "Site Related Fees," October 3, 2011, at 4.

9 PG&E Protest Reply on Advice 3902-E, at 2.

10 SCE Protest Reply on Advice Letter 2625-E, at 3.

11 Id

12 Protest of Joint Solar Parties, October 3, 2011, at 4.

13 Id

14 SDG&E Reply to Joint Solar Parties Protest on Advice Letter 2286-E, at 2.

15 SDG&E Schedule Expanded VNM at Sheet 3.

16 Protest of Joint Solar Parties, October 3, 2011, at 6.

17 SCE Protest Reply on Advice 2625-E, at 6.

18 SDG&E AL 2286-E, at sheet 2.

19 Protest of Joint Solar Parties, October 3, 2011, at 6.

20 Electric Rule 16, section H, Definitions for Rule 16.

21 Power "wheeling" refers to the sale and/or distribution of energy from a non-utility using utility-owned distribution systems.

22 D.11-07-031 Discussion §4.2 and Ordering Paragraph 2

23 Protest of Récolte Energy, filed October 3, 2011, at 1.

24 PG&E's Protest Reply on Advice Letter 3902-E, at 2.

25 PG&E Protest Reply on Advice Letter 3902-E, at 5.

26 Id at 5, PGE says: "The pending Proposed Decision for PG&E's 2012-2014 Demand Response Programs eliminates E-PeakChoice and the Commercial AC program (E-CSAC). Also, before the E-CBP program would be available to NEMV Benefiting Accounts however, PG&E would need to submit an Advice Letter to change the E-CBP Eligibility language, since customers billed via net-metering (NEM, NEMFC, NEMBIO, etc.), and customers billed for standby service are not currently eligible for the CBP."

27 PG&E Electric Schedule NEMV at Sheet 2.

28 SCE Schedule GM-VNM at Sheet 1.

29 D.11-07-31 at 17.

30 Reply of SCE to Protests of Joint Solar Parties to AL 2625_E, at 7

31 "Renewable electrical generation facility" means a facility that generates electricity from a renewable source listed in paragraph (1) of subdivision (a) of Section 25741 of the Public Resources Code as amended by SB 2 (Simitian) is effective January 1, 2012 and reads: (a) "Renewable electrical generation facility" means a facility that meets all of the following criteria: (1) The facility uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology."

32 SDG&E's proposed modification fee is waived if changes are limited to no more frequently than once every 12 months.

33 SDG&E staff stated to both CCSE and Energy Division staff that this system would be operational by July, 2012.

34 SDG&E's billing automation project is still in progress, and will be fully-operational by July 2012.

35 July 2011 CSI Program Administrator semi-annual expense reports for VNM show that CCSE expensed $267,597.04, PG&E expensed $475,936.02, and SCE expensed $915,906.28. SDG&E reports to CCSE and the Energy Division that its billing system will be completed in July 2012 for a total cost of approximately $900,000; thus, CCSE is expecting an invoice from SDG&E for the remaining billing infrastructure costs.

36 SCE Reply to Protest of Joint Solar Parties, at 6.

37 D.11-07-031 Discussion §4.2 p.16

38 California Public Utilities Code § 2851 (4)(a).

39 California Public Utilities Code § 2827(g).

40 D.11-07-031 at 17.

41 Recovery to occur in future rate case.

Top Of Page