3. Petition for Modification
On May 26, 2009, Bloom filed a petition to modify D.01-03-073 and allow an amendment to the SGIP Handbook to authorize SGIP-eligible fuel cell projects to receive Level 2 incentives (i.e., $4.50/watt) if the renewable fuel for the facility is obtained pursuant to a contract where biogas is nominated and delivered6 to customers via a natural gas pipeline. Bloom refers to this mode of renewable fuel delivery as "directed biogas." Bloom suggests this authorization be extended to not just fuel cells, but any SGIP-eligible DG facility.
According to Bloom, the SGIP Handbook was written before pipeline delivered renewable fuels became commercially available. The current Handbook mentions "onsite" renewable fuels and should be clarified to allow eligibility for SGIP incentives to DG facilities that contract for pipeline delivered renewable fuel. Bloom notes that it is not recommending specific modifications to D.01-03-073 because the issue of pipeline renewable fuel was not envisioned at that time, but that decision is referenced as the Commission's foundation for the policies underlying SGIP.
Bloom maintains that deliveries of renewable fuel using directed biogas can work within the existing SGIP processes and can be fully verified over the life of the SGIP project. According to Bloom, the SGIP PAs can verify delivery of directed biogas in the same way as PG&E's existing nomination, delivery, and invoicing for transportation of customer-owned gas. Appendix A of Bloom's petition contains proposed amendments to the SGIP Handbook outlining a step by step process for SGIP participants and PAs to use to verify directed biogas deliveries and usage. This proposed process includes the following significant steps:
· The customer will enter into a renewable fuel supply contract to procure 100% of the customer's forecasted renewable fuel consumption for at least 5 years.7
· Both the customer and renewable fuel supplier will utilize revenue grade meters that measure all gas flows in and out of their facilities.
· The fuel supplier and customer will true-up on actual deliveries on a regular basis, based on their contract.
· The SGIP PAs will be able to verify the gas nominations and consumption at any time over the life of the project, and can elect to use the same methods that an investor-owned utility uses to verify and audit its biogas purchases from out of state biogas facilities.
· If the customer cannot or does not procure adequate renewable fuel, the SGIP PAs will have the right to request a refund of the difference between Level 2 and Level 3 incentive payments.
To support its petition, Bloom claims that directed biogas renewable fuel sources are available and the market is growing quickly. Bloom maintains there is more demand than local supply, as evidenced by PG&E's purchase of pipeline delivered renewable fuel from Texas. Further, Bloom expects that over time, suppliers will seize the opportunity to meet this demand and California-based supplies will materialize as favorable market economics encourage their development.
Bloom contends its petition is consistent with Commission precedent. Specifically, Bloom cites to Resolution E-41938 in which the Commission granted PG&E the ability to procure biogas from a facility that creates agricultural methane (i.e., biogas) in Texas and injects it into the natural gas pipeline. The gas is then nominated for consumption at PG&E's Humboldt Bay Generation Facility in California. PG&E is able to count the megawatt hours generated from this facility towards its Renewable Portfolio Standard (RPS) requirements. Bloom's proposed SGIP handbook revisions use the same Commission approved method used by PG&E to procure renewable fuel delivered by natural gas pipelines from out of state renewable facilities to generate RPS eligible electricity in California.
Bloom alleges that ratepayers should be indifferent to its petition as the requested changes do not result in any incremental costs to ratepayers, are within the existing scope of SGIP, and merely allow a new mode of renewable fuel delivery. Moreover, Bloom asserts that a pipeline-based option for renewable fuel delivery may reduce SGIP administrative costs for verification of renewable fuels, as verification will not require physical site visits by SGIP PAs. In addition, Bloom claims directed biogas may offer the benefit of increased renewable electricity in California by advancing the development and deployment of biogas and ultra-clean DG technologies, promoting methane destruction, and spurring green jobs in California.
Pursuant to Commission Rule 16.4(d), if more than one year has elapsed since the effective date of the decision, a petition for modification must state the reason the petition could not have been filed within one year. Bloom contends that its petition could not have been filed within one year of D.01-03-073 because recent changes in the fuel cell marketplace in terms of the availability of renewable fuels transported via pipeline have only recently developed. Bloom's reasons for filing the petition beyond the one year deadline are reasonable and we will accept the petition for consideration.
Bloom requests expedited treatment of its petition because the requested changes have been previously reviewed and approved by the SGIP Working Group, as directed by D.08-11-044, and the Working Group unanimously supported the Program Modification Request that preceded this petition. Bloom attaches to its petition the Working Group Summary wherein the Working Group voted to support Bloom's proposal. Bloom claims it has incorporated into its proposal most of the Working Group's specific suggestions, and provides its rationale where it did not accept them. Bloom's request for a shortened response period for the petition was not opposed and was granted by the Administrative Law Judge.
6 Bloom's petition explains that the renewable biogas is nominated and injected into the pipeline for delivery to the customer. Nevertheless, as with electricity, there is no means of ensuring the actual molecules of renewable gas are consumed at the customer's site. Thus, the gas is not literally delivered, but notionally delivered, as the biogas may actually be utilized at any other location along the pipeline route.
7 Bloom's petition states that 100% is higher than the current Level 2 requirement that allows customers to use up to 25% fossil fuel. (See Section 2.6.1 of the SGIP Handbook.) The petition further states that if the supplier experiences a supply disruption or fails to deliver the full quantity of renewable fuel in the schedule, the customer will have the contractual right to procure an alternative source of renewable fuel to maintain compliance with the 75% threshold for renewable fuel consumption, as measured annually.
8 See Resolution E-4193, Oct. 2, 2008 approving PG&E Advice Letter 3132-E.
