6. Comments on Proposed Decision

The proposed decision of President Michael R. Peevey in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code. Under Rule 14.6(b) of the Commission's Rules of Practice and Procedure, the parties agreed to a reduced comment period of seven days. Comments were filed by Bloom, BioEnergy Solutions LLC (BES), BFE, the City of San Diego, FCE, and SCE. Reply comments were filed jointly by CCSE, SDG&E and SoCalGas.

Bloom, BFE, the City of San Diego and FCE all urge removal of a requirement in the proposed decision that facilities using directed biogas contracts use 100% renewable fuel. These parties claim this requirement could prevent host customers from using directed biogas contracts due to the higher risk of having to procure 100% of their fuel in the nascent biogas market. The parties cite intermittency in biogas production, possible equipment failures, and lack of biogas supply options and hedging opportunities as reasons that the 100% requirement places too great a risk on the host customer and could undermine the purpose of the petition to expand opportunities for biogas. Moreover, parties argue that customers using directed biogas should not be held to a higher standard than facilities where biogas is delivered by truck. The parties urge a return to the 75% fuel use requirement in the petition, or the increased flexibility of a true-up period. We find the parties assertions convincing that a 100% fuel use requirement for directed biogas is not reasonable at this time given the infancy of the directed biogas market. The decision has been modified to require a customer to contract for at least 75% of its 5 year forecasted fuel consumption, and does not penalize customers unless they fall below a 75% threshold for renewable fuel consumption, as measured annually.

BES requests modification of the decision to allow the 20 percent adder for California suppliers to apply to the full Level 2 incentive of $4.50 if the biogas also comes from California. We will not make this change because, as the decision explains, we interpret the statute to require the adder only for the installation of the DG equipment, not its fuel source.