2. Background
The Commission opened this rulemaking in June 2008 to implement the provisions of Assembly Bill (AB) 1613. (Stats. 2007, ch. 713.) AB 1613 established the Waste Heat and Carbon Emissions Reduction Act which relates to the utilization of excess waste heat through combined heat and power (CHP) technologies.2 The legislation expresses the intent to support and facilitate both consumer and utility-owned CHP systems and imposes certain requirements on the Commission, the California Energy Commission (CEC), the State Air Resources Board and electrical corporations.
Among other things, AB 1613 directs the Commission to establish a PAYS pilot program for each electrical corporation to finance all the upfront costs for the purchase and installation of CHP systems by eligible customers. (Pub. Util. Code § 2842.4.)3 An "eligible customer" for purposes of § 2842.4 is defined as either a nonprofit organization exempt from taxation pursuant to Section 501 of the Internal Revenue Code (26 U.S.C., § 501(a)) or a federal, state or local government facility.4
In the scoping memo of November 4, 2008, the Commission set forth four main issues to be addressed in this rulemaking. The first three issues, pertaining to the policies and procedures for purchase of electricity from eligible CHP systems, were addressed in Decision (D.) 09-12-042. On May 11, 2010, the Administrative Law Judge (ALJ) issued a ruling requesting parties to provide comments on the fourth issue, namely policies and procedures for a PAYS pilot program. Comments in response to the May 2010 ruling were filed by Mountain Utilities, Pacific Gas and Electric Company (PG&E), PacifiCorp, Sierra Pacific Power Company, Southern California Edison Company (SCE), and jointly by San Diego Gas & Electric Company and Southern California Gas Company (SDG&E/SoCalGas). Reply comments were filed by SCE.
2 CHP (sometimes referred to as cogeneration) is the production of two kinds of energy - electricity and heat - from a single source of fuel.
3 Unless otherwise specified, all statutory references are to the Public Utilities Code.
4 Section 2842.4 was amended by AB 2791 (Stats. 2008, ch. 253) to include a federal, state or local government facility within the definition of "eligible customer" for purposes of the pay-as-you-save pilot program.
