3. Discussion

Rule 21 is currently part of each investor-owned utility's tariff. The tariff provisions originally applied solely to interconnections with Qualifying Facilities¹, but have been broadened to encompass other parallel generation units connected to the distribution grid. (See SCE AL 1410-E-A and PG&E AL 1909-E-A.)

The proposed Rule 21, as recommended by the Energy Commission, contains eight sections and one appendix. Section 1 governs applicability, followed by the general rules and obligations of both the distributed generation customer and the utility (Section 2). The heart of the Rule is contained in Sections 3 and 4, which describe the non-technical and technical considerations for completing an interconnection agreement. Specific technical details on the screening procedures are detailed in the Appendix. Ownership and operational considerations, as well as procedures for settling disputes, are addressed in Sections 5-7. The rule ends with a common set of definitions to ensure consistency in the rule language. The appendix lays out a schematic and procedures for determining whether an application is eligible for simplified interconnection.

The proposed rules promote application of consistent rules across utility service territories and provide clear guidance to applicants seeking interconnection regarding the standards that must be met for simplified interconnection. We commend the Energy Commission and all of the parties who participated in the process for their efforts to develop these rules. Comments on the Energy Commission recommendation raised only three substantive issues.

First, PG&E and SCE raise concerns about the proposed rule language regarding confidentiality of information related to the interconnection application. PG&E and SCE point out that, as currently drafted, the proposed language could be read to restrict the ability of the utility to inform customers of existing rate options if an interconnection application is pending. PG&E also argues that the language is overbroad and proposes alternate language. Honeywell opposes changes to the language adopted by the Energy Commission, but suggests alternate language in the event the Commission finds that clarification is required.

After reviewing the discussion on this topic in the recommendation and comments, we believe that a modification of the language is warranted. The alternative language proposed by PG&E accomplishes the objective of maintaining a level playing field between the utility and other providers of services. We adopt the following language for Section 2.7 of Rule 21:

2.7 Confidentiality of Information. Any information pertaining to Generation and/or Interconnection Facilities provided to Electrical Corporation by an Electricity Producer shall be treated by Electrical Corporation in a confidential manner. Electrical Corporation shall not use information contained in the Application to propose discounted tariffs to the customer unless authorized to do so by the customer or the information is provided to Electrical Corporation by the customer through other means.

SDG&E raises the second issue. As part of the proposed Rule 21, the Energy Commission recommends timelines for utilities to complete the initial review and supplemental review. The Energy Commission recommends that initial review be completed within 10 business days, absent any extraordinary circumstances. Supplemental review is to be completed within 20 business days, absent any extraordinary circumstances. As described in its recommendation, the Siting Committee and the full Energy Commission added the underlined language to that proposed in the staff report, in order to respond to concerns by utilities, including SDG&E, that problems may arise that prevent a strict deadline from being met.

The prior language had required that initial review normally be completed within 10 business days and supplemental review normally be completed within 20 business days. In its comments before this Commission, SDG&E now recommends that we return to the language that it previously viewed as providing insufficient flexibility to the utility. While we do not disagree that the initial and supplemental review should normally be completed in a specified period of time, we believe that the Energy Commission's recommendation provides sufficient flexibility to respond to unusual circumstances. We adopt the Energy Commission's recommended language. In the event that SDG&E, or other utilities, are unable to meet the timelines adopted in Rule 21, we will consider a petition to modify the requirements.

Finally, PG&E argues that it is premature to adopt a revised Rule 21 now because additional work is required with respect to several key areas of the rules. PG&E identifies standard applications and interconnection agreements; type testing and precertification; fees for application, initial review, and supplemental review; further refinement of the Supplemental Review process; uniqueness of utility tariffs; and monitoring development of distributed generation as examples of issues requiring additional work. The Energy Commission identifies these same areas as requiring additional work and lays out a general process by which the work is to be completed.

The Siting Committee has held several additional working group meetings to develop supplemental rule language since its recommendations were submitted on June 27, 2000. In some cases, language developed through additional meetings is designed to replace aspects of the proposed rule language we consider today, in other cases it proposes incremental language. The Energy Commission adopted supplemental recommendations on October 25, 2000. Much of the language under consideration represents consensus views of the stakeholders.

Based on our review of the June 27, 2000 proposed tariff language, it is clear that completion of the additional work will provide a more complete tariff than currently proposed. However, when compared to existing Rule 21 of PG&E, SCE, and SDG&E, the proposed rule language covers all aspects of the existing tariffs adequately. In addition, Assembly Bill (AB) 970 (Chap. 329, Stats. 2000) encourages this Commission to take steps to promote investment in new, environmentally superior electricity generation. By adopting clear standards to facilitate interconnection of new, small scale generating facilities, we take a first step towards relieving California's electricity supply constraints. We find no reason to delay implementation of new rules (as modified by this decision) until the additional work is complete. Once the Energy Commission has completed the additional work, submitted its recommendations to this Commission, and we have acted, Rule 21 will be revised as appropriate.

We adopt the Rule 21 language recommended by the Energy Commission on June 27, 2000 in its entirety, with the modification to Section 2.7 as described above. PG&E, SCE, and SDG&E are directed to file compliance advice letters to replace their existing Rule 21 with the Model Tariff, within 15 days of the effective date of this order. It is our goal that Rule 21 be adopted on a statewide basis; however, there may be compelling reasons why smaller utilities, or those with limited California operations, may not be able to comply with this standard. Therefore, within 40 days of the effective date of this order, Sierra, Pacificorp, Mountain Utilities, and Bear Valley Electric are directed to either file a compliance advice letter adopting the Model Tariff or a compliance filing in this docket demonstrating compelling reasons why the adopted rule should not apply to them.

After today's decision is implemented, but while the Energy Commission's supplemental recommendations are still pending, we encourage utilities to implement consensus procedures recommended by the Energy Commission in its Supplemental Recommendation (for example, revised initial review process, maximum application fees) for requested interconnections.