Comments on Draft Decision
The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were received from on March 28, 2005, and reply comments were received on April 4, 2005.
While some comments were generally supportive of the draft decision,many comments were highly critical. The comments were unusual in that there was a wide disparity in the nature of the criticisms, indicating some disagreement among the parties as to the meaning of the decision. This disagreement appeared to stem mainly from conflicting concerns about the future implications of the decision, rather than the fairly limited scope of the decision itself. In addition, some of the criticism directed at the draft decision is actually criticism of our prior holding in D.02-10-062 that the "full output of renewable DG should be credited" toward meeting RPS requirements.
Without changing the substance of the draft decision, we have made a number of changes to clarify its relatively narrow scope and implications. We remind the parties that the Ruling originally requesting party comments on this issue stated:
CPUC-CEC Collaborative Staff issued a staff data request on DG participation issues in October of 2003. One of the issues identified for party feedback was the question of REC ownership in the context of DG facilities that receive public subsidies via the programs of the CPUC and CEC. While this is only one of the many questions that arise when considering DG's role in the RPS program, it is one that deserves a prompt resolution, as we want to be sure to avoid any possible chilling effect on the renewable DG market in California, given the state's priorities for these technologies. Accordingly, this Ruling requests comments on the question of REC ownership by DG facilities.6
All we are doing in this decision is resolving the issue of REC ownership. The parties predicting future ramifications from extensions of the logic contained in the decision are reading too much into the decision. This decision does not reach those issues, and we intend to specifically examine later in this proceeding (and in R.04-03-017) the issues raised by the parties, such as the appropriate treatment of QF RECs and the implications of unbundled and tradable RECs.
PG&E notes that the draft decision adopted Green Power's recommendation that if RECs associated with DG energy are to be counted for RPS compliance, the associated energy produced by the DG facility must also be added to the utility's total retail sales. PG&E agrees with this, but only for power consumed on site, and argues that energy delivered to the grid should not be treated the same way. (PG&E Comments, pp. 3, 11.) Green Power acknowledges that this is correct. (Green Power Reply Comments, p. 2.) We have changed the language of the decision to reflect this clarification.
In D.02-10-062, we held that only new renewable DG installations are to count for utility RPS purposes, which means that only facilities installed after October 24th, 2002, the date of D.02-10-062, are eligible to generate RPS-eligible RECs. Green Power questions the need for this cutoff, noting that only a small amount of eligible renewable DG was online prior to that date, and calling it "an unnecessary and artificial boundary." (Green Power Comments, p. 2.) Green Power may have a valid point. Because removing this date limitation would constitute modification of a Commission decision, we will not do so here in response to Comments on the Draft Decision, but we would consider a petition to modify D.02-10-062 on this issue.
Southern California Water Company (SCWC), which is both a water utility and an electric utility (with separate and non-overlapping service territories), states that it has installed a photovoltaic facility at one of its water utility facilities located outside its electric utility service territory. SCWC requests that utility-owned facilities such as this one be eligible for inclusion in the electric-utility's RPS program. According to SCWC, its recommendation would encourage the installation of renewable DG. Consistent with our holding that RECs from a DG facility belong to the owner of that facility, we note that this holding also applies to DG facilities owned by utilities. How those RECs may be used for purposes of the RPS program will be addressed later in this proceeding and in R.04-03-017.
Findings of Fact
1. D.03-06-071 held that RECs belonged to the generation owner, but were transferred to the utility along with the electricity under a standard RPS contract.
2. D.02-10-062 held that only new renewable DG installations were to be eligible for the RPS program.
3. DG facilities have received ratepayer subsidies that typically cover part of their equipment and capital costs.
4. The electrical output of individual renewable DG facilities is not consistently measured.
Conclusions of Law
5. For purposes of the renewable portfolio standards program, eligible renewable DG facilities should be treated equivalently to other types of eligible renewable generation to the extent that is feasible.
6. For purposes of the renewable portfolio standards program, our treatment of eligible renewable DG facilities should be consistent with our prior decisions relating to the RPS program.
7. The existence of ratepayer subsidies for renewable DG complicates the propriety of renewable DG participation in the RPS program.
8. The lack of consistent, accurate metering of the electrical output of renewable DG facilities is a barrier to the participation of renewable DG in the RPS program.
9. The Commission currently has a Rulemaking open relating to DG, R.04-03-017.
O R D E R
IT IS ORDERED that:
10. Consistent with our prior Decisions (D.) 02-10-062 and D.03-06-071 and the recommendation of Green Power Institute, our general policy under the renewable portfolio standards (RPS) program is that eligible renewable distributed generation (DG) facilities should be treated equivalently to other types of eligible renewable generation to the extent that is feasible.
11. The owner of a renewable DG facility owns the renewable energy credits associated with the generation of electricity from that facility, consistent with D.03-06-071.
12. Renewable energy credits from eligible renewable DG facilities installed after October 24, 2002 qualify to be counted for purposes of the RPS program.
13. To the extent that renewable energy credits from eligible renewable DG facilities are counted for purposes of the RPS the associated electrical generation consumed on the customer side of the meter will also be added to the applicable utility's total retail sales.
14. Renewable energy credits from eligible renewable DG facilities cannot be counted for purposes of the RPS program until issues relating to subsidies and measurement are resolved, as described above.
15. The issues relating to subsidies and measurement will be addressed in the Commission's DG Rulemaking (R.) 04-03-017.
16. The Executive Director shall serve a copy of this decision on the parties to R.04-03-017.
This order is effective today.
Dated May 5, 2005, in San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
Comr. Bohn recused himself from
this agenda item and was not part
of the quorum in its consideration.
Comr. Grueneich recused hersef from
this agenda item and was not part
of the quorum in its consideration.
