II. Background
DG is a parallel or stand-alone electric generation unit generally located within the electric distribution system at or near the point of consumption.6 Self generation refers to DG technologies that are installed on the customer's side of the meter to provide electricity to the customer for a portion of its load. The Commission has long recognized the value of DG in the resource planning and procurement context and has made a substantial effort to encourage the installation of DG in California. The joint agency Energy Action Plan II, issued by the California Energy Commission (CEC) and this Commission, emphasizes the state's commitment to DG development. Toward that end, the Commission, in coordination with the CEC, has implemented several policies and programs that provide financial incentives to DG owners to promote DG deployment. In 2001, the Commission established the SGIP to provide incentives to DG facilities with differential incentives for renewable and super clean DG units. The Commission expanded the SGIP's budget for solar programs by $300 million in December 2005 to spur additional solar development, and introduced the CSI. In 2006, the Commission committed a total of $2.8 billion (including the $300 million) to the CSI with the goal of installing 3000 megawatts of new solar DG facilities in the service territories of the California investor-owned utilities (IOUs) between 2006 and 2016.7 We then opened this Rulemaking to develop program rules and policies for the CSI and the SGIP, and to continue addressing general policies related to DG.
We established Phase II of this proceeding to consider, among other issues, two issues that were identified in D.05-05-011 related to the treatment of DG output for the purpose of compliance with the requirements of the California's RPS. In that decision, we clarified how renewable DG can participate in the RPS and explored how the RECs from renewable DG facilities might be counted towards the IOUs' RPS obligations.8 A REC consists of the renewable and environmental attributes associated with the production of electricity from a renewable resource and is an accounting tool for measuring RPS compliance.9 In D.05-05-011, we concluded that the owners of renewable DG facilities own the RECs associated with the generation of electricity from those facilities, but we also concluded that we needed to consider:
1. How to calculate the ratepayers' share of DG RECs to fairly reflect the subsidies they have paid to DG projects.
2. How to measure a DG project's output with sufficient accuracy to support the use of the output for RPS purposes.
By a ruling dated July 12, 2006, the Administrative Law Judge (ALJ) requested comments on the above issues.
Comments were filed by Americans for Solar Power (ASPv), R. Thomas Beach (Beach), Californians for Renewable Energy (CARE), PV Now, joined by California Solar Energy Industries Association and the Vote Solar Initiative (hereinafter "The Joint Solar Parties"), City and County of San Francisco (CCSF), the Commission's Division of Ratepayer Advocates (DRA), the Green Power Institute (GPI), Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E)/Southern California Gas Company (SoCalGas), and the Independent Energy Producers Association (IEP).
Reply comments were filed by ASPv, Beach, CARE, Joint Solar Parties, CCSF, DRA, GPI, PG&E, SCE, SDG&E/SoCalGas, and The Utility Reform Network (TURN).
In the following sections, we address parties' comments on the subsidy questions followed by a discussion of the subsidy issues. Because of the outcome of this issue, it is unnecessary to resolve the measurement issues at this time.
6 R.04-03-017, p. 6.
7 The total included 2640 MW for CSI and 360 MW for the CEC's New Solar Homes Partnership. Subsequent passage of SB 1 necessitated changes to the exact budget and goals, which has been addressed in an order, but the basic outline of the Commission's program remains the same.
8 The CEC is responsible for determining RPS eligibility of generation and verifying load-serving entities' (LSEs) claims of RPS-eligible energy deliveries.
9 D.03-06-071. F.O.F. 2; SB 107, new Pub. Util. Code § 399.12 (g).
