8. Comments on Proposed Decision

The proposed decision of ALJ Duda in this matter was mailed to the parties in accordance with Section 311 and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed by CALSEIA/EC, CARE, the City of San Diego, the Joint Solar Parties, PG&E, SCE, SDG&E, and Sierra Pacific. Reply comments were filed by CARE, the City of San Diego, DRA, the Joint Solar Parties, PG&E, SCE, SDG&E, and Walmart. Minor corrections and clarifications in response to comments are incorporated throughout the decision. A few comments merit discussion.

PG&E, SCE, and SDG&E contend the proposed decision contains errors in its legal analysis of the Commission's authority to set an NSC rate under PURPA. Upon further legal review, the decision has been revised to implement the NSC program pursuant to PURPA and consistent with avoided cost principles. In this regard, the decision relies upon a recent FERC order granting clarification on the subject of state latitude to use a multi-tiered approach to setting avoided cost rates. The decision also requires all net surplus generators to notify the utility that they are a QF exempt from certification filing at the time the NEM customer affirmatively elects either an NSC payment or application of its net surplus to future usage.

The City of San Diego suggests the Commission revise the hours used in the DLAP rolling average calculation. The City suggests it is unlikely customers would inject energy into the system during the early morning or late afternoon hours of the day, and therefore, the DLAP rolling average should use prices from 10 a.m. to 5 p.m., rather than 7 a.m. to 5 p.m. CALSEIA/EC comment that solar PV systems are unlikely to produce excess power between 7 a.m. and 9 a.m. and these hours should be excluded from the DLAP rolling average calculation. PG&E and SCE respond that the hours used should reflect symmetry around peak generation hours which is generally noontime. We will not revise the hours used in the DLAP rolling average calculation based on speculation about when customers might be more likely to inject energy into the system. The decision notes that since information about individual customer usage is unknown, it is difficult to know when surplus generation is actually exported. We agree with PG&E and SCE that it is a reasonable to assume production occurs during daylight hours, symmetrical around the noon hour when the sun is at its peak. Therefore, we will not revise the hours included in the DLAP calculation.

Similarly, Joint Solar Parties comment that the decision errs by assuming production will be equal in all daylight hours. It reiterates its advocacy for incorporation of solar generation profiles into the NSC rate calculation. Again, we agree with PG&E that we should not assume solar generation matches net surplus because the shape of exports to the grid depends on individual customer usage, can vary greatly, and is unknown. Given this unknown and the need for administrative simplicity in implementing this program, it is reasonable to assume net generation occurs evenly over daylight hours.

CALSEIA/EC allege problems with using DLAP prices for NSC payments because DLAPs can be disaggregated further into sub-LAPs, and the use of DLAP prices could result in cost-shifting between ratepayers. SCE and PG&E counter that the CAISO does not use sub-LAP pricing today and the idea of having an NSC rate that varies geographically based on sub-LAP prices would be administratively costly. We agree with SCE and PG&E and will retain our use of DLAP prices as the basis for calculating the NSC rate for administrative simplicity.

Finally, the decision is modified to clarify that all small and multi-jurisdictional investor-owned electric utilities (SMJUs) operating in California are required to offer net surplus compensation. Sierra Pacific and Pacificorp participated in the proceeding, but other SMJUs did not participate. Therefore, ordering paragraphs have been added to the decision to notify these SMJUs that they may either file an advice letter to opt into the NSC rate for PG&E, SCE or SDG&E, or file an application justifying a deviation from the NSC methodology adopted in this decision