ALJ/DOT/jt2 Date of Issuance 6/20/2011

Decision 11-06-016 June 9, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the matter of the Application of PacifiCorp (U901E) for approval to implement a Net Surplus Compensation Rate.	Application 10-03-001 (Filed March 1, 2010)
And Related Matters.	Application 10-03-010 Application 10-03-012 Application 10-03-013 Application 10-03-017

DECISION ADOPTING NET SURPLUS COMPENSATION

RATE PURSUANT TO ASSEMBLY BILL 920 AND THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

Table of Contents

Title Page

DECISION ADOPTING NET SURPLUS COMPENSATION RATE
PURSUANT TO ASSEMBLY BILL 920 22

1. Summary 22

2. Background 44

3. Jurisdiction 77

3.1. Commission Authority to Set a Net Surplus Compensation Rate 77

3.1.1. Parties' Positions 77

3.1.2. Discussion 99

3.2. Authority over Interconnection 1111

3.2.1. Parties' Positions 1111

3.2.2. Discussion 1212

4. Net Surplus Compensation Proposals 1313

4.1. PG&E's Proposal 1313

4.2. SCE's Proposal 1414

4.3. SDG&E's Proposal 1616

4.4. PacifiCorp's Proposal 1717

4.5. Sierra Pacific's Proposal 1717

4.6. Responses to Utility Proposals 1818

4.7. Joint Solar Parties 1919

4.8. CALSEIA/EC 2222

4.9. DRA 2323

4.10. City of San Diego 2424

4.11. Acton 2424

4.12. IREC 2525

4.13. Solutions for Utilities 2525

4.14. CARE 2626

5. Adopted Value of Electricity 2626

5.1. Discussion of Proposals Not Adopted 3030

5.1.1. Utility Proposals 3030

5.1.2. MPR 3232

5.1.3. Other Proposals 3535

6. Renewable Attributes and Renewable Energy Credits under NSC 3838

6.1. RPS Eligibility, Metering and Tracking Requirements 4040

6.2. What if customers have sold their RECs to a third party? 4343

6.3. Value of renewable attributes 4545

7. Implementation of NSC Payments 4848

7.1. Does The Customer Need A Bill Credit To Be Eligible For An NSC
Payment? 4848

7.2. Rollover of Excess kWh 5050

7.3. Minimum Payment Amount 5252

7.4. System Sizing Limits 5252

7.5. Should Customers Repay CSI or SGIP Incentives to Receive NSC? 5454

7.6. Are Community Choice Aggregation, Direct Access, and Other Customers Eligible to Receive NSC? 5454

7.7. Administrative Costs 5656

7.8. NEM tariffs 5656

8. Comments on Proposed Decision 5757

9. Assignment of Proceeding 5959

Findings of Fact 5959

Conclusions of Law 6262

ORDER 6565

DECISION ADOPTING NET SURPLUS COMPENSATION
RATE PURSUANT TO ASSEMBLY BILL 920 AND THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

1. Summary

This decision fulfills the requirements of Assembly Bill 920¹ and adopts a net surplus compensation rate to compensate net energy metering customers for electricity they produce in excess of their on-site load at the end of a 12-month true-up period. Net energy metering customers who produce excess power over a 12-month period are known as "net surplus generators."

Specifically, the net surplus compensation rate will be calculated using an avoided cost derived from an hourly day-ahead electricity market price known as the "default load aggregation point" (DLAP) price. A utility's DLAP price reflects the costs the utility avoids in procuring power during the time period net surplus generators are likely to produce their excess power. Consequently, the DLAP price also meets our obligation to comply with the avoided cost principles of the Public Utility Regulatory Policies Act of 1978 (PURPA).²

The net surplus compensation rate will be a simple rolling average of each utility's DLAP price from 7 a.m. to 5 p.m. to match the hours that most net surplus generators produce electricity with their generating facilities. The simple rolling average will match the 12-month period over which a customer's net surplus generation is calculated. In 2009, this average DLAP price for Pacific Gas and Electric Company was approximately four cents per kilowatt hour.

Next, the decision finds that net surplus generators must meet certain preconditions, namely Renewables Portfolio Standard (RPS) certification by the California Energy Commission (CEC) and renewable energy credit (REC) metering and tracking requirements approved by the CEC, in order to create RECs and for the utilities to count any net surplus generation they purchase toward RPS annual procurement targets. These requirements have not yet been established by the CEC.

Further, the decision finds that the net surplus compensation rate should include payment for the renewable attributes of net surplus generation, but this payment cannot occur until the CEC completes its work to establish an RPS certification and REC ownership verification and tracking process for net surplus generators. Until the CEC completes this RPS certification and REC verification and tracking work, all net surplus generators will be paid at the net surplus compensation rate based on DLAP. After the CEC process is complete, net surplus generators may be compensated at the net surplus compensation rate plus an adder for their renewable attributes based on an interim proxy rate derived from the Western Electricity Coordinating Council average renewable energy premium, published by the Department of Energy. This interim renewable attribute adder is currently calculated to be 1.83 cents per kilowatt hour. If the CEC authorizes retroactive RPS certification of net surplus generators, the utilities may retroactively pay the renewable attribute adder and utilities may retroactively count net surplus generation toward their RPS procurement goals.

Finally, net surplus generators seeking net surplus compensation payments for the renewable attributes of their electricity must certify they own any RECs associated with their generating facilities. Net surplus generators who do not own or do not transfer their renewable attributes to the utility purchasing their excess generation will be compensated at the net surplus compensation rate without the renewable attribute adder.

¹ Stats. 2009, Ch. 376.

² PURPA is codified in scattered sections of 16 U.S.C. including § 796 (definitions), § 824a-3, and §§ 2601 et seq.