3. Petition for Modification
On July 25, 2007, FCE filed its petition requesting the Commission modify D.04-12-045 to increase the limit of incentive payments available under the SGIP program from the current cap of 1 MW to 3 MW.2 Although projects up to 5 MW are eligible for participation in SGIP, incentives are limited to 1 MW. FCE contends this has suppressed participation by larger fuel cell projects in the program. FCE argues an increase in the incentive cap to 3 MW is needed to stimulate the much needed market transformation for affordable fuel cell technology and other renewable distributed generation applications that are only economic at a larger scale. FCE also maintains that the modification would result in new projects that would deliver substantial reductions in greenhouse gases.
In its petition, FCE contends the market for fuel cells in California is significantly constrained, particularly in the waste treatment market, by the 1 MW limit. Based on feedback from operators of industrial facilities and wastewater treatment plants, FCE reasons the modification will result in significant deployments of new fuel cell power plants at these sites. The most prominent emerging market sector is municipal wastewater treatment. Specifically, FCE contends that fuel cells' high electrical efficiency enables them to deliver almost twice the electrical output for each unit of gas consumed. In a declaration filed with its petition, FCE's witness states that wastewater treatment plant operators have expressed an interest in fuel cell technology as an alternative to combustion technologies. Further, the witness states that he has had conversations with wastewater treatment plant owners who have tried but failed to cost-justify installation of fuel cells at larger facilities without incentives.
FCE further justifies its modification request with the reasoning that raising the incentive cap will result in new projects that would deliver substantial greenhouse gas (GHG) reductions in addition to peak electricity demand reductions. According to FCE, renewable fuel cells can provide high GHG reduction by capturing and using biogas in lieu of its use in either flares or combustion. Thus, FCE argues, larger fuel cell projects, particularly at municipal wastewater plants, could benefit ratepayers by maximizing returns on local tax dollars and increasing the reduction in combustion emissions, with associated environmental benefits. Moreover, FCE contends that increasing the cap on SGIP incentives from 1 to 3 MW could lead to reduced product costs via larger production volumes, thus enabling market transformation for fuel cells.
FCE maintains the only down side to its request is the potential that program funds could be depleted more rapidly than they would otherwise. To offset this concern, FCE suggests the Commission authorize additional SGIP funding to support more projects, or consider other measures to ensure participation by small projects.
According to Rule 16.4(d) of the Commission's Rules of Practice and Procedure, petitions for modification must be filed within one year of a Commission decision. FCE states that its petition, filed more than two years after issuance of D.04-12-045, is based on experience gained, particularly with larger customers, over the six-year history of SGIP, and therefore could not have been filed earlier. UTC Power Corporation (UTC) objects to FCE's late-filed petition to modify, asserting that FCE has not adequately justified its late submission because potential customers of every size have existed since SGIP's inception. We find that FCE has adequately justified the late filing of its petition because information pertaining to larger customers and the market demand for fuel cells is newly available. Thus, we will address FCE's petition on its merits.
2 FCE's petition was filed in R.04-03-017, the docket in which D.04-12-045 was issued, and also served on parties to R.06-03-004. Service to both lists was completed on July 31, 2007, which extended the filing date for comments on the petition to August 30, 2007. The two dockets, R.04-03-017 and R.06-03-004, were consolidated for purposes of resolving this petition. The petition was transferred to this docket by R.08-03-008 and is resolved herein.
