VI. Distributed Generation (DG)
In D. 04-01-050, the Commission provided direction for the inclusion of DG in this long-term procurement proceeding as follows:
"The utilities next round of long-term procurement plans should include a more robust discussion of distributed generation to include: (1) a line item entry clearly identifying distributed generation separate and apart from other entries such as energy efficiency and departing load; (2) the energy (GWh) and demand (MW) reduction attributed to distributed generation; and (3) a description of the technologies the utility includes in its definition of distributed generation as well as a statement noting whether its forecast includes utility-side distributed generation, such as QFs."55
On March 16, 2004, the Commission opened a new distributed generation rulemaking, R. 04-03-017. Among the high-priority tasks of the rulemaking is the development of a cost-benefit analysis methodology applicable to distributed generation technologies. Parties filed opening testimony on October 4, 2004. Reply testimony is expected in early 2005 and evidentiary hearings are scheduled for March 2005.
To date, the Commission's efforts in the area of DG have focused on promoting customer-side DG installations in utility service territories. These efforts are directed in four areas:
i. Financial Incentives - rebates are offered to customers installing DG through the Self-Generation Program & CEC's Emerging Renewables Technology program
ii. Interconnection Rules -- streamlining interconnection regulations and processes through the Rule 21 Working Group.
iii. Special Tariffs and Exemptions -- such as the standby charge exemptions for certain DG in accordance with PU Code Sections 353.1 and 353.2 and the Departing Load Cost Responsibility Surcharge exemptions from D. 03-04-030.
iv. Net Metering - the PUC expanded net metering eligibility to include biogas digester and fuel cell projects along with the currently-eligible solar and wind projects.
In addition to promoting customer-side DG, the Commission is also pursuing grid-side initiatives. In accordance with D.03-02-068, the three IOUs are required to evaluate DG as an alternative to distribution system upgrades, subject to a prescribed set of conditions enumerated in the decision. As of the effective date of this decision, none of the utilities have yet issued RFOs identifying projects where DG might serve as an appropriate alternative.
With respect to the utilities' long-term resource plans, each IOU prepared a DG forecast that is based on a forecast of DG operating on the customer-side of the meter. These estimates are then deducted from the load forecast. This treatment is consistent with the load forecasting approach recommended in the Workshop Report on Resource Adequacy Issues, dated June 15, 2004 and later adopted in D.04-10-035. The workshop report stated that "Parties agreed that customer-side distributed generation should be deducted from LSE load forecasts."56 This resource counting protocol recognizes that customer-side DG reduces the utility's actual load to be served and the associated reserve margin attributed to that self-served load.
In its long-term plan testimony, SCE states that "it is planning on issuing a [RFP], soliciting location-specific demand-side DG to defer distribution upgrades in 2004."57 SCE indicates in it Opening Brief that this effort has been pushed back to 2005.58 59 Interverners did not offer testimony on any DG specific issues raised in the utility resource plans.
We find that the utilities' treatment of DG as a component of the load forecast is appropriate. The utilities shall continue to adhere to the directives for reflecting DG estimates in load forecasting consistent with D.01-04-050 and
D.04-10-035. We also encourage SCE to move forward with its planned DG RFO, the results of which will be monitored by the Commission for guidance in both the DG rulemaking and this docket. Lastly, we note that the DG rulemaking's progress towards developing a cost-benefit analysis methodology for DG will inform future policy guidance we provide to the utilities regarding DG as a procurement resource.
55 D.04-01-050, p.122.
56 Workshop Report on Resource Adequacy Issues, Prepared by ALJ Cooke, June 15, 2004, p.15.
57 Exhibit XX, SCE testimony, p. 85.
58 Edison's opening brief, pp. 29-30.
59 We note current SGIP program eligibility rules prohibit utility customers "who have entered into contracts for DG services (e.g., DG installed as a distribution upgrade or replacement deferral) and who are receiving payment for those services; (this does not include power purchase agreements, which are allowed) from participating in the SGIP program." [D.01-03-073, Attachment 1, p.25]
