STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 6, 2001

TO: PARTIES OF RECORD IN RULEMAKING 98-07-037

This is the draft decision of Commissioner Lynch and Administrative Law Judge (ALJ) Gottstein. It will be on the Commission's agenda at the meeting on June 14, 2001. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Pursuant to Rule 77.7(f)(9), comments on the draft decision shall be filed and received by June 11, 2001 and no reply comments will be accepted.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Gottstein at meg@cpuc.ca.gov. Finally, comments must be served separately on the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

/s/ ANGELA K. MINKIN for

Lynn T. Carew, Chief

Administrative Law Judge

LTC:eap

Attachments

COM/LYN/MEG/eap DRAFT H-9

6/14/01

Decision DRAFT DECISION OF COMMISSIONER LYNCH
AND ALJ GOTTSTEIN (Mailed 6/6/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Proposed Policies and Programs Governing Energy Efficiency, Low-Income Assistance, Renewable Energy and Research Development and Demonstration

Rulemaking 98-07-037 (filed July 23, 1998)

INTERIM OPINION: WASTE HEAT RECOVERY AND
RELIABILITY STANDARDS FOR SECTION 399.15(b)
DISTRIBUTED GENERATION INITIATIVES

1. Summary

This decision adopts a waste heat recovery standard for non-renewable technologies applying for distributed generation incentives under the Commission's Self-Generation Incentive Program adopted in Decision (D.) 01-03-073. We adopt the waste heat recovery and efficiency standards for qualifying facilities set forth in Pub. Util. Code § 218.5.

We also address the Emergency Petition of Southern California Edison Company (SCE) to Modify D.01-03-073, filed on May 17, 2001. SCE requests that we remove the requirement that incentive payments for fossil-fired facilities be paid only if those facilities make a demonstrable contribution to the reliability of transmission or distribution. We deny the Petition and reaffirm the reliability requirements set forth in D.01-03-073. However, given the current electricity crisis facing California, it is important to bring new generation capacity on-line this year. Therefore, it is appropriate to suspend the transmission and distribution reliability requirement for fossil-fueled projects that are seeking funding this year.