Background
The starting point for our analysis is our prior decision on this issue, Decision (D.) 02-10-062, which stated:
We include in our definition of renewable generation, for purposes of compliance with both D.02-08-071 [establishing pre-RPS targets for renewable procurement] and SB 1078 [the RPS statute], renewable distributed generation (DG) on the customer side of the meter...
Including renewable DG as part of our definition will serve to encourage its installation, regardless of whether the utility purchases the output or whether it serves to meet on-site load. The full output of renewable DG should be credited to meeting the RPS or D.02-08-071 requirements, but only new renewable DG installations are to be credited (existing renewable DG does not count toward the utility's RPS baseline calculation). (Id., p. 21.)
Subsequently, in D.03-06-071, we assumed (in the context of central-station generation) that RECs from renewable generation facilities were the property of the owner of the facility, but if that facility participates in the RPS program the RECs associated with the electrical output of that facility are transferred to the utility and retired. (See, Id., pp. 8-15.)4 In other words, REC ownership and possession were not unbundled from the underlying electricity.
4 While competitive solicitation and a standardized RPS contract are the preferred method of participation in the RPS program, they are not mandatory in all situations, as potentially in the case of DG.
