Discussion and Analysis

Our decision today is consistent with our prior decisions. We find that the "guiding principle" offered by the Green Power provides the most reasoned, neutral, and fair approach. As Green Power states:

While some of the RPS compliance rules that pertain to grid-distributed renewable electricity may have to be modified for customer-side renewable DG, the principle should be that the RPS program should avoid developing rules for DG renewables that confer any advantage or disadvantage to these systems compared with grid-distributed systems. There may be valid reasons why DG systems may deserve different levels of public support than grid-distributed renewables in programs like the CEC's PGC-funded renewables programs, and that can be expected to continue to be the case into the future. Nevertheless, the RPS program itself is the wrong place to target specific renewable technologies. RPS program rules should strive to provide equal treatment for renewables that are grid distributed, and renewables on the customer side of the meter, even when the rules specific to these two different types of renewables have to be different. (Green Power Comments, p. 2.)

Using this approach, we hold that the RECs associated with renewable distributed generation on the customer side of the meter should be treated equivalently to the other types of renewable generation we addressed in D.03-06-071. Since in that case we held that the RECs belonged to the generation owner, and were only transferred to the utility when specified in a CPUC approved transaction, it is most consistent for us to hold the same thing with regard to DG facilities. Such a holding would also be consistent with D.02-10-062, which allowed for certain DG facilities' output to count towards meeting RPS requirements.

Consistency is particularly important in the definition of "counting" for RPS purposes. Not only do we need to see if the energy from a particular renewable facility is transferred to the utility, we need to consider whether the RECs associated with that energy (whether under our current "bundled" system or in a possible future "unbundled" system) are also transferred to the utility. This is consistent with our treatment of central station facilities in D.03-06-017- if a facility does not participate in the RPS program, then its output cannot be counted for RPS purposes, and its RECs are not required to go to the utility to which it is supplying energy. If the energy and associated RECs are to be counted for RPS purposes, then they must be transferred.

As Cal SEIA puts it: "There is no justification for discriminatory policies regarding REC ownership based upon size or location on the grid. Distributed generation facilities are no less renewable than central station facilities. They provide all the public benefits that the RPS program was created to encourage (as well as additional benefits due to their location at load)." (Cal SEIA Comments, p. 9.)