Measurement

A related problem that hinders DG participation in the RPS program is the measurement of electric production from DG units. As Green Power characterizes the issue: "RPS compliance is predicated on actual renewable energy production, not on the amount of renewable generating capacity that is installed. RECs will only be issued for actual, metered output for grid-distributed renewables, regardless of the size of the generating unit." (Green Power Comments, p. 5.) Similarly, IEP argues, "If DG is going to be "counted" for purposes of RPS compliance, it must be treated in a comparable manner to other eligible renewable generation. Importantly, it must be measured and tracked to ensure that actual energy generation is being counted for purposes of RPS compliance." (Comments of IEP, p. 4.) Again, this is an issue that we do not have the record to resolve here, but it can and will be addressed in R.04-03-017.

While it is desirable to keep the RPS rules consistent for all technologies, it may not be feasible to establish metering requirements for all of the DG systems we wish to see participating in the RPS program. For larger DG systems that utilize sophisticated meters, it may be feasible to measure the exact output of renewable generation to arrive at a precise number of associated RECs, much like is done for central station renewable facilities. It may be appropriate to require that this level of metering sophistication be present before RPS-eligible RECs can be produced by DG facilities. Alternatively, we may wish to establish a separate standard for smaller or less sophisticated DG facilities that could provide a reasonable approximation of those facilities' renewable output. We will address this issue further in R.04-03-017.

Once the above details relating to transaction rules and measurement are resolved, renewable DG will be eligible to produce RECs that comply with the requirements of the RPS program, consistent with our prior decisions.

In implementing these DG rules, we intend to count the output consistently with Green Power's recommendation that RECs associated with DG energy can be counted for RPS compliance, but the associated energy produced by the DG facility and consumed on the customer side of the meter must also be added to the utility's total retail sales. (Green Power Reply Comments, p. 4.)

Finally, we must establish eligibility for the RPS on the basis of when the facility was installed. In D.02-10-062, we held that "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.) Accordingly, all DG facilities installed after October 24^th, 2002, the date of D.02-10-062, are eligible to generate RPS-eligible RECs.⁵ Precisely how the amount of these RECs will be established - via metering of DG facilities or by some form of approximation - will be determined in R.04-03-017. What we establish here is that technologies of this vintage are RPS-eligible, and the RECs they produce are the property of the DG owner.