4. Discussion
We first address the issue of whether the denominator in the NEM cap calculation should be based on each utility's coincident system peak demand or, as the Joint NEM Parties propose, on the sum of each customer's non-coincident peak demand. The Joint NEM Parties' argument rests largely on the interpretation of the phrase "aggregate customer peak demand." Section 2827 does not provide a definition of "aggregate customer peak demand," but the Joint NEM Parties contend that three principles of statutory construction support their position that "aggregate customer peak demand" must not be equivalent in meaning to coincident peak demand. First, the Legislature revised the language in § 2827 from "peak electricity demand" to "aggregate customer peak demand" with the passage of AB 1755. Where the Legislature modifies statutory language with new terminology, it is generally presumed that the Legislature intended a substantive change. Second, the Joint NEM Parties note that "aggregate customer peak demand" is used exclusively in § 2827, whereas the phrase "peak demand" is used in several other instances where it is understood to mean coincident peak demand.8 The Joint NEM Parties argue that the Legislature intended to signify something other than coincident peak demand given that the Legislature's use of the modifying phrase "aggregate customer" is unique to § 2827, and the Legislature generally avoids the use of inconsistent terminology in order to prevent confusion. Third, the Joint NEM Parties argue that if the Legislature had intended "aggregate customer peak demand" to simply mean coincident peak demand, the words "aggregate customer" would constitute surplusage, a result that statutory interpretation should avoid. Additionally, the Joint NEM Parties suggest that the phrase "aggregate customer peak demand" is most plainly interpreted as the aggregation of each "customer peak demand," which is each customer's non-coincident peak.
In contrast to the arguments based on the textual principles of statutory construction made by the Joint NEM Parties, PG&E and SDG&E generally look to legislative staff analysis for evidence of legislative intent. However, statutory interpretation should begin with an examination of the statutory language itself. We find persuasive the Joint NEM Parties' observation that the words "aggregate customer" would constitute surplusage if the Legislature had intended "aggregate customer peak demand" to mean peak demand.
As an initial matter, we find the language of the statute itself to be ambiguous as to whether coincident or non-coincident peak demand should be used as the denominator for purposes of calculating the cap on NEM for the various utilities. We agree with The Utility Reform Network (TURN) that the words of the statute are "inherently ambiguous" in this regard.9 However, we agree with the Joint NEM Parties that it seems unlikely, given the choice of words, that the Legislature intended the words "aggregate customer peak demand" to simply mean coincident peak demand. As the Joint NEM Parties point out, the phrase "peak demand" is used in multiple instances in the Public Utilities Code to signify coincident peak demand. If the Legislature intended the language in § 2827 to mean coincident peak demand, as distinct from non-coincident peak demand, it could have chosen the term "peak demand," as used elsewhere in the Pub. Util. Code, to avoid surplusage and internal inconsistency in the Pub. Util. Code.
In short, we are presented with a statute that is concededly ambiguous with respect to the particular question at hand. But, on balance, the statutory language itself tips in favor of the interpretation proposed by the Joint NEM Parties, and against the interpretation proposed by TURN and the utilities.
Given the inherent ambiguity in the statutory term "aggregate customer peak demand" the responsibility falls upon this Commission to interpret and clarify the meaning of this phrase in the context of a program the Legislature has entrusted this agency to administer. The Commission, as the regulatory agency with access to relevant data and specialized expertise in this field, must consider a variety factors to interpret this provision.
In the legislative history of AB 1755, the bill that enacted the change to "aggregate customer peak demand," the Senate Committee notes brought to light the lack of information regarding NEM at that time to impose a relevant cap that would not become obsolete in the face of growing electricity demand. The previous cap was set at a specified quantity for each utility service area. The fixed cap, however, did not take into consideration the fact that demand changes over time, and thus would become obsolete over time.
We note that § 2827(a) enumerates several goals of the NEM program, including encouraging substantial private investment in renewable energy resources and stimulating in-state economic growth. In light of the NEM program goals and the language of the statute itself, we conclude that the Joint NEM Parties' interpretation of "aggregate customer peak demand" to mean the sum of all customers' non-coincident peak demands is reasonable and we hereby adopt it. The electric utilities should use the highest recorded sum of non-coincident peak demands in a calendar year as the denominator for their NEM cap calculations.
PG&E explains in comments that calculating the non-coincident aggregate customer peak demand poses some difficulty due to the lack of data for many customers who have not yet received smart meters. However, using estimation techniques, such as extrapolating from available smart meter data or using load research data for these customers is a reasonable interim solution. Within 45 days of the effective date of this decision, the Energy Division should convene a public workshop with SCE, PG&E, and SDG&E and other interested parties to discuss methods for estimating the individual peak demands of the customers for which the utilities lack demand data and establishing a consistent methodology for calculating non-coincident aggregate customer peak demand. Within 60 days of the effective date of this decision, Energy Division should provide the Administrative Law Judge (ALJ) and assigned Commissioner a recommendation on a methodology for calculating non-coincident aggregate customer peak demand. Within 90 days of the effective date of this decision, the assigned Commissioner, in consultation with the ALJ and Energy Division, shall issue a ruling with instructions to the utilities on the methodology the utilities must use to calculate non-coincident aggregate customer peak demand. Within 120 days of the effective date of this decision, the utilities must file Tier 2 advice letters with revised NEM tariffs that conform to the assigned Commissioner's ruling. The assigned Commissioner or ALJ may modify these dates as necessary.
8 Joint NEM Parties comments 1/17/12 at 5, fn 10.
9 TURN comments 5/1/12 at 4.
