18. Utility Discretion to Deny Tariff Request Under § 399.20

This decision implements SB 32 by directing utilities to incorporate a provision into their standard form contracts, which utilities and parties are currently developing, for written notice of a denial of a request for service under the § 399.20 FiT Program.

SB 32 adds subsection (n) to § 399.20 to provide the electric corporation with the ability to deny a tariff request by an electric generation facility in certain circumstances relating, generally, to compliance with the statute and ensuring the safety of the electric grid.

In its March 2011 opening brief, FuelCell Energy suggested that the Commission clarify this provision to avoid unnecessary misunderstandings and disputes. Specifically, FuelCell Energy requested that the Commission determine the point in the contracting process that a utility may deny such a tariff request. Other parties, including the Solar Alliance and the Vote Solar Initiative support further clarification but fail to provide a specific proposal with supporting rationale. These parties note the importance of clarifying the term "inadequate" interconnection point but others recognize the difficulty in establishing greater certainty.

SCE suggests that an affidavit may be sufficient means to determine compliance with subsection (n)(3). Silverado Power suggests that, in the interest of contract certainty and securing financing, that contract termination provisions only apply before a contract is executed. SDG&E states, in addition to the need for more specificity, that the language of subsection (n) would also permit a denial in other circumstances, such as a when the facility is located outside of the service territory as set forth in subsection (f).

In the interest of administrative ease and reducing transaction costs, it is important to adopt clear policies around when an electric corporation may deny a tariff request. We find that it is also reasonable to place a certain amount of discretion in the utility to carrying out subsection (n), especially since the denials are subject to a statutorily required appeal process before the Commission under § 399.20(o). ⁸⁵ Neither the statutory language itself nor secondary sources further clarify this matter. At a minimum, we find that any denial of service under § 399.20(n) must be provided in writing to the producer.

Accordingly, PG&E, SCE, and SDG&E shall add a provision regarding denial of service by the utility to the FiT Program standard form contract and/or tariff that is being developed in this proceeding in accordance with the schedule set forth in the January 10, 2012 ALJ ruling. The Commission will review this provision submitted by the utilities and, in a separate decision accept, reject, or modify the provision. Related FiT tariff modifications will also be addressed in this separate decision.

⁸⁵ § 399.20(o) provides that "Upon receiving a notice of denial from an electrical corporation, the owner or operator of that electric generation facility denied a tariff pursuant to this section shall have the right to appeal that decision to the commission."