2. Energy Division's Proposal and Parties' Comments

Energy Division recommends a process that formalizes the Working Group's current evaluation of proposed new technologies, and affords applicants, distributors, and manufacturers the opportunity to present new technologies for Commission consideration without filing a petition for modification. The process includes guidelines to assist applicants with their proposals, and establishes timeframes by which the applicant could expect the Energy Division/Working Group to submit recommendations to the Commission. Parties also have an opportunity to comment on those recommendations. The individual steps in the evaluation process and guidelines recommended by the Energy Division are presented in Attachment 1.

Opening comments on Energy Division's proposal were filed on May 5, 2003 by Pacific Gas and Electric Company (PG&E), Solel Solar Systems, LTD (Solel), Capstone Turbine Corporation (Capstone), Southern California Edison Company (SCE) and jointly by San Diego Gas & Electric Company and Southern California Gas Company (SDG&E/SoCal). SCE and RealEnergy, Inc. (RealEnergy) filed reply comments on May 12, 2003.

PG&E supports Energy Division's proposed evaluation process, arguing that it is represents an overall improvement to the procedural vehicle of petitions for modification. However, PG&E requests two clarifications: First, whether the process would also apply to other categories of program changes, and second, whether it would apply to changes proposed by the Working Group itself. PG&E also suggests minor changes to the timeline and proposes additional information requirements under the guidelines.

In Capstone's view, the Energy Division's proposal unduly weights the influence of the Working Group in determining whether or not a new technology is deserving of program inclusion. Therefore, Capstone recommends that the applicant be advised of the Working Group's recommendations and have the right to file a Petition for Modification if the Working Group rejects its proposal in full or part. Capstone also recommends that the guidelines include a definition of what constitutes heat recovery and what constitutes heat use for the purpose of determining the eligibility of heat recovery equipment for self-generation incentives.

Solel argues that the current procedure outlined by the Energy Division does not solicit sufficient input from the applicant. To address this, Solel proposes two modifications to the process. First, Solel proposes that the applicant itself should be permitted to introduce the proposal to the members of the Working Group. Second, Solel recommends that the Working Group provide the applicant a copy of the proposed recommendations before those recommendations are issued for comment, and allow the applicant five days to respond. Solel also urges the Commission to provide an accelerated path within the adopted process for consideration of its pending Petition for Modification.

RealEnergy supports Solel's proposals to solicit input from the applicant, and further recommends that Energy Division be the contact point for the applicant, rather than a program administrator.

SDG&E and SoCal believe that Energy Division's proposed process is reasonable and urge the Commission to adopt it, with one minor change. They request that the proposal be corrected to reflect SDG&E's continued participation in the Working Group.

SCE also supports Energy Division's proposal, but suggests minor revisions that it believes will better define the process. In response to Solel's comments, SCE supports the suggestion that the applicant be permitted to introduce its proposal to members of the Working Group. However, SCE argues that both Solel's and Capstone's request to learn of the Working Group's recommendations before they are issued for comment would not contribute to a streamlined process, and recommends that the Commission reject these modifications.