3. Discussion

Our goal today is to establish a process by which we can give careful consideration to proposed new technologies for the self-generation program. Petitions to modify do not facilitate such a process because the information presented to the Commission is, by definition, driven by the petitioners' submittal and the individual views of parties who elect to respond. We believe that Energy Division's proposal meets our goal with the minor modifications and clarifications discussed below.

First, we clarify that the process adopted today will also apply to any other type of proposed program modifications, including changes to incentive levels or proposals to include "ancillary" technologies (i.e., absorption chillers and other waste heat devices) as an eligible cost. To date, we have addressed such proposals via the procedures related to petitions for modification, as we have for proposals to add technologies.³ We believe that the process established today for evaluating proposals to include new generation technologies lends itself to other types of program modifications as well. In addition, we also see no reason to limit that process to changes suggested by non-Working Group members. It should also apply to changes proposed by the Working Group itself, as suggested by PG&E in its comments.

In response to comments, we add clarifying language regarding our expectations if the Working Group cannot reach a unanimous recommendation. Under that circumstance, we direct Energy Division to distribute the recommendation of the majority of the Working Group, along with a description of the minority position, with a discussion of the pros and cons of each. In addition, we add a few items to the list of information to be provided by the party proposing a change to the program. Of most significance is the need for the applicant to identify what incentive level is being requested and on what basis.

We also agree with Solel that each applicant should be given the opportunity to have a more interactive role in the process of presenting its proposal for a new technology and responding to Working Group recommendations. Accordingly, we will afford each applicant the opportunity to personally introduce its proposal to the Working Group and to respond to the Working Group recommendations before they are forwarded to the Commission. In our opinion, the delay in the timeline resulting from this accommodation represents an acceptable trade-off for giving the applicant additional input into the process.

Capstone's suggested modification to the Energy Division proposal, on the other hand, does nothing to contribute to the development of a careful evaluation process that will avoid petitions to modify. In effect, it represents only a slight variation of the current process that has led to a series of such petitions. With the modification discussed above, the applicant will have four separate opportunities to communicate its views to the Commission: In its initial proposal, in response to the Working Group's proposed recommendations prior to the distribution of those recommendations for comment, in comments filed on the Working Group's final recommendations and lastly, in comments on the draft decision. We believe that this provides the applicant, as well as other interested parties, ample opportunity to respond to the Working Group's recommendations and communicate their views to the Commission.

With respect to Capstone's request for definitions of heat recovery and heat use, we note that Capstone has raised this issue in its February 14, 2003 Petition for Modification of D.01-03-073. A draft decision on Capstone's Petition is circulating, and the issues raised therein will be addressed by separate Commission decision in this proceeding.

As SoCal and SDG&E point out, SDG&E has been and continues to be a very active member of the Working Group even though SDG&E is not one of the self-generation program administrators (the San Diego Regional Energy Office administers the program in SD&GE's service territory). SDG&E's continued participation is consistent with our direction in D.01-03-073, Ordering Paragraph 16: "SoCal shall convene a working group including PG&E, SCE, SD&GE, and the San Diego Regional Energy Office to select final program details for statewide implementation, as soon as possible." (Emphasis added.) Accordingly, we correct Energy Division's inadvertent omission of SDG&E from its description of Working Group members.

RealEnergy's recommendation would affect who directs the initial paperwork for any proposal, i.e., an Energy Division staff person versus a staff person working for a program administrator. We note that none of the program administrators objected to Energy Division's proposal. In our view, the approach reflected in Energy Division's evaluation procedures reasonably utilizes program resources in a manner that avoids creating a paperwork bottleneck at the Commission.

Finally, we turn to Solel's request for expedited review of its proposal to include solar thermal electric technologies under the Level 1 (highest) incentive category. Solel's request was submitted on October 28, 2002 as a petition for modification of D.01-03-073. We note, as SCE did in its November 25, 2002 response, that Solel's petition does not provide sufficient information with which to evaluate its request. In particular, Solel provided no cost information related to solar electric thermal technologies and did not address the issue of fuel-switching, even though we have expressly stated in prior decisions that this information must be considered.⁴ Solel must submit this and other information required by the adopted guidelines before the Working Group and the Commission can evaluate its request. Once it submits this information, Solel's proposal will be evaluated according to the timeline set forth in our adopted procedures. Accordingly, we deny Solel's petition for modification without prejudice, and direct Solel to submit its request directly to the Working Group in accordance with today's adopted procedures and information guidelines. This direction extends to all petitions pending before the Commission as of the date of issuance of this decision, including the petition filed by the Department of General Services (DGS) on May 16, 2003.

Attachment 2 presents our adopted procedures and guidelines for the evaluation of proposals to add new technologies to the self-generation program, and other program changes.