IV. Dispute Resolution Procedures

Utility tariffs currently provide that disputes with regard to interconnections be negotiated between the DG and the utility and then become subject to the Commission's "consumer complaint" process. Tecogen, Inc.
comments that in its experience, this process is slow, frustrating and uncertain.

The members of the Rule 21 Working Group recommended a process for mediating disputes. Generally, upon notice of a dispute regarding the application of Rule 21, each party would designate a representative with authority to make decisions and one with technical expertise. If parties cannot resolve their dispute within 45 days, they would either (1) continue negotiations or (2) make a written request to the Energy Division for mediation within 45 days. If the dispute is not resolved within 90 days from the date of the notice, either party could file a formal complaint with the Commission.

Members of the Working Group disagreed on three issues:

1. Whether the utility should be required to provide a technical explanation for its decision on an interconnection issue. PG&E believes it should only have to invoke system safety and reliability concerns.

2. Whether the resolution of the dispute should constitute precedent for future disputes with similar facts. PG&E doesn't believe this requirement is realistic because other projects will have distinguishable facts.

3. Whether the outcomes of the disputes should be made publicly available. PG&E argues that it does not release customer information without the permission of the customer and that the recommendation is contrary to the Commission's Rule 51, which requires confidentiality with regard to settlement negotiations.

The CEC generally supports the Working Group's recommendations. It suggests the parties to the dispute be provided five business days to notify each other of representatives for resolving the dispute. We agree with the CEC's recommendation and will adopt it.

The CEC defers to the Commission on where it will find mediators for an informal resolution process, whether in the Energy Division or elsewhere. We agree with the CEC that the tariffs should not identify any particular organization at the Commission since the Commission's management of its staff resources must change from time to time. We will direct the tariffs to require that the parties either request an informal mediation from the Commission's Chief ALJ or by mutual consent, an outside third-party mediator.

The CEC agrees that the utility should be required to provide a technical justification for decisions that affect project interconnections. We share the CEC's concern that without such a requirement, the DG community cannot make sound business judgments, for example, in determining how to cure a problem. Moreover, the information is critical in any dispute resolution process and in order for the utility to avoid arbitrary decisions about DG interconnections. We will direct the utilities to provide, at the request of the DG interconnection applicant, written justification for any interconnection requirement, which shall provide relevant detail about how the interconnection may compromise the utility system or public safety, or compromise regulatory requirements. As SCE suggests, the utility's concern may relate to regulatory issues and the tariff language should recognize this may be the subject of the utility's interconnection requirements.

The CEC expresses concern about public disclosure of information relating to dispute resolution. While a dispute resolution process involving mediation will of necessity require the exchange and protection of confidential information during mediation, the outcome of the dispute resolution process, i.e., the agreement reached, must be public to the extent it does not disclose legitimately confidential information, such as trade secrets. Public disclosure of the technical aspects of the parties' resolution could be valuable to other interconnection applicants and ultimately to the utilities as future interconnection processes are informed by some previous ones. We will ask the CEC, or a designated utility, to maintain such information on its website. The information should be published where it is provided by the interconnection applicant or where the applicant agrees that the utility may disclose it, and where it does not disclose technical or customer-related information the utility or the customer designates as confidential. We encourage the Working Group to refine this procedure and the types of information that should be included at the website, as the CEC suggests.

We believe that public disclosure of the resolution of a dispute, combined with written justifications for a utility's interconnection requirements and a mediation procedure, will promote consistent utility decision-making with regard to interconnection requirements. Accordingly, we do not have to address the proposal that the utilities consider as precedent the resolution of a dispute.

We will direct the utilities to submit tariff changes consistent with the foregoing and following consultation with the Working Group.