STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

Agenda ID #2962

Quasi-Legislative

November 10, 2003

TO: PARTIES OF RECORD IN RULEMAKING 98-07-037

This is the draft decision of Administrative Law Judge (ALJ) Gottstein. It will not appear on the Commission's agenda for at least 30 days after the date it is mailed. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Parties to the proceeding may file comments on the draft decision as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages.

Consistent with the service procedures in this proceeding, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Meg Gottstein at meg@cpuc.ca.gov. Service by U.S. mail is optional, except that hard copies should be served separately on ALJ Gottstein and the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail or other expeditious methods of service. In addition, if there is no electronic address available, the electronic mail is returned to the sender, or the recipient informs the sender of an inability to open the document, the sender shall immediately arrange for alternate service (regular U.S. mail shall be the default, unless another means - such as overnight delivery is mutually agreed upon). The current service list for this proceeding is available on the Commission's web page, www.cpuc.ca.gov.

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:hf1

Attachment

ALJ/MEG/hf1 DRAFT Agenda ID #2962

Quasi-legislative

Decision DRAFT DECISION OF ALJ GOTTSTEIN (Mailed 11/10/2003)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Proposed Policies and Programs Governing Energy Efficiency, Low-Income Assistance, Renewable Energy and Research Development and Demonstration.

Rulemaking 98-07-037 (Filed July 23, 1998)

INTERIM OPINION DENYING THE INCLUSION OF TURBO-EXPANDERS IN THE ASSEMBLY BILL 970 SELF-GENERATION PROGRAM

1. Introduction and Summary

By Decision (D.) 01-03-073, dated March 27, 2001, the Commission adopted program incentives for demand-responsiveness and self-generation, pursuant to Assembly Bill (AB) 970.¹ In D. 03-01-006, we considered a Petition for Modification of D.01-03-073 filed by Mafi-Trench Corporation U.S.A. (Mafi-Trench) to include expansion turbines (turbo-expanders) in the AB 970 self-generation incentive program. Turbo-expanders may be used in place of throttling valves to step down high-pressure, transmission-level natural gas to lower pressures for customer usage at distribution level. The recovery of excess pressure can be used to produce electrical power.

We found that Mafi-Trench's Petition left several questions unanswered concerning this technology, and raised several concerns about its inclusion in the incentive program. We denied the Petition at the time but we afforded Mafi-Trench the opportunity to respond to our concerns by answering several questions. We directed Energy Division to develop recommendations for our consideration concerning the appropriateness of including turbo-expanders within the self-generation program, based on Mafi-Trench's responses and the comments of interested parties.

For the reasons discussed in today's decision, Energy Division recommends that turbo-expanders not be eligible for any incentives under the program. The assigned Administrative Law Judge (ALJ) distributed Energy Division's recommendation to the parties for comment on August 6, 2003. No comments were filed in response.

For the reasons discussed in this decision, we deny Mafi-Ttrench's Petition to include turbo-expanders as an eligible project at any incentive level under our AB 970 self-generation program.