IV. DG Issues before the Commission, CEC, Power Authority and Air Resources Board

With the direction provided in the Regulatory Framework decision of last year D.02-10-062 the Commission expanded the role of DG as a utility procurement option, directing the utilities to include DG in utility long-term generation and distribution planning. In the most recent Procurement decision, D.04-01-050, the Commission found that the IOU's long-term plans did not contain sufficient detail regarding how this direction is being implemented. In the next round of long-term plan filings each IOU is to provide the following: a line item entry identifying distributed generation separate and apart from other entries such as energy efficiency and demand response; the energy (GWh) and demand (MW) reduction attributed to distributed generation; and a description of the technologies the utility includes in its definition of distributed generation, as well as a statement noting whether its forecast includes utility-side distributed generation, such as QFs.

The Self Generation Incentive Program (SGIP) will be incorporated into this rulemaking. The Commission will address the continuation of program funding through 2007, as well as the additional eligibility requirements adopted in AB 1685. We intend to complete our mid-program evaluation, consider recommendations for program improvements as allowed within the framework of AB 1685, and identify opportunities for further action by the Legislature.

The number of solar, wind, and biogas net metering installations have increased since 2001, largely due to the availability of incentives and the expansion of California's net metering program to include systems with higher generating capacity. In recognition, the Legislature directed the Commission to study the environmental impacts of net metering. In conjunction with this assessment, this proceeding may also identify necessary changes to state and federal statutes that will enable California's net metering program to achieve its highest potential.

The CEC undertakes a number of important DG-related activities, including the Commission-approved facilitation of the state's DG interconnection working group process (see Appendix A)⁶. In addition, the CEC administers the renewable DG subsidy funds under the Emerging Renewables Program, and supplies ratepayer funds to DG research and development projects through the PIER program. Finally, the CEC manages the bid process to determine customer exemptions from cost responsibility surcharges (CRS), pursuant to criteria established in Commission D.03-04-030. We plan to continue our collaboration with the CEC, including coordination between our SGIP and the Emerging Renewables Program, bringing the results of PIER R&D into the planning and procurement process, and any necessary reforms to the Rule 21 program.

The CPA is presently engaged in a Request for Bids in its State Facility Solar Energy Sales Program, to enable state agencies to meet their goal of implementing all cost-effective solar PV projects, as mandated by SBxx 82 (2001). This effort falls within the scope of the CPA's 2003-2004 Energy Resource Investment Plan and its emphasis on efficiency and DG in public facilities across the state. Other CPA projects in the DG area will be considered in this proceeding as appropriate.

As of January 1, 2003 the Air Resources Board (ARB) is responsible for ensuring that DG technologies that are exempt from air pollution control or air quality management district permits meet specific emission standards and other requirements before they can be sold in California. The ARB has also developed guidance for districts in making permitting decisions for DG technologies that require such local certification. By July 2005 ARB staff must complete a technology review for the Board to evaluate whether the emissions standards established in ARB regulations should be modified. Additionally, we are required to incorporate the AB 1685 emissions and efficiency SGIP eligibility requirements by January 2005. We will coordinate our SGIP rules with these new regulations. The Commission is committed to promoting clean DG and to monitoring the emissions of the state's DG facilities, and will assist the ARB in its responsibilities via this proceeding.