V. DG Issues before the Federal Energy Regulatory Commission

On July 24^th, 2003 FERC issued a Notice of Proposed Rulemaking (Docket No. RM02-12-000) on "Standardization of Small Generator Interconnection Agreements and Procedures," the results of which will bear directly on the work undertaken in this proceeding. The proposed NOPR approach to these issues appears to be compatible with what California has implemented in its Commission-authorized tariff Rule 21 interconnection process, and in fact closely resembles the model rule developed and filed at FERC by California, Texas, Ohio and New York, under the auspices of the National Association of Regulatory Utility Commissioners. To the extent that this proves true, we will encourage FERC to pursue its NOPR as it is presently established.

We hope, through the input of parties in this proceeding, to develop a solid foundation for arguments at FERC that will protect California's ratepayers, utilities and DG customers, and allow us to implement DG policies that best reflect California's needs and the public interest. We will develop a California position on these issues, with input from our colleagues at the CEC and the California Independent System Operator (CAISO).

FERC's influence on DG policy in California also potentially extends into the realm of net metering, and the ill-defined border between a net-metered and a wholesale transaction. While it does provide a bill credit for the sale of excess power to the grid, at present the net metering system in California does not allow for payments from the IOU to the DG owner. Hence there has been no need for a FERC-approved wholesale tariff governing such transactions. In order to maximize the benefits of DG to the California system, however, we may wish to consider developing such a tariff for submission at FERC, one that will promote the types of DG technologies and transactional relationships that California favors. We invite parties to comment, and to assist us in taking a leadership role on this issue as we act on our statutory authority to represent California at FERC.