DSP/BAR/dpa Mailed 3/18/2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
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Order Instituting Rulemaking Regarding Policies, Procedures and Incentives for Distributed Generation and Distributed Energy Resources. |
FILED PUBLIC UTILITIES COMMISSION March 16, 2004 SAN FRANCISCO OFFICE RULEMAKING 04-03-017 |
ORDER INSTITUTING RULEMAKING REGARDING POLICIES, PROCEDURES AND INCENTIVES FOR DISTRIBUTED GENERATION AND DISTRIBUTED ENERGY RESOURCES
I. Summary
In this proceeding we continue our consideration of rules and policies impacting distributed generation (DG). DG has taken on greater significance in the energy industry since this Commission opened its last DG rulemaking in October of 1999 (R.99-10-025). The technologies of DG continue to evolve, and their potential benefits present a compelling set of options to be considered in the resource planning and procurement context. As expressed in state legislation, in the joint agency Energy Action Plan and the California Energy Commission's (CEC) recently adopted Integrated Energy Policy Report, evaluating and deploying DG is a priority for California's energy future1. There are multiple efforts underway to achieve these goals.
This Commission has made a substantial effort to stimulate DG installations by providing multiple technologies with financial incentives and exemptions from standby rates and DWR cost responsibility surcharges. The CEC, through its ratepayer-funded Public Interest Energy Research (PIER) program, has spent more than $80 million to study and support DG in recent years. In this Rulemaking the Commission will ensure that California's investor-owned utility customers get the maximum possible benefit from these policies.
It is equally true, however, that there is much left to learn regarding the true costs and benefits of adding DG to the electrical system; about the proper levels of public subsidies or incentives for various DG technologies; and about the extent to which DG can and should be incorporated into IOU long-term resource planning and procurement. This Rulemaking will update the record of our predecessor DG rulemakings, taking a broad look at the reality and potential of DG, and will allow the Commission to make informed decisions from a base of facts that we will strive to keep current. We will scope this Rulemaking to answer the challenging technical questions regarding DG posed by the Legislature, the utilities, and DG developers.
Work in this Rulemaking will be divided into five tasks:
1 Numerous pieces of enacted legislation have indicated the Legislature's intent to support DG, including but not limited to SB 1685 of 2003, AB 58 and SB 1038 of 2002, SB 82xx, SB 17xx, and SB 48xx of 2001, AB 918 and AB 970 of 2000, and others. California's first Net Metering law, described below, was enacted in 1995 via SB 656. The CEC's Integrated Energy Policy Report is publication number 100-03-019F, November 2003 and can be found at http://www.energy.ca.gov/energypolicy/index.html 2 Pub.Util.Code Sections 353.9 and 2827(n) 3 December 30, 2003 ALJ Ruling (R.98-07-037)1. The first is to develop the cost-benefit analysis methodologies for DER and for net metering as called for by the Legislature.2
2. The second is to carry out our responsibility to administer the Self Generation Incentive Program mandated by AB 970 and modified by AB 1685, and to optimize the coordination of our incentive program with that of the CEC.3
3. Third, we will develop further guidance for the IOUs on the use of DG as a planning and procurement resource, in keeping with the direction on long-term planning contained in D.02-10-062, the "Regulatory Framework" decision returning the IOUs to the business of procurement. It is in this area that we will consider any necessary changes to the state's Net Metering program for DG. This direction was updated in D.04-01-50 with specific instructions to the utilities in preparing their long-term plans, as described below.
4. Fourth, we will examine to the extent necessary the outstanding technical issues arising from the Commission-authorized tariff Rule 21 interconnection process managed by the CEC (see Appendix A for a report provided by the CEC, containing input on these outstanding issues from the Rule 21 Working Group).
5. Finally, we hope to explore associated, emerging technologies of Distributed Energy Resources (DER), (defined below, and of which DG is a subset), such as hydrogen fuel cells, microgrids, and electrical storage, among others, in order to bring the benefits of ratepayer-funded research and development into the IOU resource mix. The first three tasks are the top priorities of this rulemaking; we will address the last two topics as issues dictate and the schedule permits.
