May 2012

Greetings!  ,

 

Welcome to the news update for members of the Local Government Sustainable Energy Coalition ("LGSEC").  We are trying to publish the newsletter on a monthly basis.  This month there is a lot to report from the California Public Utilities Commission ("CPUC"), as well as the California Air Resources Board ("ARB").  This month's newsletter is organized by topic, rather then agency.  Read on for more about energy efficiency, feed-in tariffs and rooftop solar, community choice aggregation, and other topics.  

In This Issue
LSGEC News
CPUC Probides Guidance for 2013-2014 Transition Period
Feed-in Tariff, Solar, Long-Term Procurement on the renewables front
Low Carbon Fuel Standard Moves Forward
Demand Response, CCA, Smart Meters
Upcoming Events
June 22:  Quarterly Meeting, Sacramento

LGSEC members enjoy opportunities to help formulate policy positions through ongoing calls and electronic communication
LGSEC News

LGSEC is pleased this month to welcome a new member, the Sonoma County Regional Climate Protection Authority.  

 

You all should have received the proposed updates to the LGSEC member roles and responsibilities.  Please provide us with your feedback.  Hope to see you June 22 in Sacramento!

Energy Efficiency

 

 CPUC Provides Guidance for 2013-2014 Transition Period

 

On May 10, the CPUC adopted Decision 12-05-015, which provides guidance to parties for the 2013-2014 energy efficiency transition period.  The utilities are directed to submit applications for the transition period portfolio on July 2, 2012.  A key victory for the LGSEC is the direction in D.12-05-015 for interested local governments to submit applications for regional energy networks.  These regional networks would complement the work of existing local government partnerships, and provide services that are not provided currently, some of which benefit from the economies of scale that can be realized when working regionally.  The regional networks must:

  • Leverage additional state and federal resources so that energy efficiency programs are offered at lower costs to ratepayers;
  • Address the water/energy nexus;
  • Develop and deploy new and existing technologies;
  • Address workforce training issues; and
  • Address hard-to-reach customer segments such as low to moderate residential households and small to medium sized businesses.

 The utilities also are directed to expand existing local government partnerships that can provide deep retrofits.  In their July 2 applications, the utilities are instructed to include a separate set of criteria for proposed increases in local government programs.  The utilities are directed to confer with local governments and LGSEC to obtain input on expansion criteria.  The utilities also are directed to increase expand energy efficiency programs run by third parties.  The utilities hosted a "stakeholder advisory meeting" on May 29, at which they rolled out proposals on how to extend local government partnerships and third party programs.  The discussion focused primarily on criteria to use for "evergreen" programs for third party programs, an idea long championed by LGSEC.  It appears that we will need to debate these criteria in the comments on the July 2 applications.  The criteria the utilities propose to use for defining a "successful" partnership are being promoted by SDG&E, the result of a rather extensive stakeholder process it has used in its service territory.

 

D.12-05-015 takes on a number of other hot-button energy efficiency issues (the entire decision is over 400 pages).  It directs the utilities to submit a proposal for a $200 million statewide energy efficiency financing program.  This should include on-bill financing, as well as successful financing programs started with funds from the American Recovery and Reinvestment Act ("ARRA").  Although the amount of funds directed to continue ARRA financing programs appears to be small - $5 million - $10 million - this is a another victory for the LGSEC, which pointed to financing programs established by local governments as the primary opportunities currently available in California.  Sempra is directed to hire a consultant who will, by the end of the summer, provide recommendations on a statewide financing program. 

 

The decision directs that funds previously used for Engage 360 be moved to Energy Upgrade California, which will become the statewide marketing brand for energy efficiency.  Funds for Engage 360 were frozen earlier this year while the CPUC determined how to proceed with statewide marketing.  The California Center for Sustainable Energy (a LGSEC affiliate member), is directed to implement the statewide program, with PG&E administering the contract with CCSE.  In another win for the LGSEC, the utilities are directed to preserve the web portal from Engage 360.

 

As mentioned above, the decision is quite lengthy. The decision goes into detail in setting energy savings goals for the transition period, as well as associated avoided costs, discount rates, and other factors.  Issues related to the shareholder incentives for utility energy efficiency programs are being considered in a different docket, R.12-01-005.  Subsequent to this Decision, the CPUC Energy Division has issued the Program Implementation Plan template and instructions for the transition period applications.

Renewable Energy

CPUC Approves Funding Program for Renewables, RD&D

 

            On May 24, the CPUC authorized ongoing collection of the Electric Program Investment Charge ("EPIC"), in D.12-05-037.  EPIC was authorized late last year, after the Legislature failed to re-authorize the Public Goods Charge.  D.12-05-037 puts in place an ongoing framework for the EPIC program.  Specifically, it approves funding for research and development ("R&D"), technology demonstration and deployment, and market facilitation.  Funding is authorized at $162 million per year through 2020, with program portfolio review every three years.  Funds are to be allocated as follows:

 

Funding Element

CEC

Utilities

CPUC

Total

Applied Research

$55.0

-

-

$55.0

Technology Demonstration and Deployment

$45.0

$30.0

-

$75.0

Market Facilitation

$15.0

-

-

$15.0

Program Administration

$12.8

$3.3

-

$16.2

Program Oversight

-

-

$0.8

$0.8

Total

$127.8

$33.3

$0.8

$162.0

 

 

For technology demonstration and deployment, EPIC funds will be administered 80% by the California Energy Commission ("CEC") and 20% by the electric utilities.  The utilities had argued they should control all funding in this area, citing a report last year by the Legislative Analyst's Office that was highly critical of the CEC's administration of R&D funds.

 

Under the terms of the decision, all funds will be administered with CPUC oversight, with a proceeding at least every three years to consider investment plans presented by the administrators.  All of the administrators of EPIC funds will be subject to the same limits and requirements, including a 10% cap on administrative expenditures, annual reporting requirements, and at least one independent review conducted by a consultant hired by CPUC staff in 2016.

 

New Feed-in Tariff Finally Approved

 

On May 24, the CPUC approved a revised feed-in tariff, in response to SB 32 (2009).  Decision 12-05-035 (the link is to the redline version on which the CPUC voted; the final has not yet been issued) establishes a process for determining the feed-in tariff price.  This tariff expands the size of eligible projects from 1.5 MW to 3 MW.  The Decision is viewed favorably by some, particularly some solar groups, and by others is not expected to do much to bring other small renewable projects into the mix (this latter group includes LGSEC Regulatory Consultant Jody London, who has been very involved in this issue for years). 

 

Under the Renewable Market Adjusting Tariff ("ReMAT"), the price for the feed-in tariff will initially be established by taking the weighted average of prices received in the November 2011 Renewable Auction Mechanism ("RAM").  The RAM is an auction for renewable projects up to 20 MW.  The initial ReMAT price is anticipated to be 8.9 cents/kwh.  This price will be adjusted upward or downward every other month, by each of the three large investor-owned utilities, for three "buckets" or types of projects: peaking as-available, non-peaking as-available, and baseload.  Critics of ReMAT note that the RAM auction being used as the starting point was almost entirely solar projects, so there is not a good starting point for the other "buckets" of resource types.  Many parties had advocated for specific prices for different technologies, as has been used successfully in other states and countries. This was denied because it is "administrative," not "market based." 

 

SB 32 included a number of additional factors the CPUC was to include in setting the new feed-in tariff price.  D.12-05-035 adopts only an adder for time of delivery.  It does not include environmental compliance costs, as directed in SB 32, arguing that those costs are captured in the project's bid price. 

 

The CPUC still needs to approve the actual contract that will be used. The contract has been the subject of several workshops over the past six months.

 

CPUC Increases Net Metering Cap

 

On May 24, the CPUC expanded the amount of capacity eligible for net energy metering, from 2,464 MW to 5,265 MW.  D.12-05-036 modifies the formula for calculating "aggregate customer peak demand."  Under State law, the limit for net metering is 5 percent of each utility's aggregate customer peak demand.  Up until now, that peak demand was calculated as the highest total electricity demand in each utility's service territory. The new methodology, which was strongly supported by the solar industry, directs that aggregate customer peak demand should be the peak demand of individual customers.  Now that so many customers have smart meters, this calculation is easier to make.  (No comment in the decision about how you calculate the peak demand of a customer who opts out of smart metering!) 

 

The utilities opposed this new methodology, arguing that it subsidizes solar customers and removes them from helping pay for grid maintenance costs.  The CPUC has directed a study come back to it in October 2013 on the costs and benefits of net metering. 

 

CPUC Expands Virtual Net Metering

 

The California Public Utilities Commission (CPUC) approved a resolution on April 19 that will make it more cost-effective for solar systems to be installed on multitenant and multi-meter properties. Known as Virtual Net Metering (VNM), this new billing arrangement allows the utilities to issue bill credits for the energy produced by a renewable generating system to other tenants in the building. This resolution was the final step in a lengthy stakeholder process to implement VNM, a part of the Multifamily Affordable Solar Housing program that was expanded by the commission to the general market sector in a decision last year.

In the past, regulations had made it nearly impossible to install a single solar or renewable energy system that could offset multiple meters, which meant that renters and businesses with leased spaces were essentially excluded from installing solar.  VNM allows multitenant and multimeter properties to install a single generation system, such as solar, wind, or fuel cells, to cover the electricity load of both common area and tenant meters.  The expanded program should be available later this summer. 

 

CPUC Moves Utility Long-Term Procurement to New Docket

 

Periodically the CPUC is required by law to open a new docket for proceedings that never end.  On May 17, it issued a Scoping Ruling in the new Long-Term Procurement Proceeding, R.12-03-014.  The proceeding will have three tracks:

1. Local Reliability

2. System Needs

3. Procurement Rules and Bundled Procurement

 

The Initial focus for the proceeding will be Track 1.  The CPUC needs to figure out how to integrate renewables into the utility grid, particularly distributed generation and energy efficiency.  The type of issues the CPUC will look at initially include whether and how much additional generating capacity is required to meet local reliability needs, how to plan for possible retirement of power plants that use once-through cooling, whether reliability obligations should apply to all load serving entities or just the utilities, and how to allocate those costs across load serving entities.  This is not an area where the LGSEC has been active, although it is important for any community choice aggregator, which is considered a load serving entity. 

AB32/GREENHOUSE GAS PROCEEDINGS

  Low Carbon Fuel Standard Implementation               Continues 

 

One of the programs that will implement AB 32 is a Low Carbon Fuel Standard ("LCFS"), which the California Air Resources Board ("ARB") began implementing in 2011.  On December 29, 2011, the U.S. District Court for the Eastern District of California issued several rulings in federal lawsuits challenging the LCFS. One of the district court's rulings preliminarily enjoined the ARB from enforcing the regulation.  In January 2012, ARB appealed that decision to the Ninth Circuit Court of Appeals (Ninth Circuit), and then moved to stay the injunction pending resolution of the appeal.  On April 23, 2012, the Ninth Circuit granted the ARB's motion for a stay of the injunction while it continues to consider ARB's appeal of the lower court's decision.
 
In the meantime, the CPUC in Phase 2 of its proceeding on greenhouse gas costs and revenues, R.11-03-012, has taken comments on how to allocate utility revenue from the low carbon fuel standard.  The LGSEC is monitoring this phase of the proceeding.   The LGSEC has been very active in Phase 1 of this proceeding, which addresses how to use revenue from allowances the utilities have been given under the cap and trade program.  In partnership with a coalition of environmental groups and low income advocates, LGSEC has argued that a portion of the revenues should support community programs that combat climate changes.  Utilities, large customers, and ratepayer groups have argued all revenues should be returned to customers as a rebate.  The CPUC has yet to issue a Proposed Decision on this.  CPUC staff held another workshop May 23 to review the parties' positions one more time. 
 

CARB Looks at Disposition of Other Revenues from Cap and Trade

 

On May 24, CARB held a workshop on how to use the additional revenues from cap and trade, revenues that are completely separate from the utility auction revenues that are involved in the CPUC proceeding. CARB will work with the Department of Finance to develop annual proposals for the expenditure of the funds. The funds will go through the regular legislative and budget process.  CARB's main focus is:

  •  the most effective use of the funds for lasting and multiple benefits
  • use of the funds in furtherance of the goals of AB32
  • finding consensus and synergies among different proposals

While there were two separate panels, the first one was the most applicable to LGSEC interests.  Of significance, every single panelist mentioned the important role that local governments play in reaching AB 32 goals. Many discussed the need for transportation infrastructure, integrated water management and the great potential benefits of local governments working with the state. The most articulate statement about the role of local governments came from Grant Davis, General Manager of the Sonoma County Water Agency (Sonoma County Water Agency is a member of the LGSEC Board).  LGSEC will submit formal comments to CARB next month on this topic.  

RELATED ENERGY ISSUES

Demand Response Funded at $450 Million for 2012-2014

 

On April 19, the CPUC adopted demand response ("DR") activities and budgets for the three large investor-owned utilities, in D.12-04-045.  For 2012 through 2014 the CPUC authorized $454 million for this program.  This breaks down as: 

�                $191,886,588 for PG&E;

�                $65,806,526 for SDG&E, and

�                $196,338,052 for SCE.

 

The Decision also approves DR customer incentives of $33.5 million requested by SDG&E in its application, as part of the above authorized budget, and authorizes PG&E and SCE to pay their DR response customers the incentives that have been approved in other proceedings.

 

Richmond Becomes a Community Choice Aggregator

 

On May 15, the City of Richmond's City Council voted 5-2 to request membership in the Marin Energy Authority ("MEA").  According to media reports, Richmond's decision was motivated by an interest in letting customers choose their electricity provider.  Marin Energy Authority today has 12,500 customers, with another 80,000 potentially joining in coming months as the program expands in Marin County.  Richmond brings the potential for an additional 34,500 customers, and potentially $2 million in revenues.  Richmond also brings a larger percentage of low-income customers than currently served by MEA. 

 

Once Richmond officially joins MEA, it will take about nine months for CCA services to become available in the city.  MEA has to make changes to its CCA implementation plan to accommodate Richmond and submit it to the CPUC.  Once Richmond joins, it will have a seat on the MEA governing board. 

 

CPUC Sets Up Process to Measure Smart Grid Progress

 

On April 19, the CPUC adopted metrics to measure utility progress in meeting goals for deploying smart meters.  D.12-04-025 establishes a series of four Technical Working Groups: to revise consensus metrics; to develop cyber-security metrics; to develop environmental measures; and to develop four Smart Grid goals.  The utilities are directed to submit annual reports to the CPUC by October 1 of each year; the annual reports will inform the CPUC's report to the Governor and Legislature, which is due January 1.  
We hope you have enjoyed this e-newsletter. It is one of the benefits of your membership in the LGSEC.  Please send us feedback, and contact us with any questions or comments!
Jody London
Regulatory Consultant to the LGSEC
510/459-0667

Howard Choy
LGSEC Board Chair and Director, County of Los Angeles Office of Sustainabilty