Message-ID: <26407303.1075843079754.JavaMail.evans@thyme> Date: Mon, 11 Oct 1999 05:44:00 -0700 (PDT) From: roger.yang@enron.com To: jeff.dasovich@enron.com Subject: CPUC Draft Decision on Distributed Generation and Electric Distribution Competition Cc: greg.cordell@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: greg.cordell@enron.com X-From: Roger Yang X-To: Jeff Dasovich X-cc: Greg Cordell X-bcc: X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\Distributed generation X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Jeff, The purpose of this e-mail is to reply to your e-mail to EESO requesting input on the CPUC's draft decision on distributed generation and electric distribution competition. As you already know, EESO is very interested in "behind the meter" competition including distributed generation, as well as other competitive opportunities. I understand that decision puts forth procedures and identifies issues that need to be addressed for distributed generation and electric distribution competition. The decision does not address an opinion on the issues identified; hence, I will not be providing EESO's position on the issues. The decision provides for testimony on issues at a later point in time. We will defer to Government Affairs expertise on what are the most appropriate procedural steps. I will limit my analysis to identifying any issues that were not addressed by the decision. The following is an outline of issues that I believe were identified by the decision: I. Retail Competition A. Wires Competition 1. Distributed Generation/Distributed Energy Resources a. Interconnec tion (Workshop) Definitions Size Limitations Voltage Level Interconnection options Changes to Rule 21 for broader application, eliminating QF distinctions "Type Testing" Safety (Testimony) Islanding (Workshop) Statutory Amendments b. Ownership an Operational Control (Staff Report) Siting Jurisdiction UDC and affiliate ownership (Testimony) c. Environmental Impacts Air Quality Visual Impacts Noise Impacts d. Rate Design and Cost Allocation Cost Shifting Stranded Investment (Testimony) Bypass Fee (Testimony) Standby Rates, including Firm v. Non-Firm (Testimony) Flexible Rate Offering e. Distribution System Planning Process (Workshop) System Benefits Reliability Losses Deferral of Distribution Investments Relieve Constraints DG Distribution Valuation System (Testimony) Additional costs Impacts on PBR f. Net Metering (Testimony) Statutory Limitations Rate bypass Issues Public Purpose Programs Consistency for all generation technology g. Dispatch and Scheduling of Excess Generation (Workshop and Testimony) Market Power Must Run Statutory clarification on what is a utility Jurisdiction h. Future Role of UDC (Testimony) i. Distribution Service for Generators Distribution-only Service (Testimony) Jurisdiction (Testimony) Unbundle Voltage Service Levels j. Other Impacts on California Air Resources Board Emissions Credits Impacts on Local Air Quality Districts Local Governments Building Codes & Permits California Environmental Quality Act (Workshop) 2. Competition with Irrigation and Municipal Districts (Energy Division Report) a. Local Government Franchises b. Stranded Costs c. Rate Flexibility d. Statutory Amendments for uniform construction, inspecition, reliability & safety standards e. Obligation to serve f. Statutory Amendments for uniform Public Purpose Program requirements g. Local government tax advantages 3. Privatization of Distribution (Energy Division Report) a. Safety & Construction Standards Interconnection b. Uniform Standards Jurisdiction Legislative clarification c. Obligation to Serve d. Line Extension Rules e. Public Purpose Program charge bypass Alternate ways of funding f. Wires only service unbundling g. Rate Design Bypass Charge Standby Rate Flexibility Average Rate Structure h. Master-Meter & Submetering Impact on construction costs DSM cost effectiveness Price Signals Scale Safety and Reliability Impact on Direct Access Customer Choice Cost Shifting Legislative Amendments Submetering Accuracy Local Government Weights & Measures Rates to submeter customers 4. Rights-of-Way Competition (Energy Division Report) a. Cooperation of Local Government 5. Independent Distribution Operator a. Pros/Cons b. Costs c. Use of ISO B. Energy Competition (Energy Division Report) 1. Clear Separation of Monopoly & Competitive Services a. Cross-subsidies 2. Provider of Last Resort v. Default Provider a. Competition for Default Provider Role b. Monopsony Market Power to influence market prices c. Mandarory PX Buy Requirement for Provider of Last Resort d. Economies of scale enjoyed fy the Default Provider C. Other (Energy Division Report) 1. Social, Labor, and Economic Impacts 2. DG Consumer Education I believe this is a fairly comprehensive list. However, there are some issues that I believe should either be identified or if already identified better defined. First, in the Energy Division's assessment of Energy Competition and the clear separation of monopoly and competitive services, the Energy Division should identify all of the assymetric rules, responsibilities, and expectations placed upon ESPs compared to those of the UDC default service provider. For instance, hourly interval metering requirements only apply to direct access customers and not to standard offer customers. Costs to fulfill regulatory requirements by the ESP are expected to be recovered from market transactions; whereas, the utilities recover these costs in non-competitive service rates. These are examples of competitive barriers that disadvantage ESPs. Secondly, the decisions reference to Standby Service on page 17 inappropriate implies that Standby Service is only available from the UDC, when in fact ESPs can supply Standby Generation Service as well. The issue of Standby Service needs to unbundle Standby T&D service from Standby Generation service, where these two issues are looked at independently. Third, in addressing the Distributed Generation issue of distribution service for excess generation the issue of bidirectional distribution service needs to be more fully explored. In other words, if the customer is expected to pay for distribution service as a load, some of the costs of distribution service for excess generation should be offset by the payments already paid for distribution charges to the load. Fourth, the issue of voltage service levels is in part addressed with respect to interconnection. Discounts for voltage service levels should be addressed with respect to both loads and generation. Finally, the issue of interruptible service should also be addressed, because it is an unresolved issue that is related to the issues above about distribution system benefits. Roger