BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking into Distributed Generation.	Rulemaking 99-10-025
(Filed October 21, 1999)	

SCOPING MEMO AND RULING OF ASSIGNED COMMISSIONER

I.	Summary
The California Public Utilities Commission (Commission) opened this Order Instituting Rulemaking (Rulemaking) into distributed generation in response to Decision (D.) 99-10-065.  A prehearing conference was held in this matter on December 1, 1999. 
This scoping memo and ruling addresses the issues raised at the prehearing conference and in the prehearing conference statements of the parties and sets forth the schedule for this proceeding. (See Appendix A.)
II.	Scope Of Issues To Be Considered
A.	Background
In the Rulemaking, the Commission identified the issues covered by this proceeding.  These issues include: interconnection standards; ownership and control of distributed generation; distribution system planning, maintenance and operation; valuation of distributed generation and net metering; consumer education and outreach to governmental entities; rate design and stranded costs; distribution wheeling; and streamlining of the California Environmental Quality Act (CEQA) review process.  
In the November 2, 1999 “Notice Of Prehearing Conference And Administrative Law Judge’s Ruling,” parties were provided with the opportunity to raise “other issues that have not been identified in the Rulemaking, which should be considered in this proceeding.”  Several parties filed prehearing conference statements raising additional issues that they believe should be covered in the Rulemaking. 
The issues to be addressed in this proceeding include the issues originally identified in the Rulemaking as summarized above.  Except as noted below, the other issues identified by the parties may also be addressed in this proceeding.
B.	Issues Raised By Solar Development Cooperative
At the prehearing conference, the Administrative Law Judge (ALJ) noted that Solar Development Cooperative (SDC) was seeking to introduce issues concerning oil companies and their ownership, control, and suppression of solar energy technologies. (PHC R.T. 9-12.)  SDC had previously sought to raise the same kinds of issues in R.98-12-015.  In D.99-10-065 at pages 99 to 102, the Commission denied SDC’s request to open an investigation into those kinds of issues.  The ALJ stated that he intended to recommend that SDC’s issues concerning oil companies and their ownership, control, and suppression of distributed generation technologies not be considered in this proceeding.
I agree that the issues that SDC has raised regarding oil companies, and their ownership, control and alleged suppression of certain kinds of distributed generation technologies, have no place in this proceeding.  In accordance with the reasoning set forth in D.99-10-065, and the fact that this Commission does not regulate oil companies, the issues that SDC raised regarding oil companies, and their ownership, control and alleged suppression of distributed generation technologies, will not be addressed in this proceeding.
C.	Enron’s Gas Interconnection Issue
The prehearing conference statement of Enron North America Corporation and Enron Energy Services Incorporated (hereinafter, “Enron”) urges the Commission not to foreclose discussion of gas interconnection issues at the distributed generation workshops.  The ALJ noted at the prehearing conference that D.99-10-065 determined that gas interconnection issues should not be consolidated with electric interconnection issues. (PHC R.T. 27-28.)
I agree that gas interconnection issues should not be a focus of this proceeding.  To the extent there is a need in the interconnection workshop on distributed generation to discuss gas interconnection issues, that should be permitted.  However, this proceeding should not be the forum in which to study and adopt natural gas interconnection standards.
D.	Other Issues Raised In Prehearing Conference Statements
In their prehearing conference statements, several of the parties raised various issues that were not specifically identified in the Rulemaking.  At the prehearing conference, the ALJ stated that most of the issues that parties raised “do have a home in the issues that have been identified in the Rulemaking.”
The Utility Consumers’ Action Network (UCAN) voiced its concern that:
“the investigation into ‘System Planning, Maintenance and Operation’ and ‘Valuation of Distributed Generation Benefits’ be more explicitly described so as to direct parties to discuss methodologies by which DG and transmission/distribution can be fairly compared. (UCAN prehearing conference Statement, pp. 1-2.)
Any party proposing a methodology for evaluating or quantifying the benefits of distributed generation should include that methodology in their prepared written testimony on the Phase 1 Issues.
The Latino Issues Forum and the Greenlining Institute (LIF/GI) raised three issues in their prehearing conference statement.  They state that:
“low-income consumers will be negatively affected if: 1) non-bypassable funding mechanisms for public purpose programs are not secured, 2) education and consumer protection about distributed generation is not properly disseminated to vulnerable communities, and 3) distributed generation is not made readily accessible to all communities.”
The three issues raised by LIF/GI are issues subsumed within the broad topic areas of: ownership and control of distributed generation, rate design, and consumer education.
The Sacramento Municipal Utility District (SMUD) listed seven issues in its prehearing conference statement.  All of the issues identified by SMUD are covered by the topics that this proceeding will address.
The Office of Ratepayer Advocates (ORA) listed several issues in its prehearing conference statement.  The definitional issues that ORA seeks to include can be addressed in the workshops on interconnection standards and distribution system planning and operations, and in their testimony regarding the ownership and control of distributed generation, and distribution wheeling. ORA also was concerned about where the role of unregulated affiliates of utility distribution companies (UDCs) would be addressed.  Parties interested in this issue should address this subject in testimony on the ownership and control of distributed generation.
ORA stated that supporters of a solicitation approach for voltage support and other ancillary services should discuss in their testimony the details of how to structure such solicitations, or to discuss how these markets can be facilitated.  I agree that parties who address this issue should discuss the details of how these solicitations can occur, and the mechanisms that they believe are needed.  These are appropriate Phase 1 Issues.
ORA also recommended that policy issues concerning distribution wheeling should be Phase 1 Issues instead of Phase 2 Issues.  Because of the extension of the schedule, I agree that moving these policy issues to Phase 1 makes sense.  Rate design associated with distribution wheeling will remain in Phase 2.
At the prehearing conference, we discussed UDC ownership of distributed generation while this proceeding is pending.  I believe that D.99-10-065 is clear on this point.  Any party who believes that clarification of D.99-10-065 is necessary should file a petition to modify that decision.  This scoping memo is not the appropriate vehicle to clarify what interim requirements the UDCs must adhere to with respect to the ownership and control of distributed generation.  Rules adopted in this proceeding will be applied prospectively.
III.	Schedule
In the prehearing conference statements and at the prehearing conference, the proposed schedule attached to the Rulemaking was discussed.  Due to the schedule of the workshops, some of the parties favor a delay in the proposed schedule so that the activities in the workshops can be incorporated into the prepared written testimony of the parties.  
In the proposed schedule that was attached to the Rulemaking, prepared written testimony on the Phase 1 Issues was to be served on the parties on February 1, 2000, and the Phase 2 testimony was to be served on March 17, 2000.  Evidentiary hearings into the Phase 1 Issues were proposed for the last two weeks in March 2000, and hearings into the Phase 2 Issues during the first week in May.  
I will adopt the schedule shown in Appendix A of this scoping memo and ruling.  Prepared testimony for the Phase 1 Issues shall be served on April 10, 2000, with evidentiary hearings beginning on May 31, 2000 through June 12, 2000.  The prepared testimony for the Phase 2 Issues shall be served on May 26, 2000, with evidentiary hearings during the week of July 24, 2000.
In D.99-10-065, the Commission directed that the staff of the Division of Strategic Planning and Energy Division study and submit a report on distribution competition and the role of the UDC no later than April 21, 2000.  In accordance with this ruling, the new schedule for submission of prepared testimony on whether the UDCs should be allowed to participate in distributed generation will not be submitted until April 10, 2000.  To allow the staff to consider the testimony on the UDCs’ role in distributed generation in their study, it is logical to allow submission of the staff study and report to be extended by an additional six weeks until June 2, 2000, if necessary. 
During the prehearing conference, the need for a second prehearing conference was also raised.  The ALJ and I have set a prehearing conference on May 10 in order to address scheduling issues for the evidentiary hearings.  I encourage parties to meet and confer to narrow the issues for hearing.  No later than 5 days prior to the prehearing conference, parties should file a case management statement consistent with Rule 49 of the Commission’s Rules of Practice and Procedure.
IV.	Discovery
At the prehearing conference, the ALJ stated that discovery requests related to issues addressed in prepared testimony should be delayed until the schedule for submitting testimony in this proceeding was established. (PHC R.T. 47.)  I will now permit discovery to commence on issues that are to be addressed in the prepared written testimony.  Discovery rights and obligations extend beyond the utilities to all parties in this proceeding since distributed generation is not unique to utilities.
V.	California Energy Commission
Senate Bill 735 (Stats. 1999, ch. 1021, § 3) provides that the California Energy Commission (CEC) is to undertake an investigation of distributed generation as comparable reliable alternatives to “transmission system or generation projects in the Independent System Operator’s electric grid planning process.”  Due to the CEC’s responsibilities, any filings related to the Commission workshop on Distribution System Planning and Operations shall also be filed in the CEC docket, CEC Docket No. 99-DIST-GEN-(2).
The ALJ noted at the prehearing conference that the Rulemaking addressed the workshop to be held by the CEC on whether a streamlined process could be used to address the CEQA concerns.  The Rulemaking in ordering paragraph 3.b.1) did not specifically state that the comments to the workshop report should be filed with the CEC.  Any party filing comments to the CEQA streamlining workshop report are to file those comments with the CEC.
VI.	Categorization
When this Rulemaking was initiated, the Commission preliminarily determined the category of this proceeding to be quasi-legislative.  Although ORA did not object to the categorization of this proceeding as quasi-legislative, ORA stated in its prehearing conference statement that some aspects of this proceeding that involve tariff elements are ratemaking in nature.  This issue was discussed at the prehearing conference, and parties were provided with the opportunity to file pleadings on whether certain aspects of this proceeding should be categorized as ratemaking.
In the pleadings, the UDCs support the categorization of this Rulemaking as quasi-legislative.  ORA proposes in its pleading of December 7, 1999 that “all elements of this proceeding that will result in the imposition of tariffs onto customers be categorized as ‘ratesetting’.”  In particular, ORA recommends that the issue of interconnection standards be categorized as ratesetting.
Rule 6.1(b) of the Commission’s Rules of Practice and Procedure provides in pertinent part that if a proceeding fits more than one category, the Commission “may divide the subject matter of the proceeding into different phases or one or more new proceedings.”  In order for a proceeding to be characterized as ratesetting, the proceeding must be one “in which the Commission sets or investigates rates for a specifically named utility (or utilities), or establishes a mechanism that in turn sets the rates for a specifically named utility (or utilities).” (Rule 5(c).)  A quasi-legislative proceeding is defined as:
“proceedings that establish policy or rules (including generic ratemaking policy or rules) affecting a class of regulated entities, including those proceedings in which the Commission investigates rates or practices for an entire regulated industry or class of entities within the industry.”
I agree with the UDCs that all of the issues to be addressed in this proceeding should be categorized as quasi-legislative.  In the Rulemaking the Commission expressed the intent that this proceeding would “develop policies and rules regarding the deployment of distributed generation….” (Rulemaking, pp. 1, 21.)  Although some of the issues to be addressed in this Rulemaking involves rates, these rates affect “an entire regulated industry or class of entities within the industry.” (Rule 5(d).)  Accordingly, this Rulemaking should be categorized as quasi-legislative.
In accordance with Rule 6.4, any party who disagrees with my categorization of this proceeding may file an appeal of the categorization as provided for in Rule 6.4.  Since this proceeding has been categorized as a quasi-legislative proceeding, ex parte communications are allowed without restriction or any reporting requirement. (Rule 7(a)(4) and (d).)
VII.	Presiding Officer
Rule 5(k)(3) states:
“In a quasi-legislative proceeding, the assigned Commissioner, except that the assigned Administrative Law Judge, in the assigned Commissioner’s absence, shall act as presiding officer at any hearing other than a formal hearing, as defined in Rule 8(f)(2).”
Since I am the Commissioner assigned to this proceeding, I am the presiding officer.  In my absence, ALJ Michelle Cooke shall act as the presiding officer.  The provisions of Pub. Util. Code § 1701.4 are applicable.
VIII.	Final Oral Argument
In quasi-legislative proceedings, a party has the right to make a final argument before the Commission if a party requests to do so within the time and in the manner specified by the scoping memo. (Rule 8(d).)  
Any party who wants to make a final argument before the Commission shall include its request in its opening brief.
IX.	Service List And Electronic Distribution And Posting
The service list in this proceeding was created following the appearances at the prehearing conference on December 1, 1999.  Anyone filing any pleadings or submitting any prepared written testimony shall use the service list for this proceeding.  The CEC has indicated that it will use this service list as well.  The service list can be downloaded off of the Commission’s website at www.cpuc.ca.gov.  
All pleadings and testimony are to be served in accordance with Rule 2.3.  Parties are encouraged to distribute their pleadings and testimony by e-mail.  The electronic mail addresses of parties can be found in the comma-delimited service list on the Commission’s website.  
Parties are also encouraged to continue the practice initiated in R.98-12-015 of posting their pleadings and testimony onto the distributed generation website located at www.cpuc.ca.gov/distgen/index.htm.  Documents for posting should be mailed to the following address: r9910025@cpuc.ca.gov.
Therefore, IT IS RULED that:
1.		The scope of the issues to be addressed in this proceeding is set forth in Section II of this scoping memo and ruling. 
2.		The schedule adopted for this proceeding is set forth in Appendix A of this scoping memo and ruling. 
3.		Discovery into the Phase 1 and Phase 2 Issues is now permitted.  
4.		Any filings related to the Commission workshop on Distribution System Planning and Operations shall also be filed in the CEC docket.
5.		The comments to the CEQA streamlining report are to be filed with the CEC.  
6.		This proceeding is categorized as quasi-legislative.  
7.		Commissioner Bilas is the presiding officer, and in his absence, ALJ Cooke shall act as the presiding officer. 
8.		Any party who wants to make a final argument before the Commission in this proceeding shall include its request in its opening brief.
9.		Anyone filing any pleadings or submitting any prepared written testimony shall use the service list for this proceeding.
Dated January 20, 2000, at San Francisco, California.

			
		Richard A. Bilas
Assigned Commissioner	

CERTIFICATE OF SERVICE

I certify that I have by mail this day served a true copy of the original attached Scoping Memo and Ruling of Assigned Commissioner on all parties of record in this proceeding or their attorneys of record.
Dated January 20, 2000, at San Francisco, California.

Erlinda A. Pulmano	

NOTICE

Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA  94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.

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The Commission’s policy is to schedule hearings (meetings, workshops, etc.) in locations that are accessible to people with disabilities. To verify that a particular location is accessible, call: Calendar Clerk (415) 703-1203.

If specialized accommodations for the disabled are needed, e.g., sign language interpreters, those making the arrangements must call the Public Advisor at (415) 703‑2074 or TDD# (415) 703-2032 five working days in advance of the event.
APPENDIX A – SCHEDULE

DATE	EVENT	
October 21, 1999	Rulemaking issued	
December 1, 1999	Prehearing Conference	
December 6, 1999 and TBD	CEC Workshops (interconnection issues, CEQA streamlining)	
December 15, 1999 and TBD	Energy Division Workshops (distributed generation impacts on distribution system operations, accounting for future deployment of DER in the UDC distribution system planning process, rate design issues)	
Within 60 days from close of workshops	Workshop reports filed and served	
Within 30 days of filing of respective workshop reports	Comments to the respective workshop reports filed and served	
Within 50 days of filing of respective workshop reports	Reply comments to respective workshop reports filed and served	
4/10/00	Testimony-Phase 1 Issues served (ownership and control, valuation, net metering, consumer education, outreach to governmental entities) 	
5/8/00	Rebuttal Testimony-Phase 1 Issues served	
5/10/00 	Scheduling Prehearing Conference	
5/26/00	Testimony-Phase 2 Issues served (rate design, stranded costs, distribution wheeling) 	
5/31/00 - 6/12/00	Evidentiary hearing-Phase 1 Issues	
Mid-June 2000	CEC files formal recommendation on interconnection standards	
Within 21 days of filing of CEC recommendation	Comments on CEC recommendation on interconnection standards filed	
6/23/00	Rebuttal Testimony-Phase 2 Issues served	
7/12/00	Opening Briefs-Phase 1 Issues (including any request for oral argument before the Commission)	
Week of 7/24/00	Evidentiary hearing-Phase 2 Issues	
8/2/00	Reply Briefs-Phase 1 Issues	
8/25/00	Opening Briefs-Phase 2 Issues	
9/15/00	Reply Briefs-Phase 2 Issues	
11/1/00	Proposed Decision-Phase 1 Issues	
December 2000	Commission Decision-Phase 1 Issues	
12/14/00	Proposed Decision-Phase 2 Issues	
January 2001	Commission Decision-Phase 2 Issues	

(END OF APPENDIX A)