**(note proposal below, and let me know of your interest)***

The California Public Utilities Commission (CPUC) is about to embark on what may become the most far-reaching restructuring process to date. Motivated in large part by the advent of distributed resources (small generation and storage technologies) and the California Alliance for Distributed Energy Resources (CADER), the CPUC will evaluate over the next 12 months the rules for the distribution systems of the future.

Topics will include the role of wires companies, true retail access, whether the wires should remain a monopoly, and whether distribution companies can own or operate distributed generation and storage. The results could dramatically alter some of the most important aspects of AB1890, define the distributed technology market rules in California, and influence similar discussions now heating up in other states and on the federal level.

At its regular meeting on Dec 17, the CPUC issued an “OIR”:

R.98-12-015, “Order Instituting Rulemaking to Consider
Commission Reforms in the Structure and Regulatory Framework
Governing Electricity Distribution Service”

The full text is available online:
http://www.cpuc.ca.gov/981217_orders.htm
(in HTML, Word, or PDF format)

>>> The Summary and Rulemaking Questions are attached below. <<<<<

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*******”OIR Watch Proposal”***********
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Obviously, utilities in California will be heavily involved (they’re named as respondents). The rest of the country will probably want to pay close attention to this entire discussion, as lengthy and voluminous as it is likely to be.

Distributed Utility Associates (founding members of CADER and a leading consultant in distributed resources) is considering a plan to prepare concise monthly reviews of the CPUC Distribution System Order Instituting Rulemaking (OIR), and to interpret its progress, direction and interpreting its importance.

The rulemaking’s implications could include new definitions of distribution companies, new business opportunities or exclusions for wires companies, needs for new or revised energy technologies and set the pace of distributed resources market entry.

In addition, a final synopsis on the resulting rulemaking and its implications on the electric utility industry could be issued at the conclusion of the twelve to fifteen month process. This would be offered as a subscription package.

Pricing is to be determined, probably in the range of $5,000, assuming a sufficient number of subscribers. UFTO Client Companies would be eligible to subscribe at a substantial discount.

Please let me know how this idea strikes you, and what your level of interest might be.

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ORDER INSTITUTING RULEMAKING

Summary
By this order, we open a rulemaking proceeding to consider whether the Commission should pursue reforms in the structure and regulatory framework governing electricity distribution service. The purpose of this proceeding is to gather additional information to assist us in framing proposals to the Legislature and our stakeholders for whatever reforms may be necessary in light of current developments in California’s electric industry.

This rulemaking will provide the opportunity for the Commission to begin consulting with the Legislature and collaborating with the Administration, interested stakeholders, and other state/local agencies who may have jurisdiction or interest in electric distribution and generation issues. In particular, we believe that our consideration of issues focusing on distributed generation and/or distribution competition will benefit from a collaborative effort among the Commission, the California Energy Commission (CEC), and the California Electricity Oversight Board (EOB). This process will allow us to work with these parties to identify the range of issues on distributed generation and distribution competition, and their interrelationships; explore whether we should undertake a focused analysis of distributed generation or a more comprehensive consideration of distribution competition issues; and determine those issues we can address more narrowly and more expeditiously. At the end of this process, we anticipate issuing a proposal that reflects our coordination with the CEC and the EOB, outlining the specific steps we will undertake, in cooperation with the Legislature, in addressing the issues and considering proposed changes in our regulatory policies and rules.

We solicit comments and proposals regarding the scope and substance of issues that need to be addressed, possible policy options, and the procedural steps that the Commission could pursue in adopting and implementing needed reforms that are consistent with the state’s goals and objectives in electric restructuring. We invite responses to our questions in Appendix A of this rulemaking. Respondents shall and interested parties may file opening comments on or before March 17, 1999, and reply comments on or before May 17, 1999. Given the collaborative efforts we intend to undertake with the CEC and the EOB in this proceeding, respondents and interested parties should also provide copies of their comments to these two agencies. We intend to consider a proposal from the Assigned Commissioner in the summer of 1999.

APPENDIX A

Rulemaking Questions

From a policy perspective, does consideration of DG necessarily require a broader, more comprehensive look at distribution competition and the role of the UDC?

Where has competition, as it relates to distribution, emerged or not emerged in California? Has there been growth in irrigation, municipal, and other public utility districts in the existing service areas of the UDCs? What has been the market penetration of DG, self-generation, and T&D substitutes in California?

Is there a need for further reforms in the structure and regulatory framework governing electricity distribution service, in light of current market developments described in your response to Q2 above? If so, what are they? What is the UDC’s ultimate role in this restructured energy market?

How would competition in distribution service be effected? Please give specific examples or scenarios manifesting competition in distribution facilities and/or services. What is the Commission’s role and the roles of other state/local agencies?

How would the integrity, reliability, safety, and efficiency of the T&D system be affected by a more competitive electric distribution and/or DG market? Please provide policy options.

What are the regulatory jurisdictional effects, if any, of allowing more competition in distribution and/or DG? Please provide policy options.

Provide an assessment of the possible environmental impacts of increased competition in distribution and/or DG. Please provide policy options.

Provide an assessment of the possible social, economic, and labor impacts, including implications for public purpose programs (i.e., energy efficiency and low-income programs), of increased competition in distribution and/or DG. Please provide policy options.

What are the ratemaking consequences of introducing or encouraging more competition in distribution and/or DG? Please provide policy options.

Describe the potential costs of promoting competition in distribution and/or DG? What are the potential stranded costs? What are the benefits? How should the potential costs and benefits be analyzed and quantified?

Does competition in electric distribution service have implications on the delivery infrastructure for natural gas? Please describe any such interrelationship and the resulting impacts on customer benefits, the environment, and regulatory structure?

What procedural steps should be pursued? Should there be a more focused analysis of DG issues, or a more comprehensive consideration of issues surrounding distribution competition? Are there issues which are more appropriately considered in workshops, full panel hearings, and/or other procedural forums?