Legislative and Regulatory UpdateAugust 25, 2022
Inflation Reduction Act
SDG&E General Rate Case (“GRC”)
New CPUC Demand Flexibility Rulemaking
NEM 3.0 Update
Inflation Reduction Act of 2022 Overview
Comprehensive bill to replace Biden Administration’s Build Back Better – includes health care, climate, and tax legislation Energy and Climate Change Goals:
Lower consumer energy cost
Increase American energy security
Invest in decarbonizing all sectors of the economy
Focus investments into disadvantaged communities
Inflation Reduction ActLower Consumer Energy Costs
$9 billion in consumer home energy rebate programs
10 years of consumer tax credits to make homes energy efficient Tax credit for lower/middle income individuals to buy clean vehicles $4,000 for used vehicle
$7,5000 for new vehicle
$1 billion grant program to make affordable housing more energy efficient
Inflation Reduction ActEnergy Security and Domestic Manufacturing Production tax credits to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and critical minerals processing $10 billion investment tax credits to build clean technology manufacturing facilities $500 million in the Defense Production Act for heat pumps and critical minerals processing $2 billion in grants to retool existing auto manufacturing facilities to manufacture clean vehicles Up to $20 billion in loans to build new clean vehicle manufacturing facilities $2 billion for National Labs to accelerate energy research
Inflation Reduction ActDecarbonize the Economy
Tax credits for clean sources of electricity and energy storage and roughly $30 billion in targeted grant and loan programs for states and electric utilities to accelerate the transition to clean electricity Tax credits and grants for clean fuels and clean commercial vehicles Grants and tax credits to reduce emissions from industrial manufacturing processes Over $9 billion for Federal procurement of American-made clean technologies $27 billion clean energy technology accelerator to support deployment of technologies to reduce emissions Methane Emissions Reduction Program
Inflation Reduction ActCommunities and Environmental Justice $3 billion in Environmental and Climate Justice Block Grants – invest in community led projects and community capacity building centers $3 billion in Neighborhood Access and Equity Grants – support neighborhood equity, safety, and affordable transportation access $3 billion in Grants to Reduce Air Pollution at Ports – support purchase and installation of zero-emission equipment and technology $1 billion for clean heavy-duty vehicles – school buses, transit buses, and garbage trucks Many of the other programs previously mentioned also have an environmental justice or low-income benefit/focus
SDG&E General Rate Case (”GRC”)
Prehearing conference was held on July 27, 2022
Focus on:
Scoping Issues
Scheduling
Public Participation Hearings
SDG&E General Rate Case (”GRC”)Scoping Issues
Should cost functionalization methodologies be reviewed in GRC Phase 1 as proposed by the Joint CCAs? If yes, is it encompassed in one of the main issues discussed earlier. Please define cost functionalization as you understand it for the benefit of all participants.
Background: Joint CCAs raised issue. Sempra (SDG&E and SoCal Gas) said that cost allocation among customer classes is out of scope.
Term borrowed from PG&E GRC Decision, D. 20-12-005.
Refers to the process by which costs are allocated across various utility functions (i.e., electric generation and delivery functions).
Administrative Law Judge seemed to agree with us, but we will not know for sure until final scoping memo is released in the next month or two
SDG&E General Rate Case (”GRC”)Scheduling and Public Participation Hearings Scheduling
Parties addressed proceeding schedule.
Public Participation Hearings
Time, duration and location are being decided now.
San Diego Community Power sent a letter to the CPUC requesting in person hearings.
Demand FlexibilityRulemaking 22-07-005
New CPUC rulemaking filed July 14, 2022
The CPUC is embarking on a significant overhaul to demand response rules, and this rulemaking will consider updates to:
The Commission’s rate design principles,
Guidance principles for demand flexibility, and
How to streamline the patchwork of niche rates and programs to expand the use of demand flexibility beyond early adopters.
Demand FlexibilityObjectives
Enhance the reliability of California’s electric system; Make electric bills more affordable and equitable;
Reduce the curtailment of renewable energy and greenhouse gas emissions associated with meeting the state’s future system load; Enable widespread electrification of buildings and transportation to meet the state’s climate goals; Reduce long-term system costs through more efficient pricing of electricity; and Enable participation in demand flexibility by both bundled and unbundled customers.
Demand FlexibilityStrategies
Provide universal access to the current electricity price through a statewide internet-based price portal that provides the current composite electricity price specific to each customer at any time.
Introduce dynamic energy prices based on real-time wholesale energy costs that reflect the localized marginal cost of energy.
Incorporate dynamic capacity prices based on real-time grid utilization.
Offer bi-directional electricity prices that allow customers to import and export energy based on the same dynamic, composite prices.
Offer a subscription option based on customer-specific load shapes.
Enable transactive features that allow customers to lock in electricity prices to import or export a pre-determined quantity of energy at some future time.
NEM 3.0Status Update
May 9 – ALJ ruling requesting comments on topics presented June 10 – Opening Comments
July 1 – Reply Comments
Next Steps – CPUC will likely issue a proposed decision based on comments received
NEM 3.0Background
Topics addressed in ALJ ruling and comments:
Glide Path Approach: transition customers from existing NEM tariff to a successor tariff in form of Market Transition Credit (“MTC”), which is a fixed $/kW of solar system size, provided as a monthly electricity bill credit Non-Bypassable Charges (“NBC”) on Gross Consumption: proposal from the Sierra Club for utilities to collect NBC on each tariff customer’s gross consumption, including both imports and behind-the-meter (compared to NEM 2.0 where customers pay certain NBCs on billed imports) Community Distributed Energy Resources: expanding the capacity, locational eligibility requirement, customer eligibility criteria, and technology eligibility criteria for the Community Solar Green Tariff (“CSGT”) program, which enables residential customers in disadvantaged communities to benefit from a local solar project and receive a 20% bill discount