Wednesday, October 22, 2008

more on prop 7

The prior research and discussion on Prop 7 continues, both on this blog and in the comments here. Here's where things stand now.

1. I've managed to convince myself that Prop 7 will not affect the legal status of distributed power generation (such as rooftop solar) that's operating under a net metering program.

Net metering is a program where you hook your rooftop solar up to the grid. You pay your utility company for the amount of power you use minus the amount you generate. Under net metering, if you generate more than you use, the utility doesn't have to pay you for it unless you have some sort of separate contract with them.

I was concerned that Prop 7's language would interfere with distributed generation. It turns out it still might, but not the part of distributed generation that's part of net metering. The Energy Policy Initiatives Center has a useful article (pdf) on California law governing Renewable Energy Credits. Section 5, along with its footnotes, gets into distributed generation. It points out that distributed generation through net metering is governed by a separate set of laws, not by the part Prop 7 changes. That's what the exclusion from the definition of "Retail Seller" of generation consistent with Section 218(b) is all about in Public Utilities Code section 399.12(i)(4)(A).

Now, if you want a contract where you get paid for generating more than you use, that may well put you in the category of being a photovoltaic producer under 30 megawatts, so Prop 7 may have some implications for you.

2. It's still not clear what effect Prop 7 has on producers under 30 megawatts.

There are basically two arguments that prop 7 locks out producers of less than 30 megawatts. I think I may have cleared one up, but the other's still murky.

2.a. Must an "in-state renewable electricity generation facility" be a "facility"?

The first argument goes something like this: to be an "eligible renewable energy resource," you must be a "solar and clean energy facility" and you must also be an "in-state renewable electricity generation facility" as defined in the public resources code. The public resources code § 25741 defines "in-state renewable electricity generation facility" as "a facility that meets all of the following criteria" and then gives a list of criteria. It also contains a definition of the word "facility" in § 25110, which the text of prop 7 (official pdf, unofficial HTML version) changes to specifically include "solar and clean energy plant", a term that means a plant of 30MW or more. So the question is whether an in-state renewable electricity generation facility must be a "facility" as defined in § 25110, or whether the word "facility" there is just the generic, English word "facility" without the statutory meaning. If it has the statutory meaning, then to qualify for the renewable portfolio standard, your solar or clean energy generator would have to generate at least 30MW.

I haven't been able to find a court case, a California Public Utilities Commission decision, or a California Energy Commission decision that addresses that question. However, the California Energy Commission publishes a set of guides for energy producers interested in the Renewable Portfolio Standard. One guide (pdf), in particular, covers what energy generators are eligible to participate in the Renewable Portfolio Standard. The current definition of "facility" is restricted to transmission lines and thermal power plants (which must have a capacity of at least 50 megawatts), but the eligibility guide says that solar photovoltaic generators are eligible and doesn't give a minimum size. So I can't point to chapter and verse, but it seems likely that the CPUC and CEC are using "facility" in its common meaning in this case, rather than as the defined term.

2.b. Is a "solar and clean energy plant" the same as a "solar and clean energy facility"?

When the "no on prop 7" folks put in their ballot response that prop 7 excludes renewable energy producers of less than 30 megawatts, the "yes on prop 7" folks took them to court. Peter Wall was kind enough to get a copy (pdf) of the ruling, which he posted to his blog. The associated legal whitepaper (pdf), which appears to be a moderately-edited legal brief, goes into more detail about the arguments. Essentially, the argument boils down to the fact that, to be eligible under the renewable portfolio standard, prop 7 requires that you be a "solar and clean energy facility" and an "in-state renewable electricity generation facility." But it doesn't define "solar and clean energy facility." It does define "solar and clean energy plant," however, and that definition sets a 30 megawatt floor on its size. It also defines "facility," but it does it over in the Public Resources Code, not in the Public Utilities Code where it uses "solar and clean energy facility."

In the court case, the folks against Prop 7 argued that Prop 7 made the two terms the same, that a "solar and clean energy facility" is a "solar and clean energy plant", blocking out producers under 30 MW. The folks in favor of Prop 7 argued that they're different. The court found "each of the party's interpretations has some support in the initiative's text." Personally, I'm not convinced either way by the arguments, so this one's still murky.

3. And now, two rants.

3.a. Rant the First: For cryin' out loud, California, fix your defined terms!

When you write a contract, it's common practice to capitalize defined terms. For instance, you might say something like this:
"Facility" means an thermal power plant which produces electricity and has a capacity of at least 30 megawatts.
And then when you use the definition, if you mean the defined term, you capitalize it, and when you don't mean the defined term, you leave it lower case to indicate the word takes on its ordinary meaning in common written English:
The Commission will consider the application of any facility, but it will approve an application only if it is submitted by a Facility.
This is something California does not do. Which means when they pepper the Public Utilities Code and the Public Resources Code with the word "facility," there's no way to know whether they mean the common term or the defined term. I mean, come on, all you'd have to do is distinguish between "Solar and Clean Energy Plant" and "solar and clean energy facility" and that whole issue 2.b. would just go away.

3.b. Rant the Second: Could we please raise the level of information here?

The amount of time it's taking to get hard info on this initiative is really adding up, and a big part of the problem is the "yes" and "no" campaigns. The "no on 7" web site is mostly conclusory statements with nary a link or cite to supporting data. I can't even get on the "yes on 7" site because it's flash-only, and flash is giving my browser indigestion right now. The Union of Concerned Scientists' "no on 7" page is marginally better, but it still doesn't provide the raw info necessary to really assess this complex set of changes. And there are rapidly approaching limits to how much time I can spend analyzing this stuff. It really shouldn't be necessary to spend hours digging for primary sources to cut through the crap.


False Data said...

Here's a direct link to the "yes on 7" site's Facts page for others who are Flash challenged.

MikeMac said...

I would have to say again what I said on Peter Wall's site: a "plant" would seem to be a special case of a "facility". I couldn't agree with you more on the rants, though. :-)

One thing that had puzzled me was why they chose to define "plants" rather than sticking with "facility". Why separate out 30MW+ from everything else unless you want to do something differently with one than the other? Someone made the comment that "plants" had to be approved by a Commission for siting purposes only.

I think I'm reaching the end of my rope on this damn thing. I can't devote any more time to it without taking away from my other prop study, which is sorely lacking in time now. But if you want to follow up on that, it might be good to know one way or the other.

Anonymous said...

Hi hi (again)! Here is a legal review I found about prop 7 that may be helpful in terms of rant #3b. :)