California Regulators Grant Request to Dismiss Proposal for Community Microgrids

by Paul Ciampoli
APPA News Director
April 13, 2023

The California Public Utilities Commission recently granted a request to dismission Sunnova Energy’s plans to build community microgrids in California.

In September Sunnova Community Microgrids California, a wholly owned subsidiary of Sunnova Energy, applied to the CPUC for a Certificate of Public Convenience and Necessity for authorization to build and operate public utility microgrids and to set electric service rates for the microgrid customers.

In the application (22-09-002), SCMC laid out plans for the microgrids that would be built as part of new master planned residential communities of between 500 to 2,000 homes, as well as and select non-residential facilities that would be co-located in or an essential part of each community.

SCMC also requested the CPUC’s approval to provide bundled retail service under Section 2780 of the Public Utilities Code and requested authority to establish market-based rates for service and requested exemption from several CPUC general orders and rules, including its general order regarding advice letters and customer notice requirements and affiliate transaction rules.

In October, the Public Advocates Office (Cal Advocates), an independent unit of the CPUC, filed a motion to dismiss SCMC’s application. In the petition, Cal Advocates argued that SCMC’s requests are based on “unsubstantiated claims and lack the basic information” required for a CPCN. Cal Advocates also said SCMC did not demonstrate that its proposals would ensure rates are just, reasonable, and necessary.

In a February 2023 proposed decision, a CPUC administrative law judge recommended granting the challenge.

In an April 6 decision, the CPUC said that the exemptions sought by SCMC are unauthorized.

The Commission said that SCMC is seeking to be exempt from the Commission’s statutorily required function of conducting oversight of electricity rates to ensure that they are just and reasonable. To grant the authority being sought by SCMC, the CPUC said it would have to “abdicate its responsibility to ensure just and reasonable rates.”

The Commission also said that SCMC failed to provide the information required for a Certificate of Public Convenience and Necessity.

PUC Approves Rules for New Microgrid Incentive Program

Meanwhile, the CPUC on April 6 approved rules for a new Microgrid Incentive Program for Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).

The decision approves the program rules for the MIP, a $200 million program previously authorized by the CPUC to support the development of community microgrids in disadvantaged and vulnerable communities, as well as tribal communities, who have experienced and are likely to experience power outages. 

It allocates $79.2 million for PG&E, $83.3 million for SCE, and $17.5 million for SDG&E to build complex projects that can operate independently for extended periods and serve multiple customers in disadvantaged and vulnerable communities. Projects selected under the MIP can receive up to $15 million in award funding.

The decision “aims to advance microgrid resiliency technology, distribute the benefits of microgrids equitably across these vulnerable communities, and provide insights for future actions that can enhance the resilience of the power system to benefit all customers,” the Commission said.