DATE: February 15, 2001

TIME: 12:30 p.m.

PLACE: Arizona Corporation Commission, Pipeline Safety Conference Room, 1200 W.

ATTENDANCE: No Quorum of Commissioners. Attendance list is attached.

Ray Williamson of Commission Staff called the meeting to order. Mr. Williamson explained that this was the first meeting of a working group on portfolio standards and operating procedures. All participants introduced themselves.

The group discussed an Outline of Portfolio Standards and Operating Procedures. The list of technologies that need standards are: solar water heating, solar air conditioning, photovoltaics, solar trough systems, dish stirling systems, central receivers, wind systems, biomass systems, and landfill gas systems. The group added hybrid systems and metering. The technologies with the highest priority are solar air conditioning water heating, photovoltaics, and solar trough systems. The other technologies will be addressed later. A functional approach to standards was also discussed. IEEE 929 is now available. In addition, utilities have interconnection standards specific to smaller units.

The following operating procedures were discussed: Portfolio Surcharge, Portfolio Percentage, Environmental Portfolio Cost Evaluation Working Group, Extra Credit Multipliers, Reports, Deficiency Payments, Systems on Customer Premises, Banking and Sale of Portfolio kWh, Annual Calculation of Portfolio Requirements, Partial Credit for Investment in Solar Electric Manufacturing Plant, Development of Standards, Solar Water Heating and Solar Air Conditioning Systems, and Environmentally Friendly Renewable Electricity Technologies. "Other" was added to the list.

A question was asked about how the EPS will work administratively. Staff responded that the Commission will not be micro-managing; the utilities can develop their own programs. If a rate is involved, the Commission will have to pre-approve the program. The Commission will not set the value of tradable credits. In addition, the Commission does not generally set wholesale rates; it is usually the responsibility of FERC. The Commission's authority is over retail rates.

1. Can a utility program qualify for a Distributed Solar Electric Generator and Solar Incentive Program Extra Credit Multiplier under R14-2-1618.C? Mr. Williamson will look into the definition of "distributed."

2. In regard to R14-2-1618.F and H, what happens if a customer switches from one load-serving entity to another?

3. What is the definition of "affiliate" as used in R14-2-1618.J?

4. Under R14-2-1618.J, what does the term "significant" mean in regard to percent of ownership in a plant?

5. Size of a "power plant"

6. Green credits, their ownership and trading

7. Metering for remote solar electric systems

8. Who owns the credits when the resources are installed in other service areas? The group agreed that green credits would be owned by the owner of the renewable resource unless it is subsidized or financed by the load-serving entity.

9. Interconnection

10. Credit metering versus net metering/billing

11. Net metering versus net billing

12. In-state content description

13. Green credits for out-of-state solar

14. How is the surcharge applied to security lighting which is in addition to metered service at a location? Calculate the surcharge for the metered service and add to it the surcharge for the lighting service (kWh can be estimated).

15. Are large accounts with multiple meters or streetlights billed on a single account basis subject to the caps or is the surcharge applied to each individual meter or light inside the account? The surcharge is per kWh; the cap is not automatically applied to each light.

16. What are the specific types of costs that the revenues to be derived from the newly approved Environmental Surcharge are intended to cover?

The group decided to form a subcommittee on Accounting and Tax-related Issues, with Carl Dabelstein chairing the subcommittee. The subcommittee will provide a report to be distributed with the minutes. Anyone wanting to join the subcommittee can contact Mr. Dabelstein at cdabelst@czn.com.

17. Is the surcharge taxable? The surcharge is subject to sales tax because the money goes to the load-serving entity, not a governmental entity, and because the money is not for a service.

18. Is there a need for language in R14-2-1618.A to reflect the fact that acquisition of generation of solar or environmentally friendly sources constitutes earned renewable energy credits?

19. In 2001 and 2002, could system benefit charge money be used to invest in eligible generation systems?

20. In R14-2-1818.L, should it be stated that the owner of solar water heating and air conditioning systems can sell credits to load-serving entities with a stipulated formula?

21. Nevada Portfolio Standard allows a separation of credits from energy.

22. There is a lack of assurance of surcharge after 2004.

23. For how long can credits be banked?

24. Wording of line item on bill

25. Product certification

It was suggested that we use Arizona facilities, use third party certification, and keep it simple.

26. Can federal agencies install solar facilities and earn credits?

27. How will Electric Service Providers get surcharge money from Utility Distribution Companies?

28. How should the treatment of the credits be handled? The Accounting Subcommittee will address this issue.