California again is the proving ground. Analysts see DG as the biggest issue since the PUC first mapped its "vision" for retail competition.
The distributed generation (DG) debate among utilities, environmentalists, power marketers, manufacturers and consumer advocates, set to move into second gear late this year before the California Public Utilities Commission, promises to "be a bloody, back-biting, nail-scratching fight."
That is the belief of Michael Shames, director of advocacy group UCAN, the Utility Consumers Action Network, who participated in early June hearings spurred by a CPUC Order Instituting a Rulemaking (OIR) on DG. (See RM98-12-015, Cal.P.U.C.; also, www.cpuc.ca.gov.)
UCAN's Shames observes that the DG issue pits industry groups against each other because it throws everything done by utilities as part of electricity restructuring into question, both in California and nationally.
"The utilities have recognized that the greatest asset they own is the grid," he says. "They view those wires as the future in which they can offer commodities. The utility distribution companies (UDCs) must view distributed generation as a competitive threat. Their own business, their own assets, the distribution lines are at risk by the development of a distributed generation market."
All of this makes for a spicy stew. On one hand, distributed generation represents a budding and exciting technology. It may demand new policies and standards from regulators on such matters as utility interconnection and net metering. At the same time, however, DG might render obsolete a good deal of what regulators have done so far concerning direct access, functional unbundling and forced divestiture of generating assets.