BILL NUMBER: SB 1	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 31, 2005
	AMENDED IN ASSEMBLY  AUGUST 18, 2005
	AMENDED IN ASSEMBLY  JULY 12, 2005
	AMENDED IN ASSEMBLY  JULY 5, 2005
	AMENDED IN ASSEMBLY  JUNE 23, 2005
	AMENDED IN SENATE  MAY 31, 2005
	AMENDED IN SENATE  MAY 16, 2005
	AMENDED IN SENATE  APRIL 25, 2005
	AMENDED IN SENATE  FEBRUARY 28, 2005

INTRODUCED BY    Senators   Murray 
   and Campbell   Senator
  Murray 
   (Principal coauthor: Assembly Member Levine)
   (Coauthors: Senators Alquist, Chesbro, Ducheny, and Kehoe)
   (Coauthors: Assembly Members Bermudez, Chan, Cohn, 
Garcia,     Huff,  Koretz,
Laird, Leno, Lieber,  Maze,  Nation, Pavley,
Saldana, Wolk, and Yee)

                        DECEMBER 6, 2004

   An act  to add Sections 7110.3, 7110.4, and 7146 to the
Business and Professions Code,  to amend Section 25744 of, to
add Sections 25405.5 and 25405.6 to, and to add Chapter 8.8
(commencing with Section 25780) to Division 15 of, the Public
Resources Code, and to amend Sections 379.6 and 2827 of, and to add
Sections 379.8 and 387.5 to, the Public Utilities Code, relating to
solar  energy   electricity  .


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1, as amended, Murray   Energy  
Electricity  : renewable energy resources: Million Solar Roofs
Initiative  : contractors: regulation of electrical work  .
   (1) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to expand and
accelerate development of alternative sources of energy, including
solar resources. Existing law requires the Energy Commission, until
January 1, 2006, and to the extent that funds are appropriated for
that purpose in the annual Budget Act, to implement a grant program
to accomplish specified goals, including making solar energy systems
cost competitive with alternate forms of energy.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations. The existing Public Utilities Act requires the PUC to
require Pacific Gas and Electric Company, San Diego Gas and Electric,
and Southern California Edison to identify a separate electrical
rate component to fund programs that enhance system reliability and
provide in-state benefits. This rate component is a nonbypassable
element of local distribution and collected on the basis of usage.
The funds are collected to support cost-effective energy efficiency
and conservation activities, public interest research and development
not adequately provided by competitive and regulated markets, and
renewable energy resources. Existing law requires that 17.5% of the
money collected under the renewable energy public goods charge be
used for a multiyear, consumer-based program to foster the
development of emerging renewable technologies in distributed
generation applications. Existing law requires that the funds be
expended in accordance with a specified report of the Energy
Commission to the Legislature, subject to certain requirements.
   Existing law requires the PUC, on or before March 7, 2001, and in
consultation with the Independent System Operator, to take certain
actions, including, in consultation with the Energy Commission,
adopting energy conservation demand-side management and other
initiatives in order to reduce demand for electricity and reduce load
during peak demand periods, including differential incentives for
renewable or super clean distributed generation resources.  Pursuant
to this requirement, the PUC has developed a self-generation
incentive program to encourage customers of electrical corporations
to install distributed generation that operates on renewable fuel or
contributes to system reliability. Existing law requires the PUC, in
consultation with the Energy Commission, to administer, until January
1, 2008, a self-generation incentive program for distributed
generation resources in the same form that exists on January 1, 2004,
subject to certain air emissions and efficiency standards.
   This bill would establish the Million Solar Roofs Initiative,
administered by the Energy Commission, with the goals of placing
1,000,000 solar energy systems, as defined or designated by the
Energy Commission, on new and existing residential and commercial
customer sites, or its generation capacity equivalent of 3,000
megawatts, establishing a self-sufficient solar industry in 10 years,
and placing solar energy systems on 50% of new home developments in
13 years. The bill would establish the Million Solar Roofs Initiative
Trust Fund and would provide that, upon appropriation by the
Legislature, moneys deposited into the fund may be expended by the
Energy Commission for purposes of carrying out the Million Solar
Roofs Initiative. The bill would provide that up to 2% of the money
in the fund may be expended for the state's costs of administration.
The program would require the Energy Commission to award incentives,
pursuant to a declining schedule to be adopted by the Energy
Commission, and would authorize certain other incentive programs, to
support the installation of eligible solar energy systems. The bill
would require the Energy Commission to adopt by January 1, 2010, a
performance-based incentive program, for at least 50% of the moneys
expended, that is based on the actual electrical output of the solar
energy system and that promotes the installation of solar energy
systems that maximize electrical output to coincide with 
peak loads   peak   loads  . The bill
would require the Energy Commission to establish and revise
eligibility criteria for solar energy systems and to establish
conditions for incentives.  The bill would require that
electrical work to install the solar energy system be performed under
contract by a contractor meeting certain licensure requirements.
 The bill would require the Energy Commission to adopt
guidelines governing the program at a publicly noticed meeting. The
bill would provide that the Million Solar Roofs Initiative program
supplants that portion of the program to foster the development of
emerging renewable technologies that encourages installation of
residential and commercial photovoltaic solar energy systems.  The
bill would require that, upon disbursement of funds from the Million
Solar Roofs Initiative Trust Fund consistent with the Million Solar
Roofs Initiative, the  annual funding associated with the 
photovoltaic portion of the emerging renewable technologies program
be  discontinued and the remaining funds from that program be
 deposited into the Million Solar Roofs Initiative Trust
Fund, and would prohibit the Energy Commission from establishing any
other program in addition to the Million Solar Roofs Initiative
program, to encourage the  increased  installation
of residential and commercial photovoltaic solar energy systems. The
bill would require the Energy Commission to conduct random audits of
solar energy systems to evaluate their operational performance. The
bill would require the Energy Commission, on or before January 1,
2009, and every year thereafter, to submit an assessment of the
success of the Million Solar Roofs Initiative program to the
Legislature.
   This bill would require that the PUC, on or before February 1,
2006, and in consultation with the Energy Commission, issue an order
opening a proceeding, or expanding the scope of an existing
proceeding, to finance a comprehensive solar energy program to
adequately fund the Million Solar Roofs Initiative. The bill would
require funding of the Million Solar Roofs Initiative to be an
element of the program adopted by the PUC, with the charge imposed
not to exceed an unspecified amount per kilowatthour for each
customer class, with the total amount collected not to exceed a
specified aggregate dollar limit within the service territories of
participating electrical corporations. The bill would require that
the reasonable cost of the program be included in the distribution
revenue requirements of electrical corporations. The bill would
require that the program adopted by the PUC be a cost-effective
investment by ratepayers in peak electricity generation capacity that
enables ratepayers to recoup the cost of their investment through
lower rates as a result of avoiding purchases of electricity at peak
rates generated by traditional generation resources. The bill would
require the PUC to adopt the program no later than January 1, 2007.
The bill would provide that the Million Solar Roofs Initiative
program supplants that portion of the self-generation incentive
program that encourages installation of residential and commercial
photovoltaic solar energy systems and would require that, upon
disbursement by the Energy Commission of funds from the Million Solar
Roofs Initiative Trust Fund consistent with the Million Solar Roofs
Initiative program, the  annual funding associated with the 
photovoltaic portion of the self-generation incentive program
 be discontinued and the PUC order the remaining funds from
that program  be deposited into the Million Solar Roofs
Initiative Trust Fund. The bill would prohibit the PUC from
establishing any other program to encourage the  increased
 installation of residential and commercial solar energy
systems.
   This bill would require all local publicly owned electric
utilities, as defined, that sell electricity at retail, on or before
January 1, 2007, to adopt, implement, and finance a solar roofs
initiative program,  funded by a surcharge,  as
prescribed, for the purpose of investing in, and encouraging the
increased installation of, residential and commercial solar energy
systems. The bill would require a local publicly owned electric
utility to make certain program information available to its
customers and to the Energy Commission on an annual basis beginning
June 1, 2007. By imposing additional duties upon local publicly owned
electric utilities, the bill would thereby impose a state-mandated
local program.
   (2) Existing law requires all electric service providers, as
defined, to develop a standard contract or tariff providing for net
energy metering, and to make this contract available to eligible
customer generators, upon request.  Existing law requires all
electric service providers, upon request, to make available to
eligible customer generators contracts for net energy metering on a
first-come-first-served basis until the time that the total rated
generating capacity used by eligible customer generators exceeds 0.5%
of the electric service provider's aggregate customer peak demand.
   This bill would require the PUC to order electric service
providers to expand the availability of net energy metering so that
it is offered on a first-come-first-served basis until the time that
the total rated generating capacity used by all eligible
customer-generators exceeds  5%   2.5%  of
the electric service provider's aggregate customer peak demand.
   (3) Existing law requires the Energy Commission to expand and
accelerate development of alternative sources of energy, including
solar resources.
   This bill would require that beginning January 1, 2010, a seller
of production homes, as defined, offer the option of a solar energy
system, as defined, to all customers negotiating to purchase a new
production home constructed on land meeting certain criteria and to
disclose certain information. The bill would require the Energy
Commission to develop an offset program that allows a developer or
seller of production homes to forego the offer requirement on a
project, by installing solar energy systems generating specified
amounts of electricity on other projects. The bill would require that
not later than July 1, 2006, the Energy Commission initiate a public
proceeding and make findings if and under what conditions solar
energy systems are to be required on new residential and
nonresidential buildings. The bill would prohibit the Energy
Commission from requiring that a solar energy system be installed on
a residential building unless the Energy Commission determines, based
upon consideration of all costs associated with the system,
including the availability of certain financial incentives, that the
system is cost effective when amortized over the economic life of the
structure. 
   (4) Existing law requires individuals who perform work as
electricians to become certified by January 1, 2005, and prohibits
uncertified individuals from performing electrical work for which
certification is required after that date. After the January 1, 2005,
certification deadline, an uncertified person may perform electrical
work for which certification is required to obtain on-the-job
experience as a registered apprentice, if the uncertified person
meets certain requirements. Existing law authorizes the California
Apprenticeship Council to extend for up to two years the January 1,
2005, certification deadline.  
   This bill would require that the electrical work related to the
installation of a solar energy system pursuant to the Million Solar
Roofs Initiative program, be performed under contract by a contractor
meeting certain licensure requirements. The bill would require that
all persons who engage in the connection of electrical devices of 100
volt-amperes or above for a solar energy system pursuant to the
Million Solar Roofs Initiative program be electricians certified
pursuant to the above-described requirements.  
   (5) Existing law, the Contractors' State License Law, provides for
the licensure and regulation of contractors and authorizes the
Contractors' State License Board to conduct all functions and duties
relating to the licensing, regulation, and discipline of licensees.
 
   This bill would provide that employment of an uncertified person
to perform work as an electrician for which certification is required
pursuant to the above-described requirements constitutes a cause for
disciplinary action. The bill would additionally provide that the
failure to provide adequate direct supervision of an uncertified
person performing electrical work as a registered apprentice
constitutes a cause for disciplinary action. The bill would require
that certain contractors seeking renewal of a licensee provide
certain information relative to their familiarity with these
requirements and compliance with certain certification requirements.

    (4) 
    (6)  Under existing law, a violation of the Public
Utilities Act or an order or direction of the PUC is a crime.
    Various provisions of this bill are within the act and require
action by the PUC to implement the bill's requirements. Because a
violation of those provisions or of PUC actions to implement those
provisions would be a crime, this bill would impose a state-mandated
local program by creating new crimes.
    (5) 
    (7)  The California Constitution requires the state to
reimburse local agencies and school districts for certain costs
mandated by the state. Statutory provisions establish procedures for
making that reimbursement.
   This bill would provide that no reimbursement is required by this
act for specified reasons.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.   Section 7110.3 is added to the Business and
Professions Code, to read: 
   7110.3.  Employment of an uncertified person to perform work as an
electrician for which certification is required by Section 3099.2 of
the Labor Code constitutes a cause for disciplinary action. 

  SEC. 2.   Section 7110.4 is added to the Business and
Professions Code, to read: 
   7110.4.  The failure to provide adequate direct supervision of an
uncertified person performing electrical work, as required by Section
3099.4 of the Labor Code, constitutes a cause for disciplinary
action.  
  SEC. 3.  Section 7146 is added to the Business and Professions
Code, to read:
   7146.  (a) After January 1, 2008, a licensee seeking renewal of a
class C-10 electrical license shall certify under penalty of perjury,
that the licensee is familiar with the requirements of Section
3099.2 of the Labor Code and will not employ uncertified persons to
perform work for which certification is required by Section 3099.2 of
the Labor Code.
   (b) After January 1, 2008, a licensee seeking renewal of a class
C-10 electrical license shall submit with a renewal application, a
list of current employees that perform work for which certification
is required by Section 3099.2 of the Labor Code, and for each listed
employee, one of the following:
   (1) The employee's certification number.
   (2) A statement that the employee is a registered apprentice
within the meaning of subdivision (d) of Section 3099.2 of the Labor
Code.
   (3) A statement that the employee is registered with the Division
of Apprenticeship Standards pursuant to Section 3099.4 of the Labor
Code.
   (c) The registrar may charge an additional fee for license
renewals, not to exceed ten dollars ($10), to administer this
section. 
   SECTION 1.   SEC. 4.   Section 25405.5
is added to the Public Resources Code, to read:
   25405.5.  (a) As used in this section, the following terms have
the following meanings:
   (1) "kW" means kilowatts or 1,000 watts, as measured from the
alternating current side of the solar energy system inverter
consistent with Section 223 of Title 15 of the United States Code.
   (2) "Production home" means a single family residence constructed
as part of a development of at least 50 homes per project that is
intended or offered for sale.
   (3) "Solar energy system" means a photovoltaic solar collector or
other photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar energy for the
generation of electricity, and that produces at least 1 kW, but not
more than 1 megawatt, alternating current rated peak electricity.
The commission may designate a solar energy device that is not a
photovoltaic solar collector or other photovoltaic solar energy
device to be a "solar energy system" if the solar energy device 
produces at least 1 kW, but not more than 1 megawatt, alternating
current rated peak electricity,  has the primary purpose of
providing for the collection and distribution of solar energy for the
generation of electricity, and it meets or exceeds the eligibility
criteria established pursuant to subdivision (c) of Section 25782.
   (b) A seller of production homes shall offer a solar energy system
option to all customers that enter into negotiations to purchase a
new production home constructed on land for which an application for
a tentative subdivision map has been deemed complete on or after
January 1, 2010, and disclose the following:
   (1) The total installed cost of the solar energy system option.
   (2) The estimated cost savings associated with the solar energy
system option, as determined by the commission pursuant to Chapter
8.8 (commencing with Section 25780) of Division 15.
   (c) The State Energy Resources Conservation and Development
Commission shall develop an offset program that allows a developer or
seller of production homes to forego the offer requirement of this
section on a project, by installing solar energy systems generating
specified amounts of electricity on other projects, including, but
not limited to, low-income housing, multifamily, commercial,
industrial, and institutional developments. The amount of electricity
required to be generated from solar energy systems used as an offset
pursuant to this subdivision, shall be equal to the amount of
electricity generated by solar energy systems installed on a
similarly sized project within that climate zone, assuming 20 percent
of the prospective buyers would have installed solar energy systems.

   (d) The requirements of this section shall not operate as a
substitute for the implementation of existing energy efficiency
measures, and the requirements of this section shall not result in
lower energy savings or lower energy efficiency levels than would
otherwise be achieved by the full implementation of energy savings
and energy efficiency standards established pursuant to Section
25402.
   SEC. 2.   SEC. 5.   Section 25405.6 is
added to the Public Resources Code, to read:
   25405.6.  Not later than July 1, 2006, the commission shall
initiate a public proceeding and make findings if, and under what
conditions, solar energy systems shall be required on new residential
and new nonresidential buildings, including the establishment of
numerical targets. A solar energy system shall not be required for a
residential building unless the commission determines, based upon
consideration of all costs associated with the system, that the
system is cost effective when amortized over the economic life of the
structure. When determining the cost effectiveness of the solar
energy system, the commission shall consider the availability of
governmental rebates, tax deductions, net-metering, and other
quantifiable factors, provided that the commission can determine the
availability of these financial incentives if a solar energy system
is made mandatory and not elective. The commission shall periodically
update the standards and adopt any revision that the commission
determines is necessary, including revisions that reflect changes in
the financial incentives originally considered by the commission when
determining cost effectiveness of the solar energy system. For
purposes of this section, "solar energy system" means a photovoltaic
solar collector or other photovoltaic solar energy device that has a
primary purpose of providing for the collection and distribution of
solar energy for the generation of electricity.
   SEC. 3.   SEC. 6.   Section 25744 of the
Public Resources Code is amended to read:
   25744.  (a) Seventeen and one-half percent of the money collected
pursuant to the renewable energy public goods charge shall be used
for a multiyear, consumer-based program to foster the development of
emerging renewable technologies in distributed generation
applications.
   (b) Any funds used for emerging technologies pursuant to this
section shall be expended, except as provided in subdivisions (c) and
(d), in accordance with the report, subject to all of the following
requirements:
   (1) Funding for emerging technologies shall be provided through a
competitive, market-based process that shall be in place for a period
of not less than five years, and shall be structured so as to allow
eligible emerging technology manufacturers and suppliers to
anticipate and plan for increased sale and installation volumes over
the life of the program.
   (2) The program shall provide monetary rebates, buydowns, or
equivalent incentives, subject to subparagraph (C), to purchasers,
lessees, lessors, or sellers of eligible electricity generating
systems. Incentives shall benefit the end-use consumer of renewable
generation by directly and exclusively reducing the purchase or lease
cost of the eligible system, or the cost of electricity produced by
the eligible system. Incentives shall be issued on the basis of the
rated electrical generating capacity of the system measured in watts,
or the amount of electricity production of the system, measured in
kilowatthours. Incentives shall be limited to a maximum percentage of
the system price, as determined by the commission.
   (3) Eligible distributed emerging technologies are photovoltaic,
solar thermal electric, fuel cell technologies that utilize renewable
fuels, and wind turbines of not more than 50 kilowatts rated
electrical generating capacity per customer site, and other
distributed renewable emerging technologies that meet the emerging
technology eligibility criteria established by the commission.
Eligible electricity generating systems are intended primarily to
offset part or all of the consumer's own electricity demand, and
shall not be owned by local publicly owned electric utilities, nor be
located at a customer site that is not receiving distribution
service from an electrical corporation that is subject to the
renewable energy public goods charge and contributing funds to
support programs under this chapter. All eligible electricity
generating system components shall be new and unused, shall not have
been previously placed in service in any other location or for any
other application, and shall have a warranty of not less than five
years to protect against defects and undue degradation of electrical
generation output. Systems and their fuel resources shall be located
on the same premises of the end-use consumer where the consumer's own
electricity demand is located, and all eligible electricity
generating systems shall be connected to the utility grid in
California. The commission may require eligible electricity
generating systems to have meters in place to monitor and measure a
system's performance and generation. Only systems that will be
operated in compliance with applicable law and the rules of the
Public Utilities Commission shall be eligible for funding.
   (4) The commission  may limit the distribution of funds
available pursuant to the program based upon the receipt of funding
or financial incentives from other federal or local government or
public utility programs to promote solar energy.   shall
limit the amount of funds available for any system or project of
multiple systems and reduce the level of funding for any system or
project of multiple systems that has received, or may be eligible to
receive, any government or utility funds, incentives, or credit.

   (5) In awarding funding, the commission may provide preference to
systems that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
   (6) In awarding funding, the commission shall develop and
implement eligibility criteria and a system that provides preference
to systems based upon system performance, taking into account
factors, including, but not limited to, shading, insulation levels,
and installation orientation.
   (7)  The commission shall, at least once annually,
  At least once annually, the commission shall 
publish and make available to the public the balance of funds
available for emerging renewable energy resources for rebates,
buydowns, and other incentives for the purchase of these resources.
   (c) Notwithstanding Section 399.6 of the Public Utilities Code,
the commission may expend, until December 31, 2008, up to sixty
million dollars ($60,000,000) of the funding allocated to the
Renewable Resources Trust Fund for the program established in this
section, subject to the repayment requirements of subdivision (f) of
Section 25751.
   (d) Notwithstanding Section 399.6 of the Public Utilities Code and
subdivision (b), the Million Solar Roofs Initiative program shall
supplant that portion of the program to foster the development of
emerging renewable technologies that encourage the installation of
residential and commercial photovoltaic solar energy systems. Upon
disbursement of funds from the Million Solar Roofs Initiative Trust
Fund consistent with the Million Solar Roofs Initiative program
established pursuant to Chapter 8.8 (commencing with Section 25780),
the photovoltaic portion of the emerging renewable technologies
program shall be discontinued and the  remaining funds from
that   annual funding associated with the photovoltaic
portion of the emerging renewable technologies  program shall be
deposited into the Million Solar Roofs Initiative Trust Fund. The
commission shall not establish any other program to encourage the
 increased  installation of residential and
commercial photovoltaic solar energy systems.
   SEC. 4.   SEC. 7.   Chapter 8.8
(commencing with Section 25780) is added to Division 15 of the Public
Resources Code, to read:
      CHAPTER 8.8.  MILLION SOLAR ROOFS INITIATIVE

   25780.  The Legislature finds and declares all of the following:
   (a) California has a pressing need to procure a steady supply of
affordable and reliable peak electricity.
   (b) Solar generated electricity is uniquely suited to California's
needs because it produces electricity when California needs it most,
during the peak demand hours in summer afternoons when the sun is
brightest and air conditioners are running at capacity.
   (c) Procuring solar electric generation capacity to meet peak
electricity demand increases system reliability and decreases
California's dependence on unstable fossil fuel supplies.
   (d) Solar generated electricity diversifies California's energy
portfolio. California currently relies on natural gas for the bulk of
its electricity generation needs. Increasing energy demands place
increasing pressure on limited natural gas supplies and threaten to
raise costs.
   (e) More than 150,000 homes will be built annually in California
in the coming years, challenging energy reliability and
affordability.
   (f) Investing in residential and commercial solar electricity
generation installations today will lower the cost of solar generated
electricity for all Californians in the future. In 10 years, solar
peak electric generation can be procured without the need for
rebates.
   (g) Increasing California's solar electricity generation market
will also bring additional manufacturing, installation, and sales
jobs to the state at a higher rate than most conventional energy
production sources.
   (h) Funding a Million Solar Roofs Initiative is a cost-effective
investment by ratepayers in peak electricity generation capacity and
ratepayers will recoup the cost of their investment through lower
rates as a result of avoiding purchases of electricity at peak rates,
with additional system reliability and pollution reduction benefits.

   (i) Solar energy systems provide substantial energy reliability
and pollution reduction benefits. Solar energy systems also diversify
our energy supply and thereby reduce our dependence on imported
fossil fuels.
   25781.  As used in this chapter, the following terms have the
following meanings:
   (a) "kW" means kilowatts or 1,000 watts, as measured from the
alternating current side of the solar energy system inverter
consistent with Section 223 of Title 15 of the United States Code.
   (b) "kWh" means kilowatthours, as measured by the number of
kilowatts generated in an hour.
   (c) "MW" means megawatts or 1,000,000 watts.
   (d) "Solar energy system" means a photovoltaic solar collector or
other photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar 
electrical  energy for the generation of electricity, and
that produces at least 1 kW and not more than 1 MW alternating
current rated peak electricity. The commission may designate a solar
energy device that is not a photovoltaic solar collector or other
photovoltaic solar energy device to be a "solar energy system" if the
solar energy device has the primary purpose of providing for the
collection and distribution of solar energy for the generation of
electricity,  it produces at least 1 kW, but not more than 1
megawatt, alternating current rated peak electricity,  and it
meets or exceeds the eligibility criteria established pursuant to
subdivision (c) of Section 25782.
   (e) "Million Solar Roofs Initiative" means the program established
by this chapter.
   25782.  (a) (1) The commission shall develop and implement a
multiyear Million Solar Roofs Initiative to provide funding and
support to foster the installation of solar energy systems on new and
existing residential and commercial customer sites in California.
The goals of this program are the placement of solar energy systems
on 1,000,000 residential and commercial sites, or its generation
capacity equivalent of 3,000 MW, the establishment of a
self-sufficient solar industry in which solar energy systems are a
viable mainstream option for both homes and businesses in 10 years,
and the placement of solar energy systems on 50 percent of new homes
in 13 years.
   (2) The Million Solar Roofs Initiative program shall supplant that
portion of the program to foster the development of emerging
renewable technologies funded pursuant to Section 25744, that
encourages installation of residential and commercial photovoltaic
solar energy systems. Upon disbursement of funds from the Million
Solar Roofs Initiative Trust Fund consistent with the Million Solar
Roofs Initiative program, the photovoltaic portion of the emerging
renewable technologies program shall be discontinued and the
remaining funds from that program shall be deposited into the Million
Solar Roofs Initiative Trust Fund.
   (3) The commission shall not establish any other program in
addition to the program established pursuant to this chapter, to
encourage the increased installation of residential and commercial
photovoltaic solar energy systems.
   (b) All funds used for the Million Solar Roofs Initiative shall be
expended in accordance with the following:
   (1) The commission shall award monetary incentives for eligible
solar energy systems not to exceed the existing level of incentive in
effect on January 1, 2006. The incentive level shall decline each
year thereafter at a rate of no less than 7 percent per year and
shall be zero as of December 31, 2016. The commission shall adopt and
publish a schedule of declining incentive levels no less than 60
days in advance of the first decline in incentive levels. The
commission may develop incentives based upon the output of
electricity from the system, provided those incentives are consistent
with the declining incentive levels of this paragraph.
   (2) By January 1, 2010, the commission shall adopt a
performance-based incentive program in which at least 50 percent of
the moneys  thereafter  expended pursuant to the Million
Solar Roofs Initiative is expended to provide incentives that are
based on the actual electrical output of the solar energy system and
that promote the installation of solar energy systems that maximize
electrical output to coincide with peak loads.  The commission
shall ensure that the performance-based incentive declines each year
thereafter at a rate of no less than 7 percent per year.  In
developing the performance-based incentive program, the commission
may:
   (A) Apply performance-based incentives only to customer classes
designated by the commission.
   (B) Design the performance-based incentives so that customers may
receive a higher level of incentives than under incentives based on
installed electrical capacity.
   (C) Develop financing options that help offset the installation
costs of the solar energy system, provided that this financing is
ultimately repaid in full by the consumer or through the application
of the performance-based rebates.  
   (3) On or before January 1, 2007, the commission shall adopt
revisions to the eligibility criteria for solar energy systems,
including design, installation, and electricity output standards or
incentives.  
   (4) 
    (3)    Notwithstanding paragraph (1), the
commission may increase the incentive level by not more than 50
percent above the maximum incentive level established pursuant to
paragraph (1) for solar energy systems that are installed on "zero
energy homes" or "zero energy commercial structures." Prior to an
increase in the incentive level, the commission shall adopt
definitions for "zero energy homes" and "zero energy commercial
structures" through a public process, including at least one public
hearing with not less than 30 days' notice. 
   (5) 
    (4)    Notwithstanding paragraph (1), the
commission may increase the incentive level by not more than 25
percent above the maximum incentive level established pursuant to
paragraph (1) for solar energy systems that are installed on homes or
commercial structures that exceed the commission's established
building standards by a specified percentage as determined by the
commission. 
   (6) 
    (5)    Awards shall be made for the
installation of eligible solar energy systems on new or existing
residential and commercial customer sites that are or will be
receiving electrical distribution service from an electrical
corporation that is contributing funds to support the Million Solar
Roofs Initiative pursuant to Section 379.8 of the Public Utilities
Code. 
   (7) 
    (6)   Awards shall not be made for eligible
solar energy systems installed on the premises of individuals or
entities that are not contributing funds to support the Million Solar
Roofs Initiative, except for the following:
   (A) Customers that participate in the California Alternate Rates
for Energy (CARE) or family electric rate assistance (FERA) programs
are eligible to receive awards.
   (B) An electrical corporation, where the commission determines the
solar energy system is appropriately sized to load and is installed,
operated, or part of a program to facilitate achieving the goals of
the Million Solar Roofs Initiative. An electrical corporation that
receives an award for participation in the Million Solar Roofs
Initiative shall not recover the value of that award from ratepayers
in rates.  Awards for eligible solar energy systems made pursuant
to this subparagraph shall not exceed 100 MW alternating current
rated peak electricity for any electrical corporation.   (7)
A solar energy system that is installed on a nonresidential
structure that receives monetary incentives from the Million Solar
Roofs Initiative Trust Fund is subject to the requirements of
subdivision (h) of Section 399.14 of the Public Utilities Code, if
the solar energy system is an eligible renewable energy resource that
receives production incentives or supplemental energy payments
pursuant to Sections 25742 and 25743. 
   (c) The commission shall  , by January 1, 2007, 
establish eligibility criteria for solar energy systems, including
the following: 
   (1) Design, installation, and electrical output standards or
incentives.  
   (1) 
    (2)    The solar energy system is intended
primarily to offset part or all of the consumer's own electricity
demand. 
   (2) 
    (3)    All components in the solar energy
system are new and unused, and have not previously been placed in
service in any other location or for any other application. 
   (3) 
    (4)    The solar energy system has a warranty
of not less than 10 years to protect against defects and undue
degradation of electrical generation output. 
   (4) 
    (5)   The solar energy system is located on the
same premises of the end-use consumer where the consumer's own
electricity demand is located. 
   (5) 
    (6)   The solar energy system is connected to
the electrical corporation's electrical distribution system within
the state. 
   (6) 
    (7)    The solar energy system has meters or
other devices in place to monitor and measure the system's
performance and the quantity of electricity generated by the system.

   (7) The electrical work to install the solar energy system is
performed under contract by a California contractor with an active
C-10 license, in accordance with rules and regulations adopted by the
Contractors' State License Board.   
   (8) The electrical work related to the installation of the solar
energy system is performed under contract by a California contractor
possessing the appropriate active license designated by the
Contractors' State License Board for performing electrical work to
install a solar energy system. A C-46 license holder shall only be
eligible to install a solar energy system under the Million Solar
Roofs Initiative program if the license is active and in good
standing on September 1, 2005. All persons who engage in the
connection of electrical devices of 100 volt-amperes or above shall
be electricians certified pursuant to Sections 3099 and 3099.2 of the
Labor Code.  
   (8) 
    (9)    The solar energy system is installed in
conformance with the manufacturer's specifications and in compliance
with all applicable electrical and building code standards.
   (d) The commission shall establish conditions on incentives that
require all of the following:
   (1) Appropriate siting and high quality installation of the solar
energy system by developing installation guidelines that maximize the
performance of the system and prevent qualified systems from being
inefficiently or inappropriately installed. The conditions
established by the commission shall not impact housing designs or
densities presently authorized by a city, county, or city and county.
The goal of this paragraph is to achieve efficient installation of
solar energy systems to promote the greatest energy production per
ratepayer dollar.
   (2) Optimal solar energy system performance during periods of peak
electricity demand  , including the use of advanced metering
systems, onsite performance meters, dispatchable battery backup
systems, and performance based incentives.   . 
   (3) Appropriate energy efficiency improvements in the new or
existing home or commercial structure where the solar energy system
is installed. 
   (4) Rate 
    (e)     The commission shall set rating
standards for  equipment, components, and systems to assure
reasonable performance and to develop standards that provide for
compliance with the
minimum ratings. 
   (e) 
    (f)    The commission may limit the
distribution of funds available to the program based upon the receipt
of funding or financial incentives from other federal or local
government or public utility programs to promote solar energy. 
The commission shall not limit the distribution of funds available to
the program based upon the receipt of financial loans from any
governmental or private entity.  
   (f) 
    (g)   Notwithstanding subdivision (e), the
commission shall provide not less than 10 percent of the overall
funds for the Million Solar Roofs Initiative  ,  for
installation of solar energy systems on affordable housing projects
undertaken pursuant to Section 50052.5, 50053, or 50199.14 of the
Health and Safety Code. If deemed appropriate in consultation with
the California Tax Credit Allocation Committee, the commission may
establish a revolving loan or loan guarantee program for affordable
housing projects consistent with the requirements of Chapter 5.3
(commencing with Section 25425). 
   (g) 
    (h)    Pursuant to this chapter, the commission
may provide incentives in the form of a monetary incentive or its
equivalent to purchasers, lessees, lessors, or sellers of an eligible
solar energy system. The incentive shall benefit the end-use
consumer by directly and exclusively reducing the purchase or lease
cost of the eligible solar energy system, or the cost of electricity
produced by the eligible solar energy system. Incentives shall be
issued on the basis of the rated electrical capacity of the system
measured in watts, or in the electricity production of the system,
measured in kWh, as determined by the commission.
   25783.  In administering the Million Solar Roofs Initiative, the
commission shall do all the following:
   (a) Examine and implement, to the extent appropriate, financing
options that could lower solar energy system financing costs to
residential and commercial customers. The commission shall examine
wholesale and retail mortgage markets, and other issues that it deems
appropriate.
   (b) Acquire, if the commission determines it necessary,
appropriate technical and administrative services or expertise to
support the Million Solar Roofs Initiative. The commission may award
contracts to develop or administer all or a portion of the Million
Solar Roofs Initiative.
   (c) Publish educational materials designed to demonstrate how
builders may incorporate solar energy systems during construction as
well as energy efficiency measures that best complement solar energy
systems.
   (d) Develop and publish the estimated annual electrical generation
and savings for solar energy systems. The estimates shall vary by
climate zone, type of system, size, lifecycle costs, electricity
prices, and other factors the commission determines to be relevant to
a consumer when making a purchasing decision.
   (e) Provide assistance to builders and contractors in support of
the Million Solar Roofs Initiative. The assistance may include
technical workshops, training, educational materials, and related
research.
   (f) Publish, and make available to the public, at least once
annually, the balance of funds available in the Million Solar Roofs
Initiative Trust Fund, the cost of the program, the photovoltaic
generating capacity installed, and the percentage of new and existing
residential and commercial customer sites that are equipped with
solar energy systems funded by the Million Solar Roofs Initiative.
This information shall be included in the report to the Legislature
made pursuant to subdivision (i).
   (g) The commission shall annually conduct random audits of solar
energy systems to evaluate their operational performance.
   (h) The commission, in consultation with the Public Utilities
Commission, shall evaluate the costs and benefits of having an
increased number of operational solar energy systems as a part of the
electrical system with respect to their impact upon the
distribution, transmission, and supply of electricty, using the best
available load profiling and distribution operations data from the
Public Utilities Commission, local publicly owned electric utilities,
and electrical corporations, and performance audits of installed
solar energy systems.
   (i) On or before January 1, 2009, and every year thereafter, the
commission shall submit to the Legislature an assessment of the
success of the Million Solar Roofs Initiative program. That
assessment shall include the number of residential and commercial
sites that have installed solar energy systems, the electrical
generating capacity of the installed solar energy systems, the cost
of the program, total electrical system benefits, including the
effect on electrical service rates, environmental benefits, how the
program affects the operation and reliability of the electrical grid,
how the program has affected peak demand for electricity, the
progress made toward reaching the goals of the program, whether the
program is on schedule to meet the program goals, and recommendations
for improving the program to meet its goals.
   25784.  (a) The commission shall adopt guidelines governing the
Million Solar Roofs Initiative authorized under this chapter, at a
publicly noticed meeting offering all interested parties an
opportunity to comment. Not less than 30 days' public notice shall be
given of the meeting required by this section, before the commission
initially adopts guidelines. Substantive changes to the guidelines
shall not be adopted without at least 10 days' written notice to the
public. Notwithstanding any other provision of law, any guidelines
adopted pursuant to this chapter shall be exempt from the
requirements of Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code.
   (b) Funds to further the purposes of this chapter may be committed
for multiple years.
   25785.  (a) The Million Solar Roofs Initiative Trust Fund is
hereby created in the State Treasury.
   (b) The money in the fund may be expended to implement and support
the Million Solar Roofs Initiative pursuant to this chapter upon
appropriation by the Legislature in the annual Budget Act. Up to 2
percent of the money in the fund may be expended for the costs of the
state's administration of this chapter, upon appropriation by the
Legislature.
   (c) Revenues collected by electrical corporations pursuant to
Section 379.8 of the Public Utilities Code shall be transmitted to
the commission at least quarterly for deposit in the Million Solar
Roofs Initiative Trust Fund. The Treasurer shall immediately deposit
money received pursuant to this section into the Million Solar Roofs
Initiative Trust Fund for the current calendar year.
   (d) Upon appropriation by the Legislature and notification by the
commission, the Controller shall pay all awards of the money in the
fund for purposes enumerated in this chapter. The eligibility of an
award shall be determined solely by the commission based on the
procedures it adopts under this chapter. Based on the eligibility of
an award, the commission shall also establish the need for a
multiyear commitment to any particular award and so advise the
Department of Finance. An eligible award submitted by the commission
to the Controller shall be accompanied by a summary description of
how payment of the award furthers the purposes enumerated in this
chapter, and an accounting of future costs associated with any award
or group of awards known to the commission to represent a portion of
a multiyear funding commitment.
   SEC. 5.   SEC. 8.   Section 379.6 of the
Public Utilities Code is amended to read:
   379.6.  (a) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall administer,
until January 1, 2008, the self-generation incentive program for
distributed generation resources originally established pursuant to
Chapter 329 of the Statutes of 2000. Except as provided in
subdivisions (b) and (c), the program shall be administered in the
same form as it existed on January 1, 2004.
   (b) Eligibility for the self-generation incentive program's level
3 incentive category shall be subject to the following conditions:
   (1) Commencing January 1, 2005, all combustion-operated
distributed generation projects using fossil fuel shall meet an
oxides of nitrogen (NOx) emissions rate standard of 0.14 pounds per
megawatthour.
   (2) Commencing January 1, 2007, all combustion-operated
distributed generation projects using fossil fuel shall meet a NOx
emissions rate standard of 0.07 pounds per megawatthour and a minimum
efficiency of 60 percent. A minimum efficiency of 60 percent shall
be measured as useful energy output divided by fuel input. The
efficiency determination shall be based on 100 percent load.
   (3) Combined heat and power units that meet the 60 percent
efficiency standard may take a credit to meet the applicable NOx
emissions standard of 0.14 pounds per megawatthour or 0.07 pounds per
megawatthour. Credit shall be at the rate of one megawatthour for
each 3.4 million British thermal units (Btus) of heat recovered.
   (4) Notwithstanding paragraphs (1) and (2), a project that does
not meet the applicable NOx emission standard is eligible if it meets
both of the following requirements:
   (A) The project operates solely on waste gas. The commission shall
require a customer that applies for an incentive pursuant to this
paragraph to provide an affidavit or other form of proof, that
specifies that the project shall be operated solely on waste gas.
Incentives awarded pursuant to this paragraph shall be subject to
refund and shall be refunded by the recipient to the extent the
project does not operate on waste gas. As used in this paragraph,
"waste gas" means natural gas that is generated as a byproduct of
petroleum production operations and is not eligible for delivery to
the utility pipeline system.
   (B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce an onsite net air emissions
benefit, compared to permitted onsite emissions if the project does
not operate. The commission shall require the customer to secure the
permit prior to receiving incentives.
   (c) In administering the self-generation incentive program, the
commission may adjust the amount of rebates, include other ultraclean
and low-emission distributed generation technologies, as defined in
Section 353.2, and evaluate other public policy interests, including,
but not limited to, ratepayers, and energy efficiency and
environmental interests. The Million Solar Roofs Initiative program
shall supplant that portion of the self-generation incentive program
that encourages installation of residential and commercial
photovoltaic solar energy systems. Upon disbursement by the State
Energy Resources Conservation and Development Commission of funds
from the Million Solar Roofs Initiative Trust Fund consistent with
the Million Solar Roofs Initiative program established pursuant to
Chapter 8.8 (commencing with Section 25780) of Division 15 of the
Public Resources Code, the photovoltaic portion of the
self-generation incentive program shall be discontinued and the
commission shall order the  remaining funds from that
  annual funding associated with the photovoltaic
portion of the self-generation incentive  program to be
deposited into the Million Solar Roofs Initiative Trust Fund. The
commission shall not establish any other program to encourage the
 increased  installation of residential and
commercial solar energy systems.
   SEC. 6.   SEC. 9.   Section 379.8 is
added to the Public Utilities Code, to read:
   379.8.  (a) As used in this section, the following terms have the
following meanings:
   (1) "kW" means kilowatts or 1,000 watts, as measured from the
alternating current side of the solar energy system inverter
consistent with Section 223 of Title 15 of the United States Code.
   (2) "kWh" means kilowatthours, as measured by the number of
kilowatts generated in an hour.
   (3) "MW" means megawatts or 1,000,000 watts.
   (4) "Solar energy system" means a photovoltaic solar collector or
other photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar electrical
energy for the generation of electricity, and that produces at least
1 kW and not more than 1 MW alternating current rated peak
electricity. The State Energy Resources Conservation and Development
Commission may designate a solar energy device that is not a
photovoltaic solar collector or other photovoltaic solar energy
device to be a "solar energy system" if the solar energy device has
the primary purpose of providing for the collection and distribution
of solar energy for the generation of electricity,  produces at
least 1 kW, but not more than 1 megawatt, alternating current rated
peak electricity,  and it meets or exceeds the eligibility
criteria established pursuant to subdivision (c) of Section 25782 of
the Public Resources Code.
   (b) Notwithstanding any other law, on or before February 1, 2006,
the commission, in consultation with the State Energy Resources
Conservation and Development Commission, shall initiate a new
proceeding or expand the scope of an existing proceeding to finance a
comprehensive solar energy program pursuant to Chapter 8.8
(commencing with Section 25780) of Division 15 of the Public
Resources Code, to adequately fund the Million Solar Roofs Initiative
program.
   (c) The commission's proceeding shall do all of the following:
   (1) Order that  annual  funding for the photovoltaic
portion of the self-generation incentive program for distributed
generation be deposited into the Million Solar Roofs Initiative Trust
Fund, at the same level as was collected in the 2004-05 fiscal year.

   (2) Determine the level of additional funding needed to adequately
support the goal of placing solar energy systems on one million
residential and commercial customer sites or its equivalent of 3,000
MW solar generating capacity in the state by December 31, 2018. Any
additional funding  shall not exceed ___ dollars ($___) per
kilowatthour for any class of customers and  shall not
result in the collection of more than one billion eight hundred
 thousand   million  dollars
($1,800,000,000) from customers within the service territories of the
participating electrical corporations.
   (3) In making the determination pursuant to paragraph (2), the
commission shall consider the impact all existing solar incentive
programs will have on achieving the goals of the program, including
cash and noncash incentives, state and federal tax benefits, credits
from net energy metering that exceed the actual avoided costs of the
replaced generation, and benefits from waivers of other electrical
corporation costs and charges. For purposes of this paragraph, "other
electrical corporation costs and charges" include the nonbypassable
rate component of local distribution service imposed pursuant to
Article 7 (commencing with Section 381) or Article 15 (commencing
with Section 399), standby charges, cost responsibility surcharges,
and installation costs.
   (4) Encourage participation by a broad and diverse range of
interests from all areas of the state, and interested state entities.

   (d) The commission shall include the reasonable cost of the
program in the distribution revenue requirements of electrical
corporations.
   (e) Notwithstanding any other provision of law, any charge imposed
to fund the program adopted and implemented pursuant to this section
shall be imposed upon all customers not participating in the
California Alternate Rates for Energy (CARE) or family electric rate
assistance (FERA) programs as provided in paragraph (2), including
those residential customers subject to the rate cap required by
Section 80110 of the Water Code for existing baseline quantities or
usage up to 130 percent of existing baseline quantities of
electricity.
   The costs of the program adopted and implemented pursuant to this
section may not be recovered from customers participating in the
California Alternate Rates for Energy or CARE program established
pursuant to Section 739.1, except to the extent that program costs
are recovered out of the nonbypassable system benefits charge
authorized pursuant to Section 399.8.
   (f) The commission shall adopt the program no later than January
1, 2007.
   (g) The program adopted by the commission pursuant to this
section, shall do all of the following:
   (1) Be a cost-effective investment by ratepayers in peak
electricity generation capacity that enables ratepayers to recoup the
cost of their investment through lower rates as a result of avoiding
purchases of electricity at peak rates generated by traditional
powerplants and peaker generation units, with additional system
reliability and pollution reduction benefits.
   (2) Utilize the most cost-effective administrative mechanism to
adequately accomplish the goals of the program.
   (3) Provide a predictable long-term funding mechanism sufficient
to encourage adequate investment by the solar industry.
   (4) Require time-variant pricing for all ratepayers with a solar
energy system. The commission shall develop a time-variant tariff
that creates the maximum incentive for ratepayers to install solar
energy systems so that the system's peak electricity production
coincides with California's peak electricity demands and that assures
that ratepayers receive due value for their contribution to the
purchase of solar energy systems and customers with solar energy
systems continue to have an incentive to use electricity efficiently.

   (5) Require San Diego Gas and Electric Company, Southern
California Edison Company, and Pacific Gas and Electric Company to
each designate at least one employee to be accountable for solar
energy system installations and operations.
   (6) Require San Diego Gas and Electric Company, Southern
California Edison Company, and Pacific Gas and Electric Company to
each monitor and report key solar program performance and progress
data to the commission in a clearly identified place on the utility's
Internet Web site.
   (7) Consider energy efficiency and demand side management options,
in addition to solar energy system procurement, for new residential
and commercial construction.
   (h) The program adopted by the commission pursuant to this section
shall also include elements for the purpose of funding a Million
Solar Roofs Initiative by the State Energy Resources Conservation and
Development Commission pursuant to Chapter 8.8 (commencing with
Section 25780) of Division 15 of the Public Resources Code. These
program elements shall exclude customers participating in the State
Energy Resources Conservation and Development Commission's Million
Solar Roofs Initiative from the rate cap for residential customers
for existing baseline quantities or usage by those customers of up to
130 percent of existing baseline quantities, as required by Section
80110 of the Water Code.
   (i) Any rate structure for an electrical corporation in effect as
of January 1, 2006, that provides for a separate per kW energy charge
and a separate facilities charge for nonresidential customers with a
maximum demand of more than 20 kW shall remain in effect for those
nonresidential customers with a maximum demand of more than 20 kW who
participate in the Million Solar Roofs Initiative pursuant to
Chapter 8.8 (commencing with Section 25780) of Division 15 of the
Public Resources Code. This section does not alter or affect the
authority of the commission to allocate costs in a manner it
determines to be just and reasonable.
   (j) Upon disbursement by the State Energy Resources Conservation
and Development Commission of funds from the Million Solar Roofs
Initiative Trust Fund consistent with the Million Solar Roofs
Initiative program established pursuant to Chapter 8.8 (commencing
with Section 25780) of Division 15 of the Public Resources Code, the
photovoltaic portion of the self-generation incentive program shall
be discontinued and the commission shall order the  remaining
funds from that   a   nnual funding associated
with the photovoltaic portion of the self-generation incentive 
program to be deposited into the Million Solar Roofs Initiative
Trust Fund. The commission shall not establish any other program to
encourage the  increased  installation of
residential and commercial photovoltaic solar energy systems.
   SEC. 7.   SEC. 10.   Section 387.5 is
added to the Public Utilities Code, to read:
   387.5.  (a) The governing body of a local publicly owned electric
utility, as defined in subdivision (d) of Section 9604, that sells
electricity at retail, shall adopt, implement, and finance a solar
roofs initiative program, funded  by a surcharge  in
accordance with subdivision (b), for the purpose of investing in,
and encouraging the increased installation of, residential and
commercial solar energy systems. This program shall be consistent
with the intent and goals of the Legislature to encourage the
installation of 3,000 megawatts of photovoltaic solar energy in
California in accordance with  the Million Solar Roofs
Initiative program (Chapter 8.8 (commencing with Section 25780) of
Division 15 of the Public Resources Code).   Sections
25780 and 25781, and paragraph (1) of subdivision (a) of Section
25782 of the Public Resources Code. 
   (b) On or before January 1, 2007, a local publicly owned electric
utility shall  establish a new surcharge sufficient to
 offer monetary incentives for the installation of solar
energy systems of at least two dollars and  forty cents
($2.40) per installed watt of photovoltaic solar energy 
 eighty cents ($2.80) per installed watt, or for the electricity
produced by the solar energy system, measured in kWh, as determined
by the governing board of a local publicly owned electric utility,
for photovoltaic solar energy systems  . The incentive level
shall decline each year thereafter at a rate of no less than 7
percent per year.  
   (c) A local publicly owned electric utility shall establish the
program on or before January 1, 2007. Before establishing the
program, the governing body of the local publicly owned utility shall
give notice of, and hold, a public hearing to seek comment on the
program from the community.   
   (c) A local publicly owned electric utility shall initiate a
public proceeding to fund a solar energy program to adequately
support the goals of the Million Solar Roofs Initiative program in
accordance with Sections 25780 and 25781 and paragraph (1) of
subdivision (a) of Section 25782 of the Public Resources Code. The
proceeding shall determine what additional funding, if any, is
necessary to provide the incentives pursuant to subdivision (b). The
public proceeding shall be completed and the comprehensive solar
energy program established by January 1, 2007. 
   (d) A local publicly owned electric utility shall, on an annual
basis beginning June 1, 2007, make available to its customers and to
the State Energy Resources Conservation and Development Commission,
information relating to the utility's solar roofs initiative program
established pursuant to this section, including, but not limited to,
the number of photovoltaic solar watts installed, the total number of
photovoltaic systems installed, the total number of applicants, the
amount of incentives awarded, and the contribution toward the program
goals.  
   (e) It is the intent of the Legislature that, in establishing the
program required by this section, no moneys be diverted from any
existing programs for low-income ratepayers, or from cost-effective
energy efficiency or demand response programs.  
   (f) It is the intent of the Legislature that the statewide
expenditure cap for local publicly owned electric utilities shall not
exceed seven hundred million dollars ($700,000,000). The expenditure
cap for each local publicly owned electric utility shall be based on
that utility's percentage of the total statewide load served by all
local publicly owned electric utilities. Expenditures by a local
publicly owned electric utility may be less than the utility's cap
amount, provided that funding is adequate to provide the incentives
required by subdivision (b). 
   SEC. 8.   SEC. 11.   Section 2827 of the
Public Utilities Code is amended to read:
   2827.  (a) The Legislature finds and declares that a program to
provide net energy metering for eligible customer-generators is one
way to encourage substantial private investment in renewable energy
resources, stimulate in-state economic growth, reduce demand for
electricity during peak consumption periods, help stabilize
California's energy supply infrastructure, enhance the continued
diversification of California's energy resource mix, and reduce
interconnection and administrative costs for electricity suppliers.
   (b) As used in this section, the following definitions apply:
   (1) "Electric service provider" means an electrical corporation,
as defined in Section 218, a local publicly owned electric utility,
as defined in Section 9604, or an electrical cooperative, as defined
in Section 2776, or any other entity that offers electrical service.
This section shall not apply to a local publicly owned electric
utility, as defined in Section 9604 of the Public Utilities Code,
that serves more than 750,000 customers and that also conveys water
to its customers.
   (2) "Eligible customer-generator" means a residential, small
commercial customer as defined in subdivision (h) of Section 331,
commercial, industrial, or agricultural customer of an electric
service provider, who uses a solar or a wind turbine electrical
generating facility, or a hybrid system of both, with a capacity of
not more than one megawatt that is located on the customer's owned,
leased, or rented premises, is interconnected and operates in
parallel with the electric grid, and is intended primarily to offset
part or all of the customer's own electrical requirements.
   (3) "Net energy metering" means measuring the difference between
the electricity supplied through the electric grid and the
electricity generated by an eligible customer-generator and fed
                                       back to the electric grid over
a 12-month period as described in subdivision (h). Net energy
metering shall be accomplished using a single meter capable of
registering the flow of electricity in two directions. An additional
meter or meters to monitor the flow of electricity in each direction
may be installed with the consent of the customer-generator, at the
expense of the electric service provider, and the additional metering
shall be used only to provide the information necessary to
accurately bill or credit the customer-generator pursuant to
subdivision (h), or to collect solar or wind electric generating
system performance information for research purposes. If the existing
electrical meter of an eligible customer-generator is not capable of
measuring the flow of electricity in two directions, the
customer-generator shall be responsible for all expenses involved in
purchasing and installing a meter that is able to measure electricity
flow in two directions. If an additional meter or meters are
installed, the net energy metering calculation shall yield a result
identical to that of a single meter. An eligible customer-generator
who already owns an existing solar or wind turbine electrical
generating facility, or a hybrid system of both, is eligible to
receive net energy metering service in accordance with this section.

   (4) "Wind energy co-metering" means any wind energy project
greater than 50 kilowatts, but not exceeding one megawatt, where the
difference between the electricity supplied through the electric grid
and the electricity generated by an eligible customer-generator and
fed back to the electric grid over a 12-month period is as described
in subdivision (h). Wind energy co-metering shall be accomplished
pursuant to Section 2827.8.
   (5) "Co-energy metering" means a program that is the same in all
other respects as a net energy metering program, except that the
local publicly owned electric utility, as defined in Section 9604,
has elected to apply a generation-to-generation energy and
time-of-use credit formula as provided in subdivision (i).
   (6) "Ratemaking authority" means, for an electrical corporation as
defined in Section 218, or an electrical cooperative as defined in
Section 2776, the commission, and for a local publicly owned electric
utility as defined in Section 9604, the local elected body
responsible for regulating the rates of the local publicly owned
utility.
   (c) (1) Every electric service provider shall develop a standard
contract or tariff providing for net energy metering, and shall make
this contract available to eligible customer-generators, upon
request, on a first-come-first-served basis until the time that the
total rated generating capacity used by eligible customer-generators
exceeds  5   2.5  percent of the electric
service provider's aggregate customer peak demand.  However,
the net metering cap shall not exceed 2 percent until the commission
has established an appropriate net metering time-variant rate design,
pursuant to Section 379.8, that considers the costs to all net
metering participants and ratepayers as a whole and that considers
the recovery of the fixed costs of providing distribution service to
customers. The commission shall monitor the level of net energy
metering for each electrical corporation to ensure that the cap is
increased in a timely manner as needed to further the objectives of
the Million Solar Roofs Initiative program and Section 379.8.

   (2) On an annual basis, beginning in 2003, every electric service
provider shall make available to the ratemaking authority information
on the total rated generating capacity used by eligible
customer-generators that are customers of that provider in the
provider's service area. For those electric service providers who are
operating pursuant to Section 394, they shall make available to the
ratemaking authority the information required by this paragraph for
each eligible customer-generator that is their customer for each
service area of an electric corporation, local publicly owned
electric utility, or electrical cooperative, in which the customer
has net energy metering. The ratemaking authority shall develop a
process for making the information required by this paragraph
available to energy service providers, and for using that information
to determine when, pursuant to paragraph (3), a service provider is
not obligated to provide net energy metering to additional
customer-generators in its service area.
   (3) Notwithstanding paragraph (1), an electric service provider is
not obligated to provide net energy metering to additional
customer-generators in its service area when the combined total peak
demand of all customer-generators served by all the electric service
providers in that service area furnishing net energy metering to
eligible customer-generators exceeds  5   2.5
 percent of the aggregate customer peak demand of those electric
service providers.
   (d) Electric service providers shall make all necessary forms and
contracts for net metering service available for download from the
Internet.
   (e) (1) Every electric service provider shall ensure that requests
for establishment of net energy metering are processed in a time
period not exceeding that for similarly situated customers requesting
new electric service, but not to exceed 30 working days from the
date the electric service provider receives a completed application
form for net metering service, including a signed interconnection
agreement from an eligible customer-generator and the electric
inspection clearance from the governmental authority having
jurisdiction. If an electric service provider is unable to process
the request within the allowable timeframe, the electric service
provider shall notify both the customer-generator and the ratemaking
authority of the reason for its inability to process the request and
the expected completion date.
   (2) Electric service providers shall ensure that requests for an
interconnection agreement from an eligible customer-generator are
processed in a time period not to exceed 30 working days from the
date the electric service provider receives a completed application
form from the eligible customer-generator for an interconnection
agreement.  If an electric service provider is unable to process the
request within the allowable timeframe, the electric service provider
shall notify the customer-generator and the ratemaking authority of
the reason for its inability to process the request and the expected
completion date.
   (f) (1) If a customer participates in direct transactions pursuant
to paragraph (1) of subdivision (b) of Section 365 with an electric
supplier that does not provide distribution service for the direct
transactions, the service provider that provides distribution service
for an eligible customer-generator is not obligated to provide net
energy metering to the customer.
   (2) If a customer participates in direct transactions pursuant to
paragraph (1) of subdivision (b) of Section 365 with an electric
supplier, and the customer is an eligible customer-generator, the
service provider that provides distribution service for the direct
transactions may recover from the customer's electric service
provider the incremental costs of metering and billing service
related to net energy metering in an amount set by the ratemaking
authority.
   (g) Each net energy metering contract or tariff shall be
identical, with respect to rate structure, all retail rate
components, and any monthly charges, to the contract or tariff to
which the same customer would be assigned if the customer did not use
an eligible solar or wind electrical generating facility, except
that eligible customer-generators shall not be assessed standby
charges on the electrical generating capacity or the kilowatthour
production of an eligible solar or wind electrical generating
facility. The charges for all retail rate components for eligible
customer-generators shall be based exclusively on the
customer-generator's net kilowatthour consumption over a 12-month
period, without regard to the customer-generator's choice of electric
service provider. Any new or additional demand charge, standby
charge, customer charge, minimum monthly charge, interconnection
charge, or any other charge that would increase an eligible
customer-generator's costs beyond those of other customers who are
not customer-generators in the rate class to which the eligible
customer-generator would otherwise be assigned if the customer did
not own, lease, rent, or otherwise operate an eligible solar or wind
electrical generating facility are contrary to the intent of this
section, and shall not form a part of net energy metering contracts
or tariffs.
   (h) For eligible residential and small commercial
customer-generators, the net energy metering calculation shall be
made by measuring the difference between the electricity supplied to
the eligible customer-generator and the electricity generated by the
eligible customer-generator and fed back to the electric grid over a
12-month period. The following rules shall apply to the annualized
net metering calculation:
   (1) The eligible residential or small commercial
customer-generator shall, at the end of each 12-month period
following the date of final interconnection of the eligible
customer-generator's system with an electric service provider, and at
each anniversary date thereafter, be billed for electricity used
during that period. The electric service provider shall determine if
the eligible residential or small commercial customer-generator was a
net consumer or a net producer of electricity during that period.
   (2) At the end of each 12-month period, where the electricity
supplied during the period by the electric service provider exceeds
the electricity generated by the eligible residential or small
commercial customer-generator during that same period, the eligible
residential or small commercial customer-generator is a net
electricity consumer and the electric service provider shall be owed
compensation for the eligible customer-generator's net kilowatthour
consumption over that same period. The compensation owed for the
eligible residential or small commercial customer-generator's
consumption shall be calculated as follows:
   (A) For all eligible customer-generators taking service under
tariffs employing "baseline" and "over baseline" rates, any net
monthly consumption of electricity shall be calculated according to
the terms of the contract or tariff to which the same customer would
be assigned to or be eligible for if the customer was not an eligible
customer-generator. If those same customer-generators are net
generators over a billing period, the net kilowatthours generated
shall be valued at the same price per kilowatthour as the electric
service provider would charge for the baseline quantity of
electricity during that billing period, and if the number of
kilowatthours generated exceeds the baseline quantity, the excess
shall be valued at the same price per kilowatthour as the electric
service provider would charge for electricity over the baseline
quantity during that billing period.
   (B) For all eligible customer-generators taking service under
tariffs employing "time of use" rates, any net monthly consumption of
electricity shall be calculated according to the terms of the
contract or tariff to which the same customer would be assigned to or
be eligible for if the customer was not an eligible
customer-generator. When those same customer-generators are net
generators during any discrete time of use period, the net
kilowatthours produced shall be valued at the same price per
kilowatthour as the electric service provider would charge for retail
kilowatthour sales during that same time of use period. If the
eligible customer-generator's time of use electrical meter is unable
to measure the flow of electricity in two directions, paragraph (3)
of subdivision (b) shall apply.
   (C) For all residential and small commercial customer-generators
and for each billing period, the net balance of moneys owed to the
electric service provider for net consumption of electricity or
credits owed to the customer-generator for net generation of
electricity shall be carried forward as a monetary value until the
end of each 12-month period. For all commercial, industrial, and
agricultural customer-generators the net balance of moneys owed shall
be paid in accordance with the electric service provider's normal
billing cycle, except that if the commercial, industrial, or
agricultural customer-generator is a net electricity producer over a
normal billing cycle, any excess kilowatthours generated during the
billing cycle shall be carried over to the following billing period
as a monetary value, calculated according to the procedures set forth
in this section, and appear as a credit on the customer-generator's
account, until the end of the annual period when paragraph (3) shall
apply.
   (3) At the end of each 12-month period, where the electricity
generated by the eligible customer-generator during the 12-month
period exceeds the electricity supplied by the electric service
provider during that same period, the eligible customer-generator is
a net electricity producer and the electric service provider shall
retain any excess kilowatthours generated during the prior 12-month
period. The eligible customer-generator shall not be owed any
compensation for those excess kilowatthours unless the electric
service provider enters into a purchase agreement with the eligible
customer-generator for those excess kilowatthours.
   (4) The electric service provider shall provide every eligible
residential or small commercial customer-generator with net
electricity consumption information with each regular bill. That
information shall include the current monetary balance owed the
electric service provider for net electricity consumed since the last
12-month period ended.  Notwithstanding this subdivision, an
electric service provider shall permit that customer to pay monthly
for net energy consumed.
   (5) If an eligible residential or small commercial
customer-generator terminates the customer relationship with the
electric service provider, the electric service provider shall
reconcile the eligible customer-generator's consumption and
production of electricity during any part of a 12-month period
following the last reconciliation, according to the requirements set
forth in this subdivision, except that those requirements shall apply
only to the months since the most recent 12-month bill.
   (6) If an electric service provider providing net metering to a
residential or small commercial customer-generator ceases providing
that electrical service to that customer during any 12-month period,
and the customer-generator enters into a new net metering contract or
tariff with a new electric service provider, the 12-month period,
with respect to that new electric service provider, shall commence on
the date on which the new electric service provider first supplies
electric service to the customer-generator.
   (i) Notwithstanding any other provisions of this section, the
following provisions shall apply to an eligible customer-generator
with a capacity of more than 10 kilowatts, but not exceeding one
megawatt, that receives electrical service from a local publicly
owned electric utility, as defined in Section 9604, that has elected
to utilize a co-energy metering program unless the electric service
provider chooses to provide service for eligible customer-generators
with a capacity of more than 10 kilowatts in accordance with
subdivisions (g) and (h):
   (1) The eligible customer-generator shall be required to utilize a
meter, or multiple meters, capable of separately measuring
electricity flow in both directions. All meters shall provide
"time-of-use" measurements of electricity flow, and the customer
shall take service on a time-of-use rate schedule. If the existing
meter of the eligible customer-generator is not a time-of-use meter
or is not capable of measuring total flow of energy in both
directions, the eligible customer-generator shall be responsible for
all expenses involved in purchasing and installing a meter that is
both time-of-use and able to measure total electricity flow in both
directions. This subdivision shall not restrict the ability of an
eligible customer-generator to utilize any economic incentives
provided by a government agency or the electric service provider to
reduce its costs for purchasing and installing a time-of-use meter.
   (2) The consumption of electricity from the electric service
provider shall result in a cost to the eligible customer-generator to
be priced in accordance with the standard rate charged to the
eligible customer-generator in accordance with the rate structure to
which the customer would be assigned if the customer did not use an
eligible solar or wind electrical generating facility. The generation
of electricity provided to the electric service provider shall
result in a credit to the eligible customer-generator and shall be
priced in accordance with the generation component, established under
the applicable structure to which the customer would be assigned if
the customer did not use an eligible solar or wind electrical
generating facility.
   (3) All costs and credits shall be shown on the eligible
customer-generator's bill for each billing period. In any months in
which the eligible customer-generator has been a net consumer of
electricity calculated on the basis of value determined pursuant to
paragraph (2), the customer-generator shall owe to the electric
service provider the balance of electricity costs and credits during
that billing period. In any billing period in which the eligible
customer-generator has been a net producer of electricity calculated
on the basis of value determined pursuant to paragraph (2), the
electric service provider shall owe to the eligible
customer-generator the balance of electricity costs and credits
during that billing period. Any net credit to the eligible
customer-generator of electricity costs may be carried forward to
subsequent billing periods, provided that an electric service
provider may choose to carry the credit over as a kilowatthour credit
consistent with the provisions of any applicable tariff, including
any differences attributable to the time of generation of the
electricity. At the end of each 12-month period, the electric service
provider may reduce any net credit due to the eligible
customer-generator to zero.
   (j) A solar or wind turbine electrical generating system, or a
hybrid system of both, used by an eligible customer-generator shall
meet all applicable safety and performance standards established by
the National Electrical Code, the Institute of Electrical and
Electronics Engineers, and accredited testing laboratories such as
Underwriters Laboratories and, where applicable, rules of the Public
Utilities Commission regarding safety and reliability. A
customer-generator whose solar or wind turbine electrical generating
system, or a hybrid system of both, meets those standards and rules
shall not be required to install additional controls, perform or pay
for additional tests, or purchase additional liability insurance.
   (k) If the commission determines that there are cost or revenue
obligations for an electric corporation, as defined in Section 218,
that may not be recovered from customer-generators acting pursuant to
this section, those obligations shall remain within the customer
class from which any shortfall occurred and may not be shifted to any
other customer class. Net-metering and co-metering customers shall
not be exempt from the public benefits charge. In its report to the
Legislature, the commission shall examine different methods to ensure
that the public benefits charge remains a nonbypassable charge.
   (l) A net metering customer shall reimburse the Department of
Water Resources for all charges that would otherwise be imposed on
the customer by the commission to recover bond-related costs pursuant
to an agreement between the commission and the Department of Water
Resources pursuant to Section 80110 of the Water Code, as well as the
costs of the department equal to the share of the department's
estimated net unavoidable power purchase contract costs attributable
to the customer. The commission shall incorporate the determination
into an existing proceeding before the commission, and shall ensure
that the charges are nonbypassable. Until the commission has made a
determination regarding the nonbypassable charges, net metering shall
continue under the same rules, procedures, terms, and conditions as
were applicable on December 31, 2002.
   (m) In implementing the requirements of subdivisions (k) and (l),
a customer-generator shall not be required to replace its existing
meter except as set forth in paragraph (3) of subdivision (b), nor
shall the electric service provider require additional measurement of
usage beyond that which is necessary for customers in the same rate
class as the eligible customer-generator.
   (n) On or before January 1, 2005, the commission shall submit a
report to the Governor and the Legislature that assesses the economic
and environmental costs and benefits of net metering to
customer-generators, ratepayers, and utilities, including any
beneficial and adverse effects on public benefit programs and special
purpose surcharges. The report shall be prepared by an independent
party under contract with the commission.
   (o) It is the intent of the Legislature that the Treasurer
incorporate net energy metering and co-energy metering projects
undertaken pursuant to this section as sustainable building methods
or distributive energy technologies for purposes of evaluating
low-income housing projects.
   SEC. 9.   SEC. 12.   (a) It is the
intent of the Legislature in establishing the Million Solar Roofs
Initiative that all individuals or entities that contribute funds to
support the Millions Solar Roofs Initiative, including residential,
commercial, and governmental customers be eligible to receive awards
under the initiative.
   (b) It is the intent of the Legislature in establishing the
Million Solar Roofs Initiative that no moneys be diverted from any
existing programs for low-income ratepayers, or from cost-effective
energy efficiency or demand response programs.
   SEC. 10.   SEC. 13.   No reimbursement
is required by this act pursuant to Section 6 of Article XIII  B of
the California Constitution because the only costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.
   SEC. 11.   SEC. 14.   No reimbursement
is required by this act pursuant to Section 6 of Article XIII  B of
the California Constitution for certain other costs that may be
incurred by a local agency or school district because a local agency
or school district has the authority to levy service charges, fees,
or assessments sufficient to pay for the program or level of service
mandated by this act, within the meaning of Section 17556 of the
Government Code.