BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
51 (Blakeslee)
Hearing Date: 08/02/2010 Amended: 05/17/2010
Consultant: Brendan McCarthy Policy Vote: EU&C 6-0
AB 51 (Blakeslee), Page 2
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BILL SUMMARY: AB 51 permits agricultural electricity customers
who have installed solar or wind generation systems to aggregate
the electricity use of adjacent properties, in order to use the
excess generation from solar or wind systems to offset all of
the customer's electricity usage.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Regulatory oversight Absorbable within existing
resourcesSpecial *
Reporting costs $100 - $200 Special
*
Increased energy costs to Unknown Various
state agencies
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Under current law, investor owned utilities and publicly owned
utilities (except the Los Angeles Department of Water and Power)
are required to credit any excess electricity generated by a
customer's solar or wind energy system against the customer's
electricity bill. In essence, this system allows a customer's
meter to spin backward when generation exceeds the customer's
use. This is referred to as "net energy metering". The amount of
net energy metering for each utility is capped at five percent
of the utility's aggregate peak energy demand. Under AB 920
(Huffman, Chapter 376, Statutes of 2009), net energy metering
customers are allowed to roll over excess generation credits (in
other words, the customer generated more electricity in a twelve
month billing cycle than the customer used) or the customer may
be compensated for his or her excess electricity generation. The
Public Utilities Commission is in the process of determining the
rates at which customers will be compensated for excess
generation.
AB 51 (Blakeslee), Page 3
AB 51 allows a net energy metering customer that owns multiple
adjacent or contiguous agricultural properties to aggregate the
electricity usage of those properties in order to offset that
usage with any excess electricity generated from the customer's
solar or wind system. (Oftentimes, agricultural customers will
have several different meters for equipment such as irrigation
pumps that are spread across one or more properties.)
The Public Utilities Commission indicates that any costs to
implement the bill can be accommodated within existing resources
dedicated to renewable energy issues.
In addition to the direct costs of this bill (or any bill
dealing with net energy metering) there are potential costs to
other ratepayers, of which the state makes up a large share. By
allowing customers to offset their electricity bills with their
own generation, current law essentially allows customers to sell
their electricity to their utility at the retail rate. However,
it is important to note that the retail cost of electricity is
made up of more than the cost of generating electricity. In
addition to the generation costs, retail rates include the costs
to construct and maintain the transmission and distribution
system, costs of public benefit programs, subsidies for low
income customers, and other taxes and fees. When a net energy
metering customer reduces his or her electricity bill to zero or
generates excess electricity, the customer avoids paying these
costs, even though most net energy metering customers draw
electricity from the grid at off-peak times and benefit from
public purpose programs. Thus, net energy metering customers are
subsidized by all other ratepayers. A recent study by the Public
Utilities Commission indicates that net energy metering
customers (in the aggregate) are subsidized in the amount of
about $20 million per year. When the state reaches its existing
goal of 2,550 megawatts of installed solar (under the California
Solar Initiative), the ratepayer subsidy for net energy metering
is projected to be about $140 million per year.
By allowing agricultural users to aggregate their electricity
usage and offset that usage with their solar or wind generation,
the bill will allow net energy metering customers to offset more
of their electricity usage. This will increase the subsidies
paid by other ratepayers. The scope of this impact on ratepayers
is unknown. Staff notes that state agencies paid almost $400
million for electricity in 2009. To the extent that the bill
increases the subsidies paid by non-net energy metering
AB 51 (Blakeslee), Page 4
customers, the state will share in those costs.
Staff recommends the bill be amended to reflect amendments
agreed to in the Senate Energy, Utilities and Communications
Committee. When the bill was heard in that committee, the author
agreed to amend the bill to prohibit agricultural net energy
metering customers from receiving compensation for excess
generation. In addition, the author agreed to add a requirement
that the Public Utilities Commission prepare a report on the
state's existing programs designed to encourage distributed,
renewable energy generation and potential changes to those
programs to improve outcomes and cost-effectiveness. The cost to
prepare such a report is estimated to be between $100,000 and
$200,000 in one-time costs.
AB 920 (Huffman, Chapter 376, Statutes of 2009) allows customers
to roll-over excess generation credits or receive compensation
for the excess generation. The Public Utilities Commission is
currently implementing this bill.
AB 560 (Skinner, Chapter 5, Statutes of 2010) increases the cap
on a utility's use of net energy metering from 2.5 percent to 5
percent of peak demand.
AB 228 (Huffman) increases the cap on net energy metering from 5
percent to 6 percent of a utility's peak demand, with the
marginal increase available for customers with larger solar
systems. That bill was held in the Senate Energy Utilities &
Communications Committee.