BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 510|
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                                 THIRD READING


          Bill No:  AB 510
          Author:   Skinner (D), et al
          Amended:  1/26/10 in Senate
          Vote:     21

           
           SENATE HUMAN SERVICES COMMITTEE  :  Not relevant (See Note  
            under Digest)  

          ASSEMBLY FLOOR :  Not relevant (See Note under Digest)


           SUBJECT  :    Net energy metering

           SOURCE  :     Solar Alliance


           DIGEST  :    This bill requires that the standard contract or  
          tariff for net energy metering be offered on a  
          first-come-first-served basis until the time that the total  
          rated generating capacity used by eligible  
          customer-generators exceeds five percent of the electric  
          utility's aggregate customer peak demand.  The bill  
          requires an electrical corporation to include a provision  
          in the net energy metering contract or tariff requiring  
          that any customer with an existing electrical generating  
          facility and meter who enters into a new net energy  
          metering contract to provide an inspection report to the  
          electrical corporation, unless the electrical generating  
          facility and meter have been installed or inspected within  
          the previous three years.

          Note:  This bill is similar to AB 560 (Skinner) which  
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          passed the Assembly 
                 with a vote of 47-22, the Senate Energy, Utilities  
                and Commerce Committee with a vote of 9-1 and the  
                Senate Appropriations Committee with a vote of 12-1.   
                AB 560 was sent to Senate Rules Committee on a 29.10  
                and was referred to the Senate Business and  
                Professions Committee, where it presently resides.

           ANALYSIS  :    Current law requires the state's investor  
          owned utilities (IOUs), publicly owned utilities (POUs),  
          except the Los Angeles Department of Water and Power, and  
          any other entity offering retail electric service, to  
          credit all electricity generated by a customer-owned solar  
          or wind system against the customer's usage of electricity  
          sold by the utility, on a kilowatt hour basis, a procedure  
          known as "net energy metering" (NEM).  Participation by all  
          utilities is capped at 2.5 percent of each utility's  
          aggregate peak electricity demand.

           Background

          Net Energy Metering  .  The primary benefit of the California  
          Solar Initiative (CSI) program is derived from the solar  
          customer's eligibility to NEM which is au theorized under  
          state law separately from the CSI program.  Utility  
          customers that generate power from a wind or solar system  
          are eligible NEM under which the electricity purchases of  
          the customer are netted against the electricity generated  
          by the customer's own solar or wind electric system.  When  
          the sun is shining or the wind is blowing, the generated  
          electricity spins the meter backward, making it financially  
          equivalent to using less electricity for the customer with  
          the same effect as the electric utility paying the customer  
          the full retail price for the electricity.  When the sun  
          stops shining and the wind stops blowing, the customer  
          draws electricity from the grid and their meter spins  
          forward using the credit on the meter.  In theory,  
          depending on weather patterns, system size and customer  
          behavior, the customer will have a zero energy bill at the  
          end of a 12-month cycle.

          The full retail price of electricity includes the utility's  
          cost of generation, distributing and transmitting the  
          power, public goods program (e.g., energy efficiency),  







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          low-income customer assistance (e.g., CARE), energy crisis  
          costs and other charges not related to generation.  By  
          compensating the solar or wind customer at the full retail  
          rate, the utility is using ratepayer funds to pay the solar  
          or wind customer at a rate well above the value of the  
          generated power which is about one-third of the total cost  
          of a typical residential customer's bill.  The solar or  
          wind customer does not pay transmission or distribution  
          costs even though they are still connected to the  
          electrical grid and use it for all their generation needs  
          when the sun isn't shining and the wind isn't blowing  
          (approximately 18 hours a day.)  Consequently, those unpaid  
          transmission and distribution costs and public goods  
          charges are a subsidy, the cost of which is ultimately  
          shifted to all other ratepayers in the class.  All customer  
          classes are eligible for NEM. 

           California Solar Initiative

           The Public Utilities Commission (PUC) established the CSI  
          regulation in 2005.  The goal of the CSI is to provide a  
          long-term subsidy for solar systems with incentives that  
          are reduced annually.  SB 1 (Murray), Chapter 132, Statutes  
          of 2006, statutorily established the CSI policy goal of  
          3,000 MW of new, solar-produced electricity in 2017.  The  
          CSI statewide budget is $3.3 billion over 10 years,  
          distributed between three distinct program components:  The  
          CSI ($2.167 million/1,940 MW), the New Solar Homes  
          Partnership ($400 million/360 MW), and Publicly Owned  
          Utility Programs ($700 million/700 MW).

          SB 1 required the PUC, in consultation with the California  
          Energy Commission, to report to the Governor and the  
          Legislature on the costs and benefits of net metering, wind  
          energy co-metering, and co-energy metering to participating  
          customers with options to replace those costs and benefits  
          with a more equitable mechanism.

          SB1 further required the Contractor State Licensing Board  
          to review and, if needed, revise its licensing  
          classifications and examinations to ensure that contractors  
          authorized to perform work on solar energy systems subject  
          to the provisions of the Public Resources Code have the  
          requisite qualifications to perform the work.







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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  2/9/10)

          City of San Jose (co-source)
          Solar Alliance (co-source)
          Applied Materials
          Applied Solar
          Association of California Water Agencies
          Building Owners and Managers Association of California
          California Building Industry Association
          California Business Properties Association
          CalSEIA
          Clean Power Campaign
          Contractors Association, California Chapter
          County of Lake
          Environmental Defense fund
          EnvironmentCA
          Global Green USA
          International Council of Shopping Centers
          Kyocera
          KyotoUSA
          Large Scale Solar Association
          McCalmont Engineering
          Mitsubishi Electric and Electronics USA
          NAIOP of California
          National Electric
          National Parks Conservation Association
          NRDC
          PetersonDean Roofing and Solar Systems
          Sharp Solar
          Silicon Valley Leadership Group
          SolarCity
          Solaria
          SolarTech
          SOLutions in Solar Energy
          SPG Solar
          SunEdison
          SunRun Inc.
          Suntech America
          Tioga Energy
          U.S. Green Building Council, California Chapter







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          Union of Concerned Scientists
          United Solar Ovonic
          Vote Solar Initiative
          Yolo County

           ARGUMENTS IN SUPPORT  :    Solar Alliance states, "California  
          was one of the first states to enact net energy metering  
          legislation.  In 2006, when the California legislature  
          enacted the California Solar Initiative (CSI), it increased  
          the state-wide net energy metering cap to 2.5 percent of a  
          retail electric service provider's "aggregate customer peak  
          demand."  The net energy metering cap was increased in  
          recognition of the fact that net energy metering would be  
          necessary in order for the state to meet its CSI goals.

          "However, California has been recently surpassed by other  
          states in net metering legislation.  Of the 44 states that  
          offer net metering, 18 states have completely eliminated  
          the cap on total net energy metering capacity.

          "Solar customers are homes, businesses, and local, state  
          and federal governments.  Today there are over 50,000 net  
          metered solar customers in California.  It is crucial to  
          send a message to the solar industry that California has a  
          long-term commitment to solar development.  The Solar  
          Alliance strongly believes that increasing the existing cap  
          to five percent is essential in order to ensure the both  
          successful completion of the California Solar Initiative's  
          goal of installing 3,000 MW and a successful market growth  
          after the completion of the program."




          DLW:cm  2/10/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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