BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 510|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
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
CONTINUED
AB 510
Page
2
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),
AB 510
Page
3
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.
AB 510
Page
4
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
AB 510
Page
5
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
**** END ****