BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
560 (Skinner)
Hearing Date: 08/27/2009 Amended: 07/16/2009
Consultant: Brendan McCarthy Policy Vote: EU&C 9-1
AB 1108 (Skinner)
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BILL SUMMARY: This bill increases the existing cap on net energy
metering, under which electricity customers are credited for the
electricity they generate from their own solar or wind energy
system, from 2.5 percent of a utility's peak demand to 5
percent.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Public Utilities Commission Minor and absorbable Special
*
oversight
Increased electricity costs Unknown, potentially up to
$1,000 per year Various
to state agencies
*Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: Suspense file.
Under current law, investor owned utilities, publicly owned
utilities (except the Los Angeles Department of Water and
Power), and any other entities that supply retail electricity
are required to credit all electricity generated by
customer-owned solar or wind systems against the customer's
electricity bill. This process is referred to as net energy
metering. Essentially, net energy metering spins a customer's
electricity meter backwards when the customer's solar or wind
system is generating more electricity than the customer is
using. Customers can reduce their electricity bills to zero, but
under current law they are not compensated for any electricity
generated in excess of the total energy they use. Under current
law, total net energy metering is limited to 2.5 percent of each
utility's peak electricity demand.
According to the Public Utilities Commission, at the end of
2008, net energy metering in Pacific Gas & Electric's service
territory reached 1.3 percent of peak electricity demand; in
AB 1108 (Skinner)
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Southern California Edison's service territory it was 0.5
percent of peak demand; in San Diego Gas & Electric's service
territory it was 0.6 percent of peak demand. The Commission
expects Pacific Gas & Electric to reach the 2.5 percent cap by
the end of 2009.
One issue of concern surrounding net energy metering is the
extent to which it causes non-participants to subsidize the
electricity bills of participants. Under net energy metering,
participants may reduce their monthly electricity bills close to
zero, depending on the capacity of their system and their own
electricity use. (Most utility bill costs are volumetric, that
is they are based on the amount of electricity consumed. These
costs include the cost for generating electricity, the cost to
operate and maintain the electricity transmission and
distribution system, and certain public purpose charges that are
used for public benefit programs. There are some minor costs not
based on usage that are paid no matter how much electricity is
used.) A net energy metering customer can eliminate almost all
of his or her electricity bill. Because customer-owned solar and
wind systems typically only generate electricity during part of
the day, a net energy metering customer still draws power from
the system at night or other times when the system is not
generating power. However, if the net energy metering customer
has reduced his or her electricity bill close to zero, he or she
may not be paying for the costs of operating and maintaining the
transmission and distribution system they still rely on.
Similarly, the net energy metering customer may not be
contributing to the cost of public benefit programs that other
customers contribute to. Thus, non-net energy metering customers
of the utilities can provide a subsidy to net energy metering
customers. The extent to which this potential subsidization
actually occurs is not yet known.
Current law requires the Public Utilities Commission to submit a
report on the costs and benefits of net energy metering to the
Legislature by January 1, 2010. The report will address the cost
and benefits to both participants and non-participants and
include options to equitably balance the interests of both
participants and non-participants.
This bill increases the existing cap on net energy metering in a
utility's service territory to 5 percent of peak demand.
The Public Utilities Commission indicates that it can absorb any
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additional regulatory costs from the bill within existing
resources.
State agencies are significant consumers of electricity in the
state. To the extent that the bill increases any existing
subsidy that net energy metering customers receive from non-net
energy metering customers, the bill may increase state costs for
electricity. The extent of this impact on state costs is
unknown.
Staff estimates that state agencies in the investor owned
utility service territories paid approximately $250 million for
electricity in 2008. If the bill were to increase rates paid by
electricity consumers by 0.5 percent per year, costs to state
agencies would increase by about $1 million, from various funds.
Under this scenario, there would also be unknown increased costs
to state agencies served by publicly owned utilities.
SB 7 (Wiggins) allows net energy metering customers to roll over
excess generation to two subsequent 12 month billing cycles. SB
7 does not include compensation for unused excess generation. SB
7 is in the Assembly Appropriations Committee.
AB 920 (Huffman) allows net energy metering customers that have
excess generation credits at the of a twelve month period to
roll those credits over for future use or to be compensated for
the unused credits by their electric utility at a rate
determined by the Public Utilities Commission. AB 920 will also
be heard in this committee.