BILL ANALYSIS Ó
AB 512
Page 1
Date of Hearing: April 4, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 512 (Gordon) - As Introduced: February 15, 2011
SUBJECT : Local government renewable energy self-generation
program.
SUMMARY : Increases the capacity of a powerplant from 1
megawatt (MW) to 5 MW that would be eligible for a local
government program that allows a municipality to generate
electricity at one location to offset electricity usage at
another municipal location.
EXISTING LAW : Establishes numerous individual net-energy
metering tariffs where the generator may not be located where
the energy is consumed:
1)Provides that a city, county, city and county, special
district, school district, political subdivision, campus, or
other local public agency may elect to designate another
account or accounts controlled by the governmental entity to
receive a bill credit for the electricity generated by a
renewable generating facility that has a generating capacity
of no more than 1 MW and is located within the boundaries of
the governmental entity.
2)Authorizes the City of Davis to receive a bill credit for
electricity supplied to the electric grid from a specific
photovoltaic electricity generation facility selected by the
City of Davis (PVUSA), with a peak generation capacity of 600
kW, and as it may be expanded not to exceed 1 MW of peak
generation capacity, to offset the electricity at a benefiting
account.
3)Requires an electrical corporation to transmit and distribute
East Bay Municipal Utility District (EBMUD) generated
electricity to serve EBMUD load at other locations.
4)Allows the City and County of San Francisco to designate a
remote renewable generation facility with a total generating
capacity not to exceed 15 MW , to supply electricity to
specific facilities designated as qualifying remote load.
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FISCAL EFFECT : Unknown.
COMMENTS : A 1-MW generation facility can serve about 750
single-family homes. A 5-MW facility can serve almost 4,000
homes.
According to the author, the purpose of this bill is to
implement a recommendation from a November 2010 State Assembly
Select Committee on California's Green Economy report titled,
"How to Grow Jobs and Investment in California's Green Economy."
The report noted that the City of Fresno as well as other local
governments in the state expressed frustration at the
limitations placed on their ability to produce their own
renewable energy. In particular, the report states that the City
of Fresno had considered generating more of their own energy
through renewable projects, but found that they did not work
financially due to the 1 MW limit of the existing local
government net-energy metering program. The report recommended
to increase renewable energy generation by local governmental
entities, and to also increase the capacity of an eligible local
government generation facility from 1 MW to 5 MW. That
suggestion is the basis for this bill. Another suggestion was
to increase the geographic boundary restrictions; however, this
bill does not address the boundaries.
1) Background : Net energy metering is an electricity tariff
billing mechanism. It allows a customer to place an electricity
generation system where it might maximize generation potential,
while offsetting electricity usage at another location. An
example is placing solar panels over a city parking lot with
little electricity needs, to offset a large city-owned user such
as City Hall.
There are many existing programs in statute that allow a
municipality or public entity to generate electricity in one
location and receive a bill credit, or a net-metered tariff, for
a meter in another location(s). Each has been added in a
piecemeal fashion. For example, in 2002, SB 1038 (Sher) Chapter
515, Statutes of 2002, allowed the City of Davis to use
electricity generated from PVUSA to receive a bill credit at a
benefiting account or accounts designated by the City of Davis.
The same bill allowed California State University (CSU), Fresno
to receive a bill credit for the electricity generated at a
biomass facility owned by CSU Fresno known as the Dinuba
Facility. The CSU Fresno net-energy metering allowance
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sunsetted on January 1, 2008.
In 2008, AB 2466 (Laird), Chapter 540, Statutes of 2008, created
a comprehensive "Local Government Renewable Energy
Self-Generation Program." AB 2466 allowed an eligible facility
to not exceed 1 MW, and it limited the statewide capacity for
the three largest investor-owned utilities (IOUs) to 250 MW.
After the IOUs offer service or contracts to its proportionate
share of the 250-MW limitation, it does not need to provide
net-metering allowances to additional local government
generation facilities.
2) Why doesn't 1 MW work : According to Pacific Gas and Electric
Company (PG&E), no entity has used the program. AB 2466 was set
up with the 1 MW capacity cap as a trial to determine if the
distribution system could handle large surges in electricity
coming from facilities onto wires that were only intended to
serve one-way electricity deliveries.
Southern California Edison (SCE) states that there are
considerable costs and barriers associated with moving above 1
MW, which is why the initial limit was set at that point. At 5
MW the program becomes even more uneconomic for customers. In
addition, the rationale of a proposal to increase the capacity
from 1 MW to 5 MW is unclear if no entity has even subscribed to
the existing program.
Most of the state's existing programs limit the qualified
projects to those that are less than 1 MW, in part because
net-meter customer generation cannot be scheduled by the
electric utility. The utility must take the power when it is
produced, whether it needs it at that moment or not. The
electric utility can easily adapt to small amounts of
unscheduled electricity coming onto the grid; however, they may
encounter reliability problems if they cannot schedule larger
generators.
Reliability concerns were the basis of AB 578 (Blakeslee)
Chapter 627, Statutes of 2008, which require the California
Public Utilities Commission (CPUC) to study and submit a report
by January 1, 2010, and biennially thereafter, on the impacts of
distributed energy generation on the state's distribution and
transmission grid. This report noted that there were no
noticeable impacts on the distribution and transmission
infrastructure based on performed studies. Nevertheless, the
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report recommended to develop consistent interconnection
policies and to continuously evaluate the penetration of
distributed generation on distribution feeders.
3) Net Energy Metering Cost-Effectiveness Report : Public
Utilities Code section 2827 requires the CPUC to submit a report
to the Governor and the Legislature on the costs and benefits of
net energy metering. In March 2010, the CPUC published its
report and concluded that the estimated average net cost of net
energy metering is "$0.12 per kilowatt-hour (kWh) exported,
which is relatively high on a cents per kWh basis?." According
to the U.S. Energy Information Administration, day-ahead
(usually higher) wholesale prices in California at a Southern
California hub (SP 15) in a moderate month (October 2010)
averaged between $0.037 to $0.038 per kWh, or about one-third
the price of the net-energy metering price. The CPUC report
justifies the higher price by noting that net energy metering is
not designed as an energy procurement program, and "the volume
of energy exported to the utilities is small compared to the
total solar generation and it is de minimus compared to the
total energy procured by the utilities."
REGISTERED SUPPORT / OPPOSITION :
Support
City of Santa Rosa
Sonoma County Board of Supervisors
Opposition
None on file.
Analysis Prepared by : Gina Adams/DaVina Flemings / U. & C. /
(916) 319-2083