BILL ANALYSIS Ó 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE ALEX PADILLA, CHAIR AB 512 - Gordon Hearing Date: June 21, 2011 A As Introduced: February 15, 2011 FISCAL B 5 1 2 DESCRIPTION Current law requires electric corporations (investor-owned utilities or IOUs) to allow local governments and public college and university campuses to generate electricity from an eligible renewable facility at one site and transfer any available excess bill credits (in dollars) to another account owned by the same local government, college or university. The program is capped at 250 MW and divided proportionally between the state's largest IOUs. The facility size is capped at 1 MW per account. The program is commonly referred to as the Renewable Energy Self-Generation Bill Credit Transfer Program (RES-BCT). The renewable energy does not count toward the state's Renewable Portfolio Standard (RPS) which requires electric utilities to obtain 33% of generation from renewable resources by 2020. This bill increases the size of an eligible facility from 1 MW to 5 MWs. BACKGROUND Under existing law there are several programs which encourage customers to meet their own generation needs. Each legislative year brings additional proposals to facilitate different types of distributed generation and/or different rate structures. There is a common theme with these programs - each generally involves a customer installing small scale renewable power on the customer's side of the meter to offset their load and in some instances generate excess power. The distinction between measures is usually the type of customer (e.g. local government, agriculture, residential), the type of renewable generation (e.g. solar, fuel cells, wind), the size of the generation, and the regulated rate structure under which the generation is valued. This program was implemented as a result of AB 2466 (Laird, 2008) and designed to allow local government entities that could not fit or site solar photovoltaic systems on their side of the meter to site them in a nearby location but still receive credit for the generation. Because the generation is not on the customer's side of the meter (and therefore not offsetting the customer's own load) customers are not eligible for full retail net metering and receive credit at the generation rate. The California Public Utilities Commission (CPUC) concluded its implementation of the bill in early 2010. To date there are no customers participating in the program. COMMENTS 1. Author's Purpose . The author opines that this bill "satisfies the suggested change in eligibility proposed by the 2010 Report from the Assembly's Select Committee on the Green Economy. This suggested change was made in order to foster growth in renewable energy development as part of a diverse and integrated statewide strategy in reaching renewable portfolio standards. An increasing number of local government entities are exploring the potential of, or are currently developing renewable generation projects with generation capacities in excess of 1 MW. This bill further incentivizes the development of those renewable energy projects." 2. Necessity ? This program is in search of a participant. This bill is the fourth in as many years to revise a program that still has no participating customers which raises an issue of whether this bill is really needed. The CPUC would once again be required to revisit a program for which there is no interest and expend time and resources to develop guidelines. However, the CPUC reports that "increasing the eligible system-size cap to 5 MW may help create more interest from larger renewable projects that are precluded from receiving California Solar Initiative Program or Self-Generation Incentive Program incentives, but where the economics of a single larger system might make the overall project economics more attractive for government entities with significant electric loads. 3. Ratepayer Impact . The CPUC notes in their analysis of this bill that that because "the current statute already provides that the amount of the bill credit be set at the generation rate and not the retail rate, the program does not result in any direct cost shift from other ratepayers to the customers receiving the bill credit." However, Sempra writes in opposition to the bill that there would be cost impacts because it permits a participating customer to use the distribution system to store energy without paying the "full cost of integrating the distribution unit into the distribution system." Current law for this program does require the program participant to pay all costs of interconnection and restricts cost shifting to other bundled service subscribers which allows the CPUC to adjust costs and rates accordingly. However, as referenced in the Background section above, at the end of the day multiple programs and rate structures have been developed to serve a common purpose - allowing customers to generate electricity to offset their own load. Are multiple programs really necessary to meet the same basic purpose? Does this lead to efficient management of an aging and outdated distribution grid? ASSEMBLY VOTES Assembly Floor (70-0) Assembly Appropriations Committee (17-0) Assembly Utilities and Commerce Committee (15-0) POSITIONS Sponsor: Author Support: Association of California Water Agencies California Public Utilities Commission California State Association of Counties City of Fresno City of San Jose City of Santa Rosa Nanosolar Regional Council of Rural Counties Santa Clara Valley Water District Sonoma County Board of Supervisors Oppose: San Diego Gas and Electric Kellie Smith AB 512 Analysis Hearing Date: June 21, 2011