BILL ANALYSIS Ó AB 512 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 512 (Gordon) As Amended August 25, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |70-0 |(May 12, 2011) |SENATE: |37-0 |(August 30, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: U. & C. 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. The Senate amendments 1)Prohibit an electrical corporation from being required to compensate a local government for electricity generated from a facility in excess of the bill credits applied to the designated benefitting account. 2)Prohibit a local government from being eligible for any other tariff program that requires an electrical corporation to purchase generation from an eligible renewable generating facility participating in the program. 3)Exempt an electrical corporation with 60,000 or fewer customer accounts from the program. AS PASSED BY THE ASSEMBLY , this bill was substantially similar to the version passed by the Senate. FISCAL EFFECT : According to the Assembly Appropriations Committee, negligible fiscal impact to the PUC. 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 AB 512 Page 2 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. Existing law requires electric corporations 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 investor-owned utilities (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. 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 Photovoltaics for Utility Systems Applications (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. CSU Fresno net-energy metering allowance sunsetted on January 1, 2008. AB 512 Page 3 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 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. PUC concluded its implementation of the bill in early 2010. To date there are no customers participating in the program. Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083 FN: 0002294