BILL ANALYSIS Ó AB 2165 Page 1 Date of Hearing: April 16, 2011 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair AB 2165 (Hill) - As Amended: February 23, 2012 SUBJECT : Net energy metering: eligible Fuel Cell customer-generators. SUMMARY : Expands the cap on Net Energy Metering (NEM) for eligible fuel cell generators and makes revisions to the definition of eligible fuel cell generators. Specifically, this bill : 1)Establishes a requirement that electrical corporation must offer a Fuel Cell NEM until the total capacity of NEM fuel cell facilities reaches 1 percent of the aggregate customer peak demand for an electrical service company territory. 2)Specifies that an eligible fuel cell generator must be located within the service territory of the electrical corporation to receive NEM. 3)Retains the existing sunset date for the Fuel Cell NEM on January 1, 2014. EXISTING LAW 1)Existing law, requires every electrical corporation to make available to an eligible fuel cell customer-generator a standard tariff for NEM on a first-come-first-served basis until the total cumulative rated generating capacity used by the eligible fuel cell customer-generators equals 45 megawatts within the service territory of the electrical corporation, for an electrical corporation with a peak demand above 10,000 megawatts, or equals 22.5 megawatts within the service territory of the electrical corporation, for an electrical corporation with a peak demand of 10,000 megawatts or below. 2)Existing law additionally limits the combined statewide cumulative rated generating capacity used by the eligible fuel cell customer-generators in the service territories of all electrical corporations in the state to not more than 112.5 megawatts. 3)Limits the maximum capacity of a qualified fuel cell project to no larger than 1 megawatt. AB 2165 Page 2 4)Provides a credit equal to the retail price of electricity for each kilowatt-hour produced that is not consumed on-site. 5)Requires the eligible fuel cell customer-generator to pay all other utility charges, other than generation charges, except to the extent that demand charges are used to recover transmission and distribution charges, then no standby charges are to be applied in that particular monthly billing cycle. 6)Sunsets the fuel cell NEM on January 1, 2014. FISCAL EFFECT : Unknown COMMENTS : 1)According to the author, California's Fuel Cell NEM program has attracted new, innovative technologies to develop their industry in the state. California-based fuel cell companies are counting on Fuel Cell NEM to encourage customers to adopt fuel cells and thereby expand in-state manufacturing. Raising the cap will help customer finance the purchase of these technologies. 2)The Fuel Cell NEM statute requires that these customers be responsible for all other charges except generation. As such, this type of NEM does not require a subsidy from non-NEM ratepayers. The author may wish to consider an amendment to eliminate the sunset date and allow the California Public Utilities Commission (PUC) to review the impact of the 1% NEM cap, in a proceeding and at such time that it deems necessary and in order to continue the growth of the market for on-site electric generation using Fuel Cells, incrementally raise the cap. 3)The current method of calculating the cap using the "aggregate customer peak demand for an electrical service company territory" is to total the aggregate capacity of individual NEM generation and divide it by the utility peak demand, to arrive at the percentage of aggregate peak demand. The California Energy Commission (CEC), CEC-AC rating is a publicly available value that is generally accepted by AB 2165 Page 3 industry of how much generation is actually interconnected to the grid after the performance of the inverter is considered. The Federal Energy Regulatory Commission (FERC) Form 1 filing is also a publicly available value that is generally accepted by industry. The author may wish to clarify the calculation of the cap to ensure that all electric utilities are calculating the cap consistently by using the peak demand reported in the utility's Form 1 filing with the FERC and the sum of the individual NEM customer capacity based on the CEC-AC rating. 4) Separate from NEM, each on-site generation facility that is connected to the utility distribution system must be inspected by utility to ensure that proper disconnection equipment is accessible to utility personnel that may need to work on power lines that may be energized by the on-site generation facility. The requirement is established via PUC Rule 21. The cost for these inspections is currently embedded in the rates paid by other customers. The author may wish to consider an amendment that allows the electrical corporation to charge a fee based on the cost for providing these inspection services so that non-NEM customers are not required to pay for these services. REGISTERED SUPPORT / OPPOSITION : Support Bloom Energy California Hydrogen Business Council (CHBC) Clean Power Campaign Fuel Cell Hydrogen and Energy Association (FCHEA) FuelCell Energy, Inc. National Fuel Cell Research Center TechNet United Technologies Corporation (UTC) Opposition Southern California Edison (SCE) Analysis Prepared by : Susan Kateley / U. & C. / (916) 319-2083 AB 2165 Page 4