BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2165
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          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.






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          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 






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            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 










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