BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2165|
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THIRD READING
Bill No: AB 2165
Author: Hill (D), et al.
Amended: 8/24/12 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 11-2, 6/11/12
AYES: Padilla, Berryhill, Corbett, De León, DeSaulnier,
Emmerson, Kehoe, Pavley, Rubio, Simitian, Wright
NOES: Fuller, Strickland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 7/2/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 52-18, 5/10/12 - See last page for vote
SUBJECT : Net energy metering: eligible fuel cell
customer-generators
SOURCE : Author
DIGEST : This bill raises the caps on fuel cell net
energy metering for the state and individual investor-owned
utilities (IOUs). This bill also allows the Public
Utilities Commission (PUC) to interconnection inspection
services.
Senate Floor Amendments of 8/24/12 add double-jointing
amendments with SB 594 (Wolk).
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ANALYSIS :
Existing law:
1. Requires the state's IOUs, publicly owned utilities
(POUs) (except the Los Angeles Department of Water and
Power), and other entities offering retail electric
service, to credit all electricity generated by a
customer-owned renewable electric generation facility
against the customer's usage of electricity sold by the
utility, on a kilowatt hour basis (kWh), a procedure
known as "net energy metering" (NEM). Participation by
all utilities is capped at five percent of each
utility's aggregate peak electricity demand and the size
of individual renewable electric generation facilities
is limited to those that will offset all or part of the
customer's own electrical requirements to a maximum of
one MW. This program also exempts the customer from
paying transmission and distribution costs. This is
commonly referred to as full retail NEM.
2. Requires the state's IOUs to credit all electricity
generated by customer-owned fuel cells against the
customer's usage of electricity sold by the utility, on
a kWh basis, a procedure known as fuel cell NEM. The
customer credit is based only on the electricity
generated and does not include non-generation costs such
as transmission, distribution, and public purpose
charges. Eligible fuel cells can be powered by
renewable or fossil-fuel, are sized MW or less, and must
at least meet the emissions standards of combined heat
and power systems.
3. Requires large IOUs (Pacific Gas & Electric & Southern
California Edison) to offer the fuel cell NEM to its
fuel cell customer generators until the cumulative
capacity of all installed fuel cells reaches 45 MWs
within each service territory. Smaller IOUs (SDG&E and
others) are subject to a cap of 22.5 MWs within each
service territory. All interconnections are subject to
a statewide cap of 112.5 MWs.
This bill:
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1. Establishes a requirement that electrical corporation
must offer a Fuel Cell NEM until the total capacity of
NEM fuel cell facilities reaches a level equal to its
proportionate share of a statewide limitation of 500 MWs
cumulative rated generation capacity.
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.
4. Provides that no fuel cell electrical generating
facility is eligible for the tariff unless it commences
operation prior to January 1, 2015, unless this
eligibility commencement date is extended by statute.
Provides that the tariff remains in effect for an
eligible fuel cell electrical generating facility that
commences operation pursuant to the tariff prior to
January 1, 2015.
Background
Fuel Cell . A fuel cell is an electrochemical device that
combines hydrogen and oxygen to produce electricity, with
water and heat as its by-product. As long as fuel is
supplied, the fuel cell will continue to generate power.
Since the conversion of the fuel to energy takes place via
an electrochemical process, not combustion, the process is
clean, quiet and highly efficient - two to three times more
efficient than fuel burning.
The Issues of Net Metering . Utility customers that
generate power from a renewable facility are eligible for
full retail NEM under which the electricity purchases of
the customer are netted against the electricity generated
by the customer's own renewable electric facility. When
the sun is shining or the wind is blowing, for example, the
generated electricity spins the meter backward, making it
financially equivalent to using less electricity for the
customer with the same effect as the electric utility
paying the customer the full retail price for the
electricity. When the sun stops shining and the wind stops
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blowing, the customer draws electricity from the grid and
their meter spins forward using the credit on the meter.
In theory, depending on weather patterns, system size and
customer behavior, the customer will have a zero energy
bill at the end of a 12-month cycle.
Although all renewable resources sized up to one MW which
offset a customer's load are eligible for full retail NEM,
most of the facilities are solar photovoltaic (PV). Fuel
cells are eligible for full retail NEM if biogas is used to
generate the power. If a fuel cell is powered by natural
gas it is eligible for a more limited NEM program which
credits the customer only for the value of the kilowatt
hours at the time the electricity is generated. Under this
program or tariff, the customer pays for transmission and
distribution costs as well as public purpose programs.
The impacts of net energy metering have raised significant
concerns, such as:
At what point does net metering stop looking like energy
efficiency and start looking like a competitor who sells
higher priced electricity than could be found elsewhere?
Will other customers have to pay for these higher rates
and is that fair?
If net metering is adopted by a significant percentage of
customers in the future, how will the utility continue to
cover fixed costs as revenues decline?
Is the utility providing a storage service with the
electric grid, for which the costs aren't being
compensated?
Can renewable energy be acquired elsewhere at lower costs
than through net metering?
At the same time, net energy metering can potentially
provide utility, social and generator benefits, such as:
Reduction of air emissions (social)
Lower costs of energy during some peak time periods
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(utility)
Some peak capacity benefits (utility)
Avoiding transmission and distribution losses (utility)
Avoiding the need for batteries (generator)
Getting paid more for renewable electricity than
wholesale rates (generator)
These issues continue to be discussed but there are few
definitive answers and many opinions.
NEM Cost Shift . In March, 2010 the PUC issued a report
which analyzed the cost of full retail NEM to non-NEM
ratepayers. At that point, based on 386 megawatts of
installed rooftop solar, the cost to non-NEM ratepayers was
estimated at $20 million per year. Installed rooftop solar
is now over 1,200 MW so that cost has now at least tripled.
Although the total net cost of the NEM at that point was
less than one-tenth of one percent of total utility revenue
average net cost, the more telling cost that was reported
was that full retail NEM amounted to a cost-shift of $0.12
per (kWh) to non-NEM ratepayers.
The PUC has initiated a new study to examine the costs and
benefits of full retail NEM and the impacts of the program
for nonparticipating customers. The study will examine the
costs and benefits by utility, customer class, and income
group and to consider possible revisions to NEM and
evaluate alternatives.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/24/12)
Bloom Energy
California Hydrogen Business Council
California Public Utilities Commission
Clean Power Campaign, if amended
ClearEdge Power
Environmental Defense Fund
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Fuel Cell Hydrogen and Energy Association
National Fuel Cell Research Center
Silicon Valley Leadership Group
TechNet
United Technologies Corporation
OPPOSITION : (Verified 8/24/12)
Division of Ratepayer Advocates (unless amended)
FuelCell Energy, Inc. (unless amended)
San Diego Gas & Electric Company
Sempra Utilities
ASSEMBLY FLOOR : 52-18, 5/10/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer,
Fong, Fuentes, Galgiani, Gatto, Gordon, Gorell, Hall,
Hayashi, Roger Hernández, Hill, Huber, Huffman, Lara,
Bonnie Lowenthal, Mitchell, Monning, Nestande, Pan,
Perea, Portantino, Skinner, Smyth, Swanson, Torres,
Valadao, Wieckowski, Williams, Yamada, John A. Pérez
NOES: Conway, Donnelly, Beth Gaines, Garrick, Grove,
Hagman, Halderman, Harkey, Jones, Knight, Logue, Mansoor,
Miller, Morrell, Nielsen, Norby, Silva, Wagner
NO VOTE RECORDED: Cook, Fletcher, Furutani, Hueso,
Jeffries, Ma, Mendoza, Olsen, V. Manuel Pérez, Solorio
RM:d 8/24/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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