BILL ANALYSIS Ó
AB 2514
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2514 (Bradford) - As Amended: May 1, 2012
Policy Committee:
UtilitiesVote:11-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Public Utilities Commission (PUC) to
complete a study and report the results to the Legislature by
August 30, 2013 regarding (a) the extent to which each class of
ratepayers and each region of the state receiving service under
a net energy metering (NEM) tariff is paying the full cost of
electrical service, (b) the extent to which those customers pay
their share of public purpose programs costs, and (c) the
benefits of NEM.
The PUC, in evaluating NEM costs and benefits for the study, is
to use specified measures of peak electricity demand and
generation capacity for purposes of calculating the 5%
limitation on aggregate NEM generation capacity specified in
current law.
FISCAL EFFECT
The PUC is in the process of awarding a contract for an NEM
cost/benefit study, has allocated up to $250,000 for this
purpose, and anticipates that this study will be well along by
the time this bill would become effective. The PUC indicates,
however, that the pending study does not include all of the
parameters specified in AB 2514-specifically evaluating the
costs and benefits by region and performing the analysis using
specific definitions of peak demand and generation capacity.
Therefore, a subsequent study based on this bill will entail
additional one-time special fund costs, potentially in the range
of $100,000.
COMMENTS
AB 2514
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1)Background . Under net-metering, the electric utility is
required to "buy back" all electricity generated by a
customer-owned generator that is not consumed by the customer
on-site. The price is set by the applicable retail rate under
the customer's existing contract. When the customer generates
electricity, that customer uses most of it for his or her own
facility. At the end of each 12-month NEM period, the
electric corporation calculates the amount of electricity
distributed to the grid by the customer and reduces the
customer's annual bill by the amount of electricity generated
by the customer. If the customer consumes more electricity
than the facility generates, the utility calculates a bill
based on the net consumption of utility delivered
kilowatthours.
The NEM statute allows the bill credit at the customer's
retail price, which, in addition to generation costs, includes
costs associated with transmission and distribution service,
the California Rates for Energy (CARE) subsidy, public good
charges, and service charges for billing and customer service.
If the customer-generator is being paid the retail price, the
non-generation costs are shifted to the utilities' other
ratepayers.
2)Purpose . According to the author's office, while the NEM
statute may be in need of reform, "ÝI]t is logical to consider
reforming the NEM subsidies. But to understand how to reform
NEM it is important to understand of the costs and benefits of
NEM. Until then, changing NEM, raising project size caps and
total capacity caps, adding charges cannot be done without
risking ratepayer backlash because of the cost or stymieing
the growth of this in-state industry."
3)NEM Capacity Cap . Current law caps the installed capacity of
generation using NEM at 5% of each utility's aggregated peak
customer demand. The purpose of this cap was to ensure that
there are limits on the amount of cost-shifting to non-NEM
customers. The PUC is currently considering a proposed
decision revising the method that has been used to calculate
this cap, specifically to be the summing up of each customer's
peak demand. Solar advocates argue this methodology is
consistent with current statute and reflects legislative
intent when the original NEM statutory language of "utility
peak demand" was amended to be "aggregated peak customer
AB 2514
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demand." The impact of this change would be to significantly
increase the capacity of generation that would be allowable
under the 5% cap.
The most recent amendments require that the NEM evaluation be
conducted in the context of the utilities' current methodology
of using utility peak coincident demand, as reported in the
utility's Form 1 filing with the Federal Energy Regulatory
Commission (FERC) and the sum of the individual NEM customer
capacity is based on California Energy Commission ratings.
According to the author's office, "The current PUC action to
double the allowed capacity under the current cap does not
comport with the Legislature's consistent interest in
controlling the costs for NEM. The appropriate method for
adjusting the capacity would have been to seek Legislative
approval. The current capacity of installed and pending solar
projects is substantially below the current cap, thus there is
no pressing urgency for raising the cap administratively
without Legislative consideration."
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081