BILL ANALYSIS Ó
SB 594
Page 1
SENATE THIRD READING
SB 594 (Wolk)
As Amended August 23, 2012
Majority vote
SENATE VOTE : 23-14
UTILITIES & COMMERCE 13-0
APPROPRIATIONS 12-0
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|Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Blumenfield, |
| |Buchanan, Fong, Fuentes, | |Bradford, Charles |
| |Gorell, Roger Hernández, | |Calderon, Campos, Davis, |
| |Huffman, Ma, Nestande, | |Gatto, Hall, Hill, Lara, |
| |Skinner, Swanson, Valadao | |Mitchell, Solorio |
| | | | |
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SUMMARY : Allows an electric utility customer to aggregate their
electricity usage on multiple meters for purposes of
establishing the maximum project size for renewable generation
and fuel cells for purposes of net energy metering (NEM).
Specifically, this bill :
1)Allows the electric utility to use the sum of the electric
load on multiple electric meters located on property adjacent
or contiguous to the property on which the generation facility
is located, if those properties are solely owned, leased, or
rented by the eligible customer-generator.
2)Allows the customer-generator to use the sum of the load for
purposes of establishing the maximum size generation renewable
generation to be used for both NEM credits and maximum rebates
allowed through the California Solar Initiative (CSI).
3)Allows aggregation of electricity usage of multiple meters for
purposes of establishing the maximum project size for fuel
cell customer-generation.
4)Prohibits an electric utility customer who uses aggregated NEM
from receiving compensation for surplus kilowatt-hours (kWh).
5)Prevents implementation of NEM aggregation if Public Utilities
Commission (PUC) determines NEM aggregation would result in a
cost shift to non-participating ratepayers.
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6)Requires NEM aggregation customers to remit payment for
billing services.
7)Prohibits a publicly owned utility (POU) from offering
aggregated net energy metering (NEM) if it would cause a rate
impact on non-NEM customers within that POU's service area.
8)Adds chaptering language to ensure that the provisions in AB
2165 (Hill), relating to Fuel Cell NEM are not impacted by the
provisions in this bill.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, PUC will incur ongoing special fund costs of about
$120,000 for one regulatory analyst position to implement the
new NEM authorization. ÝPublic Utilities Reimbursement Account]
COMMENTS :
Author's Statement . Customers with multiple meters, for
example, farmers with separate meters for each of their
irrigation pumps and other functions, are currently required to
have separate renewable facilities for each meter to utilize
NEM. This bill removes this obstacle by allowing customers to
aggregate all the energy consumed at each of their meters
located on the same property as the renewable energy facility,
or on their contiguous property, and net that use against the
power produced at a single renewable facility.
Who pays for NEM ? The cost of NEM is paid by ratepayers. The
cost of NEM is not paid by utility shareholders (in the case of
a publicly owned utility, there are no shareholders, only
ratepayers). NEM allows utility customers to avoid paying for
the costs of using transmission and distribution infrastructure
and maintenance. Those costs are then shifted to the non-NEM
customer. In addition, NEM customers are allowed to use excess
bill credit to offset their obligation to contribute to public
goods programs, such as the low-income assistance program,
energy efficiency programs, and renewable energy rebates
(customers on low-income assistance programs are exempt from
paying charges for public goods programs). Because those costs
are fixed, if one group of ratepayers does not pay their share
of these costs, those costs are shifted to the remaining
ratepayers. These costs typically comprise 40% to 45% of a
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customer's bill.
Otherwise Applicable Tariff. The value of NEM credit varies
based on the customer's electricity rate schedule (known as a
tariff). Each utility has multiple tariffs for various customer
types (e.g., residential, residential time of use, multifamily,
industrial, small commercial, commercial, street lights,
agricultural, etc.). Each of these tariffs has a variety of
rates for a kWh of electricity - as low as $0.08/kWh for a large
agricultural customer, to as high as $0.52/kWh for a residential
customer (i.e., Pacific Gas & Electric (PG&E) E-7 tariff
schedule).
Aggregated NEM, also known as "Wheeling ." This bill will allow
a customer to credit the excess generation from one renewable
facility connected to one meter against all other separate
meters so that, on paper, the customer receives the benefits
associated with renewable generation and the full retail NEM
credit for all metered service. This is also referred to as the
wheeling power because the customer's load at the separately
metered sites is still fully serviced by the utility but the
customer is exempt from charges for that service to the extent
that NEM credit offsets the charges for the services.
Some supporters of this bill suggest that wheeling costs are
paid for through demand charges. Demand charges are a method
used to pay for the cost of extra equipment needed for a
commercial or industrial customer so that power is available
during peak demand. Some utility rate schedules include demand
charges. Some do not. In addition to demand charges, these
customers pay transmission and distribution charges to cover the
costs of maintaining the grid. Demand charges can vary based on
the customer's interconnection level (secondary, primary, or
transmission).
NEM impacts on Publicly Owned Utilities (POU) . The current
statute applies to allow publicly owned utilities in California,
with the exception of Los Angeles Department of Water and Power.
For small POUs, the loss of revenue due to NEM may cause rate
increases to non-NEM customers to maintain utility service. A
small POU, with fewer ratepayers to spread the costs to, would
have to pass on proportionally higher rates than utilities with
more customers. In addition, one POU has raised concern that
aggregated NEM could have electrical system impacts such as
frequency and voltage problems. Managing these problems and
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keeping systems stable and reliable will require expensive
system upgrades that would ultimately be paid for by nonNEM
customers. This may also be true in the rural areas served by
investor owned utilities.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN:
0005421