BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 594| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 594 Author: Wolk (D), et al. Amended: 8/23/12 Vote: 21 PRIOR VOTES NOT RELEVANT ASSEMBLY FLOOR : Not available SUBJECT : Energy: net energy metering SOURCE : Author DIGEST : This bill 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). Assembly Amendments delete the Senate version of the bill relating to local public health laboratories and (1) add language that would condition the authorization, to aggregate the electrical load of the meters, upon the commission making a determination that permitting eligible customer-generators to aggregate their load from multiple meters will not result in an increase in the expected revenue obligations of customers who are not eligible customer-generator; (2) add language that states an electric utility that is a local publicly owned electric utility or electrical cooperative, the bill would condition CONTINUED SB 594 Page 2 this authorization upon the utility's ratemaking authority, as defined, making a determination that permitting aggregation will not result in an increase in the expected revenue obligations of customers who are not eligible customer-generators; (3) incorporate additional changes, proposed by AB 2165, to be operative only if AB 2165 and this bill are both chaptered and become effective on or before January 1, 2013, and this bill is chaptered last; and (4) and make clarifying and technical changes. ANALYSIS : Existing law: 1.Requires every electric utility, as defined, to make available to an eligible customer-generator, as defined, a standard contract or tariff for net energy metering on a first-come-first-served basis until the time that the total rated generating capacity used by eligible customer-generators exceeds five percent of the electric utility's aggregate customer peak demand. 2.Requires the electric utility, upon an affirmative election by the eligible customer-generator to receive service pursuant to this contract or tariff, to either: A. Provides net surplus electricity compensation for any net surplus electricity generated in the 12-month period, or B. Allows the eligible customer-generator to apply the net surplus electricity as a credit for kilowatt hours subsequently supplied by the electric utility to the surplus customer-generator. 1.Establishes a net energy metering program that is available to an eligible fuel cell customer-generator, as defined. 2.Requires that the net metering calculation be made by measuring the difference between the electricity supplied to the eligible fuel cell customer-generator and the electricity generated by the eligible fuel cell customer-generator and fed back to the electrical grid over a 12-month period. CONTINUED SB 594 Page 3 3.Requires that an electrical corporation determine if the eligible fuel cell customer-generator was a net consumer or producer of electricity during the 12-month period. For purposes of making this determination, existing law requires that the electrical corporation aggregate the electrical load of the eligible fuel cell customer-generator under the same ownership. 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. 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. 5.Prevents implementation of NEM aggregation if Public Utilities Commission (PUC) determines NEM aggregation would result in a cost shift to non-participating ratepayers. 6.Requires NEM aggregation customers to remit payment for billing services. 7.Prohibits a publicly owned utility from offering aggregated NEM if it would cause a rate impact on non-NEM customers within that publicly owned utility's service area. CONTINUED SB 594 Page 4 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. Background California is seeking to reduce its greenhouse gas emissions to 1990 levels by 2020, with over a quarter of those reductions coming from the energy sector, and has adopted a 33 percent Renewable Portfolio Standard goal. Governor Jerry Brown has also called for 12,000 megawatts of new distributed generation in California. To achieve these goals, the Legislature had created several renewable energy programs. Some are designed to facilitate large, utility scale energy systems, while others, like the NEM program, promote small-scale distributed energy production. NEM allows customers to install clean, renewable energy systems on-site for the purpose of generating power and receiving a financial credit on their utility bill for that power at the full retail rate. This rate compensates customers for the power they generate without requiring their power use to coincide with their system's production. This program is capped at five percent of each utility's peak demand, meaning utilities must allow customers to install these distributed generation systems and credit their bills until the power generated by the facilities in the utility territory equals five percent of the overall peak customer demand. NEM is an important tool for reaching our renewable energy goals; however, significant obstacles continue to block some customers from efficiently and economically participating in the program. Specifically, 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 is incredibly costly and inefficient. Nor does it allow the ability to optimize the location of the renewable facility on the property, since the incentive is to join the facility with the largest energy usage. This bill removes this obstacle by allowing customers to aggregate all the energy consumed at CONTINUED SB 594 Page 5 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. These customers would still be required to follow all the rules and limitations currently in place for the NEM program, including the program's five percent cap and limiting the system size to meet the load of the meters on-site, with an overall system size limit of one megawatt. Comments According to the author's office, 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes 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. (Public Utilities Reimbursement Account) SUPPORT : (Verified 8/30/12) Ag Biomass Center, Inc. Agricultural Energy Consumers Association American Farmland Trust BTL Enterprises California Climate and Agriculture Network California Compost Coalition California Cotton Ginners and Growers Association California Farm Bureau Federation California League of Food Processors CONTINUED SB 594 Page 6 California Off-Highway Vehicle Association California Poultry Federation California Solar Energy Industry Association Clean World Partners City of American Canyon Coalition for Adequate School Housing Community Alliance with Family Farmers Del Mesa Carmel Dixon Ridge Farms Domaine Carneros Winery Environmental California Far Niente Winery First Northern Bank Four Winds Grocers Fully Belly Farms Gasser Foundation Green Build Energy Group Hedgerow Farms Lundberg Family Farms Mainstream Energy Mira International Napa County Napa Mill Napa Valley Vintners Quattrocci Kwok Architects Recolte Energy Regional Council of Rural Counties Ridge Vineyards School Energy Coalition Sierra Club California Solar Energy Industry Association Sonoma Valley Unified School District Sustainable Agriculture Education Sustainable Conservation Sustainable Napa County Swanton Berry Farms, Inc. United Cerebral Palsy of the North Bay Vista Livestock Company Vote Solar Western Agricultural Processors Wine Institute OPPOSITION : (Verified 8/30/12) CONTINUED SB 594 Page 7 Pacific Gas and Electric Company San Diego Gas & Electric Company Southern California Edison RM:n 8/30/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED