BILL ANALYSIS Ó
SB 843
Page 1
SENATE THIRD READING
SB 843 (Wolk)
As Amended August 6, 2012
Majority vote
SENATE VOTE :Vote not relevant
UTILITIES & COMMERCE 10-2
APPROPRIATIONS 12-0
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|Ayes:|Bradford, Fletcher, |Ayes:|Gatto, Blumenfield, |
| |Buchanan, Fong, Fuentes, | |Bradford, |
| |Furutani, Huffman, Ma, | |Charles Calderon, Campos, |
| |Skinner, Swanson | |Davis, Fuentes, Hall, |
| | | |Hill, Cedillo, Mitchell, |
| | | |Solorio |
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|Nays:|Gorell, Knight |
| | |
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SUMMARY : Establishes a new business model that would allow
developers of renewable projects to sell electricity to
customers of Investor Owned Utilities (IOUs). Specifically,
this bill :
1)Makes findings and declarations regarding state distributed
generation policy, benefits of distributed generation, job
creation, military renewable energy goals, and school budgets.
2)Repeals existing statute allowing the City of Davis to receive
bill credits for power generation from a former research
facility developed by the California Energy Commission (CEC)
(The research facility was known as PVUSA and ultimately sold
to the City of Davis).
3)Allows developers of eligible renewable energy projects to
sell shares in projects and sell electricity to retail
customers of IOUs.
4)Establishes a maximum program capacity of 2.0 gigawatts (GW)
and a maximum per project size of 20 megawatts (MW).
SB 843
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5)Provides the California Public Utilities Commission (PUC)
discretionary authority to increase the capacity to 2.0 GW.
6)Requires a utility to purchase excess generation not allocated
to subscribers.
7)Exempts developers from State Securities laws and regulations.
8)Exempts developers from PUC oversight.
9)Restricts future rate changes to program participants.
10)Establishes intent to maintain ratepayer indifference.
11)Specifies method of calculating a payment rate for generation
from a facility to be shown as a bill credit on a utility bill
and requires PUC to develop a method for establishing a value
for payments made to program participants and to update the
method triennially.
12)Specifies that the bill credit can only be used against the
generation component of a customer's utility bill.
13)Restricts placement of generation facilities to locations
within IOU service area or if by mutual agreement, may be
located in an area served by an adjacent service area of a
Publicly Owned Utility (POU).
14)Requires PUC to establish and maintain a public database of
existing and proposed renewable energy facilities and requires
those facilities to report size, location, and commercial
operation date.
15)Establishes a facility rate based on the weighted average
time of delivery price paid for a comparable technology using
prior year data published by PUC.
16)Allows participants to own up to 2 MW (or equivalent
kilowatthours) of a project.
17)Allows the value of Renewable Energy Certificates (REC) to
remain with the participant. RECs associated with excess
procured go to the utility that purchases the excess
generation.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee, to implement and monitor the new program described
above, PUC will incur ongoing costs of around $250,000 for two
regulatory analysts plus an administrative law judge for the
first two years at an annual cost of $150,000 per year ÝPublic
Utilities Reimbursement Account].
COMMENTS :
Author's statement . Many cities throughout California have for
decades invested in trees to provide shade, cool homes, and
reduce energy consumption, making homes poorly suited for
rooftop solar. Further, home or business owners with roofs not
appropriately oriented for solar, and California's millions of
renters, have been shut out of cost effective ways to pursue
clean renewable power. Programs set up to offer schools and
local governments an avenue to invest in off-site renewable
energy have proven uneconomical, with too many barriers to
ensure the projects could pencil out.
Without shifting cost to customers who chose not to participate
and without spending state money, SB 843 opens up access to
affordable renewable energy to the millions of residential,
business, schools and municipal customers who currently cannot
participate in our renewable self-generation programs. SB 843
will support the construction of new renewable energy systems
right when our state needs them most. Opening up the renewable
self-generation market to those currently shut out will save
ratepayers money on their utility bills and lead to the creation
of millions in new tax revenue for the state and thousands of
new jobs.
Renewable program gaps ? A number of programs currently exist
that provide the state's IOU ratepayers with opportunities to
procure competitively priced renewable electricity. For
example: the annual California Renewables Portfolio Standard
(RPS) contract solicitation, the Reverse Auction Mechanism
(RAM), the Renewable Energy Market Adjusting Tariff (Re-MAT),
and utility direct procurement. RPS has resulted in over 2.5 GW
of operational renewable energy projects and over 17 GW of
contracts. RAM and Re-MAT combine to approximately 1.5 GW of
procurement.
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Thus, all ratepayers, including tenants and schools are
receiving ever-increasing levels of renewable generation via
their local electricity provider. While it is true that tenants
may not be able to self-generate because they do not own their
premises, they are receiving renewable generation.
In addition to these programs, the Net Energy Metering (NEM)
program is available for those who choose to self-generate.
How much will a participant pay for renewable electricity
through this bill ? This bill proposes to set a price that is
based on one-year-old weighted average time of delivery cost of
technology-comparable RPS projects. With significant price
reductions occurring in the renewable energy market, it is not
clear what would be gained by locking participants into a
payment that is based on an out-of-date average price.
According to PUC: "The weighted average time-of-delivery
adjusted cost of all contracts approved from 2003-2011 was
approximately 11.9 cents per kilowatt hour (kWh), with a range
of 5.4 cents in 2003 to 13.3 cents in 2011. Most recently, bids
from the 2011 RPS Solicitation, not yet available for inclusion
in the report, show significantly lower costs than bids from the
past few years, which will be reflected in future IOU
contracts."
Consumer safeguards . The bill provides a number of disclosures
in the event of a sale or resale of a facility describing costs
and benefits, explaining the contract, the price, and the
potential costs and benefits.
Currently, PUC registers Electricity Service Providers (ESP)
after verification of information provided regarding civil,
criminal, or regulatory sanctions or penalties imposed within 10
years prior to registration; proof of financial viability, and
proof of technical and operation ability. In addition, PUC has
authority to investigate consumer complaints.
Since there is potentially no limit to the number of developers
who can enter into this market, there is potential for
opportunists to prey on consumers or potential facility
investors.
Technicalities in the findings and declarations . A number of
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comments in the findings and declarations are made regarding
benefits that are not yet assessed. Therefore, a number of
sentences in the findings and declarations should be modified,
particularly those that state the "Legislature recognizes the
advantage of this proposal;" will assist in meeting the state's
zero net energy building goals (the state has not yet defined a
zero net energy building); "it is in the public interest?for
participants Ýto be] entitled to generate electricity and
receive credit for that electricity on their bills."
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0005009