BILL ANALYSIS Ó
SB 843
Page 1
SENATE THIRD READING
SB 843 (Wolk)
As Amended August 24, 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).
5)Provides the California Public Utilities Commission (PUC)
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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.
18)Deletes language repealing the Local Government
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Self-Generation Program.
19)Declares that this program will be counted toward an
electrical corporation's implementation of the Governor's
Clean Energy Jobs Plan.
20)Deletes provisions ensuring ratepayer indifference and
replaces it with intent language to minimize rate impacts on
non-participating ratepayers and provides direction to the
Public Utilities Commission (PUC) to equitably allocate the
costs and benefits.
21)Provides that community-renewable energy facilities may be
located within the service area of a publicly owned utility
with 100,000 or more service connections that receives
distribution service from an electrical corporation.
22)Adds a new definition of "locational value" which is equal to
the cost or benefit (in dollars per kilowatt or kilowatthour)
for avoided transmission line losses, avoided transmission and
distribution infrastructure costs, reduction in operating and
maintenance costs, and the offset of peak demand or shifting
load.
23)Provides the PUC with authority to determine what portion of
charges represent the energy component of a customer's
electrical service.
24)Requires not less than 250 megawatts (MW) of capacity to be
made available during the six-month period between January 1,
2013, to December 31, 2013, and that each electrical
corporation participating in the program submit proposals for
allocating the initial capacity and for establishing a fair
and transparent process for ranking applications for that
initial capacity so that the PUC can adopt program rules by
June 30, 2013.
25)Allocates 30 MW of the initial 250 MW of capacity to the City
of Davis for use at Photovoltaics for Utility Scale
Applications (PVUSA) or other location of their designation.
26)Establishes rules and milestones for allocating the remaining
2 Gigawatts (GW) of program capacity by no later than January
1, 2015, including adding a mechanism for including locational
value.
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27)Provides a mechanism for the PUC to adjust the bill credit
based on the fair value of electricity and other benefits
produced by the community energy facility or if the bill
credit overvalues the benefits to nonparticipating ratepayers.
Limits the PUC's authority to adjust the bill credit to new
facilities.
28)Establishes a fee to be paid by developers to an electrical
corporation at the time the developer applies for a capacity
allocation from the program.
29)Establishes milestones for developers to complete projects.
30)Establishes seller concentration limits.
31)Requires the PUC to conduct an evaluation, by June 30, 2014,
of incremental rate impacts caused by the program to all
customers except those who participate in the low-income
assistance programs known as California Alternate Rates for
Energy (CARE) and the Family Electric Rate Assistance (FERA)
program and require electrical corporation to file revised
rates to ensure an equitable allocation of costs to all
customers.
32)Requires the PUC to evaluate the rate impact of customers who
participate in Net Energy Metering (NEM) and provides the PUC
authority to pay their share of nonbypassable costs as a
similar non-NEM customer.
33)Modifies the initial price to be set on the PUC's current
renewables portfolio standard (RPS) compliance report rather
than the prior year's report unless no current comparable
facility exists. In that case, the next price paid for the
next larger facility category is to be used. Establishes that
the price is set for each kilowatthour of electricity reported
by the PUC at the time a developer applies for allocation of
capacity from the program.
34)Orders electrical corporations to use a PUC-adopted
locational value for determining the price if the price is
higher than what is currently paid for kilowatthours generated
by the facility.
35)Inserts a number of clarifying amendments and definitions to
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terms used throughout the bill.
36)Provides that any party may file a complaint at the PUC if
they believe an electrical corporation or participating
organization is not complying with the requirements of this
chapter and may seek an enforcement order from the PUC and to
take whatever steps are necessary to ensure consumer
protection.
37)Deletes provisions that would have allowed entities to
aggregate load for purposes of determining eligible capacity
for participation in the program.
38)Makes optional whether an organization is required to provide
real-time meter data and permits an electrical corporation to
rely on a statement from a participant to allocation
kilowatthours.
39)Adds a provision that developers must make a good faith
effort to fill no less than 25% of "new entry level positions"
created to construct community renewable energy facilities
with persons referred from the local workforce investment
board and includes a definition of a "new entry level
position."
40)Authorizes release of generation data to city, county, or
city and county for all kilowatthours allocated within those
regions, regardless of location for purposes of calculating
greenhouse gas emissions.
41)Mandates that electrical corporations develop a standard
contract by March 1, 2013, for PUC approval and requires the
standard contract be based on an existing PUC-approved
renewable procurement contract with specific provisions
excluded.
42)Provides a method by which accumulated bill credits can be
"rolled over" to future bills or paid to participants and
specifies the price to be used if payment is taken.
43)Requires the PUC to determine participation should be
expanded to Direct Access customers, including customers doing
business with an Electric Service Provider, customers of a
community choice aggregation program, customers of publicly
owned utilities, or electrical corporations with less than
100,000 service connections.
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44)Permits an expansion of eligible technologies used at
facilities from those that fall within the RPS definition to
also include technologies that the Air Resources Board
determines will achieve greenhouse gas emission reductions.
45)Provides for recovery of all costs, including billing
services incurred by electrical corporations and to approve a
memorandum account to track billing system and implementation
costs.
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
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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.
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
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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.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0005617