BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 327|
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THIRD READING
Bill No: AB 327
Author: Perea (D), et al.
Amended: 9/6/13 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 10-0, 7/2/13
AYES: Padilla, Fuller, Corbett, De León, DeSaulnier, Hill,
Knight, Pavley, Wolk, Wright
NO VOTE RECORDED: Cannella
SENATE APPROPRIATIONS COMMITTEE : 6-0, 8/30/13
AYES: De León, Gaines, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 66-4, 5/23/13 - See last page for vote
SUBJECT : Electricity: natural gas: rates: net energy
metering: California Renewables Portfolio Standard
Program
SOURCE : Author
DIGEST : This bill restructures the rate design for
residential electric customers, creates a new net energy
metering (NEM) program, and specifies that the Public Utilities
Commission (PUC) may require the procurement of eligible
renewable energy resources in amounts greater than what is
required in statute.
Senate Floor Amendments of 9/6/13 clarify the application of
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fixed charges to customer generators, reinstate and revise the
sunset of a tariff, and make other technical and clarifying
amendments.
ANALYSIS :
Existing law:
1. States that PUC has regulatory authority over public
utilities, including electrical and gas corporations, as
defined
2. Authorizes the PUC to fix the rates and charges for every
public utility, and requires that those rates and charges be
just and reasonable.
3. Requires the PUC to designate a baseline quantity of
electricity and gas necessary to supply a significant portion
of the reasonable energy needs of the average residential
customer and requires that electrical and gas corporations
file rates and charges, to be approved by the PUC, providing
baseline rates.
4. Requires the PUC, in establishing the baseline rates, to
avoid excessive rate increases for residential customers.
5. Requires the PUC to establish a program of assistance to
specified low-income electric and gas customers, referred to
as the California Alternate Rates for Energy (CARE) program.
6. Prohibits the PUC from requiring or permitting an electrical
corporation to do any of the following:
A. Employ mandatory or default time-variant pricing, as
defined, with or without bill protection, as defined, for
residential customers prior to January 1, 2013.
B. Employ mandatory or default time-variant pricing,
without bill protection, for residential customers prior
to January 1, 2014.
C. Employ mandatory or default real-time pricing, without
bill protection, for residential customers prior to
January 1, 2020.
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1. Authorizes the PUC to authorize an electrical corporation to
offer residential customers the option of receiving service
pursuant to time-variant pricing and to participate in other
demand response programs and requires the PUC to only
approve an electrical corporation's use of default
time-variant pricing for residential customers, beginning
January 1, 2014, if those residential customers have the
option to not receive service pursuant to time-variant
pricing and incur no additional charges, as specified, as a
result of the exercise of that option.
This bill:
1. Allows the PUC to adopt a fixed charge up to $10 per month
or $5 per month for CARE customers for the purpose of
collecting a reasonable portion of the fixed costs of
providing residential electric service. The fixed charge
must reasonably reflect the different costs of serving small
and large customers, not unreasonably impair conservation and
energy efficiency incentives, and not overburden low-income
customers. Beginning January 1, 2016, the maximum fixed
charge may be adjusted annually to the Consumer Price Index.
The PUC will be able to consider whether minimum bills are
appropriate as a substitute for fixed charge.
2. Deletes the current restrictions on time-of-use (TOU)
pricing and instead allows the PUC, beginning January 1,
2018, to require or authorize an investor-owned utility (IOU)
to use default TOU pricing for residential customers. The
TOU pricing will be subject to specified conditions,
including that it not cause unreasonable hardship for senior
citizens or economically vulnerable customers in hot climate
zones, that the customer be provided with interval usage data
before being subject to the TOU rates, and that residential
customers have the option to not receive TOU rates without
being subject to additional charges. Certain residential
customers, such as those receiving a medical baseline
allowance, will be exempt from any default TOU pricing.
3. Directs the PUC to establish rates for the CARE program and
delete the existing requirements on the CARE tiers and rate
increase limitations. For customers of the large IOUs, the
set rates must effectively give a discount between 30% and
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35% to eligible customers. The discount will include any
charges that are not paid by CARE customers such as payments
to the California Solar Initiative (CSI) and any discount in
a fixed charge. If an IOU is currently providing a benefit
greater than 35%, it cannot reduce that benefit more than is
"reasonable."
4. Specifies that the assessment of the needs of low-income
electricity and gas customers be done at least every three
years.
5. Explicitly allows the PUC to require the procurement of
renewable energy resources in excess than the statutorily
required amounts.
6. Provides that the PUC require every large electrical
corporation to make the standard contract or tariff available
to eligible customer-generators until the corporation reaches
its NEM program limit, as specified, or July 1, 2017,
whichever is earlier. Requires the corporation to file a
monthly report with the PUC regarding its progress toward the
NEM program limit. Specifies that the report include
separate calculations on progress toward the limits based on
operating solar energy systems, cumulative numbers of
interconnection requests for NEM eligible systems, and any
other PUC-required criteria.
7. Specifies the NEM cap for the large IOUs is 607 megawatts
(MW) for customers of San Diego Gas and Electric Company,
2,240 MW for Southern California Edison customers, and 2,409
MW for Pacific Gas and Electric customers. This provision
codifies the PUC's current interpretation of the NEM cap
defined as 5% of the utilities' aggregate customer peak
demand.
8. Requires the PUC to develop a new standard contract or
tariff for new NEM customers of the large IOUs by July 1,
2015, that must be used beginning January 1, 2017, or earlier
if the NEM cap has been reached. The PUC will be required to
ensure that the new standard contract or tariff for rates,
terms of service, and billing rules is based on the
electrical system costs and benefits received by
nonparticipating customers and prevents a cost shift to
non-NEM customers.
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9. Defines the term "distributed resources" as distributed
renewable generation resources, energy efficiency, energy
storage, electric vehicles, and demand response technologies.
10.Requires, no later than July 1, 2015, each electrical
corporation to submit to the PUC a distribution resources
plan proposal identifying optimal locations for the
deployment of distributed resources, as follows:
A. Evaluate locational benefits and costs of distributed
resources located on the distribution system, as
specified.
B. Propose or identify standard tariffs, contracts, or
other mechanisms for the deployment of cost-effective
distributed resources that satisfy distribution planning
objectives.
C. Propose cost-effective methods of effectively
coordinating existing PUC-approved programs, incentives,
and tariffs to maximize the locational benefits and
minimize the incremental costs of distributed resources.
D. Identify any additional utility spending necessary to
integrate cost-effective distributed resources into
distribution planning consistent with the goal of yielding
net benefits to ratepayers.
E. Identify barriers to the deployment of distributed
resources, including, but not limited to, safety standards
related to technology or operation of the distribution
circuit in a manner that ensures reliable service.
1. Requires the PUC to review each proposal submitted by an
electrical corporation and approve, or modify and approve, a
distribution resources plan for the corporation. Authorizes
the PUC to modify any plan to minimize overall system costs
and maximize ratepayer benefit from investments in
distributed resources.
2. Provides that any electrical corporation spending on
distribution infrastructure necessary to accomplish the
distribution resources plan shall be prosed and considered as
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part of the next general rate case for the corporations.
Authorizes the PUC to approve proposed spending and adopt
criteria, benchmarks, and accountability mechanisms to
evaluate the success of any investment authorized pursuant to
a distribution resources plan.
3. Defines "large electrical corporation" as an electrical
corporation with more than 100,000 service connections in
California.
4. Requires the PUC to determine which rates and tariffs are
applicable to customer generators only during a rulemaking
proceeding. Any fixed charges for residential customer
generators that differ from the specified fixed charges shall
be authorized only in a rulemaking proceeding involving every
large electrical corporation. The PUC shall ensure customer
generators are provided electric service at rates that are
just and reasonable.
5. States that no fuel cell electrical generating facility
shall be eligible for the tariff unless it commences
operation prior to January 1, 2017, unless a later enacted
statute, that is chaptered before January 1, 2017, extends
this eligibility commencement date. The tariff shall remain
in effect for an eligible fuel cell electrical generating
facility that commences operation pursuant to the tariff
prior to January 1, 2017. A fuel cell customer-generator
shall be eligible for the tariff as specified, only for the
operating life of the eligible fuel cell electrical
generating facility.
Background
Residential electric rates . Residential electric rates in the
territories of the three largest electric corporations are
generally designed in a four or five-tiered structure based on
the customer's quantity of electricity usage. Within prescribed
usage tiers, the amount of electricity consumed is priced at
increasing per-unit rates.
Tier 1 is baseline usage and tier 2 is 130% of baseline.
In response to the energy crisis, the Legislature froze rates
for tiers 1 and 2 in 2001. While rates to customers were
frozen, utilities continued to experience increased costs for
generation, distribution, transmission and new programs created
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by the Legislature and the PUC. These costs have been
disproportionally borne by customers whose electricity usage
falls in the upper tiers (3, 4, and 5). In 2009, the
Legislature passed SB 695 (Kehoe, Chapter 337, Statutes of 2009)
which allowed the tiers 1 and 2 rates to gradually increase
until 2018 at which time the freeze would be completely lifted.
These rate adjustments, overall, were revenue neutral to the
IOUs as increases in tiers 1 and 2 resulted in commensurate
decreases in rate for tiers 3, 4, and 5.
CARE program . Existing law requires the PUC to establish the
CARE program, which provides assistance to low-income electric
and gas customers with annual household incomes less than 200%
of federal poverty guideline levels. The cost of this program
is spread across multiple classes of customers. CARE rates
cannot exceed 80% of rates for non-CARE residential customer and
is exempted from certain charges, including the charge to
support CARE and CSI. CARE rates were also frozen in response
to the energy crisis, but SB 695 allowed the rates to be
increased at the same rate as increases in benefits under
CalWORKs, not to exceed 3% through 2018. However, due to budget
impacts on the CalWORKs program, there have been no increases in
benefits, thus effectively maintaining the freeze of CARE rates
at 2001 levels.
TOU pricing . SB 695 also prohibited the PUC from permitting a
utility to employ mandatory or default TOU pricing for any
residential customer prior to January 1, 2014. However,
mandatory or default TOU pricing can be authorized as early as
January 1, 2013 if the utility caps the customer's bill at the
level it would have been had the customer not changed his rate
schedule to TOU pricing. Mandatory or default real-time pricing
may be permitted as early as January 1, 2020. Beginning January
1, 2014, the PUC may approve TOU pricing in a manner consistent
with the Public Utilities Act if the customer has the option not
to be subject to TOU pricing and that option can be exercised
without charge.
Net metering . Existing law requires electric utilities to
credit all electricity generated by a customer-owned renewable
energy system against the customer's usage of electricity sold
by the utility, a procedure known as NEM. Under the CSI,
customers who install solar system receive "full retail NEM"
where the customer is exempt from paying transmission and
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distribution costs on electricity provided by the utility (the
electricity from the grid that the customer uses when his/her
solar panels are not producing, like at night). Every electric
utility is required to develop a NEM tariff to provide for net
energy metering, which is available to customers on a
first-come-first-serve basis until the total generating capacity
exceeds five percent of the utilities' aggregate customer peak
demand.
As transmission and distribution costs are typically one-half to
two-thirds of a residential customer's billing, full retail NEM
offers a substantial subsidy to NEM customers with the costs
being shifted to non-NEM customers. Given that rooftop solar
now generates 1,173MW in the IOU territories, the cost of full
retail NEM comes at a cost of approximately $60 million to
non-NEM customers across the state. The Legislature has in the
past justified this subsidy as it stimulates the solar industry,
helps the state reach its renewable energy goals, and provides
other external benefits.
RPS . RPS requires IOUs, electric service providers, and
community choice aggregators to increase procurement from
eligible renewable energy resources along a statutorily
determined schedule.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Annual costs of approximately $116,000 from the Public
Utilities Reimbursement Account (special) for the workload
involved in conducting a triennial assessment of the needs of
low-income electricity and gas customers.
Cost pressures in the millions to tens of millions of
dollars to the General Fund and various special funds to the
state as a rate payer should the PUC exercise the authority
in this bill to raise renewable energy procurement
requirements.
One-time costs of at least $120,000 from the Public
Utilities Reimbursement Account for the development of a new
NEM standard contact and tariff, a transition period for
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existing NEM customers, and the eligible period for a
fuel-cell standard tariff.
One-time costs of at least $120,000 and ongoing costs of up
to $120,000 from the Public Utilities Reimbursement Account
to review distribution resource plans and to establish
criteria on evaluating the success of investments made
pursuant to such a plan.
Cost pressures in the hundreds of thousands of dollars to
the General Fund and various special funds to the state as a
ratepayer to the extent that the distribution resources plan
proposals lead to necessary infrastructure spending that will
be paid by the ratepayers.
SUPPORT : (Verified 9/6/13)
100 Black Men of Long Beach
1st Guaranty Mortgage and Realty
AARP
Adelanto Chamber of Commerce
Age Well Senior Services
American Family Housing
Angel View, Inc.
Antelope Valley Board of Trade
Asian Business Association of San Diego
Assured Coin and Loan
Barstow Community Hospital Auxiliary
Barstow Unified School District
Border Transportation Council
Building Industry Association of Fresno/Madera Counties
Building Industry Association of the Greater Valley
Business Resource Group
C&C Development
California Apartment Association
California Asian Pacific Chamber of Commerce
California Association of Community Managers
California Biomass Energy Alliance
California Black Chamber of Commerce
California Friends of the African American Caucus
California Resource and Training
California Retailers Association
California State Conference of the NAACP
Cathedral City Mayor, Kathleen J. DeRosa
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Cement Masons, Local 500
Central Valley Opportunity Center, Inc.
Cities of Avenal, Coalinga, Desert Hot Springs, Indian Wells,
Kerman, Livingston, Mendota, Reedley, and Selma
City Fabric
City of Bakersfield Mayor, Harvey L. Hall
City of El Cajon Council Member, Gary Kendrick
City of Encinitas Council Member, Mark Muir
City of Escondido Council Member, Ed Gallo
City of Escondido Mayor, Sam Abed
City of Fresno Council Member, Oliver L. Baines
City of Fresno Councilmember, Blong Xiong
City of Huron Mayor, Sylvia Chavez
City of La Mesa Council Member, Ernest Ewin
City of Merced Council Member, Mike Murphy
City of San Clemente Mayor, James Dahl
City of San Joaquin Mayor, Amarpreet Dhaliwal
City of Vista Council Member, Cody Campbell
Coalition of California Utility Employees
Community Advocates for People with Choices, Inc.
Community Women of San Gabriel Valley
Conejo Awards
Congress of California Seniors
Cortes Communications, LLC.
Costa Mesa Chamber of Commerce
CTI Environmental, Inc.
Cyber Risk Insurance Brokers
Delhi Center
Division of Ratepayer Advocates
Downtown Pomona Owners' Association
Duarte Chamber of Commerce
El Concilio
Energy Communications Corporation
Filipino American Service Group, Inc.
Filipino-American Chamber of Commerce
FOCUSCOM, Inc.
Fresno Barrios Unidos
Fresno Metro Black Chamber of Commerce
Gardena Valley Chamber of Commerce
Gi and Associates
GRCN Connecting Communities, Inc.
Greater Antelope Valley Association of Realtors
H.O.P.E. of the Mountain Empire
Habitat for Humanity San Diego
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Hawthorne Chamber of Commerce
Healthcare and Elder Law Programs Corporation
Helpline Youth Counseling
Hilltop Group, Inc.
Hispanic Outreach Task Force
Human Services Association
Independent Energy Producers Association
Inland Valley Business Alliance
International Brotherhood of Electrical Workers, Local 465
International Brotherhood of Electrical Workers, Local 47
International Brotherhood of Electrical Workers, Local 569
JL Hawk Construction
Kalusugan Community Services
Kern Council of Governments
Kern County Board of Supervisors
Kern County Supervisor, Leticia Perez
Kern County Taxpayers Association
Kings County Economic Development Corporation
Korean Health Education Information and Research
Ledford Enterprises
LifeHOUSE Management Services
Lincoln Training Center
Lumber Estimating Service
Main Street Chamber Rancho Cucamonga/Upland
Martinez Supply
Meals on Wheels West
Menifee Sun City Concern
Mentally and Educationally Retarded Citizens, Inc.
Mercado Business Association
Moreno Valley Black Chamber of Commerce
Mountain Health and Community Services
Newberry Springs Senior Service Association, Inc.
Orange County Hispanic Chamber of Commerce
Orange Senior Center
Otay Mesa Chamber of Commerce
P&P Pools, Inc.
Pacific Gas and Electric Company
Palm Desert Area Chamber of Commerce
People Net, Inc.
Pringle Insurance Services, Inc.
Reach Out Morongo Basin
Saddleback College Foundation
San Diego Gas & Electric
San Diego Port Tenants Association
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San Diego Regional Minority Supplier Development Council
San Gabriel Valley Economic Partnership
San Joaquin Valley Clean Energy Organization
San Luis Obispo County Builders Exchange
San Ysidro Health Center
Santa Ana College Foundation
Save our Rural Community
Search to Involve Pilipino Americans
SELAC Educational Foundation
Sempra Energy Utilities
Senior Advocates of the Desert
Sepulveda Group Enterprises, Inc.
Sierra Dawn Estates
Silicon Valley Leadership Group
Solar Energy Industries Association
Southern California Edison
Southern California Gas Company
Stalwart Communications
Stroke Recovery Center
Sweetwater Authority Board
The Cathedral Center
The Center Long Beach
The Center Palm Springs
The Greenlining Institute
The Utility Reform Network
Thomas W. Amend Drywall Contractor
TLW Legal and Government Support
Transcendence
Trilogy PR Group
Tulare County Board of Supervisors
Turning Point Communications
Union of Pan Asian Communities
United Association of Food Trucks of San Diego
United Association of Plumbers and Steamfitters, Local Union 230
United Cambodian Community
United Communities Network
Vote Solar
Western Region Asians in Telecommunications and Energy
Whittier Uptown Association
OPPOSITION : (Verified 9/6/13)
Anahuak Youth Soccer Association
Association of California School Administrators
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California Association of School Business Officials
California Environmental Justice Alliance
California Farm Bureau Federation
California Large Energy Consumers Association
California League of Food Processors
California Lulac Institute
California Manufacturers and Technology Association
California School Boards Association
California Special Districts Association
California's Coalition for Adequate School Housing
Californians Against the Utilities Stopping Solar Energy
Center for Community Action and Environmental Justice
Consejo de Federaciones Mexicanas en Norteamérica
Efficiency First California
Environment California
Mexican American Political Association
Presente.org
School Energy Coalition
SD350.org
Sierra Club
Sullivan Solar Power
The Willie C. Velasquez Institute
Todos Unidos
Voces Verdes
Wine Institute
ASSEMBLY FLOOR : 66-4, 5/23/13
AYES: Achadjian, Alejo, Allen, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Conway, Cooley, Dahle, Daly,
Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia,
Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,
Roger Hernández, Jones-Sawyer, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V.
Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Ting, Wagner, Weber, Wieckowski, Wilk, Williams, John A. Pérez
NOES: Ammiano, Blumenfield, Stone, Yamada
NO VOTE RECORDED: Chesbro, Dickinson, Grove, Holden, Jones,
Levine, Muratsuchi, Waldron, Vacancy, Vacancy
JG:k 9/9/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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