BILL ANALYSIS Ó
AB 1228
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1228 (V.M. Perez) - As Amended: April 24, 2013
SUBJECT : Electricity: eligible fuel cell customer-generators
SUMMARY : This bill would increase the capacity of a fuel cell
electrical generating facility, operating under a Net Energy
Metering (NEM) tariff, from 1 megawatt to not more than 3
megawatts and makes other changes. Specifically, this bill :
a)Increases the maximum allowable capacity of a fuel facility
eligible for the NEM tariff from 1 megawatt to 3 megawatts.
b)Provides that eligible fuel cell projects shall not be exempt
from reasonable interconnection charges.
c)Establishes that interconnection charges are to take into
account the ratepayer and system benefits of larger baseload
fuel cell projects.
d)Sets a maximum rate at which electricity is fed back to the
grid at no more than one megawatt-hour.
EXISTING LAW
1)Limits the maximum capacity of a qualified fuel cell project
to no larger than 1 megawatt. (Public Utilities Code 2827.10
(a)(3)(A)(i))
2)Requires every electrical corporation to make available to an
eligible fuel cell customer-generator a standard tariff for
NEM on a first-come-first-served basis, until the total
cumulative rated generating capacity of the eligible fuel cell
electrical generating facilities receiving service reaches a
level equal to its proportionate share of a statewide limit of
500 megawatts cumulative rated generation. The proportionate
share shall be calculated based on the ratio of the electrical
corporation's peak demand compared to the total statewide peak
demand. (Public Utilities Code 2827.10 (b)(1))
3)Allows the California Public Utilities Commission (PUC) to
incrementally raise the statewide limit of 500 megawatts
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following a review. (Public Utilities Code 2827.10 (b)(1))
4)Requires that each NEM tariff be identical, with respect to
rate structure, all retail rate components, and any monthly
charges, to customer's otherwise applicable tariff if the
customer were not a fuel cell generator. (Public Utilities
Code 2827.10 (d)(1))
5)Restricts any new or additional demand charge, standby charge,
customer charge, minimum monthly charge, interconnection
charge, or other charge that would increase an eligible fuel
cell customer-generator's costs beyond those of other
customers in the rate class to which the eligible fuel cell
customer-generator would otherwise be assigned. (Public
Utilities Code 2827.10 (d)(1))
6)Authorizes a fee for interconnection inspection services for
fuel cell customer-generators. (Public Utilities Code 2827.10
(d)(1))
7)Establishes that the value of electricity generated by the
fuel cell facility be the same price as the electrical
corporation would charge for retail sales of electricity,
exclusive of surcharges and, to the extent that transmission
and distribution services are recovered through demand
charges, no standby charges are to be applied. (Public
Utilities Code 2827.10 (e)(2)(A))
8)Establishes that any excess kilowatt-hour generation that
might occur during the 12-month NEM period are to be retained
by the electrical corporation and no compensation is to be
paid to the customer. (Public Utilities Code 2827.10
(e)(2)(B)(3))
9)Sunsets the fuel cell NEM on January 1, 2015. (Public
Utilities Code 2827.10 (f))
10)Requires the PUC, in consultation with the California Energy
Commission (CEC) and the California Independent System
Operator (CAISO), to report on or before January 1, 2010, on
the impacts of distributed energy generation on the state's
distribution and transmission grid. The study is to include
the following:
a) Reliability and transmission issues related to
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connecting distributed energy generation to the local
distribution networks and regional grid.
b) Issues related to grid reliability and operation,
including interconnection, and the position of federal
and state regulators toward distributed energy
accessibility.
c) The effect on overall grid operation of various
distributed energy generation sources.
d) Barriers affecting the connection of distributed
energy to the state's grid.
e) Emerging technologies related to distributed energy
generation interconnection.
f) Interconnection issues that may arise for CAISO and
local distribution companies.
g) The effect on peak demand for electricity.
h) The impacts of the California Solar Initiative (CSI)
program, the self-generation incentive program (SGIP),
and the net energy metering pilot program.
(Public Utilities Code 321.7)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement. "This measure will amend the code to allow
fuel cell generating facilities up to 3 MW to qualify for the
NEM program. Increasing the fuel cell electrical generating
facility capacity will enhance competition among California's
fuel cell developers and will engender high-value,
multi-megawatt projects.
"These projects will allow corporate campuses, agricultural
facilities, colleges and universities and similar facilities
with fluctuating load to participate in this program.
"In so doing, sites with more variable onsite load -like
campuses or agricultural facilities that fluctuate
seasonally-- will be able to send clean, reliable excess
energy back to the electric grid when onsite load is low.
"Thus, more facilities and employment centers can make the
switch to clean DG. This is an important step toward growing
the market for zero-emission, baseload generation in
California."
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2)Two-types of NEM tariffs. There are currently two different
types of NEM tariffs in place: one tariff offers bill credits
at the full retail rate for RPS-eligible technologies,
including fuel cells that use renewable fuel ("full-retail
NEM"). A separate tariff, the subject of this bill, offers a
significantly lower bill credit that pays for the
generation-only component of the rate, available to fuel cells
that use renewable or non-renewable fuel and which meet
specified reductions in GHG emissions ("Fuel Cell NEM, FC-
NEM").
According to the PUC, "Because renewable fuel cell projects
will likely take advantage of the higher bill credit rate
under the full-retail NEM program, the PUC assumes that the
majority of current fuel cell projects using the FC- NEM
tariff will be non-renewable fuel cells."
Although all renewable resources sized up to 1 MW which offset
a customer's load are eligible for full retail NEM, most of
the facilities are solar photovoltaic (PV).
3)Baseload Generation. Although fuel cells are not intermittent
and provide baseload generation, theses generators are
generally not dispatchable and lack ramping capability.
Consequently, the fuel cell generator can be run full-time
regardless of the load of the facility. If the load drops,
such as in the night or on weekends, the surplus electricity
goes back to the grid. The FC-NEM program allows that
generation to accumulate to the customer's credit so that the
customer can utilize that credit during business hours when
the fuel cell is offsetting some or all load but the customer
could also be using generation from the grid.
4)Electrical Corporations Only. The mandates of this program
apply only to the electrical corporations regulated by the
PUC. There are no comparable requirements on Publicly Owned
Utilities (POU), which may create barriers to growth of the
industry and use of the technologies in very significant
portions of the state since the POUs serve as much as 23% of
the electric load in California. On the other hand, by
limiting the FC-NEM to the electrical corporations the
potential cost shift to non-participating ratepayers will not
effect on POU customers.
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5)It's a Grid Problem . The 1 MW capacity cap for fuel is
consistent across all NEM programs for all technologies for
all customers. There reasons for the 1 MW cap is related to
the reliability of the electric grid.
The California Independent System Operator (CAISO) requires
that generators exporting to the grid schedule deliveries. NEM
customers have no obligation to schedule deliveries because
they are located on the customer's side of the meter. If they
produce more than they consume on-site, the excess generation
is pushed back onto the grid, whether or not it is needed.
This is unscheduled excess generation. The excess generation
can create grid stability problems leading to poor power
quality which could damage equipment or appliances, blackouts,
or flickering.
Larger NEM facilities, such as those envisioned by this bill,
could cause grid reliability problems, particularly depending
on the daily load profile of the FC-NEM customer. For example,
the FC-NEM customer could be 'closed on weekends and holidays"
yet still operate their fuel cell during those time periods.
This could put substantial amounts of unscheduled electricity
onto the grid at a time when demand for electricity is
typically low and there are substantial amounts of excess
generation from other resources (including renewable
supplies).
Grid integration issues are among those being studied by the
PUC in the DG impacts study.
AB 1228 was amended to add a provision that would limit the
net rate at which electricity is fed back to the electric
grid. The limit established in this provision is one
megawatt-hour. The author's intent is to ensure that
regardless of the increase in the FC-NEM cap the fuel cell
customer will be limited in the amount of electricity fed back
to the grid. This approach effectively increases the amount of
electricity that can be fed back to the grid because the
current cap of 1megawatt limits the amount fed back to the
grid at no more than 1 megawatt less the amount of electricity
consumed on-site.
If this bill is passed out of this committee the author should
amend this provision to refer to the limit as one megawatt
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rather than one megawatt-hour.
6)Interconnection Issues . Interconnection describes the
electrical transfer point between a generating facility and
the distribution system. "Rule 21" is the name of the tariff
that sets metering and operating standards for self-generation
facilities interconnected to the utility distribution system.
In a two-part proceeding the PUC approved, in September 2012,
a settlement to reform the interconnection tariff to craft
transparent rules that provide a clear, predictable path to
interconnection for distributed generation while maintain the
safety and reliability of the electric grid.
In December 2012, the PUC initiated Phase 2 in this proceeding
to further address issues related to streamlining
interconnection rules.
This bill provides that eligible FC-NEM facilities with a
capacity of less than one megawatt would pay reasonable
interconnection charges. Interconnection charges are generally
inspection charges, which are current law.
In addition, this bill would require the PUC, when it revises
Rule 21, to consider ratepayer and system benefits of larger
baseload fuel cell projects. The way this language was drafted
implies an assumption that there are no costs to adding larger
baseload fuel cell projects.
7)Ratepayer funded incentives . The Self Generation Incentive
Program (SGIP) also provides incentives to encourage the
deployment of clean distributed generation technologies that
have been determined to achieve reductions in greenhouse gas
emissions. Fuel cells that operate on renewable fuels and fuel
cells that operate on non-renewable fuels are eligible to
participate in SGIP. The SGIP offers incentives for the first
3 MW of fuel cell projects, which can be of any size (e.g. a
10MW fuel cell receives financial support for the first 3MW).
Provided a system meets all requirements, both renewable and
non-renewable fuel cell systems could potentially participate
in the SGIP and the fuel cell NEM program.
8)Unknown shift of costs to other ratepayers. According to the
PUC, the FC-NEM customers are granted the same exemptions as
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full retail NEM customers. This includes an exemption from
standby and certain departing load charges, specifically, all
of the Cost Responsibility Surcharges - DWR Bond charge, DWR
Power charge, Regulatory Asset Charge, and Competition
Transition Charge).
According to the PUC, the cost shift due to FC-NEM or whether
or not FC-NEM customers pay their share of public purpose
programs is not known at this time. The costs and benefits of
the FC-NEM are not part of the NEM study authorized by AB 2514
(Bradford)
9)Related Legislation.
AB 2514 (Bradford, Chapter 609, Statutes of 2012) requires the
PUC to study and report on the costs and benefits of NEM by
October 2013.
AB 2075 (Fong, 2011-2012) would have increased the capacity of
a fuel cell electrical generating facility to not more than 3
megawatts. Failed passage in Senate EU&C Committee
REGISTERED SUPPORT / OPPOSITION :
Support
Clean Power Campaign
Fuel Cell Energy (Sponsor)
Opposition
San Diego Gas & Electric Company (SDG&E)
Southern California Edison (SCE)
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083