Amended in Senate July 10, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1409

Introduced by Committee on Utilities and Commerce (Bradford (Chair), Bonilla, Buchanan, Fong, Garcia, Quirk, Rendon, Skinner, and Williams)

March 13, 2013

An act to amend Sections 398.4, 399.20, 399.22, 1904, and 2827 of, begin delete and end delete to amend and renumber Section 387.8 of, begin insert and to repeal Section 1906 of, end insert the Public Utilities Code, relating to begin delete energy end delete begin insert public utilities end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 1409, as amended, Committee on Utilities and Commerce. begin delete Energy. end delete begin insert Public utilities: electricity. end insert

(1) Under existing law, the Public Utilities Commission begin delete (commission) end delete has regulatory authority over public utilities, including electrical corporations, as defined. Decisions of the PUC adopted the California Solar Initiative. Existing law requires the governing body of a local publicly owned electric utility that sells electricity at retail to adopt, implement, and finance a solar initiative program for the purpose of investing in, and encouraging the increased installation of, residential and commercial solar energy systems.

This bill would move the above-described requirements for local publicly owned electric utilities from an area of the Public Utilities Code pertaining to electrical restructuring, to the area of the code pertaining to the implementation of the California Solar Initiative.

(2) Existing law allows the commission to charge and collect a fee of $75 for filing each application for a certificate of public convenience and necessity, or for the mortgage, lease, transfer, or assignment of a certificate.

This bill would instead begin delete change that amount to a fee to be determined by commission rule or order and adjusted as appropriate based on the Consumer Price Index. end delete begin insert require the fee to not exceed the reasonable costs to the commission for filing these applications. The bill would authorize the fee in an amount not to exceed $500 and would authorize the commission to adjust this fee based on the Consumer Price Index. end insert

begin insert

(3) Existing law establishes the Public Utilities Commission Utilities Reimbursement Account in the General Fund and generally provides that all fees and charges collected under the Public Utilities Code, except penalties, from each public utility be paid into the fund. Other existing law provides that specified fees, including, but not limited to, the fee for filing each application for a certificate of public convenience and necessity, or for the mortgage, lease, transfer, or assignment of a certificate, are required to be paid at least once each month into the State Treasury to the General Fund.

end insert begin insert

This bill would repeal the provision that requires certain fees to be paid at least once each month into the State Treasury to the General Fund.

end insert begin delete

This

end delete

begin insert (4) end insert begin insert   end insert begin insert This end insert bill would also make nonsubstantive changes and other conforming and corrective changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 387.8 of the Public Utilities Code is
amended and renumbered to read:

2855.  

Notwithstanding paragraphs (2) and (5) of subdivision
(d) of Section 2854, a local publicly owned electric utility may
adopt, implement, and finance a solar initiative program otherwise
in accordance with that section, using monetary incentives
authorized by subdivision (b) of Section 2854, to residential and
business consumers where consumers offset part or all of their
electricity demand with electricity generated by a solar energy
system not located on the premises of the consumer, if all of the
following requirements are met:

(a) The solar energy system meets all of the following
conditions:

(1) It is located within the service territory of the local publicly
owned electric utility.

(2) It has a capacity of no more than five megawatts.

(3) It is interconnected to the local publicly owned electric
utility’s system at the distribution level.

(b) The local publicly owned electric utility meets all of the
following conditions:

(1) It provides monetary incentives authorized by Section 2854
for not more than the first megawatt of generating capacity of each
solar energy system.

(2) It has contracted to purchase the total electricity produced
by the solar energy system or owns the solar energy system.

(3) It provides no greater incentive per watt for the solar energy
system than provided for by systems that participate in the
applicable solar initiative program established under Section 2854.

(4) It has received approval for the solar energy system from
its governing board at a publicly noticed and held meeting.

(c) The total megawatt capacity of solar energy systems eligible
for a local publicly owned electric utility program under this section
is both of the following:

(1) Not more than the total megawatt capacity of the combined
residential and commercial solar energy systems installed in the
service area of the local publicly owned electric utility after July
1, 2010, that participate in the applicable solar initiative programs
established under Section 2854.

(2) Not more than 20 percent of the proportionate amount for
the local publicly owned electric utility of the overall 3,000
megawatt state goal set forth in Section 2854, based on the
percentage of the total statewide load served by that entity.

SEC. 2.  

Section 398.4 of the Public Utilities Code is amended
to read:

398.4.  

(a) Every retail supplier that makes an offering to sell
electricity that is consumed in California shall disclose its
electricity sources for the previous calendar year.

(b) The disclosures required by this section shall be made to
potential end-use consumers in all product-specific written
promotional materials that are distributed to consumers by either
printed or electronic means, including the retail supplier’s Internet
Web site, if one exists, except that advertisements and notices in
general circulation media shall not be subject to this requirement.

(c) The disclosures required by this section shall be made
annually to end-use consumers of the offered electricity. The annual
disclosure shall be made by the end of the first complete billing
cycle for the third quarter of the year, and shall be consistent with
information provided to the Energy Commission pursuant to
Section 398.5.

(d) The disclosures required by this section shall be made
separately for each offering made by the retail supplier.

(e) On or before January 1, 1998, the Energy Commission shall
specify guidelines for the format and means for disclosure required
by Section 398.3 and this section, based on the requirements of
this article and subject to public hearing.

(f) The costs of making the disclosures required by this section
shall be considered to be generation related.

(g) The disclosures required by this section shall comply with
the following:

(1) A retail supplier’s disclosure of its electricity sources shall
be expressed as a percentage of annual sales derived from each of
the following categories:

(A) Unspecified sources of electricity.

(B) Specific purchases.

(2) A retail supplier’s disclosure of its electricity sources shall
also separately identify total California system electricity, which
is the sum of all in-state generation and net electricity imports by
fuel type.

(h) Each of the categories specified in subdivision (g) shall be
additionally identified as a percentage of annual sales that is
derived from the following fuels or sources of energy:

(1) Coal.

(2) Large hydroelectric (greater than 30 megawatts).

(3) Natural gas.

(4) Nuclear.

(5) Eligible renewable energy resources pursuant to the
California Renewables Portfolio Standard Program (Article 16
(commencing with Section 399.11)), including any of the
following:

(A) Biomass and biowaste.

(B) Geothermal.

(C) Eligible hydroelectric.

(D) Solar.

(E) Wind.

(6) Other categories as determined by the Energy Commission.

(i) All electricity sources disclosed as specific purchases shall
meet the requirements of subdivision (c) of Section 398.2.

(j) Specific purchases identified pursuant to this section shall
be from sources connected to the Western Electricity Coordinating
Council interconnected grid.

(k) Compliance with this section by a local publicly owned
electric utility shall constitute compliance with subdivision (l) of
Section 399.30.

(l) This section shall not apply to generators providing electric
service onsite, under an over-the-fence transaction as described in
Section 218, or to an affiliate or affiliates, as defined in subdivision
(a) of Section 372.

SEC. 3.  

Section 399.20 of the Public Utilities Code is amended
to read:

399.20.  

(a) It is the policy of this state and the intent of the
Legislature to encourage electrical generation from eligible
renewable energy resources.

(b) As used in this section, “electric generation facility” means
an electric generation facility located within the service territory
of, and developed to sell electricity to, an electrical corporation
that meets all of the following criteria:

(1) Has an effective capacity of not more than three megawatts.

(2) Is interconnected and operates in parallel with the electrical
transmission and distribution grid.

(3) Is strategically located and interconnected to the electrical
transmission and distribution grid in a manner that optimizes the
deliverability of electricity generated at the facility to load centers.

(4) Is an eligible renewable energy resource.

(c) Every electrical corporation shall file with the commission
a standard tariff for electricity purchased from an electric
generation facility. The commission may modify or adjust the
requirements of this section for any electrical corporation with less
than 100,000 service connections, as individual circumstances
merit.

(d) (1) The tariff shall provide for payment for every
kilowatthour of electricity purchased from an electric generation
facility for a period of 10, 15, or 20 years, as authorized by the
commission. The payment shall be the market price determined
by the commission pursuant to paragraph (2) and shall include all
current and anticipated environmental compliance costs, including,
but not limited to, mitigation of emissions of greenhouse gases
and air pollution offsets associated with the operation of new
generating facilities in the local air pollution control or air quality
management district where the electric generation facility is
located.

(2) The commission shall establish a methodology to determine
the market price of electricity for terms corresponding to the length
of contracts with an electric generation facility, in consideration
of the following:

(A) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation’s general
procurement activities as authorized by the commission.

(B) The long-term ownership, operating, and fixed-price fuel
costs associated with fixed-price electricity from new generating
facilities.

(C) The value of different electricity products including
baseload, peaking, and as-available electricity.

(3) The commission may adjust the payment rate to reflect the
value of every kilowatthour of electricity generated on a
time-of-delivery basis.

(4) The commission shall ensure, with respect to rates and
charges, that ratepayers that do not receive service pursuant to the
tariff are indifferent to whether a ratepayer with an electric
generation facility receives service pursuant to the tariff.

(e) An electrical corporation shall provide expedited
interconnection procedures to an electric generation facility located
on a distribution circuit that generates electricity at a time and in
a manner so as to offset the peak demand on the distribution circuit,
if the electrical corporation determines that the electric generation
facility will not adversely affect the distribution grid. The
commission shall consider and may establish a value for an electric
generation facility located on a distribution circuit that generates
electricity at a time and in a manner so as to offset the peak demand
on the distribution circuit.

(f) (1) An electrical corporation shall make the tariff available
to the owner or operator of an electric generation facility within
the service territory of the electrical corporation, upon request, on
a first-come-first-served basis, until the electrical corporation meets
its proportionate share of a statewide cap of 750 megawatts
cumulative rated generation capacity served under this section and
Section 399.32. The proportionate share shall be calculated based
on the ratio of the electrical corporation’s peak demand compared
to the total statewide peak demand.

(2) By June 1, 2013, the commission shall, in addition to the
750 megawatts identified in paragraph (1), direct the electrical
corporations to collectively procure at least 250 megawatts of
cumulative rated generating capacity from developers of bioenergy
projects that commence operation on or after June 1, 2013. The
commission shall, for each electrical corporation, allocate shares
of the additional 250 megawatts based on the ratio of each electrical
corporation’s peak demand compared to the total statewide peak
demand. In implementing this paragraph, the commission shall do
all of the following:

(A) Allocate the 250 megawatts identified in this paragraph
among the electrical corporations based on the following
categories:

(i) For biogas from wastewater treatment, municipal organic
waste diversion, food processing, and codigestion, 110 megawatts.

(ii) For dairy and other agricultural bioenergy, 90 megawatts.

(iii) For bioenergy using byproducts of sustainable forest
management, 50 megawatts. Allocations under this category shall
be determined based on the proportion of bioenergy that sustainable
forest management providers derive from sustainable forest
management in fire threat treatment areas, as designated by the
Department of Forestry and Fire Protection.

(B) Direct the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process.

(C) Coordinate, to the maximum extent feasible, any incentive
or subsidy programs for bioenergy with the agencies listed in
subparagraph (A) of paragraph (3) in order to provide maximum
benefits to ratepayers and to ensure that incentives are used to
reduce contract prices.

(D) The commission shall encourage gas and electrical
corporations to develop and offer programs and services to facilitate
development of in-state biogas for a broad range of purposes.

(3) (A) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, the State
Air Resources Board, the Department of Forestry and Fire
Protection, the Department of Food and Agriculture, and the
Department of Resources Recycling and Recovery, may review
the allocations of the 250 additional megawatts identified in
paragraph (2) to determine if those allocations are appropriate.

(B) If the commission finds that the allocations of the 250
additional megawatts identified in paragraph (2) are not
appropriate, the commission may reallocate the 250 megawatts
among the categories established in subparagraph (A) of paragraph
(2).

(4) For the purposes of this subdivision, “bioenergy” means
biogas and biomass.

(g) The electrical corporation may make the terms of the tariff
available to owners and operators of an electric generation facility
in the form of a standard contract subject to commission approval.

(h) Every kilowatthour of electricity purchased from an electric
generation facility shall count toward meeting the electrical
corporation’s renewables portfolio standard annual procurement
targets for purposes of paragraph (1) of subdivision (b) of Section
399.15.

(i) The physical generating capacity of an electric generation
facility shall count toward the electrical corporation’s resource
adequacy requirement for purposes of Section 380.

(j) (1) The commission shall establish performance standards
for any electric generation facility that has a capacity greater than
one megawatt to ensure that those facilities are constructed,
operated, and maintained to generate the expected annual net
production of electricity and do not impact system reliability.

(2) The commission may reduce the three megawatt capacity
limitation of paragraph (1) of subdivision (b) if the commission
finds that a reduced capacity limitation is necessary to maintain
system reliability within that electrical corporation’s service
territory.

(k) (1) Any owner or operator of an electric generation facility
that received ratepayer-funded incentives in accordance with
Section 379.6 of this code, or with Section 25782 of the Public
Resources Code, and participated in a net metering program
pursuant to Sections 2827, 2827.9, and 2827.10 of this code prior
to January 1, 2010, shall be eligible for a tariff or standard contract
filed by an electrical corporation pursuant to this section.

(2) In establishing the tariffs or standard contracts pursuant to
this section, the commission shall consider ratepayer-funded
incentive payments previously received by the generation facility
pursuant to Section 379.6 of this code or Section 25782 of the
Public Resources Code. The commission shall require
reimbursement of any funds received from these incentive
programs to an electric generation facility, in order for that facility
to be eligible for a tariff or standard contract filed by an electrical
corporation pursuant to this section, unless the commission
determines ratepayers have received sufficient value from the
incentives provided to the facility based on how long the project
has been in operation and the amount of renewable electricity
previously generated by the facility.

(3) A customer that receives service under a tariff or contract
approved by the commission pursuant to this section is not eligible
to participate in any net metering program.

(l) An owner or operator of an electric generation facility
electing to receive service under a tariff or contract approved by
the commission shall continue to receive service under the tariff
or contract until either of the following occurs:

(1) The owner or operator of an electric generation facility no
longer meets the eligibility requirements for receiving service
pursuant to the tariff or contract.

(2) The period of service established by the commission pursuant
to subdivision (d) is completed.

(m) Within 10 days of receipt of a request for a tariff pursuant
to this section from an owner or operator of an electric generation
facility, the electrical corporation that receives the request shall
post a copy of the request on its Internet Web site. The information
posted on the Internet Web site shall include the name of the city
in which the facility is located, but information that is proprietary
and confidential, including, but not limited to, address information
beyond the name of the city in which the facility is located, shall
be redacted.

(n) An electrical corporation may deny a tariff request pursuant
to this section if the electrical corporation makes any of the
following findings:

(1) The electric generation facility does not meet the
requirements of this section.

(2) The transmission or distribution grid that would serve as the
point of interconnection is inadequate.

(3) The electric generation facility does not meet all applicable
state and local laws and building standards and utility
interconnection requirements.

(4) The aggregate of all electric generating facilities on a
distribution circuit would adversely impact utility operation and
load restoration efforts of the distribution system.

(o) Upon receiving a notice of denial from an electrical
corporation, the owner or operator of the electric generation facility
denied a tariff pursuant to this section shall have the right to appeal
that decision to the commission.

(p) In order to ensure the safety and reliability of electric
generation facilities, the owner of an electric generation facility
receiving a tariff pursuant to this section shall provide an inspection
and maintenance report to the electrical corporation at least once
every other year. The inspection and maintenance report shall be
prepared at the owner’s or operator’s expense by a
California-licensed contractor who is not the owner or operator of
the electric generation facility. A California-licensed electrician
shall perform the inspection of the electrical portion of the
generation facility.

(q) The contract between the electric generation facility
receiving the tariff and the electrical corporation shall contain
provisions that ensure that construction of the electric generating
facility complies with all applicable state and local laws and
building standards, and utility interconnection requirements.

(r) (1) All construction and installation of facilities of the
electrical corporation, including at the point of the output meter
or at the transmission or distribution grid, shall be performed only
by that electrical corporation.

(2) All interconnection facilities installed on the electrical
corporation’s side of the transfer point for electricity between the
electrical corporation and the electrical conductors of the electric
generation facility shall be owned, operated, and maintained only
by the electrical corporation. The ownership, installation, operation,
reading, and testing of revenue metering equipment for electric
generating facilities shall only be performed by the electrical
corporation.

SEC. 4.  

Section 399.22 of the Public Utilities Code is amended
to read:

399.22.  

(a) For purposes of this section, “state agency” means
any state agency, board, department, or commission, including the
entities specified in subdivision (a) of Section 15814.12 of the
Government Code.

(b) A state agency generating electricity from an electric
generation facility, as defined in Section 399.20 or 399.32, that
operates under a tariff adopted pursuant to either of those sections,
and that is owned by, operated by, or on property under the control
of, the state agency shall take the total annual amount of
kilowatthours exported to the grid into consideration when
determining whether the state agency has achieved the policy goals
and objectives established by law for the state agency.

SEC. 5.  

Section 1904 of the Public Utilities Code is amended
to read:

1904.  

The commission shall also charge and collect the
following fees:

(a) Except as otherwise provided in Section 1036 for filing each
application for a certificate of public convenience and necessity,
or for the mortgage, lease, transfer, or assignment thereof, begin delete a fee
to be determined by commission rule or order and adjusted as
appropriate based on the Consumer Price Index. end delete begin insert an amount not to
exceed five hundred dollars ($500). The commission may adjust
this fee based on the Consumer Price Index. The fee charged and
collected pursuant to this subdivision shall not exceed the
reasonable costs to the commission for filing the application. end insert

(b) For a certificate authorizing an issue of bonds, notes, or
other evidences of indebtedness, two dollars ($2) for each one
thousand dollars ($1,000) of the face value of the authorized issue
or fraction thereof up to one million dollars ($1,000,000), one
dollar ($1) for each one thousand dollars ($1,000) over one million
dollars ($1,000,000) and up to ten million dollars ($10,000,000),
and fifty cents ($0.50) for each one thousand dollars ($1,000) over
ten million dollars ($10,000,000), with a minimum fee in any case
of fifty dollars ($50). No fee need be paid on such portion of any
such issue as may be used to guarantee, take over, refund,
discharge, or retire any stock, bond, note or other evidence of
indebtedness on which a fee has theretofore been paid to the
commission. If the commission modified the amount of the issue
requested in any case and the applicant thereupon elects not to
avail itself of the commission’s authorization, no fee shall be paid,
and if such fee is paid prior to the issuance of such certificate by
the commission, such fee shall be returned.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 1906 of the end insert begin insert Public Utilities Code end insert begin insert is repealed. end insert

begin delete

1906.  

All fees collected under this chapter shall be paid, except
as provided in Chapter 6 (commencing with Section 5001) of
Division 2, at least once each month into the State Treasury to the
credit of the General Fund.

end delete

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Section 2827 of the Public Utilities Code is amended
to read:

2827.  

(a) The Legislature finds and declares that a program
to provide net energy metering combined with net surplus
compensation, co-energy metering, and wind energy co-metering
for eligible customer-generators is one way to encourage substantial
private investment in renewable energy resources, stimulate in-state
economic growth, reduce demand for electricity during peak
consumption periods, help stabilize California’s energy supply
infrastructure, enhance the continued diversification of California’s
energy resource mix, reduce interconnection and administrative
costs for electricity suppliers, and encourage conservation and
efficiency.

(b) As used in this section, the following terms have the
following meanings:

(1) “Co-energy metering” means a program that is the same in
all other respects as a net energy metering program, except that
the local publicly owned electric utility has elected to apply a
generation-to-generation energy and time-of-use credit formula
as provided in subdivision (i).

(2) “Electrical cooperative” means an electrical cooperative as
defined in Section 2776.

(3) “Electric utility” means an electrical corporation, a local
publicly owned electric utility, or an electrical cooperative, or any
other entity, except an electric service provider, that offers electrical
service. This section shall not apply to a local publicly owned
electric utility that serves more than 750,000 customers and that
also conveys water to its customers.

(4) “Eligible customer-generator” means a residential customer,
small commercial customer as defined in subdivision (h) of Section
331, or commercial, industrial, or agricultural customer of an
electric utility, who uses a renewable electrical generation facility,
or a combination of those facilities, with a total capacity of not
more than one megawatt, that is located on the customer’s owned,
leased, or rented premises, and is interconnected and operates in
parallel with the electrical grid, and is intended primarily to offset
part or all of the customer’s own electrical requirements.

(5) “Renewable electrical generation facility” means a facility
that generates electricity from a renewable source listed in
paragraph (1) of subdivision (a) of Section 25741 of the Public
Resources Code. A small hydroelectric generation facility is not
an eligible renewable electrical generation facility if it will cause
an adverse impact on instream beneficial uses or cause a change
in the volume or timing of streamflow.

(6) “Net energy metering” means measuring the difference
between the electricity supplied through the electrical grid and the
electricity generated by an eligible customer-generator and fed
back to the electrical grid over a 12-month period as described in
subdivisions (c) and (h).

(7) “Net surplus customer-generator” means an eligible
customer-generator that generates more electricity during a
12-month period than is supplied by the electric utility to the
eligible customer-generator during the same 12-month period.

(8) “Net surplus electricity” means all electricity generated by
an eligible customer-generator measured in kilowatthours over a
12-month period that exceeds the amount of electricity consumed
by that eligible customer-generator.

(9) “Net surplus electricity compensation” means a per
kilowatthour rate offered by the electric utility to the net surplus
customer-generator for net surplus electricity that is set by the
ratemaking authority pursuant to subdivision (h).

(10) “Ratemaking authority” means, for an electrical
corporation, the commission, for an electrical cooperative, its
ratesetting body selected by its shareholders or members, and for
a local publicly owned electric utility, the local elected body
responsible for setting the rates of the local publicly owned utility.

(11) “Wind energy co-metering” means any wind energy project
greater than 50 kilowatts, but not exceeding one megawatt, where
the difference between the electricity supplied through the electrical
grid and the electricity generated by an eligible customer-generator
and fed back to the electrical grid over a 12-month period is as
described in subdivision (h). Wind energy co-metering shall be
accomplished pursuant to Section 2827.8.

(c) (1) Every electric utility shall develop a standard contract
or tariff providing for net energy metering, and shall make this
standard contract or tariff available to eligible customer-generators,
upon request, on a first-come-first-served basis until the time that
the total rated generating capacity used by eligible
customer-generators exceeds 5 percent of the electric utility’s
aggregate customer peak demand. Net energy metering shall be
accomplished using a single meter capable of registering the flow
of electricity in two directions. An additional meter or meters to
monitor the flow of electricity in each direction may be installed
with the consent of the eligible customer-generator, at the expense
of the electric utility, and the additional metering shall be used
only to provide the information necessary to accurately bill or
credit the eligible customer-generator pursuant to subdivision (h),
or to collect generating system performance information for
research purposes relative to a renewable electrical generation
facility. If the existing electrical meter of an eligible
customer-generator is not capable of measuring the flow of
electricity in two directions, the eligible customer-generator shall
be responsible for all expenses involved in purchasing and
installing a meter that is able to measure electricity flow in two
directions. If an additional meter or meters are installed, the net
energy metering calculation shall yield a result identical to that of
a single meter. An eligible customer-generator that is receiving
service other than through the standard contract or tariff may elect
to receive service through the standard contract or tariff until the
electric utility reaches the generation limit set forth in this
paragraph. Once the generation limit is reached, only eligible
customer-generators that had previously elected to receive service
pursuant to the standard contract or tariff have a right to continue
to receive service pursuant to the standard contract or tariff.
Eligibility for net energy metering does not limit an eligible
customer-generator’s eligibility for any other rebate, incentive, or
credit provided by the electric utility, or pursuant to any
governmental program, including rebates and incentives provided
pursuant to the California Solar Initiative.

(2) An electrical corporation shall include a provision in the net
energy metering contract or tariff requiring that any customer with
an existing electrical generating facility and meter who enters into
a new net energy metering contract shall provide an inspection
report to the electrical corporation, unless the electrical generating
facility and meter have been installed or inspected within the
previous three years. The inspection report shall be prepared by a
California-licensed contractor who is not the owner or operator of
the facility and meter. A California-licensed electrician shall
perform the inspection of the electrical portion of the facility and
meter.

(3) (A) On an annual basis, every electric utility shall make
available to the ratemaking authority information on the total rated
generating capacity used by eligible customer-generators that are
customers of that provider in the provider’s service area and the
net surplus electricity purchased by the electric utility pursuant to
this section.

(B) An electric service provider operating pursuant to Section
394 shall make available to the ratemaking authority the
information required by this paragraph for each eligible
customer-generator that is their customer for each service area of
an electrical corporation, local publicly owned electrical utility,
or electrical cooperative, in which the eligible customer-generator
has net energy metering.

(C) The ratemaking authority shall develop a process for making
the information required by this paragraph available to electric
utilities, and for using that information to determine when, pursuant
to paragraphs (1) and (4), an electric utility is not obligated to
provide net energy metering to additional eligible
customer-generators in its service area.

(4) An electric utility is not obligated to provide net energy
metering to additional eligible customer-generators in its service
area when the combined total peak demand of all electricity used
by eligible customer-generators served by all the electric utilities
in that service area furnishing net energy metering to eligible
customer-generators exceeds 5 percent of the aggregate customer
peak demand of those electric utilities.

(d) Every electric utility shall make all necessary forms and
contracts for net energy metering and net surplus electricity
compensation service available for download from an Internet
Web site.

(e) (1) Every electric utility shall ensure that requests for
establishment of net energy metering and net surplus electricity
compensation are processed in a time period not exceeding that
for similarly situated customers requesting new electric service,
but not to exceed 30 working days from the date it receives a
completed application form for net energy metering service or net
surplus electricity compensation, including a signed interconnection
agreement from an eligible customer-generator and the electric
inspection clearance from the governmental authority having
jurisdiction.

(2) Every electric utility shall ensure that requests for an
interconnection agreement from an eligible customer-generator
are processed in a time period not to exceed 30 working days from
the date it receives a completed application form from the eligible
customer-generator for an interconnection agreement.

(3) If an electric utility is unable to process a request within the
allowable timeframe pursuant to paragraph (1) or (2), it shall notify
the eligible customer-generator and the ratemaking authority of
the reason for its inability to process the request and the expected
completion date.

(f) (1) If a customer participates in direct transactions pursuant
to paragraph (1) of subdivision (b) of Section 365, or Section 365.1,
with an electric service provider that does not provide distribution
service for the direct transactions, the electric utility that provides
distribution service for the eligible customer-generator is not
obligated to provide net energy metering or net surplus electricity
compensation to the customer.

(2) If a customer participates in direct transactions pursuant to
paragraph (1) of subdivision (b) of Section 365 with an electric
service provider, and the customer is an eligible
customer-generator, the electric utility that provides distribution
service for the direct transactions may recover from the customer’s
electric service provider the incremental costs of metering and
billing service related to net energy metering and net surplus
electricity compensation in an amount set by the ratemaking
authority.

(g) Except for the time-variant kilowatthour pricing portion of
any tariff adopted by the commission pursuant to paragraph (4) of
subdivision (a) of Section 2851, each net energy metering contract
or tariff shall be identical, with respect to rate structure, all retail
rate components, and any monthly charges, to the contract or tariff
to which the same customer would be assigned if the customer did
not use a renewable electrical generation facility, except that
eligible customer-generators shall not be assessed standby charges
on the electrical generating capacity or the kilowatthour production
of a renewable electrical generation facility. The charges for all
retail rate components for eligible customer-generators shall be
based exclusively on the customer-generator’s net kilowatthour
consumption over a 12-month period, without regard to the eligible
customer-generator’s choice as to from whom it purchases
electricity that is not self-generated. Any new or additional demand
charge, standby charge, customer charge, minimum monthly
charge, interconnection charge, or any other charge that would
increase an eligible customer-generator’s costs beyond those of
other customers who are not eligible customer-generators in the
rate class to which the eligible customer-generator would otherwise
be assigned if the customer did not own, lease, rent, or otherwise
operate a renewable electrical generation facility is contrary to the
intent of this section, and shall not form a part of net energy
metering contracts or tariffs.

(h) For eligible customer-generators, the net energy metering
calculation shall be made by measuring the difference between
the electricity supplied to the eligible customer-generator and the
electricity generated by the eligible customer-generator and fed
back to the electrical grid over a 12-month period. The following
rules shall apply to the annualized net metering calculation:

(1) The eligible residential or small commercial
customer-generator, at the end of each 12-month period following
the date of final interconnection of the eligible
customer-generator’s system with an electric utility, and at each
anniversary date thereafter, shall be billed for electricity used
during that 12-month period. The electric utility shall determine
if the eligible residential or small commercial customer-generator
was a net consumer or a net surplus customer-generator during
that period.

(2) At the end of each 12-month period, where the electricity
supplied during the period by the electric utility exceeds the
electricity generated by the eligible residential or small commercial
customer-generator during that same period, the eligible residential
or small commercial customer-generator is a net electricity
consumer and the electric utility shall be owed compensation for
the eligible customer-generator’s net kilowatthour consumption
over that 12-month period. The compensation owed for the eligible
residential or small commercial customer-generator’s consumption
shall be calculated as follows:

(A) For all eligible customer-generators taking service under
contracts or tariffs employing “baseline” and “over baseline” rates,
any net monthly consumption of electricity shall be calculated
according to the terms of the contract or tariff to which the same
customer would be assigned to, or be eligible for, if the customer
was not an eligible customer-generator. If those same
customer-generators are net generators over a billing period, the
net kilowatthours generated shall be valued at the same price per
kilowatthour as the electric utility would charge for the baseline
quantity of electricity during that billing period, and if the number
of kilowatthours generated exceeds the baseline quantity, the excess
shall be valued at the same price per kilowatthour as the electric
utility would charge for electricity over the baseline quantity during
that billing period.

(B) For all eligible customer-generators taking service under
contracts or tariffs employing time-of-use rates, any net monthly
consumption of electricity shall be calculated according to the
terms of the contract or tariff to which the same customer would
be assigned, or be eligible for, if the customer was not an eligible
customer-generator. When those same customer-generators are
net generators during any discrete time-of-use period, the net
kilowatthours produced shall be valued at the same price per
kilowatthour as the electric utility would charge for retail
kilowatthour sales during that same time-of-use period. If the
eligible customer-generator’s time-of-use electrical meter is unable
to measure the flow of electricity in two directions, paragraph (1)
of subdivision (c) shall apply.

(C) For all eligible residential and small commercial
customer-generators and for each billing period, the net balance
of moneys owed to the electric utility for net consumption of
electricity or credits owed to the eligible customer-generator for
net generation of electricity shall be carried forward as a monetary
value until the end of each 12-month period. For all eligible
commercial, industrial, and agricultural customer-generators, the
net balance of moneys owed shall be paid in accordance with the
electric utility’s normal billing cycle, except that if the eligible
commercial, industrial, or agricultural customer-generator is a net
electricity producer over a normal billing cycle, any excess
kilowatthours generated during the billing cycle shall be carried
over to the following billing period as a monetary value, calculated
according to the procedures set forth in this section, and appear as
a credit on the eligible commercial, industrial, or agricultural
customer-generator’s account, until the end of the annual period
when paragraph (3) shall apply.

(3) At the end of each 12-month period, where the electricity
generated by the eligible customer-generator during the 12-month
period exceeds the electricity supplied by the electric utility during
that same period, the eligible customer-generator is a net surplus
customer-generator and the electric utility, upon an affirmative
election by the net surplus customer-generator, shall either (A)
provide net surplus electricity compensation for any net surplus
electricity generated during the prior 12-month period, or (B) allow
the net surplus customer-generator to apply the net surplus
electricity as a credit for kilowatthours subsequently supplied by
the electric utility to the net surplus customer-generator. For an
eligible customer-generator that does not affirmatively elect to
receive service pursuant to net surplus electricity compensation,
the electric utility shall retain any excess kilowatthours generated
during the prior 12-month period. The eligible customer-generator
not affirmatively electing to receive service pursuant to net surplus
electricity compensation shall not be owed any compensation for
the net surplus electricity unless the electric utility enters into a
purchase agreement with the eligible customer-generator for those
excess kilowatthours. Every electric utility shall provide notice to
eligible customer-generators that they are eligible to receive net
surplus electricity compensation for net surplus electricity, that
they must elect to receive net surplus electricity compensation,
and that the 12-month period commences when the electric utility
receives the eligible customer-generator’s election. For an electric
utility that is an electrical corporation or electrical cooperative,
the commission may adopt requirements for providing notice and
the manner by which eligible customer-generators may elect to
receive net surplus electricity compensation.

(4) (A) An eligible customer-generator with multiple meters
may elect to aggregate the electrical load of the meters located on
the property where the renewable electrical generation facility is
located and on all property adjacent or contiguous to the property
on which the renewable electrical generation facility is located, if
those properties are solely owned, leased, or rented by the eligible
customer-generator. If the eligible customer-generator elects to
aggregate the electric load pursuant to this paragraph, the electric
utility shall use the aggregated load for the purpose of determining
whether an eligible customer-generator is a net consumer or a net
surplus customer-generator during a 12-month period.

(B) If an eligible customer-generator chooses to aggregate
pursuant to subparagraph (A), the eligible customer-generator shall
be permanently ineligible to receive net surplus electricity
compensation, and the electric utility shall retain any kilowatthours
in excess of the eligible customer-generator’s aggregated electrical
load generated during the 12-month period.

(C) If an eligible customer-generator with multiple meters elects
to aggregate the electrical load of those meters pursuant to
subparagraph (A), and different rate schedules are applicable to
service at any of those meters, the electricity generated by the
renewable electrical generation facility shall be allocated to each
of the meters in proportion to the electrical load served by those
meters. For example, if the eligible customer-generator receives
electric service through three meters, two meters being at an
agricultural rate that each provide service to 25 percent of the
customer’s total load, and a third meter, at a commercial rate, that
provides service to 50 percent of the customer’s total load, then
50 percent of the electrical generation of the eligible renewable
generation facility shall be allocated to the third meter that provides
service at the commercial rate and 25 percent of the generation
shall be allocated to each of the two meters providing service at
the agricultural rate. This proportionate allocation shall be
computed each billing period.

(D) This paragraph shall not become operative for an electrical
corporation unless the commission determines that allowing
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-generators.
The commission shall make this determination by September 30,
2013. In making this determination, the commission shall determine
if there are any public purpose or other noncommodity charges
that the eligible customer-generators would pay pursuant to the
net energy metering program as it exists prior to aggregation, that
the eligible customer-generator would not pay if permitted to
aggregate the electrical load of multiple meters pursuant to this
paragraph.

(E) A local publicly owned electric utility or electrical
cooperative shall only allow eligible customer-generators to
aggregate their load if the utility’s ratemaking authority determines
that allowing eligible customer-generators to aggregate their load
from multiple meters will not result in an increase in the expected
revenue obligations of customers that are not eligible
customer-generators. The ratemaking authority of a local publicly
owned electric utility or electrical cooperative shall make this
determination within 180 days of the first request made by an
eligible customer-generator to aggregate their load. In making the
determination, the ratemaking authority shall determine if there
are any public purpose or other noncommodity charges that the
eligible customer-generator would pay pursuant to the net energy
metering or co-energy metering program of the utility as it exists
prior to aggregation, that the eligible customer-generator would
not pay if permitted to aggregate the electrical load of multiple
meters pursuant to this paragraph. If the ratemaking authority
determines that load aggregation will not cause an incremental
rate impact on the utility’s customers that are not eligible
customer-generators, the local publicly owned electric utility or
electrical cooperative shall permit an eligible customer-generator
to elect to aggregate the electrical load of multiple meters pursuant
to this paragraph. The ratemaking authority may reconsider any
determination made pursuant to this subparagraph in a subsequent
public proceeding.

(F) For purposes of this paragraph, parcels that are divided by
a street, highway, or public thoroughfare are considered contiguous,
provided they are otherwise contiguous and under the same
ownership.

(G) An eligible customer-generator may only elect to aggregate
the electrical load of multiple meters if the renewable electrical
generation facility, or a combination of those facilities, has a total
generating capacity of not more than one megawatt.

(H) Notwithstanding subdivision (g), an eligible
customer-generator electing to aggregate the electrical load of
multiple meters pursuant to this subdivision shall remit service
charges for the cost of providing billing services to the electric
utility that provides service to the meters.

(5) (A) The ratemaking authority shall establish a net surplus
electricity compensation valuation to compensate the net surplus
customer-generator for the value of net surplus electricity generated
by the net surplus customer-generator. The commission shall
establish the valuation in a ratemaking proceeding. The ratemaking
authority for a local publicly owned electric utility shall establish
the valuation in a public proceeding. The net surplus electricity
compensation valuation shall be established so as to provide the
net surplus customer-generator just and reasonable compensation
for the value of net surplus electricity, while leaving other
ratepayers unaffected. The ratemaking authority shall determine
whether the compensation will include, where appropriate
justification exists, either or both of the following components:

(i) The value of the electricity itself.

(ii) The value of the renewable attributes of the electricity.

(B) In establishing the rate pursuant to subparagraph (A), the
ratemaking authority shall ensure that the rate does not result in a
shifting of costs between eligible customer-generators and other
bundled service customers.

(6) (A) Upon adoption of the net surplus electricity
compensation rate by the ratemaking authority, any renewable
energy credit, as defined in Section 399.12, for net surplus
electricity purchased by the electric utility shall belong to the
electric utility. Any renewable energy credit associated with
electricity generated by the eligible customer-generator that is
utilized by the eligible customer-generator shall remain the property
of the eligible customer-generator.

(B) Upon adoption of the net surplus electricity compensation
rate by the ratemaking authority, the net surplus electricity
purchased by the electric utility shall count toward the electric
utility’s renewables portfolio standard annual procurement targets
for the purposes of paragraph (1) of subdivision (b) of Section
399.15, or for a local publicly owned electric utility, the renewables
portfolio standard annual procurement targets established pursuant
to Section 399.30.

(7) The electric utility shall provide every eligible residential
or small commercial customer-generator with net electricity
consumption and net surplus electricity generation information
with each regular bill. That information shall include the current
monetary balance owed the electric utility for net electricity
consumed, or the net surplus electricity generated, since the last
12-month period ended. Notwithstanding this subdivision, an
electric utility shall permit that customer to pay monthly for net
energy consumed.

(8) If an eligible residential or small commercial
customer-generator terminates the customer relationship with the
electric utility, the electric utility shall reconcile the eligible
customer-generator’s consumption and production of electricity
during any part of a 12-month period following the last
reconciliation, according to the requirements set forth in this
subdivision, except that those requirements shall apply only to the
months since the most recent 12-month bill.

(9) If an electric service provider or electric utility providing
net energy metering to a residential or small commercial
customer-generator ceases providing that electric service to that
customer during any 12-month period, and the customer-generator
enters into a new net energy metering contract or tariff with a new
electric service provider or electric utility, the 12-month period,
with respect to that new electric service provider or electric utility,
shall commence on the date on which the new electric service
provider or electric utility first supplies electric service to the
customer-generator.

(i) Notwithstanding any other provisions of this section,
paragraphs (1), (2), and (3) shall apply to an eligible
customer-generator with a capacity of more than 10 kilowatts, but
not exceeding one megawatt, that receives electric service from a
local publicly owned electric utility that has elected to utilize a
co-energy metering program unless the local publicly owned
electric utility chooses to provide service for eligible
customer-generators with a capacity of more than 10 kilowatts in
accordance with subdivisions (g) and (h):

(1) The eligible customer-generator shall be required to utilize
a meter, or multiple meters, capable of separately measuring
electricity flow in both directions. All meters shall provide
time-of-use measurements of electricity flow, and the customer
shall take service on a time-of-use rate schedule. If the existing
meter of the eligible customer-generator is not a time-of-use meter
or is not capable of measuring total flow of electricity in both
directions, the eligible customer-generator shall be responsible for
all expenses involved in purchasing and installing a meter that is
both time-of-use and able to measure total electricity flow in both
directions. This subdivision shall not restrict the ability of an
eligible customer-generator to utilize any economic incentives
provided by a governmental agency or an electric utility to reduce
its costs for purchasing and installing a time-of-use meter.

(2) The consumption of electricity from the local publicly owned
electric utility shall result in a cost to the eligible
customer-generator to be priced in accordance with the standard
rate charged to the eligible customer-generator in accordance with
the rate structure to which the customer would be assigned if the
customer did not use a renewable electrical generation facility.
The generation of electricity provided to the local publicly owned
electric utility shall result in a credit to the eligible
customer-generator and shall be priced in accordance with the
generation component, established under the applicable structure
to which the customer would be assigned if the customer did not
use a renewable electrical generation facility.

(3) All costs and credits shall be shown on the eligible
customer-generator’s bill for each billing period. In any months
in which the eligible customer-generator has been a net consumer
of electricity calculated on the basis of value determined pursuant
to paragraph (2), the customer-generator shall owe to the local
publicly owned electric utility the balance of electricity costs and
credits during that billing period. In any billing period in which
the eligible customer-generator has been a net producer of
electricity calculated on the basis of value determined pursuant to
paragraph (2), the local publicly owned electric utility shall owe
to the eligible customer-generator the balance of electricity costs
and credits during that billing period. Any net credit to the eligible
customer-generator of electricity costs may be carried forward to
subsequent billing periods, provided that a local publicly owned
electric utility may choose to carry the credit over as a kilowatthour
credit consistent with the provisions of any applicable contract or
tariff, including any differences attributable to the time of
generation of the electricity. At the end of each 12-month period,
the local publicly owned electric utility may reduce any net credit
due to the eligible customer-generator to zero.

(j) A renewable electrical generation facility used by an eligible
customer-generator shall meet all applicable safety and
performance standards established by the National Electrical Code,
the Institute of Electrical and Electronics Engineers, and accredited
testing laboratories, including Underwriters Laboratories
Incorporated and, where applicable, rules of the commission
regarding safety and reliability. A customer-generator whose
renewable electrical generation facility meets those standards and
rules shall not be required to install additional controls, perform
or pay for additional tests, or purchase additional liability
insurance.

(k) If the commission determines that there are cost or revenue
obligations for an electrical corporation that may not be recovered
from customer-generators acting pursuant to this section, those
obligations shall remain within the customer class from which any
shortfall occurred and shall not be shifted to any other customer
class. Net energy metering and co-energy metering customers shall
not be exempt from the public goods charges imposed pursuant to
Article 7 (commencing with Section 381), Article 8 (commencing
with Section 385), or Article 15 (commencing with Section 399)
of Chapter 2.3 of Part 1.

(l) A net energy metering, co-energy metering, or wind energy
co-metering customer shall reimburse the Department of Water
Resources for all charges that would otherwise be imposed on the
customer by the commission to recover bond-related costs pursuant
to an agreement between the commission and the Department of
Water Resources pursuant to Section 80110 of the Water Code,
as well as the costs of the department equal to the share of the
department’s estimated net unavoidable power purchase contract
costs attributable to the customer. The commission shall
incorporate the determination into an existing proceeding before
the commission, and shall ensure that the charges are
nonbypassable. Until the commission has made a determination
regarding the nonbypassable charges, net energy metering,
co-energy metering, and wind energy co-metering shall continue
under the same rules, procedures, terms, and conditions as were
applicable on December 31, 2002.

(m) In implementing the requirements of subdivisions (k) and
(l), an eligible customer-generator shall not be required to replace
its existing meter except as set forth in paragraph (1) of subdivision
(c), nor shall the electric utility require additional measurement of
usage beyond that which is necessary for customers in the same
rate class as the eligible customer-generator.

(n) It is the intent of the Legislature that the Treasurer
incorporate net energy metering, including net surplus electricity
compensation, co-energy metering, and wind energy co-metering
projects undertaken pursuant to this section as sustainable building
methods or distributive energy technologies for purposes of
evaluating low-income housing projects.