BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                         SB 43|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                    THIRD READING


          Bill No:  SB 43
          Author:   Wolk (D), et al.
          Amended:  5/28/13
          Vote:     21

           
           SENATE ENERGY, UTILITIES & COMMUNIC. COMM.  :  6-4, 4/30/13
          AYES:  Corbett, De León, DeSaulnier, Hill, Pavley, Wolk
          NOES:  Padilla, Cannella, Knight, Wright
          NO VOTE RECORDED:  Fuller

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/23/13
          AYES:  De León, Hill, Lara, Padilla, Steinberg
          NOES:  Walters, Gaines


           SUBJECT  :    Shared Renewable Energy Self-Generation Program

           SOURCE  :     City of Davis


           DIGEST  :    This bill establishes, until January 1, 2019, the  
          Shared Renewable Self Generation Program (Program) allowing  
          investor-owned utility (IOU) customers to purchase an interest  
          in a "community renewable energy facility" and receive a bill  
          credit for the generation component of the customer's electrical  
          service.

           Senate Floor Amendments  of 5/28/13 mitigate, but not eliminate,  
          cost shifting and remove several details on program structure  
          leaving the Public Utilities Commission (PUC) with more latitude  
          in development of the Program, and sunset the bill on January 1,  
          2019.
                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          2



           ANALYSIS  :    

          Existing law:

          1. Authorizes individual retail, non-residential, end-use  
             customers to acquire electric service from other providers in  
             each electrical corporation's (IOU) distribution service  
             territory, up to the historically highest amount of  
             kilowatt-hours (kWh) of annual sales for each utility.    
             Increases authorized in 2009 require a phase-in period for  
             new customer enrollments of not less than three years and not  
             more than five years.  The program is commonly referred to as  
             "direct access" (DA).

          2. Establishes a general exception to the cap on DA for  
             community choice aggregation (CCA) undertaken by cities and  
             counties serving their own residents and businesses, with  
             electricity secured from the market or energy producers under  
             contract with the CCA to provide service to IOU customers  
             choosing to enroll. 
            
          3. Requires an electric service provider (ESP) that is a  
             non-utility entity that offers electric service to customers  
             within the service territory of an IOU to register with, and  
             be subject to, the jurisdiction of the PUC.  The ESP is  
             required to undergo background checks and provide proof of  
             financial viability and technical and operational ability in  
             addition to other fees, bonds, and reporting requirements to  
             the PUC and to the customer's served.  

          This bill:

          1. Establishes the Shared Renewable Self Generation Program to  
             allow developers of renewable energy, referred to as  
             providers (aka. developers), which are exempted from the  
             definition of a public utility, to sell renewable electricity  
             directly to customers of the state's three largest IOUs.  The  
             total capacity cap of interconnected resources would be 500  
             megawatts (MWs), with 100 MWs set aside for residential  
             customers and 100 MWs reserved for 1 MW facilities located in  
             the state's most impacted and disadvantaged communities.


                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          3

          2. Permits any customer of any one of the state's three largest  
             IOUs, identified as "participants" (aka customers) to:

             A.    Pay a provider (developer) directly for the costs of  
                electricity generated by a shared renewable energy  
                facility;

             B.    Receive a credit on the customer's IOU bill for  
                electricity, at an amount to be calculated by the PUC,  
                referred to as the facility rate;

             C.    Acquire an interest of up to 2 MWs of capacity of a  
                shared renewable energy facility, except for specified  
                government entities for which there is no cap;

             D.    Pay the IOU for only transmission and distribution  
                services for the portion of electricity the customer  
                purchases directly from a developer (the net result based  
                on a credit the customer would receive equal to the energy  
                component of the IOU bill); and

             E.    Provide a disclosure to any potential Program customer  
                to which the customer intends to sell his/her facility  
                interest.

          3. Requires the state's three largest IOUs to:

             A.    Contract with any shared renewable energy facility that  
                intends to sell electricity directly to the IOU's  
                customers if the facility is:

                (1)      A new eligible renewable resource;

                (2)      The 2 MWs Photovoltaics for Utility Scale  
                   Applications facility in the City of Davis;

                (3)      Less than 20 MWs in size; and

                (4)      Located in the service territory of the IOU and  
                   its customer.

             B.    Purchase excess generation from a developer, for which  
                they were unable to secure subscribers, at a rate to be  
                determined by the PUC equal to the day-ahead price for  

                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          4

                electricity.  The IOU would receive the renewable energy  
                credit; and

             C.    Provide to the PUC maps indicating locations where the  
                addition of capacity would reduce lines loss, lower  
                transmission-capacity constraints, and defer or avoid  
                transmission and distribution network upgrades and  
                construction.

          4. Requires the PUC to:

             A.    Establish a facility rate for each shared renewable  
                energy facility under the Program to be used to provide a  
                credit on the customer's IOU bill so that a customer can  
                continue to receive distribution and transmission service  
                from the IOU, but purchase their electricity directly from  
                a developer;

             B.    Base the initial facility rate on the PUC's cumulative  
                weighted average time-of-delivery adjusted cost of  
                electricity reported annually to the Legislature.  After a  
                comprehensive analysis of the costs and benefits  
                associated with shared renewable energy generation,  
                establish a new facility rate based on the full value that  
                the renewable generation provides to non-participating  
                customers;

             C.    Revise the facility rate methodology at any time it  
                concludes that the rate does not provide Program  
                participants with the fair value of electricity and other  
                benefits produced by the facility or overvalues the  
                benefits to nonparticipating customers;

             D.    Develop and enforce disclosures required to subscribers  
                of a shared renewable energy facility and other rules to  
                ensure consumer protection.  The PUC would be strictly  
                prohibited from regulating the prices paid by customers to  
                the shared renewable energy facility;

             E.    Determine whether DA customers should participate in  
                the Program; 

             F.    Determine the manner in which customers are billed and  
                receive credits; and

                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          5


             G.    By September 1, 2014, and annually thereafter, the  
                review the progress toward meeting the Program goals for  
                the most impacted and disadvantaged communities, and may  
                adjust the facility rate, if it determines that an  
                adjustment is necessary to achieve the goals.

          5. Prohibits:

             A.    Charging any participating customer standby or  
                departing load charges.

             B.    The PUC from regulating the prices paid by a customer  
                to a developer of a shared renewable energy facility.

          6. Expresses the intent of the Legislature to preserve a  
             thriving natural environment and to ensure that projects  
             developed under the Shared Renewable Energy Self-Generation  
             Program are subject to environmental protection best  
             practices afforded under California law and policies.

          7. Sunsets the provisions of this bill January 1, 2019.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           Ongoing costs of approximately $250,000 from the Public  
            Utilities Reimbursement Account (special fund) for two prior  
            years for Program implementation.

           One-time costs of $150,000 annually for two years from the  
            Public Utilities Reimbursement Account for an administrative  
            law judge for the development of necessary regulations.

           Unknown costs to the state as a ratepayer for nonparticipant  
            support of the Program.

           SUPPORT  :   (Verified  5/29/13)

          City of Davis (source)
          Superintendent of Public Instruction, Tom Torlakson
          All Power Labs
          American Lung Association
          Asian Pacific Environmental Network

                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          6

          California Apartment Association
          California Environmental Justice Alliance
          California Interfaith Power and Light
          California Native Plant Society 
          California Rural Legal Assistance Foundation
          California State Association of Counties
          California State Association of Counties
          City of San Diego
          Clean Energy Assets
          Clean Tech San Diego
          Cleanpath
          Coalition for Adequate School Housing
          Community Environmental Council
          Davis Joint Unified School District
          Ecoplexus
          EnFinus
          Environment California
          Environmental Defense Fund
          Environmental Health Coalition
          Firebaugh-Las Deltas Unified School District
          Fowler Unified School District
          K&L Gates
          League of California Cities
          Los Angeles Business Council
          Mainstream Energy/REC Solar/AEE Solar
          Octus Energy
          Petaluma Schools
          Recurrent Energy
          Redwood Coast Energy Authority
          Renewable Funding
          Ritual Coffee Roasters
          School Energy Coalition
          Sierra Club California
          Silicon Valley Leadership Group
          Small Business California
          Solar Gardens Community Power
          Solar Training Institute
          SolarCity
          Sonoma County Board of Supervisors
          Sullivan Solar Power
          Sunible 
          The Vote Solar Initiative
          The Western Center on Law and Poverty
          UltraSystems Environmental

                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          7

          Yolo County Board of Supervisors

           OPPOSITION  :    (Verified  5/23/13)

          California Farm Bureau Federation
          Coalition of California Utility Employees
          Pacific Gas and Electric Company
          San Diego Gas and Electric Company
          Southern California Edison
          The Utility Reform Network

           ARGUMENTS IN SUPPORT  :    The California Environmental Justice  
          Alliance writes:

            SB 43, by Senator Wolk, expands consumer access to renewable  
            energy self-generation programs, providing all customers of  
            SCE [Southern California Edison], SDG&E [San Diego Gas &  
            Electric] and PG&E [Pacific Gas and Electric Company] with the  
            ability to invest in offsite renewable energy projects and  
            receive utility bill credits in return.  It extends the  
            economic and environmental benefits of renewable energy self  
            generation to the large percentage of Californians who  
            currently have no access:  renters, people whose homes are  
            shaded or poorly oriented, small businesses who lease, space  
            limited public entities, and consumers who lack sufficient  
            credit.

            The California Environmental Justice Alliance is a strong  
            proponent of ensuring our state's most vulnerable communities  
            have access to clean energy.  Particularly, we need to direct  
            more local renewable energy into low-income communities of  
            color that are impacted first and worst from climate change,  
            while creating sustainable long-term clean energy careers in  
            these communities.

           ARGUMENTS IN OPPOSITION  :    Southern California Edison (SCE)  
          writes:

            The goal of SB 43, allowing utility customers the ability to  
            opt into an interest in larger renewable energy facilities,  
            enjoying economies of scale and pooling resources, is  
            laudable.  However, SCE has concern with many areas of this  
            proposal, and even as amended it the proposal:  1) conflicts  
            with federal and state law; 2) creates cost shift onto  

                                                                CONTINUED





                                                                      SB 43
                                                                     Page  
          8

            nonparticipating customers; and 3) creates unnecessary  
            complexity and uncertainty in implementation, among other  
            things.

            In addition to the conflicts with state and federal law, SB 43  
            will result in cost shifts from participating to  
            non-participating customers.  Although the bill credits are  
            described as netting against the generation portion of the  
            bill, credits can offset "any other portion of the customer's  
            charges" as determined by the CPUC.  Thus, not only will the  
            price for power be inflated, the bill allows this inflated  
            credit to reduce portions of a customer's bill beyond the  
            generation component.


          JG:k  5/29/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****

























                                                                CONTINUED