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