BILL ANALYSIS Ó
AB 693
Page A
CONCURRENCE IN SENATE AMENDMENTS
AB
693 (Eggman and Williams)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | |(May 11, 2015) |SENATE: |26-14 |(September 10, |
| | | | | |2015) |
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(vote not relevant)
Original Committee Reference: B. & P.
SUMMARY: This bill creates a Multifamily Affordable Housing
Solar Roofs Program to provide financial incentives for
qualified solar installations at multifamily affordable housing
properties funded from investor-owned utility's (IOUs)
greenhouse gas (GHG) allowances.
The Senate amendments:
a)Creates a program to provide monetary assistance of qualifying
solar energy systems that are installed on qualified
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multifamily affordable housing properties.
b)Allocates up to $100 million or 10% of available funding from
utility GHG allowances that are reserved for clean energy and
energy efficiency projects.
c)Restricts the program to just solar energy systems.
d)Continues funding for the program after 2020 to 2026 only to
the extent that there is adequate interest and participation,
and there are unallocated revenues available.
e)Specifies that all funds allocated to the program that remain
uncommitted after three years be credited to the ratepayers
and to clarify that tenants are beneficiaries but not the
program participants.
f)Clarifying and technical changes.
EXISTING LAW:
1) Provides the California Public Utilities Commission (CPUC)
regulatory authority over public utilities, including
electrical corporations and gas corporations, as defined.
Authorizes the CPUC to fix the rates and charges for every
public utility, and requires that those rates and charges be
just and reasonable. (Public Utilities Code Sections 218 and
222)
2) Requires the California Air Resources Board (ARB), pursuant
to the California Global Warming Solutions Act of 2006, to
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adopt rules and regulations, and consider the use of
market-based compliance mechanisms that would reduce GHG
emissions in the state to 1990 levels by 2020. (Health and
Safety Code Sections 38500 to 38599)
3) Requires the CPUC, except as provided, to require all
revenues, including accrued interest, received by an
electrical corporation as a result of the direct allocation
of GHG allowances to electric utilities to be credited
directly to the residential, small business, and
emissions-intensive trade-exposed retail customers of the
electrical corporation. (Public Utilities Code Section
748.5)
4) Authorizes the CPUC to allocate 15% of these revenues for
clean energy and energy efficiency projects established
pursuant to statute that are administered by the electrical
corporation and that are not otherwise funded by another
funding source. (Public Utilities Code Section 748.5)
5) Requires the CPUC to establish a program for assistance to
low-income electric and gas customers, referred to as the
California Alternate Rates for Energy (CARE) program.
(Public Utilities Code Section 739.1)
6)Establishes a program called Net Energy Metering (NEM) that
allows bill credits at the hourly retail electricity rate, for
energy not consumed on site for customers who self-generate
electricity from specified renewable energy technologies, to
be applied against both the generation and non-generation
charges on the customer's bill. The IOUs are not required to
offer NEM after a specified capacity of NEM projects have been
established. (Public Utilities Code Section 2827)
7)Requires the CPUC to develop a new NEM program by July 2015,
and establish a transition to the new NEM program by 2017.
The new NEM program is to be based on electrical system costs
and benefits to nonparticipating ratepayers, and removes both
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the total system capacity cap and the 1 Megawatt project size
limit. Existing NEM customers will be transitioned for a
length of time to be determined by the CPUC by March 2014.
(Public Utilities Code Section 2827.1)
8)Creates the California Solar Initiative (CSI) with a goal to
install solar energy systems with a generation capacity of
3,000 megawatts (MWs), to make solar energy systems a viable
mainstream option for both homes and businesses in 10 years,
and to place solar energy systems on 50 percent of new homes
in 13 years. Specifies no less than 10 percent of the overall
CSI funding is to be directed toward programs assisting
low-income households in obtaining the benefits of solar
technology. (Public Utilities Code Section 2852)
9)Permits the CPUC to adopt decisions that established the
Single-Family Affordable Solar Homes Program (SASH) and the
Multifamily Affordable Solar Housing Program (MASH), which
provide monetary incentives for the installation of solar
energy systems on low-income residential housing. (Public
Utilities Code Section 2852)
10)Extends the SASH and MASH programs until December 31, 2021,
or until budgeted funds are exhausted, whichever occurs
sooner. (Public Utilities Code Section 2851)
11)Establishes the Energy Efficiency Low-Income Weatherization
Program in the Department of Community Services and
Development (CSD) from the appropriation of GHG emissions
reductions allowances from non-utility funds. The program
provides for weatherization and renewable energy installations
in disadvantaged communities defined by the California
Environmental Protection Agency. (Government Code Section
12087.5)
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FISCAL EFFECT: According to Senate Appropriations:
1)Ongoing costs of $558,000 from the Public Utilities
Reimbursement Account (special fund) for CPUC to oversee the
contract to administer the program and to annually assess the
success of the program.
2)Cost pressures of up to $100 million annually (General Fund)
to fund the program after 2020, if no additional cap-and-trade
allocations are given to the electric utilities.
3)Unknown lost revenues to the state, as an electric ratepayer
(General Fund and various special funds), for reduced credits
from the sale of cap-and-trade auction revenues allocated to
electrical corporations.
COMMENTS:
1)IOUs' GHG allowance allocation for clean energy and energy
efficiency. With the passage of the Global Warming Solutions
Act of 2006, the ARB implemented regulations to achieve the
goal of reducing GHG emissions to 1990 levels by 2020. Under
the GHG Cap-and-Trade Regulation, ARB allocates GHG emissions
allowances to capped sectors, including electric IOUs. ARB
requires IOUs to sell these allowances at ARB's quarterly
allowance auctions, and requires that all proceeds be used for
ratepayer benefit, subject to CPUC oversight.
In 2012, the Legislature adopted budget trailer language in SB
1018, which requires that revenues from the GHG allowances be
credited back to residential, small business, and
emissions-intensive trade-exposed businesses (businesses that
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are most at risk for moving their activities out of California
because they aren't able to pass the costs on.) SB 1018 also
provided that up to 15% of the GHG funds could be allocated to
fund clean energy and energy efficiency programs not otherwise
funded by another funding source.
Roughly $1 billion in annual allowance revenues are
distributed to residential customers as the California Climate
Credit. Among the three largest IOUs in the state, the
semi-annual climate credit is roughly $26 to $40 per
ratepayer, depending on the utility. The CPUC has not
allocated any of the "up to 15%" funds to clean energy and
energy efficiency programs, and has instead ordered the IOUs
to allocate these funds to customers in the California Climate
Credits.
In 2015, the electric IOUs can seek CPUC approval to use a
maximum of approximately $167 million in allowance proceeds
for clean energy and energy efficiency projects not otherwise
funded. The table below shows the maximum funds allocation
available for 2015.
Electric IOU Allowance Proceeds Available for Clean Energy
and Energy Efficiency Projects, 2015
-------------------------------------------------------------
|Utility | Total Forecast | Maximum |
| | of Allowance | Allocation for |
| | Auction | Clean Energy or |
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| | Proceeds<1> | Energy Efficiency|
|-------------------------+----------------+------------------|
|Pacific Gas and Electric | $438,602,830| $65,790,425|
|Company | | |
|-------------------------+----------------+------------------|
|Southern California | $562,499,489| $84,374,923|
|Edison | | |
|-------------------------+----------------+------------------|
|San Diego Gas & Electric | $98,717,335| $14,807,600|
|Company | | |
|-------------------------+----------------+------------------|
|PacifiCorp | $11,870,145| $1,780,522|
|-------------------------+----------------+------------------|
|Liberty Utilities | $4,078,910| $611,836|
|(CalPeco Electric) | | |
|-------------------------+----------------+------------------|
| Total | $1,115,768,709|$167,365,306 |
-------------------------------------------------------------
There is one pending utility request to use allowance
proceeds: SDG&E is requesting to pay for its proposed
22-year, $103 million electric vehicle charging pilot program
(proceeding A.14-04-014) with allowance proceeds. This
proceeding is still in progress.
2)Virtual Net Energy Metering (VNM). VNM is an arrangement of
rates and terms that enables a multi-meter property owner to
allocate a solar system's energy credits to other tenants.
Historically, multi-tenant building with individual electric
meters for each tenant faced difficulties installing
---------------------------
<1>
Total forecast of allowance auction proceeds in 2015 includes
allowance proceeds that will be received in 2015 inclusive of
franchise fees and uncollectibles, and the remaining balance of
allowance proceeds received in previous years (inclusive of
interest) that has not yet been distributed.
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distributed solar systems because of the problem of assigning
the benefits of the generation to each occupant. A system
could easily be connected to a common area load or to an
individual tenant, but if it was connected directly to
multiple loads, there would be no way of ensuring equitable
distribution of the generation. Some tenants would benefit
more than others. Installing multiple systems, one for each
tenant or load in the building, is cost prohibitive. However,
VNM allows a single solar system to cover the electricity load
of both common and tenant areas connected at the same service
delivery point. The electricity does not flow directly to any
tenant meter, but rather it feeds directly back onto the grid.
The participating utility then allocates the kilowatt hours
from the energy produced by the solar photovoltaic generating
system to both the building owner and tenants' individual
utility accounts, based on a pre-arranged allocation
agreement. The intent of VNM is to help multifamily residents
receive direct benefits of the building's solar system, rather
than all of the benefits going to the building owner.
3)Net Energy Metering 2.0. The NEM program supports onsite
solar installations up to 1 MW designed to offset a portion,
or all, of the customer's electric load. A 2013 report by the
CPUC on the costs and benefits of the NEM program suggested
that NEM generation resulted in a net cost to ratepayers.
However, the report also noted that the costs of NEM are
largely a function of retail rates designs. With the passage
of AB 327 (Perea), Chapter 611, Statutes of 2013 the CPUC is
reforming the design of residential electricity rates charged
by utilities, as well as a new proceeding to reform the NEM
program with the intent to better level the playing field
between participants and non-participants. By encouraging the
installation of renewable energy technologies and therefore
increasing the number of customers enrolled in NEM, AB 693 has
the potential to impact non-participant ratepayers.
4)Overlap with other programs. There are existing programs that
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provide solar and weatherization services to low-income
residents:
a) The Low-Income Weatherization and Solar Program.
This program is administered by the CSD. Funding is
provided from the state's Greenhouse Gas Reductions Fund
(GGRF) and provides $75 million for energy efficiency and
renewable energy projects for low-income residents in
disadvantaged communities (2014 to 2015). CSD has
allocated $8.8 million to be spent on multifamily
photovoltaic projects located in disadvantaged
communities.
b) California Solar Initiative (CSI). This program
allocated $3 billion to be collected from ratepayers to
fund incentives for photovoltaic installations on
residential and commercial premises. Funds from this
program were allocated to low-income households, both
single family and multifamily. These program are known
as SASH and MASH. Additional ratepayer funds were
allocated to the low-income program as a result of
legislation. (AB 217 (Bradford), Chapter 609, Statutes
of 2013)
This bill proposes to use many of the elements, including
utilizing net metering to provide tenants with financial
incentives on their utilities bills. The current MASH program
provides rebates for individual metered properties where each
rental property has its own meter and for master-metered, such
as mobile home parks. This bill would provide incentives for
properties with individual meters.
5)Direct economic benefit? This bill provides that the CPUC
shall "ensure that electrical corporation tariff structures
affecting the low-income tenants participating in the program
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continue to provide a direct economic benefit from the
qualifying solar energy system." In many cases, photovoltaic
systems are owned by third party investment arrangements known
as Power Purchase Agreement or solar leases. In some of these
arrangements the value of net metering is monetized as part of
the contract terms between the property owner and the third
party financier. If the CPUC is to ensure that the tariff
structures continue to provide a direct economic benefit, then
the CPUC must also consider the terms and conditions in any
financing arrangement as any direct economic benefit is
potentially the result of the combination of the tariff and
the financing arrangement. While the CPUC has regulatory
authority over the tariff structure of the utility, it may not
have similar authority over the financiers. The CPUC may need
to establish terms and conditions for financing in its
eligibility criteria in order to ensure that the net effect of
the tariff structure and the financing arrangement provides a
direct economic benefit.
Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083
FN: 0002387