Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 1022


Introduced by Assembly Member Obernolte

February 26, 2015


An act tobegin delete amend Section 2827 ofend deletebegin insert repeal and add Section 2861 of, and to repeal Sections 2862, 2863, 2864, 2865, 2866, 2867, 2867.1, 2867.2, 2867.3, and 2867.4 of,end insert the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1022, as amended, Obernolte. begin deleteNet energy metering. end deletebegin insertSolar Water Heating and Efficiency Act of 2007.end insert

begin insert

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations. The Solar Water Heating and Efficiency Act of 2007 requires the commission, if it determines that a solar water heating program is cost effective for ratepayers and in the public interest, to design and implement a program applicable to the service territories of a gas corporation to achieve the goal of the Legislature to promote the installation of 200,000 solar water heating systems, as defined, in homes, businesses, and buildings or facilities of eligible customer classes, as specified, receiving natural gas service throughout the state by 2017. The act prohibits funding from exceeding $250,000,000 for the collective service territories of all gas corporations over the 10-year life of the program and requires that the cost of the program be paid through a usage-based surcharge annually established for each class of gas customers, with specified exceptions. The act requires the governing body of each publicly owned utility providing gas service to retail end-use customers to adopt, implement, and finance a solar water heating system incentive program that meets certain requirements. Existing law repeals these requirements on August 1, 2018.

end insert
begin insert

This bill would repeal the substantive requirements of the act and would prohibit any additional moneys from being collected from ratepayers to fund the act after December 31, 2015. The bill would require that any loans that are outstanding as of January 1, 2016, that were made pursuant to the act, continue to be repaid in a manner that is consistent with the terms and conditions of the loan agreements, until repaid in full. The bill would authorize moneys to be dispersed after January 1, 2016, that were encumbered on or before December 31, 2015, pursuant to the act and would require that all moneys not encumbered on or before December 31, 2015, that were collected from ratepayers pursuant to the act and all loan repayments be refunded to the ratepayers in proportion to the ratepayer classes from which they were collected.

end insert
begin insert

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

end insert
begin insert

Because the bill requires action by the commission to implement certain of its requirements, a violation of these commission orders would impose a state-mandated local program by creating a new crime.

end insert
begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert
begin delete

Existing law requires every electric utility to make available to an eligible customer-generator a standard contract or tariff for net energy metering on a first-come-first-served basis until the time that the total rated generating capacity used by eligible customer-generators exceeds 5% of the electric utility’s aggregate customer peak demand.

end delete
begin delete

This bill would make technical, nonsubstantive revisions to the net energy metering requirements.

end delete

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 2861 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
2repealed.end insert

begin delete
3

2861.  

As used in this article, the following terms have the
4following meanings:

5(a) “Gas customer” includes both “core” and “noncore”
6customers, as those terms are used in Chapter 2.2 (commencing
7with Section 328) of Part 1, that receive retail end-use gas service
8within the service territory of a gas corporation.

9(b) “kWth” means the kilowatt thermal capacity of a solar water
10heating system, measured consistent with the standard established
11by the SRCC.

12(c) “kWhth” means kilowatthours thermal as measured by the
13number of kilowatts thermal generated, or displaced, in an hour.

14(d) “Low-income residential housing” means either of the
15following:

16(1) Residential housing financed with low-income housing tax
17credits, tax-exempt mortgage revenue bonds, general obligation
18bonds, or local, state, or federal loans or grants, and for which the
19rents of the occupants who are lower income households, as defined
20in Section 50079.5 of the Health and Safety Code, do not exceed
21those prescribed by deed restrictions or regulatory agreements
22pursuant to the terms of the financing or financial assistance.

23(2) A residential complex in which at least 20 percent of the
24total units are sold or rented to lower income households, as defined
25in Section 50079.5 of the Health and Safety Code, and the housing
26units targeted for lower income households are subject to a deed
27restriction or affordability covenant with a public entity that ensures
28that the units will be available at an affordable housing cost
29meeting the requirements of Section 50052.5 of the Health and
30Safety Code, or at an affordable rent meeting the requirements of
31Section 50053 of the Health and Safety Code, for a period of not
32less than 30 years.

33(e) “New Solar Homes Partnership” means the 10-year program,
34administered by the Energy Commission, encouraging solar energy
35systems in new home construction.

36(f) “Solar heating collector” means a device that is used to
37collect or capture heat from the sun and that is generally, but need
38not be, located on a roof.

P4    1(g) “Solar water heating system” means a solar energy device
2that has the primary purpose of reducing demand for natural gas
3through water heating, space heating, or other methods of capturing
4energy from the sun to reduce natural gas consumption in a home,
5business, or any building or facility receiving natural gas that is
6subject to the surcharge established pursuant to subdivision (b) of
7Section 2863, or exempt from the surcharge pursuant to subdivision
8(c) of Section 2863, and that meets or exceeds the eligibility criteria
9established pursuant to Section 2864. “Solar water heating systems”
10include multifamily residential, governmental, educational, and
11nonprofit solar pool heating systems, but do not include
12single-family residential solar pool heating systems.

13(h) “SRCC” means the Solar Rating and Certification
14Corporation.

end delete
15begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 2861 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert, to
16read:end insert

begin insert
17

begin insert2861.end insert  

(a) No additional moneys may be collected from
18ratepayers to fund the Solar Water Heating and Efficiency Act of
192007 after December 31, 2015, and no moneys collected from
20ratepayers on or before that date shall be dispersed other than as
21directed by subdivisions (c) and (d).

22(b) All loans made pursuant to the Solar Water Heating and
23Efficiency Act of 2007 that are outstanding as of January 1, 2016,
24shall continue to be repaid in a manner that is consistent with the
25terms and conditions of the loan agreements, until repaid in full.

26(c) Moneys may be dispersed after January 1, 2016, that were
27encumbered on or before December 31, 2015, pursuant to the
28Solar Water Heating and Efficiency Act of 2007.

29(d) All moneys not encumbered on or before December 31,
302015, that were collected from ratepayers and all loan repayments
31made pursuant to the Solar Water Heating and Efficiency Act of
322007 shall be refunded to the ratepayers in proportion to the
33ratepayer classes from which they were collected.

end insert
34begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 2862 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
35

2862.  

The Legislature finds and declares all of the following:

36(a) California is heavily dependent on natural gas, importing
37more than 80 percent of the natural gas it consumes.

38(b) Rising worldwide demand for natural gas and a shrinking
39supply create rising and unstable prices that can harm California
40consumers and the economy.

P5    1(c) Natural gas is a fossil fuel and a major source of global
2warming pollution and the pollutants that cause air pollution,
3including smog.

4(d) California’s growing population and economy will put a
5strain on energy supplies and threaten the ability of the state to
6meet its global warming goals unless specific steps are taken to
7reduce demand and generate energy cleanly and efficiently.

8(e) Water heating for domestic and industrial use relies almost
9entirely on natural gas and accounts for a significant percentage
10of the state’s natural gas consumption.

11(f) Solar water heating systems represent the largest untapped
12natural gas saving potential remaining in California.

13(g) In addition to financial and energy savings, solar water
14heating systems can help protect against future gas and electricity
15shortages and reduce our dependence on foreign sources of energy.

16(h) Solar water heating systems can also help preserve the
17environment and protect public health by reducing air pollution,
18including carbon dioxide, a leading global warming gas, and
19nitrogen oxide, a precursor to smog.

20(i) Growing demand for these technologies will create jobs in
21California as well as promote greater energy independence, protect
22consumers from rising energy costs, and result in cleaner air.

23(j) It is in the interest of the State of California to promote solar
24water heating systems and other technologies that directly reduce
25demand for natural gas in homes and businesses.

26(k) It is the intent of the Legislature to build a mainstream
27market for solar water heating systems that directly reduces demand
28for natural gas in homes, businesses, schools, nonprofit, and
29government buildings. Toward that end, it is the goal of this article
30to install at least 200,000 solar water heating systems on homes,
31businesses, and other buildings or facilities of eligible customer
32classes throughout the state by 2017, thereby lowering prices and
33creating a self-sufficient market that will sustain itself beyond the
34life of this program.

35(l) It is the intent of the Legislature that the solar water heating
36system incentives created by this article should be a cost-effective
37investment by gas customers. Gas customers will recoup the cost
38of their investment through lower prices as a result of avoiding
39purchases of natural gas.

P6    1(m) It is the intent of the Legislature that this article will
2encourage the cost-effective deployment of solar heating systems
3in both residential and commercial markets and in each end-use
4application sector in a balanced manner. It is the intent of the
5Legislature that the commission monitor and adjust incentives
6created by this article so that they are cost-effective investments
7sufficient to significantly increase markets and promote market
8transformation. It is the intent of the Legislature that the
9commission ensure that increased, uniform growth in each market
10sector is achieved through program incentives or structure
11adjustments that prevent overutilization of program resources by
12any single sector.

end delete
13begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 2863 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
14

2863.  

(a) If, after a public hearing, the commission determines
15that a solar water heating program is cost effective for ratepayers
16and in the public interest, the commission shall do all of the
17following:

18(1) Design and implement a program applicable to the service
19territories of a gas corporation, to achieve the goal of the
20Legislature to promote the installation of 200,000 solar water
21heating systems in homes, businesses, and buildings or facilities
22of eligible customer classes receiving natural gas service
23throughout the state by 2017. Eligible customer classes shall
24include single-family and multifamily residential, commercial,
25industrial, governmental, nonprofit, and primary, secondary, and
26postsecondary educational customers.

27(2) The program shall be administered by gas corporations or
28third-party administrators, as determined by the commission, and
29subject to the supervision of the commission.

30(3) The commission shall coordinate the program with the
31Energy Commission’s New Solar Homes Partnership to achieve
32the goal of building zero-energy homes.

33(4) The commission shall determine an appropriate division of
34funds between solar water heating systems that are and are not
35solar pool heating systems.

36(b) (1) The commission shall fund the program through the use
37of a surcharge applied to gas customers based upon the amount of
38natural gas consumed. The surcharge shall be in addition to any
39other charges for natural gas sold or transported for consumption
40in this state.

P7    1(2) The commission shall impose the surcharge at a level that
2is necessary to meet the goal of installing 200,000 solar water
3heating systems, or the equivalent output of 200,000 solar water
4heating systems, on homes, businesses, and buildings or facilities
5of eligible customer classes receiving natural gas service in
6California by 2017. Funding for the program established by this
7article shall not, for the collective service territories of all gas
8corporations, exceed two hundred fifty million dollars
9($250,000,000) over the course of the 10-year program.

10(3) The commission shall annually establish a surcharge rate
11for each class of gas customers. Any gas customer participating
12in the California Alternate Rates for Energy (CARE) or Family
13Electric Rate Assistance (FERA) programs shall be exempt from
14paying any surcharge imposed to fund the program designed and
15implemented pursuant to this article.

16(4) Any surcharge imposed to fund the program designed and
17implemented pursuant to this article shall not be imposed upon the
18portion of any gas customer’s procurement of natural gas that is
19used or employed for a purpose that Section 896 excludes from
20being categorized as the consumption of natural gas.

21(5) The gas corporation or other person or entity providing
22revenue cycle services, as defined in Section 328.1, shall be
23responsible for collecting the surcharge.

24(c) Funds shall be allocated for the benefit of gas customers to
25promote utilization of solar water heating systems.

26(d) In designing and implementing the program required by this
27article, no moneys shall be diverted from any existing programs
28for low-income ratepayers or cost-effective energy efficiency
29programs.

end delete
30begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 2864 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
31

2864.  

(a) The commission, in consultation with the Energy
32Commission and interested members of the public, shall establish
33eligibility criteria for solar water heating systems receiving gas
34customer funded incentives pursuant to this article. The criteria
35should specify and include all of the following:

36(1) Design, installation, and energy output or displacement
37standards. To be eligible for rebate funding, a residential solar
38water heating system shall be certified by an accredited listing
39agency in accordance with standards adopted by the commission.
40Solar collectors used in systems for multifamily residential,
P8    1commercial, government, nonprofit, educational, or industrial
2water heating shall be certified by an accredited listing agency in
3accordance with standards adopted by the commission. Energy
4output of collectors and systems shall be determined in accordance
5with procedures set forth by the listing agency, and shall be based
6on testing results from accredited testing laboratories.

7(2) Require that solar water heating system components are new
8and unused, and have not previously been placed in service in any
9other location or for any other application.

10(3) Require that solar water heating collectors have a warranty
11of not less than 10 years to protect against defects and undue
12degradation.

13(4) Require that solar water heating systems are in buildings or
14facilities connected to a natural gas utility’s distribution system
15within the state.

16(5) Require that solar water heating systems have meters or
17other kWhth measuring devices in place to monitor and measure
18the system’s performance and the quantity of energy generated or
19displaced by the system. The criteria shall require meters for
20systems with a capacity for displacing over 30 kWth. The criteria
21may require meters for systems with a capacity of 30 kWth or
22smaller.

23(6) Require that solar water heating systems are installed in
24conformity with the manufacturer’s specifications and all
25applicable codes and standards.

26(b) Gas customer funded incentives shall not be made for a solar
27water heating system that does not meet the eligibility criteria.

28(c) The commission may adopt consensus solar standards
29applicable to products or systems as developed by accredited
30standards developers.

end delete
31begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 2865 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
32

2865.  

(a) The commission shall establish conditions on gas
33customer funded incentives pursuant to this article. The conditions
34shall require both of the following:

35(1) Appropriate siting and high-quality installation of the solar
36water heating system based on installation guidelines that maximize
37the performance of the system and prevent qualified systems from
38being inefficiently or inappropriately installed. The conditions
39shall not impact housing designs or densities presently authorized
40by a city, county, or city and county. The goal of this paragraph
P9    1is to achieve efficient installation of solar water heating systems
2and promote the greatest energy production or displacement per
3gas customer dollar.

4(2) Appropriate energy efficiency improvements in the new or
5existing home or facility where the solar water heating system is
6installed.

7(b) The commission shall set rating standards for equipment,
8components, and systems to ensure reasonable performance and
9shall develop standards that provide for compliance with the
10minimum ratings.

end delete
11begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 2866 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
12

2866.  

 (a) The commission shall provide not less than 10
13percent of the overall funds for installation of solar water heating
14systems on low-income residential housing.

15(b) The commission may establish a grant program or a
16revolving loan or loan guarantee program for low-income
17residential housing consistent with the requirements of Chapter
185.3 (commencing with Section 25425) of Division 15 of the Public
19Resources Code. All loans outstanding as of August 1, 2018, shall
20continue to be repaid in a manner that is consistent with the terms
21and conditions of the program adopted and implemented by the
22commission pursuant to this subdivision, until repaid in full.

23(c) The commission may extend eligibility for funding pursuant
24to this section to include residential housing occupied by ratepayers
25participating in a commission approved and supervised gas
26corporation Low-Income Energy Efficiency (LIEE) program and
27who either:

28(1) Occupy a single-family home.

29(2) Occupy at least 50 percent of all units in a multifamily
30dwelling structure.

31(d) The commission shall ensure that lower income households,
32as defined in Section 50079.5 of the Health and Safety Code, and,
33if the commission expands the program pursuant to subdivision
34(c), ratepayers participating in a LIEE program, that receive gas
35service at residential housing with a solar water heating system
36receiving incentives pursuant to subdivision (a), benefit from the
37installation of the solar water heating systems through reduced or
38lowered energy costs.

39(e) No later than January 1, 2010, the commission shall do all
40of the following to implement the requirements of this section:

P10   1(1) Maximize incentives to properties that are committed to
2continuously serving the needs of lower income households, as
3defined in Section 50079.5 of the Health and Safety Code, and, if
4the commission expands the program pursuant to subdivision (c),
5ratepayers participating in a LIEE program.

6(2) Establish conditions on the installation of solar water heating
7systems that ensure properties on which solar water heating systems
8are installed under subdivision (a) remain low-income residential
9properties for at least 10 years from the time of installation,
10including property ownership restrictions and income rental
11protections, and appropriate enforcement of these conditions.

12(f) All moneys set aside for the purpose of funding the
13installation of solar water heating systems on low-income
14residential housing that are unexpended and unencumbered on
15August 1, 2018, and all moneys thereafter repaid pursuant to
16subdivision (b), except to the extent that those moneys are
17encumbered pursuant to this section, shall be utilized to augment
18cost-effective energy efficiency measures in low-income residential
19housing that benefit ratepayers.

end delete
20begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 2867 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
21

2867.  

(a) The rebates provided through this program shall
22decline over time. They shall be structured so as to drive down the
23cost of the solar water heating technologies, and be paid out on a
24performance-based incentive basis so that incentives are earned
25based on the actual energy savings, or on predicted energy savings
26as established by the commission.

27(b) The commission shall consider federal tax credits and other
28incentives available for this technology when determining the
29appropriate rebate amount.

30(c) The commission shall consider the impact of rebates for
31solar water heating systems pursuant to this article on existing
32incentive programs for energy efficiency technology.

33(d) In coordination with the commission, the Energy
34Commission shall consider, when appropriate, coupling rebates
35for solar water heating systems with complementary energy
36efficiency technologies, including, but not limited to, efficient hot
37water heating tanks and tankless or on demand hot water systems
38that can be installed in addition to the solar water heating system.

end delete
39begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 2867.1 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is repealed.end insert

begin delete
P11   1

2867.1.  

(a) Not later than July 1, 2010, the commission shall
2report to the Legislature as to the effectiveness of the program and
3make recommendations as to any changes that should be made to
4the program. This report shall include justification for the size of
5the rebate program in terms of total available incentive moneys as
6well as the anticipated benefits of the program in its entirety. To
7facilitate the understanding of how solar water heating systems
8compare with other clean energy and energy efficiency
9technologies, all documents related to and rebates provided by this
10program shall be measured in both kWhth and therms of natural
11gas saved.

12(b) Not later than February 1, 2014, the commission shall
13complete a review of whether the rebate levels established by the
14commission will be sufficient to spur investment to reach the
15program goal of installing 200,000 solar water heating systems in
16homes, businesses, and other buildings or facilities receiving
17natural gas service throughout the state by 2017, and shall report
18to the Legislature on the results of its review. The report submitted
19pursuant to this subdivision shall be submitted in compliance with
20Section 9795 of the Government Code.

end delete
21begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 2867.2 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
22repealed.end insert

begin delete
23

2867.2.  

Except for the Solar Water Heating Pilot Program in
24San Diego, solar water heating technologies shall not be eligible
25for California Solar Initiative (CSI) funds, pursuant to Section
262851, unless they also displace electricity, in which case only the
27electricity displacing portion of the technology may be eligible
28under the CSI program, as determined by the commission.

end delete
29begin insert

begin insertSEC. 11.end insert  

end insert

begin insertSection 2867.3 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
30repealed.end insert

begin delete
31

2867.3.  

In order to further the state goal of encouraging the
32installation of 200,000 solar water heaters by 2017, the governing
33body of each publicly owned utility providing gas service to retail
34end-use gas customers shall, after a public proceeding, adopt,
35implement, and finance a solar water heating system incentive
36program that does all the following:

37(a) Ensures that any solar water heating system receiving
38monetary incentives complies with eligibility criteria adopted by
39the governing body. The eligibility criteria shall include those
P12   1elements contained in paragraphs (1) to (6), inclusive, of
2subdivision (a) of Section 2864.

3(b) Includes minimum ratings and standards for equipment,
4components, and systems to ensure reasonable performance and
5compliance with the minimum ratings and standards.

6(c) Includes an element that addresses the installation of solar
7water heating systems on low-income residential housing. If
8deemed appropriate in consultation with the California Tax Credit
9Allocation Committee, the governing board may establish a grant
10program or a revolving loan or loan guarantee program for
11low-income residential housing consistent with the requirements
12of Chapter 5.3 (commencing with Section 25425) of Division 15
13of the Public Resources Code.

end delete
14begin insert

begin insertSEC. 12.end insert  

end insert

begin insertSection 2867.4 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
15repealed.end insert

begin delete
16

2867.4.  

This article shall remain in effect only until August 1,
172018, and as of that date is repealed, unless a later enacted statute,
18that is enacted before August 1, 2018, deletes or extends that date.

end delete
19begin insert

begin insertSEC. 13.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant
20to Section 6 of Article XIII B of the California Constitution because
21the only costs that may be incurred by a local agency or school
22district will be incurred because this act creates a new crime or
23infraction, eliminates a crime or infraction, or changes the penalty
24for a crime or infraction, within the meaning of Section 17556 of
25the Government Code, or changes the definition of a crime within
26the meaning of Section 6 of Article XIII B of the California
27Constitution.

end insert

All matter omitted in this version of the bill appears in the bill as introduced in the Assembly, February 26, 2015. (JR11)



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