BILL NUMBER: AB 1637 CHAPTERED
BILL TEXT
CHAPTER 658
FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2016
APPROVED BY GOVERNOR SEPTEMBER 26, 2016
PASSED THE SENATE AUGUST 22, 2016
PASSED THE ASSEMBLY AUGUST 31, 2016
AMENDED IN SENATE AUGUST 18, 2016
AMENDED IN ASSEMBLY APRIL 14, 2016
INTRODUCED BY Assembly Member Low
(Coauthors: Assembly Members Gatto, Gordon, Irwin, and Mullin)
JANUARY 7, 2016
An act to amend Sections 379.6 and 2827.10 of the Public Utilities
Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1637, Low. Energy: greenhouse gas reduction.
(1) Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities. Existing law requires the
PUC to require the administration, until January 1, 2021, of a
self-generation incentive program for distributed generation
resources and energy storage technologies. Existing law authorizes
the PUC, in consultation with the State Energy Resources Conservation
and Development Commission, to authorize the annual collection of
not more than the amount authorized for the program in the 2008
calendar year.
This bill would increase the maximum annual collection the PUC may
authorize for the program to double the amount authorized for the
program in the 2008 calendar year.
(2) Existing law requires an electrical corporation to file with
the PUC a standard tariff providing for net energy meeting for
eligible fuel cell customer-generators and make the tariff available,
on a first-come-first-served basis, until the total cumulative rated
generating capacity of the eligible fuel cell electrical generating
facilities receiving service pursuant to the tariff reaches a level
equal to the electrical corporation's proportionate share of a
statewide limitation of 500 megawatts cumulative rated generation
capacity served (program cap). Existing law requires the eligible
fuel cell customer-generator to meet certain requirements, including
requirements that the customer-generator uses: (A) a fuel cell
electrical generation facility with a capacity of not more than one
megawatt and (B) technology the PUC has determined will achieve
certain reductions in emissions of greenhouse gases. Existing law
provides that fuel cell electrical generation facilities are not
eligible for the tariff unless the facilities commence operation
prior to January 1, 2017.
This bill would increase the program cap by authorizing 500
megawatts in addition to the total installed capacity as of January
1, 2017. The bill would increase to 5 megawatts the maximum amount of
generation capacity for a fuel cell electrical generation facility
in the program. The bill would require, by March 31, 2017, the State
Air Resources Board, in consultation with the Energy Commission, to
establish a schedule of annual greenhouse gas emissions reduction
standards, as specified, for fuel cell electrical generation
resources and would require the PUC to determine if the technology
used by the eligible fuel cell customer-generator will achieve those
standards. The bill would require the fuel cell electrical generation
resource to comply with emission standards adopted by the State Air
Resources Board under the distributed generation certification
program.
This bill would provide that fuel cell electrical generation
facilities are not eligible for the tariff unless the facilities
commence operation on or before December 31, 2021.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 379.6 of the Public Utilities Code is amended
to read:
379.6. (a) (1) It is the intent of the Legislature that the
self-generation incentive program increase deployment of distributed
generation and energy storage systems to facilitate the integration
of those resources into the electrical grid, improve efficiency and
reliability of the distribution and transmission system, and reduce
emissions of greenhouse gases, peak demand, and ratepayer costs. It
is the further intent of the Legislature that the commission, in
future proceedings, provide for an equitable distribution of the
costs and benefits of the program.
(2) The commission, in consultation with the Energy Commission,
may authorize the annual collection of not more than double the
amount authorized for the self-generation incentive program in the
2008 calendar year, through December 31, 2019. The commission shall
require the administration of the program for distributed energy
resources originally established pursuant to Chapter 329 of the
Statutes of 2000 until January 1, 2021. On January 1, 2021, the
commission shall provide repayment of all unallocated funds collected
pursuant to this section to reduce ratepayer costs.
(3) The commission shall administer solar technologies separately,
pursuant to the California Solar Initiative adopted by the
commission in Decisions 05-12-044 and 06-01-024, as modified by
Article 1 (commencing with Section 2851) of Chapter 9 of Part 2 of
Division 1 of this code and Chapter 8.8 (commencing with Section
25780) of Division 15 of the Public Resources Code.
(b) (1) Eligibility for incentives under the self-generation
incentive program shall be limited to distributed energy resources
that the commission, in consultation with the State Air Resources
Board, determines will achieve reductions in emissions of greenhouse
gases pursuant to the California Global Warming Solutions Act of 2006
(Division 25.5 (commencing with Section 38500) of the Health and
Safety Code).
(2) On or before July 1, 2015, the commission shall update the
factor for avoided greenhouse gas emissions based on the most recent
data available to the State Air Resources Board for greenhouse gas
emissions from electricity sales in the self-generation incentive
program administrators' service areas as well as current estimates of
greenhouse gas emissions over the useful life of the distributed
energy resource, including consideration of the effects of the
California Renewables Portfolio Standard.
(c) Eligibility for the funding of any combustion-operated
distributed generation projects using fossil fuel is subject to all
of the following conditions:
(1) An oxides of nitrogen (NOx) emissions rate standard of 0.07
pounds per megawatthour and a minimum efficiency of 60 percent, or
any other NOx emissions rate and minimum efficiency standard adopted
by the State Air Resources Board. A minimum efficiency of 60 percent
shall be measured as useful energy output divided by fuel input. The
efficiency determination shall be based on 100 percent load.
(2) Combined heat and power units that meet the 60-percent
efficiency standard may take a credit to meet the applicable NOx
emissions standard of 0.07 pounds per megawatthour. Credit shall be
at the rate of one megawatthour for each 3,400,000 British thermal
units (Btus) of heat recovered.
(3) The customer receiving incentives shall adequately maintain
and service the combined heat and power units so that during
operation the system continues to meet or exceed the efficiency and
emissions standards established pursuant to paragraphs (1) and (2).
(4) Notwithstanding paragraph (1), a project that does not meet
the applicable NOx emissions standard is eligible if it meets both of
the following requirements:
(A) The project operates solely on waste gas. The commission shall
require a customer that applies for an incentive pursuant to this
paragraph to provide an affidavit or other form of proof that
specifies that the project shall be operated solely on waste gas.
Incentives awarded pursuant to this paragraph shall be subject to
refund and shall be refunded by the recipient to the extent the
project does not operate on waste gas. As used in this paragraph,
"waste gas" means natural gas that is generated as a byproduct of
petroleum production operations and is not eligible for delivery to
the utility pipeline system.
(B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce an onsite net air emissions
benefit compared to permitted onsite emissions if the project does
not operate. The commission shall require the customer to secure the
permit prior to receiving incentives.
(d) In determining the eligibility for the self-generation
incentive program, minimum system efficiency shall be determined
either by calculating electrical and process heat efficiency as set
forth in Section 216.6, or by calculating overall electrical
efficiency.
(e) Eligibility for incentives under the program shall be limited
to distributed energy resource technologies that the commission
determines meet all of the following requirements:
(1) The distributed energy resource technology shifts onsite
energy use to off-peak time periods or reduces demand from the grid
by offsetting some or all of the customer's onsite energy load,
including, but not limited to, peak electric load.
(2) The distributed energy resource technology is commercially
available.
(3) The distributed energy resource technology safely utilizes the
existing transmission and distribution system.
(4) The distributed energy resource technology improves air
quality by reducing criteria air pollutants.
(f) Recipients of the self-generation incentive program funds
shall provide relevant data to the commission and the State Air
Resources Board, upon request, and shall be subject to onsite
inspection to verify equipment operation and performance, including
capacity, thermal output, and usage to verify criteria air pollutant
and greenhouse gas emissions performance.
(g) In administering the self-generation incentive program, the
commission shall determine a capacity factor for each distributed
generation system energy resource technology in the program.
(h) (1) In administering the self-generation incentive program,
the commission may adjust the amount of rebates and evaluate other
public policy interests, including, but not limited to, ratepayers,
energy efficiency, peak load reduction, load management, and
environmental interests.
(2) The commission shall consider the relative amount and the cost
of greenhouse gas emissions reductions, peak demand reductions,
system reliability benefits, and other measurable factors when
allocating program funds between eligible technologies.
(i) The commission shall ensure that distributed generation
resources are made available in the program for all ratepayers.
(j) In administering the self-generation incentive program, the
commission shall provide an additional incentive of 20 percent from
existing program funds for the installation of eligible distributed
generation resources manufactured in California.
(k) The costs of the program adopted and implemented pursuant to
this section shall not be recovered from customers participating in
the California Alternate Rates for Energy (CARE) program.
( l ) The commission shall evaluate the overall success
and impact of the self-generation incentive program based on the
following performance measures:
(1) The amount of reductions of emissions of greenhouse gases.
(2) The amount of reductions of emissions of criteria air
pollutants measured in terms of avoided emissions and reductions of
criteria air pollutants represented by emissions credits secured for
project approval.
(3) The amount of energy reductions measured in energy value.
(4) The amount of reductions of customer peak demand.
(5) The ratio of the electricity generated by distributed energy
resource generation projects receiving incentives from the program to
the electricity capable of being produced by those projects,
commonly known as a capacity factor.
(6) The value to the electrical transmission and distribution
system measured in avoided costs of transmission and distribution
upgrades and replacement.
(7) The ability to improve onsite electricity reliability as
compared to onsite electricity reliability before the self-generation
incentive program technology was placed in service.
SEC. 2. Section 2827.10 of the Public Utilities Code is amended to
read:
2827.10. (a) As used in this section, the following terms have
the following meanings:
(1) "Electrical corporation" means an electrical corporation, as
defined in Section 218.
(2) "Eligible fuel cell electrical generating facility" means a
facility that includes the following:
(A) Integrated powerplant systems containing a stack, tubular
array, or other functionally similar configuration used to
electrochemically convert fuel to electricity.
(B) An inverter and fuel processing system where necessary.
(C) Other plant equipment, including heat recovery equipment,
necessary to support the plant's operation or its energy conversion.
(3) (A) "Eligible fuel cell customer-generator" means a customer
of an electrical corporation that meets all the following criteria:
(i) Uses a fuel cell electrical generating facility with a
generating capacity of not more than five megawatts that is located
on or adjacent to the customer's owned, leased, or rented premises,
is interconnected and operates in parallel with the electrical grid
while the grid is operational or in a grid independent mode when the
grid is nonoperational, and is sized to offset part or all of the
eligible fuel cell customer-generator's own electrical requirements.
(ii) Is the recipient of local, state, or federal funds, or who
self-finances projects designed to encourage the development of
eligible fuel cell electrical generating facilities.
(iii) Uses technology the commission has determined will achieve
reductions in emissions of greenhouse gases pursuant to subdivision
(b).
(B) Complies with the emissions standards adopted by the State Air
Resources Board pursuant to the distributed generation certification
program requirements of Section 94203 of Title 17 of the California
Code of Regulations, or any successor regulation.
(C) For purposes of this paragraph, a person or entity is a
customer of the electrical corporation if the customer is physically
located within the service territory of the electrical corporation
and receives bundled service, distribution service, or transmission
service from the electrical corporation.
(4) "Net energy metering" means measuring the difference between
the electricity supplied through the electrical grid and the
difference between the electricity generated by an eligible fuel cell
electrical generating facility and fed back to the electrical grid
over a 12-month period as described in subdivision (e). Net energy
metering shall be accomplished using a time-of-use meter capable of
registering the flow of electricity in two directions. If the
existing electrical meter of an eligible fuel cell customer-generator
is not capable of measuring the flow of electricity in two
directions, the eligible fuel cell 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 time-of-use
meter.
(b) (1) Not later than March 31, 2017, the State Air Resources
Board, in consultation with the Energy Commission, shall establish a
schedule of annual greenhouse gas emissions reduction standards for a
fuel cell electrical generation resource for purposes of clause
(iii) of subparagraph (A) of paragraph (3) of subdivision (a) and
shall update the schedule every three years with applicable standards
for each intervening year.
(2) The greenhouse gas emissions reduction standards shall ensure
that each fuel cell electrical generation resource, for purposes of
clause (iii) of subparagraph (A) of paragraph (3) of subdivision (a),
reduces greenhouse gas emissions compared to the electrical grid
resources, including renewable resources, that the fuel cell
electrical generation resource displaces, accounting for both
procurement and operation of the electrical grid.
(c) (1) Every electrical corporation, not later than March 1,
2004, shall file with the commission a standard tariff providing for
net energy metering for eligible fuel cell customer-generators,
consistent with this section. Subject to the limitation in
subdivision (g), every electrical corporation shall make this tariff
available to eligible fuel cell customer-generators upon request, on
a first-come-first-served basis, until the total cumulative rated
generating capacity of the eligible fuel cell electrical generating
facilities receiving service pursuant to the tariff, in addition to
the installed capacity as of January 1, 2017, reaches a level equal
to its proportionate share of a statewide limitation of 500 megawatts
cumulative rated generation capacity served under this section. 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) To continue the growth of the market for onsite electrical
generation using fuel cells, the commission may review and
incrementally raise the limitation established in paragraph (1) on
the total cumulative rated generating capacity of the eligible fuel
cell electrical generating facilities receiving service pursuant to
the tariff in paragraph (1).
(d) In determining the eligibility for the cumulative rated
generating capacity within an electrical corporation's service
territory, preference shall be given to facilities that, at the time
of installation, are located in a community with significant exposure
to air contaminants or localized air contaminants, or both,
including, but not limited to, communities of minority populations or
low-income populations, or both, based on the ambient air quality
standards established pursuant to Division 26 (commencing with
Section 39000) of the Health and Safety Code.
(e) (1) 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 customer would be assigned if the customer was not an
eligible fuel cell customer-generator. Any new or additional demand
charge, standby charge, customer charge, minimum monthly charge,
interconnection charge, or other charge that would increase an
eligible fuel cell customer-generator's costs beyond those of other
customers in the rate class to which the eligible fuel cell
customer-generator would otherwise be assigned are contrary to the
intent of the Legislature in enacting this section, and shall not
form a part of net energy metering tariffs.
(2) The commission shall authorize an electrical corporation to
charge a fuel cell customer-generator a fee based on the cost to the
utility associated with providing interconnection inspection services
for that fuel cell customer-generator.
(f) The net metering calculation shall be made by measuring the
difference between the electricity supplied to the eligible fuel cell
customer-generator and the electricity generated by the eligible
fuel cell customer-generator and fed back to the electrical grid over
a 12-month period. The following rules shall apply to the annualized
metering calculation:
(1) The eligible fuel cell customer-generator shall, at the end of
each 12-month period following the date of final interconnection of
the eligible fuel cell electrical generating facility with an
electrical corporation, and at each anniversary date thereafter, be
billed for electricity used during that period. The electrical
corporation shall determine if the eligible fuel cell
customer-generator was a net consumer or a net producer of
electricity during that period. For purposes of determining if the
eligible fuel cell customer-generator was a net consumer or a net
producer of electricity during that period, the electrical
corporation shall aggregate the electrical load of the meters located
on the property where the eligible fuel cell electrical generating
facility is located and on all property adjacent or contiguous to the
property on which the facility is located, if those properties are
solely owned, leased, or rented by the eligible fuel cell
customer-generator. Each aggregated account shall be billed and
measured according to a time-of-use rate schedule.
(2) At the end of each 12-month period, where the electricity
supplied during the period by the electrical corporation exceeds the
electricity generated by the eligible fuel cell customer-generator
during that same period, the eligible fuel cell customer-generator is
a net electricity consumer and the electrical corporation shall be
owed compensation for the eligible fuel cell customer-generator's net
kilowatthour consumption over that same period. The compensation
owed for the eligible fuel cell customer-generator's consumption
shall be calculated as follows:
(A) The generation charges for any net monthly consumption of
electricity shall be calculated according to the terms of the tariff
to which the same customer would be assigned to or be eligible for if
the customer was not an eligible fuel cell customer-generator. When
the eligible fuel cell customer-generator is a net generator during
any discrete time-of-use period, the net kilowatthours produced shall
be valued at the same price per kilowatthour as the electrical
corporation would charge for retail kilowatthour sales for
generation, exclusive of any surcharges, during that same time-of-use
period. If the eligible fuel cell customer-generator's time-of-use
electrical meter is unable to measure the flow of electricity in two
directions, paragraph (4) of subdivision (a) shall apply. All other
charges, other than generation charges, shall be calculated in
accordance with the eligible fuel cell customer-generator's
applicable tariff and based on the total kilowatthours delivered by
the electrical corporation to the eligible fuel cell
customer-generator. To the extent that charges for transmission and
distribution services are recovered through demand charges in any
particular month, no standby reservation charges shall apply in that
monthly billing cycle.
(B) The net balance of moneys owed shall be paid in accordance
with the electrical corporation's normal billing cycle.
(3) At the end of each 12-month period, where the electricity
generated by the eligible fuel cell customer-generator during the
12-month period exceeds the electricity supplied by the electrical
corporation during that same period, the eligible fuel cell
customer-generator is a net electricity producer and the electrical
corporation shall retain any excess kilowatthours generated during
the prior 12-month period. The eligible fuel cell customer-generator
shall not be owed any compensation for those excess kilowatthours.
(4) If an eligible fuel cell customer-generator terminates service
with the electrical corporation, the electrical corporation shall
reconcile the eligible fuel cell customer-generator's consumption and
production of electricity during any 12-month period.
(g) A fuel cell electrical generating facility shall not be
eligible for the tariff unless it commences operation on or before
December 31, 2021, unless a later enacted statute, that is chaptered
on or before December 31, 2021, extends this eligibility commencement
date. The tariff shall remain in effect for an eligible fuel cell
electrical generating facility that commences operation pursuant to
the tariff on or before December 31, 2021. A fuel cell
customer-generator shall be eligible for the tariff established
pursuant to this section only for the operating life of the eligible
fuel cell electrical generating facility.