BILL ANALYSIS Ó
AB 1637
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(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB
1637 (Low)
As Amended August 18, 2016
Majority vote
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|ASSEMBLY: | |(April 28, |SENATE: |23-12 |(August 22, |
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(vote not relevant)
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|COMMITTEE VOTE: |5-3 |(August 30, |RECOMMENDATION: |concur |
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(Nat. Res.)
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|COMMITTEE VOTE: |16-0 |(August 31, |RECOMMENDATION: |concur |
| | |2016) | | |
AB 1637
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(Appr.)
Original Committee Reference: NAT. RES.
SUMMARY: Doubles the annual funding authorization for the
Self-Generation Incentive Program (SGIP), which permits the
Public Utilities Commission (PUC) to collect an additional $83
million/year from utility customers to fund payments to
distributed energy resources (DER) until 2019 ($249 million
total).
Extends the net energy metering program for fuel cells (NEMFC)
for five years, increases the individual project cap from one
megawatt (MW) to five MW, increases the statewide cap of 500 MW
by subtracting existing facilities, and updates emission
standards applicable to each fuel cell participating in NEMFC.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Double the funding authorized for SGIP for the program's
remaining three years.
2)Extend the NEMFC program for five years, including fuel cells
that commence operation on or before December 31, 2021.
a) Increase the individual project cap from one to five MW.
b) Increase the statewide cap of 500MW by subtracting
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projects installed as of January 1, 2017.
c) Require eligible projects to comply with the Air
Resources Board (ARB) distributed generation certification
standards (establishing emission limits for oxides of
nitrogen and other criteria pollutants).
d) Require ARB to establish and update greenhouse gas (GHG)
standards applicable each year to assure that each eligible
fuel cell reduces GHG emissions compared to the electrical
grid. Fuel cells must continue to meet the applicable
annual standard during operation to maintain eligibility
for NEMFC.
EXISTING LAW:
1)Authorizes the PUC to authorize investor-owned electric
utilities (IOUs) to collect up to $83 million per year from
their customers through distribution rates through 2019 to
fund SGIP. Under SGIP, utilities provide ratepayer-funded
incentives for eligible DER, including advanced energy storage
and generation technologies that the PUC, in consultation with
ARB, determines will achieve reductions in GHG emissions.
Under a PUC decision adopted earlier this year, 75% of SGIP
funds are allocated to storage technologies.
2)Requires each IOU, until January 1, 2017, to offer a NEM
tariff for a customer who generates electricity using an
onsite fuel cell electrical generating facility not greater
than one MW until total installed fuel cell electrical
generation resources reaches the IOU's proportional share of
500 MW.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill has the following costs:
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1)Up to $249 million in nonbypassable cost shifts among
ratepayers to fund SGIP incentives and potential unknown
unbypassable cost shifts among ratepayers to fund NEMFC. Cost
shifts for both programs may or may not be offset by
electrical system benefits.
2)Absorbable PUC administrative costs.
COMMENTS: For NEMFC, this bill establishes more stringent GHG
standards to assure eligible projects remain cleaner than the
grid each year of operation. The bill establishes a new GHG
standard, established by ARB, rather than the existing PUC/SGIP
standard, which is expected to be lower than the existing
standard at the outset, and get progressively lower each year as
the overall GHG emissions from the grid decrease due to
implementation of a 50% Renewables Portfolio Standard, reduction
of coal imports, and other factors. The bill's new GHG standard
applies to existing installed fuel cells, as well as future
installed fuel cells, requiring all NEMFC participants to meet
annual GHG reduction standards, to be adopted by ARB, to remain
eligible for NEMFC.
SGIP has been "reformed" pursuant to SB 861, a 2014 budget
trailer bill. In 2015, the PUC adopted more stringent GHG
standards required by SB 861, as follows:
1)350 kilograms (kg)/Megawatts per hour (MWh) (down from 379
kg/MWh, the prior standard) as the maximum level of CO2
emissions allowed for technologies participating in SGIP in
2016.
2)Decreased GHG emission factors for each successive program
year to reflect the increasing renewable energy targets
imposed by SB 350 (De León), Chapter 547, Statutes of 2015,
with a final GHG threshold of 337 kg/MWh in 2020.
In June 2016, the PUC adopted additional changes to the program,
including the following:
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1)Beginning in 2017, generation projects must use 10% biogas -
this escalates up to 100% by 2020.
2)Storage is allocated 75% of funds (15% carved out for
residential projects). Generating technologies are allocated
the remaining 25% (40% carved out for renewable generation).
3)A lottery will replace the first-come first-served system,
with lottery done by budget category. Energy storage projects
paired with renewables or located in an Aliso Canyon-affected
area will be given priority in the lottery.
4)A 20% developer cap replaces the previous 40% manufacturer
cap.
As promising as these changes may be, they have yet to be fully
implemented, much less evaluated. In addition, the recent round
of SGIP funding (February 2016) was subject to allegations of
"hacking" and misconduct on the part of an applicant who
manipulated the online application process. Finally, some
aspects of the program design, including the percentage
allocation to storage and generation technologies and the
developer cap, are based on the current level of funding.
Doubling funding requires these elements of program design be
reevaluated.
The lack of publicly-available in-use data on SGIP-funded
projects makes determining their actual reliability and
emissions performance difficult. Since emissions performance is
essential to determine eligibility and measure the programs'
performance, it is critical that each eligible customer report
in-use emissions data to the PUC and ARB on a regular basis, and
be subject to on-site inspection to verify equipment operations
and performance, including capacity, thermal output, and usage,
in order to verify criteria pollutant and GHG emissions
performance. This bill lacks provisions to assure that each
eligible customer has an obligation to report emissions data to
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ARB which was included in the language previously approved by
this committee, which was later amended into AB 1530 (Levine) of
the current legislative session.
Analysis Prepared by:
Lawrence Lingbloom / NAT. RES. / (916) 319-2092
FN: 0005029