BILL ANALYSIS Ó
AB 1773
Page 1
Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 1773
(Obernolte) - As Amended March 28, 2016
SUBJECT: Local government renewable energy self-generation
program
SUMMARY: Expands the Renewable Energy Self-Generation Bill
Credit Transfer (RES-BCT) program, which provides that a city,
county, city and county, special district, school district,
political subdivision, or other local public agency may elect to
designate another account or accounts controlled by the
governmental entity to receive bill credits for electricity
generated by a renewable generating facility located within the
boundaries of the governmental entity. Specifically, this bill:
1)Expands the definition of local government to allow a joint
powers authority (JPA) to participate in the RES-BCT program.
2)Excludes a JPA from participating in the RES-BCT program whose
membership includes the federal government, any federal
department or agency, the State of California or another
state, or any department or agency of this state or another
state.
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3)Redefines a "benefitting account" to include an electricity
account located within the geographical boundaries of the
group of public agencies that formed the JPA.
EXISTING LAW:
1)Established the RES-BCT program, which provides that a city,
county, city and county, special district, school district,
political subdivision, or other local public agency may elect
to designate another account or accounts controlled by the
governmental entity to receive bill credits for electricity
generated by a renewable generating facility located within
the boundaries of the governmental entity. (Public Utilities
Code Section 2830)
2)Excludes JPAs from participating in the RES-BCT program.
(Public Utilities Code Section 2830)
3)Defines an eligible "benefitting account" under the RES-BCT
program to mean an electricity account, or more than one
account, located within the geographical boundaries of a local
government or, for a campus, within the geographical boundary
of the city, county, or city and county in which the campus is
located, that is mutually agreed upon by the local government
or campus and an electrical corporation. (Public Utilities
Code Section 2830)
4)Requires benefitting accounts under the RES-BCT program to
receive service under a time-of-use rate schedule and
calculates the BCT amount based on when the electricity was
exported to the grid. (Public Utilities Code Section 2830)
5)Requires the three largest electrical corporations to offer
contracts to local governments under the RES-BCT program until
the combined statewide cumulative generating capacity of all
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eligible renewable facilities within their service territories
reaches 250 megawatts (MW). (Public Utilities Code Section
2830)
6)Requires the California Public Utilities Commission (CPUC) to
ensure the transfer of a bill credit to a benefiting account
does not result in a shifting of costs onto bundled service
subscribers. (Public Utilities Code Section 2830)
7)Enables two or more public agencies by contractual agreement
to jointly exercise any power common to the contracting
agencies, thus creating a JPA. (Government Code Section 6500)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "The RES-BCT program allows local
government entities to credit energy generated from renewable
sources against electricity used at more than just the
facility where the renewable energy is generated. Joint powers
authorities were explicitly prohibited from participating in
the program, regardless of their geographic scope.
Organizations like the Victor Valley Water Reclamation
Authority that may still operate within the bounds of a local
government entity are prohibited from participating based on
their status as a JPA. While participation in the program has
grown, there is still a fair amount of room under the cap of
the program. AB 1773 would expand the program to allow certain
JPAs ? to participate in the program. The bill would limit the
JPAs that could participate to those that are operating with
the geographic bounds of the local entities that created
them."
2)Background: In 2008, the Legislature approved AB 2466
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(Laird), Chapter 540, Statutes of 2008, which allowed a local
governmental entity to operate a small renewable electricity
generating facility in one location and have the utility
credit the output of that facility against electricity the
local government consumes at another location. This program
is now known as the RES-BCT program or the Laird program.
The basic concept of the program was to allow governmental
entities that had many different electricity meters (and thus
many accounts with a utility) to produce renewable power at a
location where they had very little demand and then use the
electricity to benefit another building where demand is high
but may not be a suitable location to build renewable
generation. For example, a city could locate solar panels over
the parking lot at a public park, but use the electricity to
benefit city hall.
Under the RES-BCT program, local governments such as cities
and counties, school districts, special districts, political
subdivisions, and public agencies may participate as well as
individual college campuses. In addition, the program requires
that the transfer of a bill credit to a benefiting account
does not result in a shifting of costs to bundled service
subscribers.
3)RES-BCT Participation: According to the CPUC, in 2011 no local
governments were participating in the RES-BCT program in any
of the three investor-owned utility (IOU) territories -
Pacific, Gas & Electric (PG&E), Southern California Edison
(SCE), and San Diego Gas & Electric (SDG&E). To increase
participation in the RES-BCT program, the legislature passed
AB 512 (Gordon), Chapter 478, Statutes of 2011, which
increased the maximum size for renewable energy generating
systems eligible for the program from 1 MW to 5 MW. In
addition to supporting AB 512, the CPUC recommended that the
program be expanded further so that all customers could be
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eligible to participate, not just local governments and
college campuses. According to the most recent available data,
the statewide cumulative amount of energy generated within the
RES-BCT program is now 50 MW, which leaves 200 MW available
under the total statewide program capacity.
4)JPAs in General: A JPA is created when two or more public
agencies agree to jointly exercise any power common to the
contracting agencies. According to the Senate Local Government
Committee, there are five common types of JPAs: public
services, financial services, insurance pooling and purchasing
discounts, planning services, and regulatory enforcement. JPAs
across the state are extremely diverse in their goals, size,
members, and locations. For example, the Southern California
Regional Liability Excess Fund (ReLiEF) JPA provides
risk-management services to California public schools in
various counties including San Bernardino, Orange, and San
Diego. By contrast, the Heartland Fire & Rescue Division of
the El Cajon Fire Department is a JPA that provides management
and administrative services to El Cajon, La Mesa, and Lemon
Grove, three neighboring cities within San Diego County. The
bill sponsor, Victor Valley Water Reclamation Authority, is a
JPA with its membership located entirely within San Bernardino
County.
5)JPAs, Geographical Boundaries, and Direct Access: If this bill
were to allow all JPAs to participate in the RES-BCT program,
contracts between JPAs and IOUs could include benefitting
accounts and generation facilities spread out across large
geographical areas, crossing county lines and utility
territories. AB 1031 (Blumenfield), Chapter 380, Statutes of
2009, raised similar concerns as it intended to expand the
RES-BCT program to allow the participation of public colleges
and universities, which exist in large statewide systems
similar to JPAs. To address this geographical concern, the
Senate Energy, Utilities, and Commerce Committee recommended
limiting eligibility for the program to individual campuses;
this recommendation was adopted and exists within current law.
Correspondingly, current law again indicates a desire to
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restrict the RES-BCT program based on geography as it requires
benefitting accounts to be located within the geographical
bounds of the local government participating in the RES-BCT
program.
As introduced, this bill would have allowed any JPA to
participate in the RES-BCT program. To address these
geographical concerns explained above, this bill was amended
by the author. The amendments exclude JPAs from participating
in the program if one of their members is an agency or
department of the federal government, the state of California,
or another state. The amendments also restrict the definition
of a benefitting account to mean an electricity account
located within the geographical boundaries of the group of
public agencies that formed the JPA. However, these amendments
are not narrow enough to ensure a RES-BCT contract between a
JPA and an IOU would not cross county lines or utility
territories. Referring back to the example of Southern
California ReLiEF, the geographic boundaries of the group of
public agencies that formed this JPA include at least three
different counties and include areas serviced by at least two
different IOUs. Based on the existing language of this bill,
Southern California ReLiEF would likely be eligible to
participate in the RES-BCT program.
In addition to geographical boundaries, some local governments
and schools may be procuring their electricity from an entity
other than their incumbent electric utility. These
arrangements are known as "direct access." Some university and
state college campuses are wholly or partially direct access
customers. Direct access customers should be eligible to
participate in the RES-BCT program only to the extent that
they procure electricity the incumbent electric utility.
The author may wish to consider an amendment to allow JPAs to
participate in the RES-BCT program if their renewable energy
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generation facility and electricity accounts are wholly
located within the confines of a single county and electric
service provided by a single electrical corporation.
6)Arguments in Support: According to the Victor Valley
Wastewater Reclamation Authority, the sponsor of this bill,
"Current law explicitly excludes joint powers authorities from
eligibility to participate in the RES-BCT Program, even if
they operate with the geographic bounds of a local government
entity. The Victor Valley Wastewater Reclamation Authority
resides in the geographic boundary of the city of Victorville.
VVWRA's Waste to Energy program is a leader in the wastewater
industry with the capability of producing enough green energy
to power our entire plant with electricity left over. VVWRA is
also in the position to expand the program and generate even
more sustainable energy. But current law does not allow VVWRA,
as a JPA, to export that power to the grid. AB 1773 would
eliminate the barriers VVWRA is facing and allow a new green,
environmentally friendly power source for our region."
7)Double Referred. This bill is double referred to the Committee
on Local Government.
8)Suggested Amendments:
CHAPTER 7.5. Local Government Renewable Energy Self-Generation
Program [2830- 2830.]
2830
(a) As used in this section, the following terms have the
following meanings:
(1) "Benefiting account" means
(A) an electricity account, or more than one account, located
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within the geographical boundaries of a local government or,
for a campus, within the geographical boundary of the city,
county, or city and county in which the campus is located,
that is mutually agreed upon by the local government, campus,
or joint powers authority and an electrical corporation.
(B) an electricity account, or more than one account belonging
to members of a joint powers authority, within the geographic
boundaries of the group of public agencies that formed the
joint powers authority if the renewable energy generation
facility and electricity accounts are wholly located within
the confines of a single county within which the JPA is
located and electric service is provided by a single
electrical corporation, that is mutually agreed upon by the
joint powers authority and an electrical corporation.
(2) "Bill credit" means an amount of money credited to a
benefiting account that is calculated based upon the
time-of-use electricity generation component of the
electricity usage charge of the generating account, multiplied
by the quantities of electricity generated by an eligible
renewable generating facility that are exported to the grid
during the corresponding time period. Electricity is exported
to the grid if it is generated by an eligible renewable
generating facility, is not utilized onsite by the local
government, and the electricity flows through the meter site
and on to the electrical corporation's distribution or
transmission infrastructure.
(3) "Campus" means an individual community college campus,
individual California State University campus, or individual
University of California campus.
(4) "Eligible renewable generating facility" means a
generation facility that meets all of the following
requirements:
(A) Has a generating capacity of no more than five megawatts.
(B) Is an eligible renewable energy resource, as defined in
Article 16 (commencing with Section 399.11) of Part 1.
(C) Is located within the geographical boundary of the local
government or, for a campus, within the geographical boundary
of the city or city and county, if the campus is located in an
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incorporated area, or county, if the campus is located in an
unincorporated area.
(D) Is owned by, operated by, or on property under the control
of the local government or campus.
(E) Is sized to offset all or part of the electrical load of
the benefiting account. For these purposes, premises that are
leased by a local government or campus are under the control
of the local government or campus.
(5) "Generating account" means the time-of-use electric
service account of the local government or campus where the
eligible renewable generating facility is located.
(6) "Local government" means a city, county, whether general
law or chartered, city and county, special district, school
district, political subdivision, or other local public agency,
or a joint powers authority formed pursuant to the Joint
Exercise of Powers Act (Chapter 5 (commencing with Section
6500) of Division 7 of Title 1 of the Government Code) that
has as members public agencies located within the same county
and eligible utility territory , but shall not mean the state,
other than an individual campus of the University of
California or the California State University, or any joint
powers authority that has as members public agencies located
in differing counties and electric utility territories, or
that has as a member the federal government, any federal
department or agency, this or another state, or any department
or agency of this state or another state.
(b) Subject to the limitation in subdivision (h), a local
government may elect to receive electric service pursuant to
this section if all of the following conditions are met:
(1) The local government designates one or more benefiting
accounts to receive a bill credit.
(2) A benefiting account receives service under a time-of-use
rate schedule.
(3) The benefiting account is the responsibility of, and
serves property that is owned, operated, or on property under
the control of the same local government that owns, operates,
or controls the eligible renewable generating facility.
(4) The electrical output of the eligible renewable generating
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facility is metered for time of use to allow calculation of
the bill credit based upon when the electricity is exported to
the grid.
(5) All costs associated with the metering requirements of
paragraphs (2) and (4) are the responsibility of the local
government.
(6) All costs associated with interconnection are the
responsibility of the local government. For purposes of this
paragraph, "interconnection" has the same meaning as defined
in Section 2803, except that it applies to the interconnection
of an eligible renewable generating facility rather than the
energy source of a private energy producer.
(7) The local government does not sell electricity exported to
the electrical grid to a third party.
(8) All electricity exported to the grid by the local
government that is generated by the eligible renewable
generating facility becomes the property of the electrical
corporation to which the facility is interconnected, but shall
not be counted toward the electrical corporation's total
retail sales for purposes of Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1. Ownership of the
renewable energy credits, as defined in Section 399.12, shall
be the same as the ownership of the renewable energy credits
associated with electricity that is net metered pursuant to
Section 2827.
(9) An electrical corporation shall not be required to
compensate a local government for electricity generated from
an eligible renewable facility pursuant to this section in
excess of the bill credits applied to the designated
benefiting account. A local government renewable generation
facility participating pursuant to this section shall not be
eligible for any other tariff or program that requires an
electrical corporation to purchase generation from that
facility while participating in the local government renewable
energy self-generation program pursuant to this section.
(c) (1) A benefiting account shall be billed for all
electricity usage, and for each bill component, at the rate
schedule applicable to the benefiting account, including any
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cost-responsibility surcharge or other cost recovery
mechanism, as determined by the commission, to reimburse the
Department of Water Resources for purchases of electricity,
pursuant to Division 27 (commencing with Section 80000) of the
Water Code.
(2) The bill shall then subtract the bill credit applicable to
the benefiting account. The generation component credited to
the benefiting account shall not include the
cost-responsibility surcharge or other cost recovery
mechanism, as determined by the commission, to reimburse the
Department of Water Resources for purchases of electricity,
pursuant to Division 27 (commencing with Section 80000) of the
Water Code. The electrical corporation shall ensure that the
local government receives the full bill credit.
(3) If, during the billing cycle, the generation component of
the electricity usage charges exceeds the bill credit, the
benefiting account shall be billed for the difference.
(4) If, during the billing cycle, the bill credit applied
pursuant to paragraph (2) exceeds the generation component of
the electricity usage charges, the difference shall be carried
forward as a financial credit to the next billing cycle.
(5) After the electricity usage charge pursuant to paragraph
(1) and the credit pursuant to paragraph (2) are determined
for the last billing cycle of a 12-month period, any remaining
credit resulting from the application of this section shall be
reset to zero.
(d) The commission shall ensure that the transfer of a bill
credit to a benefiting account does not result in a shifting
of costs to bundled service subscribers. The costs associated
with the transfer of a bill credit shall include all
billing-related expenses.
(e) Not more frequently than once per year, and upon providing
the electrical corporation with a minimum of 60 days' notice,
the local government may elect to change a benefiting account.
Any credit resulting from the application of this section
earned prior to the change in a benefiting account that has
not been used as of the date of the change in the benefiting
account shall be applied, and may only be applied, to a
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benefiting account as changed.
(f) A local government shall provide the electrical
corporation to which the eligible renewable generating
facility will be interconnected with not less than 60 days'
notice prior to the eligible renewable generating facility
becoming operational. The electrical corporation shall file an
advice letter with the commission that complies with this
section not later than 30 days after receipt of the notice
proposing a rate tariff for a benefiting account. The
commission, within 30 days of the date of filing, shall
approve the proposed tariff or specify conforming changes to
be made by the electrical corporation to be filed in a new
advice letter.
(g) The local government may terminate its election pursuant
to subdivision (b), upon providing the electrical corporation
with a minimum of 60 days' notice. Should the local government
sell its interest in the eligible renewable generating
facility, or sell the electricity generated by the eligible
renewable generating facility, in a manner other than required
by this section, upon the date of either event, and the
earliest date if both events occur, no further bill credit
pursuant to paragraph (3) of subdivision (b) may be earned.
Only credit earned prior to that date shall be made to a
benefiting account.
(h) An electrical corporation is not obligated to provide a
bill credit to a benefiting account that is not designated by
a local government prior to the point in time that the
combined statewide cumulative rated generating capacity of all
eligible renewable generating facilities within the service
territories of the state's three largest electrical
corporations reaches 250 megawatts. Only those eligible
renewable generating facilities that are providing bill
credits to benefiting accounts pursuant to this section shall
count toward reaching this 250-megawatt limitation. Each
electrical corporation shall only be required to offer service
or contracts under this section until that electrical
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corporation reaches its proportionate share of the
250-megawatt limitation based on the ratio of its peak demand
to the total statewide peak demand of all electrical
corporations.
(i) This chapter does not apply to an electrical corporation
with 60,000 or fewer customer accounts.
9)Prior Legislation:
AB 512 (Gordon), Chapter 478, Statutes of 2011: Increased the
maximum size for renewable energy generating systems eligible
under the RES-BCT program from 1 MW to 5 MW.
AB 2693 (Blumenfield), 2010: Attempted to expand the RES-BCT
program to allow the participation of JPAs. Died in the
Assembly Utilities and Commerce Committee.
AB 1031 (Blumenfield), Chapter 380, Statutes of 2009: Expanded
the RES-BCT program to allow individual public college and
university campuses to participate.
AB 2466 (Laird), Chapter 540, Statutes of 2008: Created the
RES-BCT program, which allowed a local governmental entity to
operate a small renewable electricity generating facility in
one location and have the utility credit the output of that
facility against electricity the local government consumes at
another location.
REGISTERED SUPPORT / OPPOSITION:
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Support
Association of California Water Agencies
Victor Valley Wastewater Reclamation Authority
Opposition
None on file.
Analysis Prepared by:Darion Johnston / U. & C. / (916) 319-2083