Amended in Assembly April 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2339

Introduced by Assembly Members Irwin and Low

February 18, 2016

An act to amend Section 2827 of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

AB 2339, as amended, Irwin. Net energy metering.

Existing law relative to private energy producers requires every electric utility, including electrical corporations and local publicly owned electric utilities, to develop a standard contract or tariff providing for net energy metering and to make this contract or tariff available to eligible customer-generators upon request for generation by a renewable electrical generation facility. Existing law provides that an electric utility that is not a large electrical corporation is not obligated to provide net energy metering when the combined total peak demand of all electricity used by eligible customer-generators in the service area exceeds 5% of the aggregate customer peak demand of the electric utility.

This bill would define the “aggregate customer peak demand” for the purposes of calculating the net energy metering program limit for electric utilities that begin insert have more than 25,000 service connections, but end insert are not large electrical corporations. begin insert The bill would dictate the manner of calculating aggregate customer peak demand if certain information is unavailable, as specified. end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

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

SECTION 1.  

Section 2827 of the Public Utilities Code is
amended to read:

2827.  

(a) The Legislature finds and declares that a program
to provide net energy metering combined with net surplus
compensation, co-energy metering, and wind energy co-metering
for eligible customer-generators is one way to encourage substantial
private investment in renewable energy resources, stimulate in-state
economic growth, reduce demand for electricity during peak
consumption periods, help stabilize California’s energy supply
infrastructure, enhance the continued diversification of California’s
energy resource mix, reduce interconnection and administrative
costs for electricity suppliers, and encourage conservation and
efficiency.

(b) As used in this section, the following terms have the
following meanings:

(1) “Co-energy metering” means a program that is the same in
all other respects as a net energy metering program, except that
the local publicly owned electric utility has elected to apply a
generation-to-generation energy and time-of-use credit formula
as provided in subdivision (i).

(2) “Electrical cooperative” means an electrical cooperative as
defined in Section 2776.

(3) “Electric utility” means an electrical corporation, a local
publicly owned electric utility, or an electrical cooperative, or any
other entity, except an electric service provider, that offers electrical
service. This section shall not apply to a local publicly owned
electric utility that serves more than 750,000 customers and that
also conveys water to its customers.

(4) (A) “Eligible customer-generator” means a residential
customer, small commercial customer as defined in subdivision
(h) of Section 331, or commercial, industrial, or agricultural
customer of an electric utility, who uses a renewable electrical
generation facility, or a combination of those facilities, with a total
capacity of not more than one megawatt, that is located on the
customer’s owned, leased, or rented premises, and is interconnected
and operates in parallel with the electrical grid, and is intended
primarily to offset part or all of the customer’s own electrical
requirements.

(B) (i) Notwithstanding subparagraph (A), “eligible
customer-generator” includes the Department of Corrections and
Rehabilitation using a renewable electrical generation technology,
or a combination of renewable electrical generation technologies,
with a total capacity of not more than eight megawatts, that is
located on the department’s owned, leased, or rented premises,
and is interconnected and operates in parallel with the electrical
grid, and is intended primarily to offset part or all of the facility’s
own electrical requirements. The amount of any wind generation
exported to the electrical grid shall not exceed 1.35 megawatt at
any time.

(ii) Notwithstanding paragraph (2) of subdivision (e), an
electrical corporation shall be afforded a prudent but necessary
time, as determined by the executive director of the commission,
to study the impacts of a request for interconnection of a renewable
generator with a capacity of greater than one megawatt under this
subparagraph. If the study reveals the need for upgrades to the
transmission or distribution system arising solely from the
interconnection, the electrical corporation shall be afforded the
time necessary to complete those upgrades before the
interconnection and those costs shall be borne by the
customer-generator. Upgrade projects shall comply with applicable
state and federal requirements, including requirements of the
Federal Energy Regulatory Commission.

(C) (i) For purposes of this subparagraph, a “United States
Armed Forces base or facility” is an establishment under the
jurisdiction of the United States Army, Navy, Air Force, Marine
Corps, or Coast Guard.

(ii) Notwithstanding subparagraph (A), a United States Armed
Forces base or facility is an “eligible customer-generator” if the
base or facility uses a renewable electrical generation facility, or
a combination of those facilities, the renewable electrical generation
facility is located on premises owned, leased, or rented by the
United States Armed Forces base or facility, the renewable
electrical generation facility is interconnected and operates in
parallel with the electrical grid, the renewable electrical generation
facility is intended primarily to offset part or all of the base or
facility’s own electrical requirements, and the renewable electrical
generation facility has a generating capacity that does not exceed
the lesser of 12 megawatts or one megawatt greater than the
minimum load of the base or facility over the prior 36 months.
Unless prohibited by federal law, a renewable electrical generation
facility shall not be eligible for net energy metering for privatized
military housing pursuant to this subparagraph if the renewable
electrical generation facility was procured using a sole source
process. A renewable electrical generation facility procured using
best value criteria, if otherwise eligible, may be used for net energy
metering for privatized military housing pursuant to this
subparagraph. For these purposes, “best value criteria” means a
value determined by objective criteria and may include, but is not
limited to, price, features, functions, and life-cycle costs.

(iii) A United States Armed Forces base or facility that is an
eligible customer generator pursuant to this subparagraph shall
not receive compensation for exported generation.

(iv) Notwithstanding paragraph (2) of subdivision (e), an
electrical corporation shall be afforded a prudent but necessary
time, as determined by the executive director of the commission
but not less than 60 working days, to study the impacts of a request
for interconnection of a renewable electrical generation facility
with a capacity of greater than one megawatt pursuant to this
subparagraph. If the study reveals the need for upgrades to the
transmission or distribution system arising solely from the
interconnection, the electrical corporation shall be afforded the
time necessary to complete those upgrades before the
interconnection and the costs of those upgrades shall be borne by
the eligible customer-generator. Upgrade projects shall comply
with applicable state and federal requirements, including
requirements of the Federal Energy Regulatory Commission. For
any renewable generation facility that interconnects directly to the
transmission grid or that requires transmission upgrades, the United
States Armed Forces base or facility shall comply with all Federal
Energy Regulatory Commission interconnection procedures and
requirements.

(v) An electrical corporation shall make a tariff, as approved
by the commission, available pursuant to this subparagraph by
November 1, 2015.

(5) “Large electrical corporation” means an electrical
corporation with more than 100,000 service connections in
California.

(6) “Net energy metering” means measuring the difference
between the electricity supplied through the electrical grid and the
electricity generated by an eligible customer-generator and fed
back to the electrical grid over a 12-month period as described in
subdivisions (c) and (h).

(7) “Net surplus customer-generator” means an eligible
customer-generator that generates more electricity during a
12-month period than is supplied by the electric utility to the
eligible customer-generator during the same 12-month period.

(8) “Net surplus electricity” means all electricity generated by
an eligible customer-generator measured in kilowatthours over a
12-month period that exceeds the amount of electricity consumed
by that eligible customer-generator.

(9) “Net surplus electricity compensation” means a per
kilowatthour rate offered by the electric utility to the net surplus
customer-generator for net surplus electricity that is set by the
ratemaking authority pursuant to subdivision (h).

(10) “Ratemaking authority” means, for an electrical
corporation, the commission, for an electrical cooperative, its
ratesetting body selected by its shareholders or members, and for
a local publicly owned electric utility, the local elected body
responsible for setting the rates of the local publicly owned utility.

(11) “Renewable electrical generation facility” means a facility
that generates electricity from a renewable source listed in
paragraph (1) of subdivision (a) of Section 25741 of the Public
Resources Code. A small hydroelectric generation facility is not
an eligible renewable electrical generation facility if it will cause
an adverse impact on instream beneficial uses or cause a change
in the volume or timing of streamflow.

(12) “Wind energy co-metering” means any wind energy project
greater than 50 kilowatts, but not exceeding one megawatt, where
the difference between the electricity supplied through the electrical
grid and the electricity generated by an eligible customer-generator
and fed back to the electrical grid over a 12-month period is as
described in subdivision (h). Wind energy co-metering shall be
accomplished pursuant to Section 2827.8.

(c) (1) Except as provided in paragraph (4) and in Section
2827.1, every electric utility shall develop a standard contract or
tariff providing for net energy metering, and shall make this
standard contract or tariff available to eligible customer-generators,
upon request, on a first-come-first-served basis until the time that
the total rated generating capacity used by eligible
customer-generators exceeds 5 percent of the electric utility’s
aggregate customer peak demand. Net energy metering shall be
accomplished using a single meter capable of registering the flow
of electricity in two directions. An additional meter or meters to
monitor the flow of electricity in each direction may be installed
with the consent of the eligible customer-generator, at the expense
of the electric utility, and the additional metering shall be used
only to provide the information necessary to accurately bill or
credit the eligible customer-generator pursuant to subdivision (h),
or to collect generating system performance information for
research purposes relative to a renewable electrical generation
facility. If the existing electrical meter of an eligible
customer-generator is not capable of measuring the flow of
electricity in two directions, the eligible 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 single meter. An eligible customer-generator that is receiving
service other than through the standard contract or tariff may elect
to receive service through the standard contract or tariff until the
electric utility reaches the generation limit set forth in this
paragraph. Once the generation limit is reached, only eligible
customer-generators that had previously elected to receive service
pursuant to the standard contract or tariff have a right to continue
to receive service pursuant to the standard contract or tariff.
Eligibility for net energy metering does not limit an eligible
customer-generator’s eligibility for any other rebate, incentive, or
credit provided by the electric utility, or pursuant to any
governmental program, including rebates and incentives provided
pursuant to the California Solar Initiative.

(2) An electrical corporation shall include a provision in the net
energy metering contract or tariff requiring that any customer with
an existing electrical generating facility and meter who enters into
a new net energy metering contract shall provide an inspection
report to the electrical corporation, unless the electrical generating
facility and meter have been installed or inspected within the
previous three years. The inspection report shall be prepared by a
California licensed contractor who is not the owner or operator of
the facility and meter. A California licensed electrician shall
perform the inspection of the electrical portion of the facility and
meter.

(3) (A) On an annual basis, every electric utility shall make
available to the ratemaking authority information on the total rated
generating capacity used by eligible customer-generators that are
customers of that provider in the provider’s service area and the
net surplus electricity purchased by the electric utility pursuant to
this section.

(B) An electric service provider operating pursuant to Section
394 shall make available to the ratemaking authority the
information required by this paragraph for each eligible
customer-generator that is their customer for each service area of
an electrical corporation, local publicly owned electric utility, or
electrical cooperative, in which the eligible customer-generator
has net energy metering.

(C) The ratemaking authority shall develop a process for making
the information required by this paragraph available to electric
utilities, and for using that information to determine when, pursuant
to paragraphs (1) and (4), an electric utility is not obligated to
provide net energy metering to additional eligible
customer-generators in its service area.

(4) (A) (i) An electric utility that is not a large electrical
corporation is not obligated to provide net energy metering to
additional eligible customer-generators in its service area when
the combined total peak demand of all electricity used by eligible
customer-generators served by all the electric utilities in that
service area furnishing net energy metering to eligible
customer-generators exceeds 5 percent of the aggregate customer
peak demand of those electric utilities. begin delete An electric utility that is
not a large electrical corporation may determine aggregate customer
peak demand using an estimation technique that the Energy
Commission has determined to be reasonable. end delete

(ii) For the purpose of calculating the program limit of an
electric utility that begin insert has more than 25,000 service connections, but end insert
is not a large electrical corporation, the “aggregate customer peak
demand” means the highest sum of the noncoincident peak
demands of all the customers of electric utilities in that service
area that occurs in any calendar year. begin insert If an electric utility that has
more than 25,000 service connections, but is not a large electrical
corporation, does not have access to 15-minute or 30-minute
interval data to calculate noncoincident demand, it shall base the
calculation on load research studies to estimate load profiles by
customer class using standard statistical sampling techniques to
select representative load samples, use a four-year moving average
of the most recently available annual noncoincident peak load
data, and not decrease the level below the most recent level
determined. end insert

begin insert

(iii) An electric utility that is not a large electrical corporation
is deemed to have complied with this paragraph if the aggregate
generating capacity of net energy metered systems in its service
territory exceeded 5 percent of the highest total peak demand
served by that electric utility prior to January 1, 2016, and the
electric utility’s ratemaking authority had adopted a successor
standard contract or tariff to facilitate new eligible
customer-generators as of that date.

end insert

(B) The commission shall require every large electrical
corporation to make the standard contract or tariff available to
eligible customer-generators, continuously and without
interruption, until such times as the large electrical corporation
reaches its net energy metering program limit or July 1, 2017,
whichever is earlier. A large electrical corporation reaches its
program limit when the combined total peak demand of all
electricity used by eligible customer-generators served by all the
electric utilities in the large electrical corporation’s service area
furnishing net energy metering to eligible customer-generators
exceeds 5 percent of the aggregate customer peak demand of those
electric utilities. For purposes of calculating a large electrical
corporation’s program limit, “aggregate customer peak demand”
means the highest sum of the noncoincident peak demands of all
of the large electrical corporation’s customers that occurs in any
calendar year. To determine the aggregate customer peak demand,
every large electrical corporation shall use a uniform method
approved by the commission. The program limit calculated
pursuant to this paragraph shall not be less than the following:

(i) For San Diego Gas and Electric Company, when it has made
607 megawatts of nameplate generating capacity available to
eligible customer-generators.

(ii) For Southern California Edison Company, when it has made
2,240 megawatts of nameplate generating capacity available to
eligible customer-generators.

(iii) For Pacific Gas and Electric Company, when it has made
2,409 megawatts of nameplate generating capacity available to
eligible customer-generators.

(C) Every large electrical corporation shall file a monthly report
with the commission detailing the progress toward the net energy
metering program limit established in subparagraph (B). The report
shall include separate calculations on progress toward the limits
based on operating solar energy systems, cumulative numbers of
interconnection requests for net energy metering eligible systems,
and any other criteria required by the commission.

(D) Beginning July 1, 2017, or upon reaching the net metering
program limit of subparagraph (B), whichever is earlier, the
obligation of a large electrical corporation to provide service
pursuant to a standard contract or tariff shall be pursuant to Section
2827.1 and applicable state and federal requirements.

(d) Every electric utility shall make all necessary forms and
contracts for net energy metering and net surplus electricity
compensation service available for download from the Internet.

(e) (1) Every electric utility shall ensure that requests for
establishment of net energy metering and net surplus electricity
compensation are processed in a time period not exceeding that
for similarly situated customers requesting new electric service,
but not to exceed 30 working days from the date it receives a
completed application form for net energy metering service or net
surplus electricity compensation, including a signed interconnection
agreement from an eligible customer-generator and the electric
inspection clearance from the governmental authority having
jurisdiction.

(2) Every electric utility shall ensure that requests for an
interconnection agreement from an eligible customer-generator
are processed in a time period not to exceed 30 working days from
the date it receives a completed application form from the eligible
customer-generator for an interconnection agreement.

(3) If an electric utility is unable to process a request within the
allowable timeframe pursuant to paragraph (1) or (2), it shall notify
the eligible customer-generator and the ratemaking authority of
the reason for its inability to process the request and the expected
completion date.

(f) (1) If a customer participates in direct transactions pursuant
to paragraph (1) of subdivision (b) of Section 365, or Section 365.1,
with an electric service provider that does not provide distribution
service for the direct transactions, the electric utility that provides
distribution service for the eligible customer-generator is not
obligated to provide net energy metering or net surplus electricity
compensation to the customer.

(2) If a customer participates in direct transactions pursuant to
paragraph (1) of subdivision (b) of Section 365 or 365.1 with an
electric service provider, and the customer is an eligible
customer-generator, the electric utility that provides distribution
service for the direct transactions may recover from the customer’s
electric service provider the incremental costs of metering and
billing service related to net energy metering and net surplus
electricity compensation in an amount set by the ratemaking
authority.

(g) Except for the time-variant kilowatthour pricing portion of
any tariff adopted by the commission pursuant to paragraph (4) of
subdivision (a) of Section 2851, 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 same customer would be assigned if the customer did
not use a renewable electrical generation facility, except that
eligible customer-generators shall not be assessed standby charges
on the electrical generating capacity or the kilowatthour production
of a renewable electrical generation facility. The charges for all
retail rate components for eligible customer-generators shall be
based exclusively on the customer-generator’s net kilowatthour
consumption over a 12-month period, without regard to the eligible
customer-generator’s choice as to from whom it purchases
electricity that is not self-generated. Any new or additional demand
charge, standby charge, customer charge, minimum monthly
charge, interconnection charge, or any other charge that would
increase an eligible customer-generator’s costs beyond those of
other customers who are not eligible customer-generators in the
rate class to which the eligible customer-generator would otherwise
be assigned if the customer did not own, lease, rent, or otherwise
operate a renewable electrical generation facility is contrary to the
intent of this section, and shall not form a part of net energy
metering contracts or tariffs.

(h) For eligible customer-generators, the net energy metering
calculation shall be made by measuring the difference between
the electricity supplied to the eligible customer-generator and the
electricity generated by the eligible customer-generator and fed
back to the electrical grid over a 12-month period. The following
rules shall apply to the annualized net metering calculation:

(1) The eligible residential or small commercial
customer-generator, at the end of each 12-month period following
the date of final interconnection of the eligible
customer-generator’s system with an electric utility, and at each
anniversary date thereafter, shall be billed for electricity used
during that 12-month period. The electric utility shall determine
if the eligible residential or small commercial customer-generator
was a net consumer or a net surplus customer-generator during
that period.

(2) At the end of each 12-month period, where the electricity
supplied during the period by the electric utility exceeds the
electricity generated by the eligible residential or small commercial
customer-generator during that same period, the eligible residential
or small commercial customer-generator is a net electricity
consumer and the electric utility shall be owed compensation for
the eligible customer-generator’s net kilowatthour consumption
over that 12-month period. The compensation owed for the eligible
residential or small commercial customer-generator’s consumption
shall be calculated as follows:

(A) For all eligible customer-generators taking service under
contracts or tariffs employing “baseline” and “over baseline” rates,
any net monthly consumption of electricity shall be calculated
according to the terms of the contract or tariff to which the same
customer would be assigned to, or be eligible for, if the customer
was not an eligible customer-generator. If those same
customer-generators are net generators over a billing period, the
net kilowatthours generated shall be valued at the same price per
kilowatthour as the electric utility would charge for the baseline
quantity of electricity during that billing period, and if the number
of kilowatthours generated exceeds the baseline quantity, the excess
shall be valued at the same price per kilowatthour as the electric
utility would charge for electricity over the baseline quantity during
that billing period.

(B) For all eligible customer-generators taking service under
contracts or tariffs employing time-of-use rates, any net monthly
consumption of electricity shall be calculated according to the
terms of the contract or tariff to which the same customer would
be assigned, or be eligible for, if the customer was not an eligible
customer-generator. When those same customer-generators are
net generators during any discrete time-of-use period, the net
kilowatthours produced shall be valued at the same price per
kilowatthour as the electric utility would charge for retail
kilowatthour sales during that same time-of-use period. If the
eligible customer-generator’s time-of-use electrical meter is unable
to measure the flow of electricity in two directions, paragraph (1)
of subdivision (c) shall apply.

(C) For all eligible residential and small commercial
customer-generators and for each billing period, the net balance
of moneys owed to the electric utility for net consumption of
electricity or credits owed to the eligible customer-generator for
net generation of electricity shall be carried forward as a monetary
value until the end of each 12-month period. For all eligible
commercial, industrial, and agricultural customer-generators, the
net balance of moneys owed shall be paid in accordance with the
electric utility’s normal billing cycle, except that if the eligible
commercial, industrial, or agricultural customer-generator is a net
electricity producer over a normal billing cycle, any excess
kilowatthours generated during the billing cycle shall be carried
over to the following billing period as a monetary value, calculated
according to the procedures set forth in this section, and appear as
a credit on the eligible commercial, industrial, or agricultural
customer-generator’s account, until the end of the annual period
when paragraph (3) shall apply.

(3) At the end of each 12-month period, where the electricity
generated by the eligible customer-generator during the 12-month
period exceeds the electricity supplied by the electric utility during
that same period, the eligible customer-generator is a net surplus
customer-generator and the electric utility, upon an affirmative
election by the net surplus customer-generator, shall either (A)
provide net surplus electricity compensation for any net surplus
electricity generated during the prior 12-month period, or (B) allow
the net surplus customer-generator to apply the net surplus
electricity as a credit for kilowatthours subsequently supplied by
the electric utility to the net surplus customer-generator. For an
eligible customer-generator that does not affirmatively elect to
receive service pursuant to net surplus electricity compensation,
the electric utility shall retain any excess kilowatthours generated
during the prior 12-month period. The eligible customer-generator
not affirmatively electing to receive service pursuant to net surplus
electricity compensation shall not be owed any compensation for
the net surplus electricity unless the electric utility enters into a
purchase agreement with the eligible customer-generator for those
excess kilowatthours. Every electric utility shall provide notice to
eligible customer-generators that they are eligible to receive net
surplus electricity compensation for net surplus electricity, that
they must elect to receive net surplus electricity compensation,
and that the 12-month period commences when the electric utility
receives the eligible customer-generator’s election. For an electric
utility that is an electrical corporation or electrical cooperative,
the commission may adopt requirements for providing notice and
the manner by which eligible customer-generators may elect to
receive net surplus electricity compensation.

(4) (A) An eligible customer-generator with multiple meters
may elect to aggregate the electrical load of the meters located on
the property where the renewable electrical generation facility is
located and on all property adjacent or contiguous to the property
on which the renewable electrical generation facility is located, if
those properties are solely owned, leased, or rented by the eligible
customer-generator. If the eligible customer-generator elects to
aggregate the electric load pursuant to this paragraph, the electric
utility shall use the aggregated load for the purpose of determining
whether an eligible customer-generator is a net consumer or a net
surplus customer-generator during a 12-month period.

(B) If an eligible customer-generator chooses to aggregate
pursuant to subparagraph (A), the eligible customer-generator shall
be permanently ineligible to receive net surplus electricity
compensation, and the electric utility shall retain any kilowatthours
in excess of the eligible customer-generator’s aggregated electrical
load generated during the 12-month period.

(C) If an eligible customer-generator with multiple meters elects
to aggregate the electrical load of those meters pursuant to
subparagraph (A), and different rate schedules are applicable to
service at any of those meters, the electricity generated by the
renewable electrical generation facility shall be allocated to each
of the meters in proportion to the electrical load served by those
meters. For example, if the eligible customer-generator receives
electric service through three meters, two meters being at an
agricultural rate that each provide service to 25 percent of the
customer’s total load, and a third meter, at a commercial rate, that
provides service to 50 percent of the customer’s total load, then
50 percent of the electrical generation of the eligible renewable
generation facility shall be allocated to the third meter that provides
service at the commercial rate and 25 percent of the generation
shall be allocated to each of the two meters providing service at
the agricultural rate. This proportionate allocation shall be
computed each billing period.

(D) This paragraph shall not become operative for an electrical
corporation unless the commission determines that allowing
eligible customer-generators to aggregate their load from multiple
meters will not result in an increase in the expected revenue
obligations of customers who are not eligible customer-generators.
The commission shall make this determination by September 30,
2013. In making this determination, the commission shall determine
if there are any public purpose or other noncommodity charges
that the eligible customer-generators would pay pursuant to the
net energy metering program as it exists prior to aggregation, that
the eligible customer-generator would not pay if permitted to
aggregate the electrical load of multiple meters pursuant to this
paragraph.

(E) A local publicly owned electric utility or electrical
cooperative shall only allow eligible customer-generators to
aggregate their load if the utility’s ratemaking authority determines
that allowing eligible customer-generators to aggregate their load
from multiple meters will not result in an increase in the expected
revenue obligations of customers that are not eligible
customer-generators. The ratemaking authority of a local publicly
owned electric utility or electrical cooperative shall make this
determination within 180 days of the first request made by an
eligible customer-generator to aggregate their load. In making the
determination, the ratemaking authority shall determine if there
are any public purpose or other noncommodity charges that the
eligible customer-generator would pay pursuant to the net energy
metering or co-energy metering program of the utility as it exists
prior to aggregation, that the eligible customer-generator would
not pay if permitted to aggregate the electrical load of multiple
meters pursuant to this paragraph. If the ratemaking authority
determines that load aggregation will not cause an incremental
rate impact on the utility’s customers that are not eligible
customer-generators, the local publicly owned electric utility or
electrical cooperative shall permit an eligible customer-generator
to elect to aggregate the electrical load of multiple meters pursuant
to this paragraph. The ratemaking authority may reconsider any
determination made pursuant to this subparagraph in a subsequent
public proceeding.

(F) For purposes of this paragraph, parcels that are divided by
a street, highway, or public thoroughfare are considered contiguous,
provided they are otherwise contiguous and under the same
ownership.

(G) An eligible customer-generator may only elect to aggregate
the electrical load of multiple meters if the renewable electrical
generation facility, or a combination of those facilities, has a total
generating capacity of not more than one megawatt.

(H) Notwithstanding subdivision (g), an eligible
customer-generator electing to aggregate the electrical load of
multiple meters pursuant to this subdivision shall remit service
charges for the cost of providing billing services to the electric
utility that provides service to the meters.

(5) (A) The ratemaking authority shall establish a net surplus
electricity compensation valuation to compensate the net surplus
customer-generator for the value of net surplus electricity generated
by the net surplus customer-generator. The commission shall
establish the valuation in a ratemaking proceeding. The ratemaking
authority for a local publicly owned electric utility shall establish
the valuation in a public proceeding. The net surplus electricity
compensation valuation shall be established so as to provide the
net surplus customer-generator just and reasonable compensation
for the value of net surplus electricity, while leaving other
ratepayers unaffected. The ratemaking authority shall determine
whether the compensation will include, where appropriate
justification exists, either or both of the following components:

(i) The value of the electricity itself.

(ii) The value of the renewable attributes of the electricity.

(B) In establishing the rate pursuant to subparagraph (A), the
ratemaking authority shall ensure that the rate does not result in a
shifting of costs between eligible customer-generators and other
bundled service customers.

(6) (A) Upon adoption of the net surplus electricity
compensation rate by the ratemaking authority, any renewable
energy credit, as defined in Section 399.12, for net surplus
electricity purchased by the electric utility shall belong to the
electric utility. Any renewable energy credit associated with
electricity generated by the eligible customer-generator that is
utilized by the eligible customer-generator shall remain the property
of the eligible customer-generator.

(B) Upon adoption of the net surplus electricity compensation
rate by the ratemaking authority, the net surplus electricity
purchased by the electric utility shall count toward the electric
utility’s renewables portfolio standard annual procurement targets
for the purposes of paragraph (1) of subdivision (b) of Section
399.15, or for a local publicly owned electric utility, the renewables
portfolio standard annual procurement targets established pursuant
to Section 399.30.

(7) The electric utility shall provide every eligible residential
or small commercial customer-generator with net electricity
consumption and net surplus electricity generation information
with each regular bill. That information shall include the current
monetary balance owed the electric utility for net electricity
consumed, or the net surplus electricity generated, since the last
12-month period ended. Notwithstanding this subdivision, an
electric utility shall permit that customer to pay monthly for net
energy consumed.

(8) If an eligible residential or small commercial
customer-generator terminates the customer relationship with the
electric utility, the electric utility shall reconcile the eligible
customer-generator’s consumption and production of electricity
during any part of a 12-month period following the last
reconciliation, according to the requirements set forth in this
subdivision, except that those requirements shall apply only to the
months since the most recent 12-month bill.

(9) If an electric service provider or electric utility providing
net energy metering to a residential or small commercial
customer-generator ceases providing that electric service to that
customer during any 12-month period, and the customer-generator
enters into a new net energy metering contract or tariff with a new
electric service provider or electric utility, the 12-month period,
with respect to that new electric service provider or electric utility,
shall commence on the date on which the new electric service
provider or electric utility first supplies electric service to the
customer-generator.

(i) Notwithstanding any other provisions of this section,
paragraphs (1), (2), and (3) shall apply to an eligible
customer-generator with a capacity of more than 10 kilowatts, but
not exceeding one megawatt, that receives electric service from a
local publicly owned electric utility that has elected to utilize a
co-energy metering program unless the local publicly owned
electric utility chooses to provide service for eligible
customer-generators with a capacity of more than 10 kilowatts in
accordance with subdivisions (g) and (h):

(1) The eligible customer-generator shall be required to utilize
a meter, or multiple meters, capable of separately measuring
electricity flow in both directions. All meters shall provide
time-of-use measurements of electricity flow, and the customer
shall take service on a time-of-use rate schedule. If the existing
meter of the eligible customer-generator is not a time-of-use meter
or is not capable of measuring total flow of electricity in both
directions, the eligible customer-generator shall be responsible for
all expenses involved in purchasing and installing a meter that is
both time-of-use and able to measure total electricity flow in both
directions. This subdivision shall not restrict the ability of an
eligible customer-generator to utilize any economic incentives
provided by a governmental agency or an electric utility to reduce
its costs for purchasing and installing a time-of-use meter.

(2) The consumption of electricity from the local publicly owned
electric utility shall result in a cost to the eligible
customer-generator to be priced in accordance with the standard
rate charged to the eligible customer-generator in accordance with
the rate structure to which the customer would be assigned if the
customer did not use a renewable electrical generation facility.
The generation of electricity provided to the local publicly owned
electric utility shall result in a credit to the eligible
customer-generator and shall be priced in accordance with the
generation component, established under the applicable structure
to which the customer would be assigned if the customer did not
use a renewable electrical generation facility.

(3) All costs and credits shall be shown on the eligible
customer-generator’s bill for each billing period. In any months
in which the eligible customer-generator has been a net consumer
of electricity calculated on the basis of value determined pursuant
to paragraph (2), the customer-generator shall owe to the local
publicly owned electric utility the balance of electricity costs and
credits during that billing period. In any billing period in which
the eligible customer-generator has been a net producer of
electricity calculated on the basis of value determined pursuant to
paragraph (2), the local publicly owned electric utility shall owe
to the eligible customer-generator the balance of electricity costs
and credits during that billing period. Any net credit to the eligible
customer-generator of electricity costs may be carried forward to
subsequent billing periods, provided that a local publicly owned
electric utility may choose to carry the credit over as a kilowatthour
credit consistent with the provisions of any applicable contract or
tariff, including any differences attributable to the time of
generation of the electricity. At the end of each 12-month period,
the local publicly owned electric utility may reduce any net credit
due to the eligible customer-generator to zero.

(j) A renewable electrical generation facility used by an eligible
customer-generator shall meet all applicable safety and
performance standards established by the National Electrical Code,
the Institute of Electrical and Electronics Engineers, and accredited
testing laboratories, including Underwriters Laboratories
Incorporated and, where applicable, rules of the commission
regarding safety and reliability. A customer-generator whose
renewable electrical generation facility meets those standards and
rules shall not be required to install additional controls, perform
or pay for additional tests, or purchase additional liability
insurance.

(k) If the commission determines that there are cost or revenue
obligations for an electrical corporation that may not be recovered
from customer-generators acting pursuant to this section, those
obligations shall remain within the customer class from which any
shortfall occurred and shall not be shifted to any other customer
class. Net energy metering and co-energy metering customers shall
not be exempt from the public goods charges imposed pursuant to
Article 7 (commencing with Section 381), Article 8 (commencing
with Section 385), or Article 15 (commencing with Section 399)
of Chapter 2.3 of Part 1.

(l) A net energy metering, co-energy metering, or wind energy
co-metering customer shall reimburse the Department of Water
Resources for all charges that would otherwise be imposed on the
customer by the commission to recover bond-related costs pursuant
to an agreement between the commission and the Department of
Water Resources pursuant to Section 80110 of the Water Code,
as well as the costs of the department equal to the share of the
department’s estimated net unavoidable power purchase contract
costs attributable to the customer. The commission shall
incorporate the determination into an existing proceeding before
the commission, and shall ensure that the charges are
nonbypassable. Until the commission has made a determination
regarding the nonbypassable charges, net energy metering,
co-energy metering, and wind energy co-metering shall continue
under the same rules, procedures, terms, and conditions as were
applicable on December 31, 2002.

(m) In implementing the requirements of subdivisions (k) and
(l), an eligible customer-generator shall not be required to replace
its existing meter except as set forth in paragraph (1) of subdivision
(c), nor shall the electric utility require additional measurement of
usage beyond that which is necessary for customers in the same
rate class as the eligible customer-generator.

(n) It is the intent of the Legislature that the Treasurer
incorporate net energy metering, including net surplus electricity
compensation, co-energy metering, and wind energy co-metering
projects undertaken pursuant to this section as sustainable building
methods or distributive energy technologies for purposes of
evaluating low-income housing projects.