BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 2339


                                                                     Page A


          ASSEMBLY THIRD READING


          AB  
          2339 (Irwin and Low)


          As Amended  April 18, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Utilities       |10-2 |Gatto, Burke, Chávez, |Patterson,          |
          |                |     |                      |Obernolte           |
          |                |     |                      |                    |
          |                |     | Cristina Garcia,     |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     | Eduardo Garcia,      |                    |
          |                |     |Hadley, Quirk,        |                    |
          |                |     |Santiago, Ting,       |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     | Mark Stone           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Specifies a method of calculating aggregated peak  
          demand to those of publicly owned electric utilities, irrigation  
          districts, and electrical cooperatives with more than 25,000  











                                                                    AB 2339


                                                                     Page B


          accounts that they may use for the requirement to offer net  
          energy metering (NEM) to their customers and exempts those  
          utilities that have adopted a successor to NEM prior to January  
          1, 2016.


          FISCAL EFFECT:  Unknown.  This bill is keyed non-fiscal by the  
          Legislative Counsel.


          COMMENTS:


          1)Author's Statement:  "[NEM] is an innovative program that  
            enables California electric consumers to invest in solar  
            energy to reduce their energy costs and support clean,  
            renewable energy.  By law, all utilities are required to offer  
            a NEM program to its customers on a first-come, first-serve  
            basis until the generating capacity used by customers exceeds  
            5% of the utility's aggregate customer peak demand.   
            Electricity providers are separated into two categories,  
            investor-owned utilities (IOUs) and publicly-owned utilities  
            (POUs).  IOUs, including [Pacific Gas and Electric] and  
            Southern California Edison, and POUs now calculate their 5%  
            limits or caps differently.  AB 327 (Perea), Chapter 611,  
            Statues of 2013 codified a California Public Utilities  
            Commission (CPUC) decision that IOUs use non-coincident peak  
            demand to determine aggregate customer peak demand, and thus  
            the 5% NEM cap.  However, by calculating the NEM cap using  
            highest peak demand, POUs are calculating their caps in a way  
            that limits the number of customers who can access NEM  
            compared with IOUs.  Faced with a lower threshold for the 5%  
            cap, proportionally more customers in POU territories are  
            unable to participate in NEM programs than in IOU territories  
            creating a disparity since some of the largest POUs are  
            located in the Central Valley or inland parts of the state.   
            This will create a uniform, statewide framework for all  
            electric utilities in California that will offer electric  
            consumers an equal opportunity to save money and choose  











                                                                    AB 2339


                                                                     Page C


            cleaner energy."
          2)Large Electrical Corporations and Publicly Owned Utilities -  
            What's the difference?  This bill requires all POUs and  
            electrical cooperatives, except for Los Angeles Department of  
            Water and Power to use the method of calculating the capacity  
            limit on offering NEM that applies to large electrical  
            corporations.  


             Electrical corporations are owned by shareholders and  
            investors and regulated by the CPUC.  POUs, irrigation  
            districts, and electrical cooperatives are non-profit entities  
            owned by a local government or customers of the utility and  
            managed by locally elected officials or public employees.   
            Companies that fit the statutory definition of a large  
            electrical corporation are Southern California Edison (SCE)  
            (3.7 million accounts), Pacific Gas and Electric (PG&E) (5.3  
            million accounts), and San Diego Gas and Electric (SDG&E) (1.4  
            million accounts).  Companies exempted from the requirement to  
            calculate the NEM cap using non-coincident peak are:  Liberty  
            Utilities, Pacificorp, and Bear Valley Electric Service.  


             The table below provides the number of accounts associated  
            with each of the utilities.  Note that the account threshold  
            of 25,000 does not apply to IOUs, thus this requirement does  
            not apply to Pacificorp and Liberty Utilities (each have more  
            than 25,000 customers).





             ------------------------------------------------------------- 
            |                              |  Number of   | Utility Type  |
            |           Utility            |   Customer   |               |
            |                              |   Accounts   |               |
            |                              |    (2014)    |               |
            |------------------------------+--------------+---------------|











                                                                    AB 2339


                                                                     Page D


            |Eastside Power Authority      |             5|Publicly Owned |
            |------------------------------+--------------+---------------|
            |Power & Water Resources       |            17|Publicly Owned |
            |Pooling Authority             |              |               |
            |------------------------------+--------------+---------------|
            |Valley Electric Association   |              |  Cooperative  |
            |                              |           44 |               |
            |------------------------------+--------------+---------------|
            |Port of Stockton              |              |Publicly Owned |
            |                              |           51 |               |
            |------------------------------+--------------+---------------|
            |Victorville, City of          |              |Publicly Owned |
            |                              |           51 |               |
            |------------------------------+--------------+---------------|
            |City of Industry              |              |Publicly Owned |
            |                              |           80 |               |
            |------------------------------+--------------+---------------|
            |Port of Oakland               |              |Publicly Owned |
            |                              |          134 |               |
            |------------------------------+--------------+---------------|
            |Lathrop ID                    |           180|Publicly Owned |
            |------------------------------+--------------+---------------|
            |Cerritos, City of             |              |Publicly Owned |
            |                              |          303 |               |
            |------------------------------+--------------+---------------|
            |Pittsburg, City of (Island    |              |Publicly Owned |
            |Energy)                       |          481 |               |
            |------------------------------+--------------+---------------|
            |Rancho Cucamonga Municipal    |              |Publicly Owned |
            |Utility                       |          581 |               |
            |------------------------------+--------------+---------------|
            |Shelter Cove Resort           |              |    Special    |
            |Improvement District          |          609 |   District    |
            |------------------------------+--------------+---------------|
            |Biggs Municipal Utilities     |              |Publicly Owned |
            |                              |          654 |               |
            |------------------------------+--------------+---------------|
            |Kirkwood Meadows PUD          |              |Publicly Owned |
            |                              |          764 |               |











                                                                    AB 2339


                                                                     Page E


            |------------------------------+--------------+---------------|
            |Corona, City of               |              |Publicly Owned |
            |                              |           1,016 |               |
            |------------------------------+--------------+---------------|
            |Vernon, City of               |              |Publicly Owned |
            |                              |           1,133 |               |
            |------------------------------+--------------+---------------|
            |City and County of San        |              |Publicly Owned |
            |Francisco                     |           2,312 |               |
            |------------------------------+--------------+---------------|
            |Surprise Valley Electric      |              |  Cooperative  |
            |Co-op                         |           2,744 |               |
            |------------------------------+--------------+---------------|
            |Gridley Electric Utility      |              |Publicly Owned |
            |                              |           2,881 |               |
            |------------------------------+--------------+---------------|
            |Needles, City of              |              |Publicly       |
            |                              |           3,520 |Owned          |
            |------------------------------+--------------+---------------|
            |Shasta Lake, City of          |              |Publicly Owned |
            |                              |           4,423 |               |
            |------------------------------+--------------+---------------|
            |Anza Electric Co-op           |              |  Cooperative  |
            |                              |           4,520 |               |
            |------------------------------+--------------+---------------|
            |Healdsburg, City of           |              |Publicly Owned |
            |                              |           5,718 |               |
            |------------------------------+--------------+---------------|
            |Moreno Valley Electric        |              |Publicly Owned |
            |Utility                       |           6,185 |               |
            |------------------------------+--------------+---------------|
            |Trinity Public Utilities      |              |Publicly Owned |
            |District                      |           7,261 |               |
            |------------------------------+--------------+---------------|
            |Ukiah, City of                |              |Publicly Owned |
            |                              |           7,627 |               |
            |------------------------------+--------------+---------------|
            |Merced Irrigation District    |              |Publicly Owned |
            |                              |           8,930 |               |











                                                                    AB 2339


                                                                     Page F


            |------------------------------+--------------+---------------|
            |Lassen Municipal Utility      |              |Publicly Owned |
            |District                      |            11,227 |               |
            |------------------------------+--------------+---------------|
            |Banning, City of              |              |Publicly Owned |
            |                              |            11,888 |               |
            |------------------------------+--------------+---------------|
            |Truckee Donner Public         |              |Publicly Owned |
            |Utilities District            |            13,328 |               |
            |------------------------------+--------------+---------------|
            |Plumas-Sierra Rural Electric  |              |  Cooperative  |
            |Co-op                         |            14,497 |               |
            |------------------------------+--------------+---------------|
            |Lompoc, City of               |              |Publicly Owned |
            |                              |            15,584 |               |
            |------------------------------+--------------+---------------|
            |Azusa Light and Water         |              |Publicly Owned |
            |                              |            16,680 |               |
            |------------------------------+--------------+---------------|
            |Colton Electric Utility       |              |Publicly Owned |
            |Department                    |            18,443 |               |
            |------------------------------+--------------+---------------|
            |Bear Valley Electric Service  |              |Investor-Owned |
            |                              |            24,125 |               |
            |------------------------------+--------------+---------------|
            |Lodi Electric Utility         |              |Publicly Owned |
            |                              |            25,533 |               |
            |------------------------------+--------------+---------------|
            |Palo Alto, City of            |              |Publicly Owned |
            |                              |            29,192 |               |
            |------------------------------+--------------+---------------|
            |Alameda Municipal Power       |              |Publicly Owned |
            |                              |            34,298 |               |
            |------------------------------+--------------+---------------|
            |Redding Electric Utility      |              |Publicly Owned |
            |                              |            43,670 |               |
            |------------------------------+--------------+---------------|
            |PacifiCorp                    |              |Investor-Owned |
            |                              |            43,937 |               |











                                                                    AB 2339


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            |------------------------------+--------------+---------------|
            |Liberty Utilities             |              |Investor-Owned |
            |                              |            48,929 |               |
            |------------------------------+--------------+---------------|
            |Burbank Water and Power       |              |Publicly Owned |
            |                              |            52,368 |               |
            |------------------------------+--------------+---------------|
            |Silicon Valley Power          |              |Publicly Owned |
            |                              |            53,361 |               |
            |------------------------------+--------------+---------------|
            |Roseville Electric            |              |Publicly Owned |
            |                              |            57,229 |               |
            |------------------------------+--------------+---------------|
            |Pasadena Water and Power      |              |Publicly Owned |
            |                              |              65,039|               |
            |------------------------------+--------------+---------------|
            |Anaheim, City of              |              |Publicly Owned |
            |                              |            70,667 |               |
            |------------------------------+--------------+---------------|
            |Glendale Water and Power*     |              |Publicly Owned |
            |                              |            85,629 |               |
            |------------------------------+--------------+---------------|
            |Turlock Irrigation District   |              |Publicly Owned |
            |                              |             102,381 |               |
            |------------------------------+--------------+---------------|
            |Riverside, City of            |              |Publicly Owned |
            |                              |             108,238 |               |
            |------------------------------+--------------+---------------|
            |Modesto Irrigation District   |              |Publicly Owned |
            |                              |             117,132 |               |
            |------------------------------+--------------+---------------|
            |Imperial Irrigation District  |              |Publicly Owned |
            |                              |             151,410 |               |
            |------------------------------+--------------+---------------|
            |Sacramento Municipal Utility  |              |Publicly Owned |
            |District                      |             613,326 |               |
            |------------------------------+--------------+---------------|
            |Los Angeles Department of     |              |Publicly Owned |
            |Water & Power                 |             866,095 |               |











                                                                    AB 2339


                                                                     Page H


            |------------------------------+--------------+---------------|
            |San Diego Gas & Electric      |    1,422,847 |Investor-Owned |
            |                              |              |               |
            |------------------------------+--------------+---------------|
            |Southern California Edison    |    3,758,295 |Investor-Owned |
            |                              |              |               |
            |------------------------------+--------------+---------------|
            |Pacific Gas & Electric        |    5,339,262 |Investor-Owned |
            |                              |              |               |
            |                              |              |               |
            |                              |              |               |
             ------------------------------------------------------------- 
             *    Note:  According to a directory published by the  
               California Municipal Utilities Association Glendale has  
               85,629 accounts.  At the time of this analysis the correct  
               number of accounts was not known.


          1)Benefits, Utility Revenues, and Cost of Service:  Discussions  
            about NEM usually include discussions about benefits, utility  
            revenues, and cost of service.  Similar to the proceeding  
            underway at the CPUC, some POUs are working on addressing  
            these issues through a public process, particularly those who  
            have or have nearly reached their NEM caps.


            The City of Palo Alto is working toward implementing its  
            successor tariff by May 2016 in anticipation of reaching its  
            current NEM cap by the summer of 2016.  A recent City Council  
            staff report<1> by the City of Palo Alto discusses the issues  
            that they are addressing in developing their successor  
            approach to the current NEM structure:


                 ? an increasing block electricity rate structure,  
                 ---------------------
          <1>


            http://www.cityofpaloalto.org/civicax/filebank/documents/50383  










                                                                    AB 2339


                                                                     Page I


                 (or tiered rate structure such as the one in use in  
                 Palo Alto), can create situations in which highly  
                 efficient, low-energy use NEM customers receive a  
                 lower NEM compensation rate than high-energy  
                 consuming NEM customers.  Low-energy consuming  
                 households who conserve and have implemented many  
                 home energy efficiency measures may only reach the  
                 first or second electricity usage tiers over the  
                 course of a month.  For example, if a household that  
                 consumes 600 kilowatt hours (kWh) per month installs  
                 a solar [photovoltaic] system that is sized to meet  
                 all of the household's electricity usage over the  
                 course of the year, the household would, in effect,  
                 be compensated at a rate of 11.2 ?/kWh for the  
                 energy generated from their on-site system under the  
                 current rate structure. By contrast, if a higher  
                 energy-using household using 1,200 kWh/month  
                 installs a solar system of the exact same size as  
                 the lower-energy consuming household, the  
                 high-energy consuming household is effectively  
                 compensated at 17.4 ?/kWh for the energy generated  
                 from their on-site system.
          2)NEM cap methodology:  This bill establishes the same  
            methodology for POUs as IOUs when calculating their 5% caps  
            for their respective NEM programs. 
          3)Transition to a successor tariff:  In addition to establishing  
            a method for calculating the aggregate cap on offering NEM to  
            utility customers, AB 327 (Perea), Chapter 611, Statutes of  
            2013, also includes statute directing the CPUC to develop a  
            NEM successor tariff that would replace the current NEM tariff  
            once the NEM cap is reached. 


            Because POUs, Irrigation Districts, and Electric Cooperatives  
            have governance by Boards and elected officials, they also  
            develop and adopt their electric rate structures through a  
            public process.  For some, their process has been completed  
            and a successor tariff has been approved by their governing  
            body, such as in the case of Turlock Irrigation District  











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                                                                     Page J


            (TID).  It is unclear if the author intends to invalidate an  
            action that has already been adopted by a governing board of a  
            POU or electric cooperative.


            TID adopted a successor tariff in 2015. This bill would exempt  
            TID from the requirement from undoing its successor tariff.


          4)Related legislation:

             a)   SB 550 (Hertzberg) of 2015:  POU NEM cap calculation.   
               Died in the Senate Appropriations Committee.

             b)   AB 1530 (Levine) of the current legislative session.   
               Currently pending in the Senate Energy, Utilities and  
               Communications Committee.

             c)   AB 327 (Perea), Chapter 611, Statutes of 2013:   
               Residential rate reform, distributed energy resources, and  
               large electrical corporation NEM cap calculation.



          Analysis Prepared by:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:  
          0002751