BILL ANALYSIS Ó
AB 2339
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2339 (Irwin) - As Amended April 18, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill provides a method of calculating aggregated peak
demand for publicly owned electric utilities (POUs), irrigation
districts, and electrical cooperatives with more than 25,000
accounts to be used to meet the requirement to offer net energy
metering (NEM) to their customers. This bill exempts those
utilities that have adopted a successor to NEM prior to January
1, 2016.
FISCAL EFFECT:
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Unknown potential cost shifts to the General Fund and various
special funds to the state as a ratepayer. This statement
assumes the full retail rate value for the electricity generated
on site that is credited to the customer is more than the actual
value of the generation. This assumption is a matter of
dispute.
For example, the Sacramento Municipal Utilities District (SMUD)
reports this bill will double the quantity of NEM contracts SMUD
is required to offer by changing the calculation methodology
used to determine the 5% requirement. When fully implemented,
SMUD estimates a cost shift of $680,000 to state customers based
on the state's share of SMUD's total load. Several other POUs
report additional cost shifts that will increase the rates for
state customers.
Others cite studies that have shown any cost shifts resulting
from NEM programs are negligible and do not result in rate
increases for non-NEM customers.
COMMENTS:
1)Background. Net Energy Metering (NEM) generally refers to a
program by which electric utility customers receive a bill
credit for the electricity they generate on-site and export to
the grid. California has required electric utilities to offer
NEM for two decades. California's NEM program is designed to
encourage substantial private investment in renewable energy
resources, among other goals.
Existing law requires each electric utility to offer a NEM
program to eligible customer-generators, upon request, on a
first-come, first-served basis until the total rated
generating capacity used by eligible customer-generators
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exceeds five percent of the electric utility's "aggregate
customer peak demand."
How the "aggregate customer peak demand" is calculated has
been the subject of discussion by the California Public
Utilities Commission (PUC) in the past few years. In the past,
the three large investor-owned utilities (IOUs) calculated
peak demand using various methodologies that all relied on a
summation of demand happening in the same period of time to
determine aggregate customer peak demand.
In 2012, the PUC adopted a controversial decision that
requires the IOUs to determine the peak demand as the highest
noncoincident demand for electricity for each customer, that
is, the sum of the highest demand of electricity for each
customer regardless of when that individual peak demand
occurred. According to the IOUs, the change in calculation of
peak demand effectively increased the NEM cap from 5% to 12%
based on the old methodology.
2)Purpose. According to the author, 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
when compared with IOUs. This bill revises the calculation to
expand the NEM program at non-investor owned electric
utilities.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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