Amended in Senate April 6, 2015

Senate BillNo. 550


Introduced by Senator Hertzberg

February 26, 2015


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

LEGISLATIVE COUNSEL’S DIGEST

SB 550, as amended, Hertzberg. Net energybegin delete metering: co-energyend delete metering.

Existing law relative to private energy producers requires every electric utility 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.begin delete Existing law authorizes a local publicly owned electric utility to elect to instead offer co-energy metering, which uses a generation-to-generation energy and time-of-use credit formula.end deletebegin insert 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. Existing law exempts from the net energy metering requirements a local publicly owned electric utility that serves more than 750,000 customers and that also conveys water to its customers.end insert

This bill wouldbegin delete make a nonsubstantive revision to the net energy metering provisions applicable to a local publicly owned electric utility.end deletebegin insert delete the exemption for those local publicly owned electric utilities. The bill would define the “aggregate customer peak demand” for the purposes of calculating the net energy metering program limit for electric utilities that are not large electrical corporations. The bill would require those electric utilities to file with the State Energy Resources Conservation and Development Commission and to make available to the public a quarterly report detailing their progress towards the program limit. By imposing additional requirements on local publicly owned electric utilities, this bill would impose a state-mandated local program. The bill would require the commission to post on its Internet Web site data detailing the progress of those electric utilities towards their program limit.end insert

begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P2    1

SECTION 1.  

Section 2827 of the Public Utilities Code is
2amended to read:

3

2827.  

(a) The Legislature finds and declares that a program
4to provide net energy metering combined with net surplus
5compensation, co-energy metering, and wind energy co-metering
6for eligible customer-generators is one way to encourage substantial
7private investment in renewable energy resources, stimulate in-state
8economic growth, reduce demand for electricity during peak
9consumption periods, help stabilize California’s energy supply
10infrastructure, enhance the continued diversification of California’s
11energy resource mix, reduce interconnection and administrative
12costs for electricity suppliers, and encourage conservation and
13efficiency.

14(b) As used in this section, the following terms have the
15following meanings:

16(1) “Co-energy metering” means a program that is the same in
17all other respects as a net energy metering program, except that
18the local publicly owned electric utility has elected to apply a
P3    1generation-to-generation energy and time-of-use credit formula
2as provided in subdivision (i).

3(2) “Electrical cooperative” means an electrical cooperative as
4defined in Section 2776.

5(3) “Electric utility” means an electrical corporation, a local
6publicly owned electric utility, or an electrical cooperative, or any
7other entity, except an electric service provider, that offers electrical
8service.begin delete This section shall not apply to a local publicly owned
9electric utility that serves more than 750,000 customers and that
10also conveys water to its customers.end delete

11(4) (A) “Eligible customer-generator” means a residential
12customer, small commercial customer as defined in subdivision
13(h) of Section 331, or commercial, industrial, or agricultural
14customer of an electric utility, who uses a renewable electrical
15generation facility, or a combination of those facilities, with a total
16capacity of not more than one megawatt, that is located on the
17customer’s owned, leased, or rented premises, and is interconnected
18and operates in parallel with the electrical grid, and is intended
19primarily to offset part or all of the customer’s own electrical
20requirements.

21(B) (i) Notwithstanding subparagraph (A), “eligible
22customer-generator” includes the Department of Corrections and
23Rehabilitation using a renewable electrical generation technology,
24or a combination of renewable electrical generation technologies,
25with a total capacity of not more than eight megawatts, that is
26located on the department’s owned, leased, or rented premises,
27and is interconnected and operates in parallel with the electrical
28grid, and is intended primarily to offset part or all of the facility’s
29own electrical requirements. The amount of any wind generation
30exported to the electrical grid shall not exceed 1.35 megawatt at
31any time.

32(ii) Notwithstanding any other law, an electrical corporation
33shall be afforded a prudent but necessary time, as determined by
34the executive director of the commission, to study the impacts of
35a request for interconnection of a renewable generator with a
36capacity of greater than one megawatt under this subparagraph. If
37the study reveals the need for upgrades to the transmission or
38distribution system arising solely from the interconnection, the
39electrical corporation shall be afforded the time necessary to
40complete those upgrades before the interconnection and those costs
P4    1shall be borne by the customer-generator. Upgrade projects shall
2comply with applicable state and federal requirements, including
3requirements of the Federal Energy Regulatory Commission.

4(5) “Large electrical corporation” means an electrical
5corporation with more than 100,000 service connections in
6California.

7(6) “Net energy metering” means measuring the difference
8between the electricity supplied through the electrical grid and the
9electricity generated by an eligible customer-generator and fed
10back to the electrical grid over a 12-month period as described in
11subdivisions (c) and (h).

12(7) “Net surplus customer-generator” means an eligible
13customer-generator that generates more electricity during a
1412-month period than is supplied by the electric utility to the
15eligible customer-generator during the same 12-month period.

16(8) “Net surplus electricity” means all electricity generated by
17an eligible customer-generator measured in kilowatthours over a
1812-month period that exceeds the amount of electricity consumed
19by that eligible customer-generator.

20(9) “Net surplus electricity compensation” means a per
21kilowatthour rate offered by the electric utility to the net surplus
22customer-generator for net surplus electricity that is set by the
23ratemaking authority pursuant to subdivision (h).

24(10) “Ratemaking authority” means, for an electrical
25corporation, the commission, for an electrical cooperative, its
26ratesetting body selected by its shareholders or members, and for
27a local publicly owned electric utility, the local elected body
28responsible for setting the rates of the local publicly owned utility.

29(11) “Renewable electrical generation facility” means a facility
30that generates electricity from a renewable source listed in
31paragraph (1) of subdivision (a) of Section 25741 of the Public
32Resources Code. A small hydroelectric generation facility is not
33an eligible renewable electrical generation facility if it will cause
34an adverse impact on instream beneficial uses or cause a change
35in the volume or timing of streamflow.

36(12) “Wind energy co-metering” means any wind energy project
37greater than 50 kilowatts, but not exceeding one megawatt, where
38the difference between the electricity supplied through the electrical
39grid and the electricity generated by an eligible customer-generator
40and fed back to the electrical grid over a 12-month period is as
P5    1described in subdivision (h). Wind energy co-metering shall be
2accomplished pursuant to Section 2827.8.

3(c) (1) Except as provided in paragraph (4) and in Section
42827.1, every electric utility shall develop a standard contract or
5tariff providing for net energy metering, and shall make this
6standard contract or tariff available to eligible customer-generators,
7upon request, on a first-come-first-served basis until the time that
8the total rated generating capacity used by eligible
9customer-generators exceeds 5 percent of the electric utility’s
10aggregate customer peak demand. Net energy metering shall be
11accomplished using a single meter capable of registering the flow
12of electricity in two directions. An additional meter or meters to
13monitor the flow of electricity in each direction may be installed
14with the consent of the eligible customer-generator, at the expense
15of the electric utility, and the additional metering shall be used
16only to provide the information necessary to accurately bill or
17credit the eligible customer-generator pursuant to subdivision (h),
18or to collect generating system performance information for
19research purposes relative to a renewable electrical generation
20facility. If the existing electrical meter of an eligible
21customer-generator is not capable of measuring the flow of
22electricity in two directions, the eligible customer-generator shall
23be responsible for all expenses involved in purchasing and
24installing a meter that is able to measure electricity flow in two
25directions. If an additional meter or meters are installed, the net
26energy metering calculation shall yield a result identical to that of
27a single meter. An eligible customer-generator that is receiving
28service other than through the standard contract or tariff may elect
29to receive service through the standard contract or tariff until the
30electric utility reaches the generation limit set forth in this
31paragraph. Once the generation limit is reached, only eligible
32customer-generators that had previously elected to receive service
33 pursuant to the standard contract or tariff have a right to continue
34to receive service pursuant to the standard contract or tariff.
35Eligibility for net energy metering does not limit an eligible
36customer-generator’s eligibility for any other rebate, incentive, or
37credit provided by the electric utility, or pursuant to any
38governmental program, including rebates and incentives provided
39pursuant to the California Solar Initiative.

P6    1(2) An electrical corporation shall include a provision in the net
2energy metering contract or tariff requiring that any customer with
3an existing electrical generating facility and meter who enters into
4a new net energy metering contract shall provide an inspection
5report to the electrical corporation, unless the electrical generating
6facility and meter have been installed or inspected within the
7previous three years. The inspection report shall be prepared by a
8California licensed contractor who is not the owner or operator of
9the facility and meter. A California licensed electrician shall
10perform the inspection of the electrical portion of the facility and
11meter.

12(3) (A) On an annual basis, every electric utility shall make
13available to the ratemaking authority information on the total rated
14generating capacity used by eligible customer-generators that are
15customers of that provider in the provider’s service area and the
16net surplus electricity purchased by the electric utility pursuant to
17this section.

18(B) An electric service provider operating pursuant to Section
19394 shall make available to the ratemaking authority the
20information required by this paragraph for each eligible
21customer-generator that is their customer for each service area of
22an electrical corporation, local publicly owned electric utility, or
23electrical cooperative, in which the eligible customer-generator
24has net energy metering.

25(C) The ratemaking authority shall develop a process for making
26the information required by this paragraph available to electric
27utilities, and for using that information to determine when, pursuant
28to paragraphs (1) and (4), an electric utility is not obligated to
29provide net energy metering to additional eligible
30customer-generators in its service area.

31(4) (A) begin insert(i)end insertbegin insertend insertAn electric utility that is not a large electrical
32corporation is not obligated to provide net energy metering to
33additional eligible customer-generators in its service area when
34the combined total peak demand of all electricity used by eligible
35customer-generators served by all the electric utilities in that
36service area furnishing net energy metering to eligible
37 customer-generators exceeds 5 percent of the aggregate customer
38peak demand of those electric utilities.

begin insert

39(ii) For the purpose of calculating the program limit of an
40electric utility that is not a large electrical corporation, the
P7    1“aggregate customer peak demand” means the highest sum of the
2noncoincident peak demands of all the customers of electric utilities
3in that service area that occurs in any calendar year.

end insert
begin insert

4(iii) Every electric utility that is not a large electrical
5corporation shall file a quarterly report with the Energy
6Commission detailing its progress toward meeting the program
7limit established in this subparagraph and shall make the report
8available to the public for download from its Internet Web site.
9The report shall include separate calculations on progress toward
10the limit based on operating solar energy systems and cumulative
11numbers of interconnection requests for net energy metering
12eligible systems.

end insert
begin insert

13(iv) The Energy Commission shall post on its Internet Web site
14data detailing the progress of every electric utility that is not a
15large electrical corporation toward meeting the program limit
16established in this subparagraph.

end insert

17(B)  The commission shall require every large electrical
18corporation to make the standard contract or tariff available to
19eligible customer-generators, continuously and without
20interruption, until such times as the large electrical corporation
21reaches its net energy metering program limit or July 1, 2017,
22whichever is earlier. A large electrical corporation reaches its
23program limit when the combined total peak demand of all
24electricity used by eligible customer-generators served by all the
25electric utilities in the large electrical corporation’s service area
26furnishing net energy metering to eligible customer-generators
27exceeds 5 percent of the aggregate customer peak demand of those
28electric utilities. For purposes of calculating a large electrical
29corporation’s program limit, “aggregate customer peak demand”
30means the highest sum of the noncoincident peak demands of all
31of the large electrical corporation’s customers that occurs in any
32calendar year. To determine the aggregate customer peak demand,
33every large electrical corporation shall use a uniform method
34approved by the commission. The program limit calculated
35pursuant to this paragraph shall not be less than the following:

36(i) For San Diego Gas and Electric Company, when it has made
37607 megawatts of nameplate generating capacity available to
38eligible customer-generators.

P8    1(ii) For Southern California Edison Company, when it has made
22,240 megawatts of nameplate generating capacity available to
3eligible customer-generators.

4(iii) For Pacific Gas and Electric Company, when it has made
52,409 megawatts of nameplate generating capacity available to
6eligible customer-generators.

7(C) Every large electrical corporation shall file a monthly report
8with the commission detailing the progress toward the net energy
9metering program limit established in subparagraph (B). The report
10shall include separate calculations on progress toward the limits
11based on operating solar energy systems, cumulative numbers of
12interconnection requests for net energy metering eligible systems,
13and any other criteria required by the commission.

14(D) Beginning July 1, 2017, or upon reaching the net metering
15program limit of subparagraph (B), whichever is earlier, the
16obligation of a large electrical corporation to provide service
17pursuant to a standard contract or tariff shall be pursuant to Section
182827.1 and applicable state and federal requirements.

19(d) Every electric utility shall make all necessary forms and
20contracts for net energy metering and net surplus electricity
21compensation service available for download from the Internet.

22(e) (1) Every electric utility shall ensure that requests for
23establishment of net energy metering and net surplus electricity
24compensation are processed in a time period not exceeding that
25for similarly situated customers requesting new electric service,
26but not to exceed 30 working days from the date it receives a
27completed application form for net energy metering service or net
28surplus electricity compensation, including a signed interconnection
29agreement from an eligible customer-generator and the electric
30inspection clearance from the governmental authority having
31jurisdiction.

32(2) Every electric utility shall ensure that requests for an
33interconnection agreement from an eligible customer-generator
34are processed in a time period not to exceed 30 working days from
35the date it receives a completed application form from the eligible
36customer-generator for an interconnection agreement.

37(3) If an electric utility is unable to process a request within the
38allowable timeframe pursuant to paragraph (1) or (2), it shall notify
39the eligible customer-generator and the ratemaking authority of
P9    1the reason for its inability to process the request and the expected
2completion date.

3(f) (1) If a customer participates in direct transactions pursuant
4to paragraph (1) of subdivision (b) of Section 365, or Section 365.1,
5with an electric service provider that does not provide distribution
6service for the direct transactions, the electric utility that provides
7distribution service for the eligible customer-generator is not
8obligated to provide net energy metering or net surplus electricity
9compensation to the customer.

10(2) If a customer participates in direct transactions pursuant to
11paragraph (1) of subdivision (b) of Section 365 or 365.1 with an
12electric service provider, and the customer is an eligible
13customer-generator, the electric utility that provides distribution
14service for the direct transactions may recover from the customer’s
15electric service provider the incremental costs of metering and
16billing service related to net energy metering and net surplus
17electricity compensation in an amount set by the ratemaking
18authority.

19(g) Except for the time-variant kilowatthour pricing portion of
20any tariff adopted by the commission pursuant to paragraph (4) of
21subdivision (a) of Section 2851, each net energy metering contract
22or tariff shall be identical, with respect to rate structure, all retail
23rate components, and any monthly charges, to the contract or tariff
24to which the same customer would be assigned if the customer did
25not use a renewable electrical generation facility, except that
26eligible customer-generators shall not be assessed standby charges
27on the electrical generating capacity or the kilowatthour production
28of a renewable electrical generation facility. The charges for all
29retail rate components for eligible customer-generators shall be
30based exclusively on the customer-generator’s net kilowatthour
31consumption over a 12-month period, without regard to the eligible
32customer-generator’s choice as to from whom it purchases
33electricity that is not self-generated. Any new or additional demand
34charge, standby charge, customer charge, minimum monthly
35charge, interconnection charge, or any other charge that would
36increase an eligible customer-generator’s costs beyond those of
37other customers who are not eligible customer-generators in the
38rate class to which the eligible customer-generator would otherwise
39be assigned if the customer did not own, lease, rent, or otherwise
40 operate a renewable electrical generation facility is contrary to the
P10   1intent of this section, and shall not form a part of net energy
2metering contracts or tariffs.

3(h) For eligible customer-generators, the net energy metering
4calculation shall be made by measuring the difference between
5the electricity supplied to the eligible customer-generator and the
6electricity generated by the eligible customer-generator and fed
7back to the electrical grid over a 12-month period. The following
8rules shall apply to the annualized net metering calculation:

9(1) The eligible residential or small commercial
10customer-generator, at the end of each 12-month period following
11the date of final interconnection of the eligible
12customer-generator’s system with an electric utility, and at each
13anniversary date thereafter, shall be billed for electricity used
14during that 12-month period. The electric utility shall determine
15if the eligible residential or small commercial customer-generator
16was a net consumer or a net surplus customer-generator during
17that period.

18(2) At the end of each 12-month period, where the electricity
19supplied during the period by the electric utility exceeds the
20electricity generated by the eligible residential or small commercial
21customer-generator during that same period, the eligible residential
22or small commercial customer-generator is a net electricity
23consumer and the electric utility shall be owed compensation for
24the eligible customer-generator’s net kilowatthour consumption
25over that 12-month period. The compensation owed for the eligible
26residential or small commercial customer-generator’s consumption
27shall be calculated as follows:

28(A) For all eligible customer-generators taking service under
29contracts or tariffs employing “baseline” and “over baseline” rates,
30any net monthly consumption of electricity shall be calculated
31according to the terms of the contract or tariff to which the same
32customer would be assigned to, or be eligible for, if the customer
33was not an eligible customer-generator. If those same
34customer-generators are net generators over a billing period, the
35net kilowatthours generated shall be valued at the same price per
36kilowatthour as the electric utility would charge for the baseline
37quantity of electricity during that billing period, and if the number
38of kilowatthours generated exceeds the baseline quantity, the excess
39shall be valued at the same price per kilowatthour as the electric
P11   1utility would charge for electricity over the baseline quantity during
2that billing period.

3(B) For all eligible customer-generators taking service under
4contracts or tariffs employing time-of-use rates, any net monthly
5consumption of electricity shall be calculated according to the
6terms of the contract or tariff to which the same customer would
7be assigned, or be eligible for, if the customer was not an eligible
8customer-generator. When those same customer-generators are
9net generators during any discrete time-of-use period, the net
10kilowatthours produced shall be valued at the same price per
11kilowatthour as the electric utility would charge for retail
12kilowatthour sales during that same time-of-use period. If the
13eligible customer-generator’s time-of-use electrical meter is unable
14to measure the flow of electricity in two directions, paragraph (1)
15of subdivision (c) shall apply.

16(C) For all eligible residential and small commercial
17customer-generators and for each billing period, the net balance
18of moneys owed to the electric utility for net consumption of
19electricity or credits owed to the eligible customer-generator for
20net generation of electricity shall be carried forward as a monetary
21value until the end of each 12-month period. For all eligible
22commercial, industrial, and agricultural customer-generators, the
23net balance of moneys owed shall be paid in accordance with the
24electric utility’s normal billing cycle, except that if the eligible
25commercial, industrial, or agricultural customer-generator is a net
26electricity producer over a normal billing cycle, any excess
27kilowatthours generated during the billing cycle shall be carried
28over to the following billing period as a monetary value, calculated
29according to the procedures set forth in this section, and appear as
30a credit on the eligible commercial, industrial, or agricultural
31customer-generator’s account, until the end of the annual period
32when paragraph (3) shall apply.

33(3) At the end of each 12-month period, where the electricity
34generated by the eligible customer-generator during the 12-month
35period exceeds the electricity supplied by the electric utility during
36that same period, the eligible customer-generator is a net surplus
37customer-generator and the electric utility, upon an affirmative
38election by the net surplus customer-generator, shall either (A)
39provide net surplus electricity compensation for any net surplus
40electricity generated during the prior 12-month period, or (B) allow
P12   1the net surplus customer-generator to apply the net surplus
2electricity as a credit for kilowatthours subsequently supplied by
3the electric utility to the net surplus customer-generator. For an
4eligible customer-generator that does not affirmatively elect to
5receive service pursuant to net surplus electricity compensation,
6the electric utility shall retain any excess kilowatthours generated
7during the prior 12-month period. The eligible customer-generator
8not affirmatively electing to receive service pursuant to net surplus
9electricity compensation shall not be owed any compensation for
10the net surplus electricity unless the electric utility enters into a
11purchase agreement with the eligible customer-generator for those
12excess kilowatthours. Every electric utility shall provide notice to
13eligible customer-generators that they are eligible to receive net
14surplus electricity compensation for net surplus electricity, that
15they must elect to receive net surplus electricity compensation,
16and that the 12-month period commences when the electric utility
17receives the eligible customer-generator’s election. For an electric
18utility that is an electrical corporation or electrical cooperative,
19the commission may adopt requirements for providing notice and
20the manner by which eligible customer-generators may elect to
21receive net surplus electricity compensation.

22(4) (A) An eligible customer-generator with multiple meters
23may elect to aggregate the electrical load of the meters located on
24the property where the renewable electrical generation facility is
25located and on all property adjacent or contiguous to the property
26on which the renewable electrical generation facility is located, if
27those properties are solely owned, leased, or rented by the eligible
28customer-generator. If the eligible customer-generator elects to
29aggregate the electric load pursuant to this paragraph, the electric
30utility shall use the aggregated load for the purpose of determining
31whether an eligible customer-generator is a net consumer or a net
32surplus customer-generator during a 12-month period.

33(B) If an eligible customer-generator chooses to aggregate
34pursuant to subparagraph (A), the eligible customer-generator shall
35be permanently ineligible to receive net surplus electricity
36compensation, and the electric utility shall retain any kilowatthours
37in excess of the eligible customer-generator’s aggregated electrical
38load generated during the 12-month period.

39(C) If an eligible customer-generator with multiple meters elects
40 to aggregate the electrical load of those meters pursuant to
P13   1subparagraph (A), and different rate schedules are applicable to
2service at any of those meters, the electricity generated by the
3renewable electrical generation facility shall be allocated to each
4of the meters in proportion to the electrical load served by those
5meters. For example, if the eligible customer-generator receives
6electric service through three meters, two meters being at an
7agricultural rate that each provide service to 25 percent of the
8customer’s total load, and a third meter, at a commercial rate, that
9provides service to 50 percent of the customer’s total load, then
1050 percent of the electrical generation of the eligible renewable
11generation facility shall be allocated to the third meter that provides
12service at the commercial rate and 25 percent of the generation
13shall be allocated to each of the two meters providing service at
14the agricultural rate. This proportionate allocation shall be
15computed each billing period.

16(D) This paragraph shall not become operative for an electrical
17corporation unless the commission determines that allowing
18eligible customer-generators to aggregate their load from multiple
19meters will not result in an increase in the expected revenue
20obligations of customers who are not eligible customer-generators.
21The commission shall make this determination by September 30,
222013. In making this determination, the commission shall determine
23if there are any public purpose or other noncommodity charges
24that the eligible customer-generators would pay pursuant to the
25net energy metering program as it exists prior to aggregation, that
26the eligible customer-generator would not pay if permitted to
27aggregate the electrical load of multiple meters pursuant to this
28paragraph.

29(E) A local publicly owned electric utility or electrical
30cooperative shall only allow eligible customer-generators to
31aggregate their load if the utility’s ratemaking authority determines
32that allowing eligible customer-generators to aggregate their load
33from multiple meters will not result in an increase in the expected
34revenue obligations of customers that are not eligible
35customer-generators. The ratemaking authority of a local publicly
36owned electric utility or electrical cooperative shall make this
37determination within 180 days of the first request made by an
38eligible customer-generator to aggregate their load. In making the
39determination, the ratemaking authority shall determine if there
40are any public purpose or other noncommodity charges that the
P14   1eligible customer-generator would pay pursuant to the net energy
2metering or co-energy metering program of the utility as it exists
3prior to aggregation, that the eligible customer-generator would
4not pay if permitted to aggregate the electrical load of multiple
5meters pursuant to this paragraph. If the ratemaking authority
6determines that load aggregation will not cause an incremental
7rate impact on the utility’s customers that are not eligible
8customer-generators, the local publicly owned electric utility or
9electrical cooperative shall permit an eligible customer-generator
10to elect to aggregate the electrical load of multiple meters pursuant
11to this paragraph. The ratemaking authority may reconsider any
12determination made pursuant to this subparagraph in a subsequent
13public proceeding.

14(F) For purposes of this paragraph, parcels that are divided by
15a street, highway, or public thoroughfare are considered contiguous,
16provided they are otherwise contiguous and under the same
17ownership.

18(G) An eligible customer-generator may only elect to aggregate
19the electrical load of multiple meters if the renewable electrical
20generation facility, or a combination of those facilities, has a total
21generating capacity of not more than one megawatt.

22(H) Notwithstanding subdivision (g), an eligible
23customer-generator electing to aggregate the electrical load of
24multiple meters pursuant to this subdivision shall remit service
25charges for the cost of providing billing services to the electric
26utility that provides service to the meters.

27(5) (A) The ratemaking authority shall establish a net surplus
28electricity compensation valuation to compensate the net surplus
29customer-generator for the value of net surplus electricity generated
30by the net surplus customer-generator. The commission shall
31establish the valuation in a ratemaking proceeding. The ratemaking
32authority for a local publicly owned electric utility shall establish
33the valuation in a public proceeding. The net surplus electricity
34compensation valuation shall be established so as to provide the
35net surplus customer-generator just and reasonable compensation
36for the value of net surplus electricity, while leaving other
37ratepayers unaffected. The ratemaking authority shall determine
38whether the compensation will include, where appropriate
39justification exists, either or both of the following components:

40(i) The value of the electricity itself.

P15   1(ii) The value of the renewable attributes of the electricity.

2(B) In establishing the rate pursuant to subparagraph (A), the
3ratemaking authority shall ensure that the rate does not result in a
4shifting of costs between eligible customer-generators and other
5bundled service customers.

6(6) (A) Upon adoption of the net surplus electricity
7compensation rate by the ratemaking authority, any renewable
8energy credit, as defined in Section 399.12, for net surplus
9electricity purchased by the electric utility shall belong to the
10electric utility. Any renewable energy credit associated with
11electricity generated by the eligible customer-generator that is
12utilized by the eligible customer-generator shall remain the property
13of the eligible customer-generator.

14(B) Upon adoption of the net surplus electricity compensation
15rate by the ratemaking authority, the net surplus electricity
16purchased by the electric utility shall count toward the electric
17utility’s renewables portfolio standard annual procurement targets
18for the purposes of paragraph (1) of subdivision (b) of Section
19399.15, or for a local publicly owned electric utility, the renewables
20portfolio standard annual procurement targets established pursuant
21to Section 399.30.

22(7) The electric utility shall provide every eligible residential
23or small commercial customer-generator with net electricity
24consumption and net surplus electricity generation information
25with each regular bill. That information shall include the current
26monetary balance owed the electric utility for net electricity
27consumed, or the net surplus electricity generated, since the last
2812-month period ended. Notwithstanding this subdivision, an
29electric utility shall permit that customer to pay monthly for net
30energy consumed.

31(8) If an eligible residential or small commercial
32customer-generator terminates the customer relationship with the
33electric utility, the electric utility shall reconcile the eligible
34customer-generator’s consumption and production of electricity
35during any part of a 12-month period following the last
36reconciliation, according to the requirements set forth in this
37subdivision, except that those requirements shall apply only to the
38months since the most recent 12-month bill.

39(9) If an electric service provider or electric utility providing
40net energy metering to a residential or small commercial
P16   1customer-generator ceases providing that electric service to that
2customer during any 12-month period, and the customer-generator
3enters into a new net energy metering contract or tariff with a new
4electric service provider or electric utility, the 12-month period,
5with respect to that new electric service provider or electric utility,
6shall commence on the date on which the new electric service
7provider or electric utility first supplies electric service to the
8customer-generator.

9(i) Notwithstanding any other provisions of this section,
10paragraphs (1), (2), and (3) shall apply to an eligible
11customer-generator with a capacity of more than 10 kilowatts, but
12not exceeding one megawatt, that receives electric service from a
13local publicly owned electric utility that has elected to utilize a
14co-energy metering program unless the local publicly owned
15electric utility chooses to provide service for eligible
16customer-generators with a capacity of more than 10 kilowatts in
17accordance with subdivisions (g) and (h):

18(1) The eligible customer-generator shall be required to utilize
19a meter, or multiple meters, capable of separately measuring
20electricity flow in both directions. All meters shall provide
21time-of-use measurements of electricity flow, and the customer
22shall take service on a time-of-use rate schedule. If the existing
23meter of the eligible customer-generator is not a time-of-use meter
24or is not capable of measuring total flow of electricity in both
25directions, the eligible customer-generator shall be responsible for
26all expenses involved in purchasing and installing a meter that is
27both time-of-use and able to measure total electricity flow in both
28directions. This subdivision shall not restrict the ability of an
29eligible customer-generator to utilize any economic incentives
30provided by a governmental agency or an electric utility to reduce
31its costs for purchasing and installing a time-of-use meter.

32(2) The consumption of electricity from the local publicly owned
33electric utility shall result in a cost to the eligible
34customer-generator to be priced in accordance with the standard
35rate charged to the eligible customer-generator in accordance with
36the rate structure to which the customer would be assigned if the
37customer did not use a renewable electrical generation facility.
38The generation of electricity provided to the local publicly owned
39electric utility shall result in a credit to the eligible
40customer-generator and shall be priced in accordance with the
P17   1generation component, established under the applicable structure
2to which the customer would be assigned if the customer did not
3use a renewable electrical generation facility.

4(3) All costs and credits shall be shown on the eligible
5customer-generator’s bill for each billing period. In any months
6in which the eligible customer-generator has been a net consumer
7of electricity calculated on the basis of value determined pursuant
8to paragraph (2), the customer-generator shall owe to the local
9publicly owned electric utility the balance of electricity costs and
10credits during that billing period. In any billing period in which
11the eligible customer-generator has been a net producer of
12electricity calculated on the basis of value determined pursuant to
13paragraph (2), the local publicly owned electric utility shall owe
14to the eligible customer-generator the balance of electricity costs
15and credits during that billing period. Any net credit to the eligible
16customer-generator of electricity costs may be carried forward to
17subsequent billing periods, provided that a local publicly owned
18electric utility may choose to carry the credit over as a kilowatthour
19credit consistent with the provisions of any applicable contract or
20tariff, including any differences attributable to the time of
21generation of the electricity. At the end of each 12-month period,
22the local publicly owned electric utility may reduce any net credit
23due to the eligible customer-generator to zero.

24(j) A renewable electrical generation facility used by an eligible
25customer-generator shall meet all applicable safety and
26performance standards established by the National Electrical Code,
27the Institute of Electrical and Electronics Engineers, and accredited
28testing laboratories, including Underwriters Laboratories
29Incorporated and, where applicable, rules of the commission
30regarding safety and reliability. A customer-generator whose
31renewable electrical generation facility meets those standards and
32rules shall not be required to install additional controls, perform
33or pay for additional tests, or purchase additional liability
34insurance.

35(k) If the commission determines that there are cost or revenue
36obligations for an electrical corporation that may not be recovered
37from customer-generators acting pursuant to this section, those
38obligations shall remain within the customer class from which any
39shortfall occurred and shall not be shifted to any other customer
40class. Net energy metering and co-energy metering customers shall
P18   1not be exempt from the public goods charges imposed pursuant to
2Article 7 (commencing with Section 381), Article 8 (commencing
3with Section 385), or Article 15 (commencing with Section 399)
4of Chapter 2.3 of Part 1.

5(l) A net energy metering, co-energy metering, or wind energy
6co-metering customer shall reimburse the Department of Water
7Resources for all charges that would otherwise be imposed on the
8customer by the commission to recover bond-related costs pursuant
9to an agreement between the commission and the Department of
10Water Resources pursuant to Section 80110 of the Water Code,
11as well as the costs of the department equal to the share of the
12department’s estimated net unavoidable power purchase contract
13costs attributable to the customer. The commission shall
14incorporate the determination into an existing proceeding before
15the commission, and shall ensure that the charges are
16nonbypassable. Until the commission has made a determination
17regarding the nonbypassable charges, net energy metering,
18co-energy metering, and wind energy co-metering shall continue
19under the same rules, procedures, terms, and conditions as were
20applicable on December 31, 2002.

21(m) In implementing the requirements of subdivisions (k) and
22(l), an eligible customer-generator shall not be required to replace
23its existing meter except as set forth in paragraph (1) of subdivision
24(c), nor shall the electric utility require additional measurement of
25usage beyond that which is necessary for customers in the same
26rate class as the eligible customer-generator.

27(n) It is the intent of the Legislature that the Treasurer
28incorporate net energy metering, including net surplus electricity
29compensation, co-energy metering, and wind energy co-metering
30projects undertaken pursuant to this section as sustainable building
31methods or distributive energy technologies for purposes of
32evaluating low-income housing projects.

33begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
34Section 6 of Article XIII B of the California Constitution because
35a local agency or school district has the authority to levy service
36charges, fees, or assessments sufficient to pay for the program or
37level of service mandated by this act, within the meaning of Section
3817556 of the Government Code.

end insert


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