Amended in Senate May 4, 2015

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 energy 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. 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.

This bill would 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.

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.

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

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

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
19generation-to-generation energy and time-of-use credit formula
20as provided in subdivision (i).

21(2) “Electrical cooperative” means an electrical cooperative as
22defined in Section 2776.

23(3) “Electric utility” means an electrical corporation, a local
24publicly owned electric utility, or an electrical cooperative, or any
P3    1other entity, except an electric service provider, that offers electrical
2service.

3(4) (A) “Eligible customer-generator” means a residential
4customer, small commercial customer as defined in subdivision
5(h) of Section 331, or commercial, industrial, or agricultural
6customer of an electric utility, who uses a renewable electrical
7generation facility, or a combination of those facilities, with a total
8capacity of not more than one megawatt, that is located on the
9customer’s owned, leased, or rented premises, and is interconnected
10and operates in parallel with the electrical grid, and is intended
11primarily to offset part or all of the customer’s own electrical
12requirements.

13(B) (i) Notwithstanding subparagraph (A), “eligible
14customer-generator” includes the Department of Corrections and
15Rehabilitation using a renewable electrical generation technology,
16or a combination of renewable electrical generation technologies,
17with a total capacity of not more than eight megawatts, that is
18located on the department’s owned, leased, or rented premises,
19and is interconnected and operates in parallel with the electrical
20grid, and is intended primarily to offset part or all of the facility’s
21own electrical requirements. The amount of any wind generation
22exported to the electrical grid shall not exceed 1.35 megawatt at
23any time.

24(ii) Notwithstanding any other law, an electrical corporation
25shall be afforded a prudent but necessary time, as determined by
26the executive director of the commission, to study the impacts of
27a request for interconnection of a renewable generator with a
28capacity of greater than one megawatt under this subparagraph. If
29the study reveals the need for upgrades to the transmission or
30distribution system arising solely from the interconnection, the
31electrical corporation shall be afforded the time necessary to
32complete those upgrades before the interconnection and those costs
33shall be borne by the customer-generator. Upgrade projects shall
34comply with applicable state and federal requirements, including
35requirements of the Federal Energy Regulatory Commission.

36(5) “Large electrical corporation” means an electrical
37corporation with more than 100,000 service connections in
38California.

39(6) “Net energy metering” means measuring the difference
40between the electricity supplied through the electrical grid and the
P4    1electricity generated by an eligible customer-generator and fed
2back to the electrical grid over a 12-month period as described in
3subdivisions (c) and (h).

4(7) “Net surplus customer-generator” means an eligible
5customer-generator that generates more electricity during a
612-month period than is supplied by the electric utility to the
7eligible customer-generator during the same 12-month period.

8(8) “Net surplus electricity” means all electricity generated by
9an eligible customer-generator measured in kilowatthours over a
1012-month period that exceeds the amount of electricity consumed
11by that eligible customer-generator.

12(9) “Net surplus electricity compensation” means a per
13kilowatthour rate offered by the electric utility to the net surplus
14customer-generator for net surplus electricity that is set by the
15ratemaking authority pursuant to subdivision (h).

16(10) “Ratemaking authority” means, for an electrical
17corporation, the commission, for an electrical cooperative, its
18ratesetting body selected by its shareholders or members, and for
19a local publicly owned electric utility, the local elected body
20responsible for setting the rates of the local publicly owned utility.

21(11) “Renewable electrical generation facility” means a facility
22that generates electricity from a renewable source listed in
23paragraph (1) of subdivision (a) of Section 25741 of the Public
24Resources Code. A small hydroelectric generation facility is not
25an eligible renewable electrical generation facility if it will cause
26an adverse impact on instream beneficial uses or cause a change
27in the volume or timing of streamflow.

28(12) “Wind energy co-metering” means any wind energy project
29greater than 50 kilowatts, but not exceeding one megawatt, where
30the difference between the electricity supplied through the electrical
31grid and the electricity generated by an eligible customer-generator
32and fed back to the electrical grid over a 12-month period is as
33described in subdivision (h). Wind energy co-metering shall be
34accomplished pursuant to Section 2827.8.

35(c) (1) Except as provided in paragraph (4) and in Section
362827.1, every electric utility shall develop a standard contract or
37tariff providing for net energy metering, and shall make this
38standard contract or tariff available to eligible customer-generators,
39upon request, on a first-come-first-served basis until the time that
40the total rated generating capacity used by eligible
P5    1customer-generators exceeds 5 percent of the electric utility’s
2aggregate customer peak demand. Net energy metering shall be
3accomplished using a single meter capable of registering the flow
4of electricity in two directions. An additional meter or meters to
5monitor the flow of electricity in each direction may be installed
6with the consent of the eligible customer-generator, at the expense
7of the electric utility, and the additional metering shall be used
8only to provide the information necessary to accurately bill or
9credit the eligible customer-generator pursuant to subdivision (h),
10or to collect generating system performance information for
11research purposes relative to a renewable electrical generation
12facility. If the existing electrical meter of an eligible
13customer-generator is not capable of measuring the flow of
14electricity in two directions, the eligible customer-generator shall
15be responsible for all expenses involved in purchasing and
16installing a meter that is able to measure electricity flow in two
17directions. If an additional meter or meters are installed, the net
18energy metering calculation shall yield a result identical to that of
19a single meter. An eligible customer-generator that is receiving
20service other than through the standard contract or tariff may elect
21to receive service through the standard contract or tariff until the
22electric utility reaches the generation limit set forth in this
23paragraph. Once the generation limit is reached, only eligible
24customer-generators that had previously elected to receive service
25 pursuant to the standard contract or tariff have a right to continue
26to receive service pursuant to the standard contract or tariff.
27Eligibility for net energy metering does not limit an eligible
28customer-generator’s eligibility for any other rebate, incentive, or
29credit provided by the electric utility, or pursuant to any
30governmental program, including rebates and incentives provided
31pursuant to the California Solar Initiative.

32(2) An electrical corporation shall include a provision in the net
33energy metering contract or tariff requiring that any customer with
34an existing electrical generating facility and meter who enters into
35a new net energy metering contract shall provide an inspection
36report to the electrical corporation, unless the electrical generating
37facility and meter have been installed or inspected within the
38previous three years. The inspection report shall be prepared by a
39California licensed contractor who is not the owner or operator of
40the facility and meter. A California licensed electrician shall
P6    1perform the inspection of the electrical portion of the facility and
2meter.

3(3) (A) On an annual basis, every electric utility shall make
4available to the ratemaking authority information on the total rated
5generating capacity used by eligible customer-generators that are
6customers of that provider in the provider’s service area and the
7net surplus electricity purchased by the electric utility pursuant to
8this section.

9(B) An electric service provider operating pursuant to Section
10394 shall make available to the ratemaking authority the
11information required by this paragraph for each eligible
12customer-generator that is their customer for each service area of
13an electrical corporation, local publicly owned electric utility, or
14electrical cooperative, in which the eligible customer-generator
15has net energy metering.

16(C) The ratemaking authority shall develop a process for making
17the information required by this paragraph available to electric
18utilities, and for using that information to determine when, pursuant
19to paragraphs (1) and (4), an electric utility is not obligated to
20provide net energy metering to additional eligible
21customer-generators in its service area.

22(4) (A) (i) An electric utility that is not a large electrical
23corporation is not obligated to provide net energy metering to
24additional eligible customer-generators in its service area when
25the combined total peak demand of all electricity used by eligible
26customer-generators served by all the electric utilities in that
27service area furnishing net energy metering to eligible
28 customer-generators exceeds 5 percent of the aggregate customer
29peak demand of those electric utilities.begin insert An electric utility that is
30not a large electrical corporation may determine aggregate
31customer peak demand using an estimation technique that the
32Energy Commission has determined to be reasonable.end insert

33(ii) For the purpose of calculating the program limit of an
34electric utility that is not a large electrical corporation, the
35“aggregate customer peak demand” means the highest sum of the
36noncoincident peak demands of all the customers of electric utilities
37in that service area that occurs in any calendar year.

38(iii) Every electric utility that is not a large electrical corporation
39shall file a quarterly report with the Energy Commission detailing
40its progress toward meeting the program limit established in this
P7    1subparagraph and shall make the report available to the public for
2download from its Internet Web site. The report shall include
3separate calculations on progress toward the limit based on
4operating solar energy systems and cumulative numbers of
5interconnection requests for net energy metering eligible systems.

6(iv) The Energy Commission shall post on its Internet Web site
7data detailing the progress of every electric utility that is not a
8large electrical corporation toward meeting the program limit
9established in this subparagraph.

10(B)  The commission shall require every large electrical
11corporation to make the standard contract or tariff available to
12eligible customer-generators, continuously and without
13interruption, until such times as the large electrical corporation
14reaches its net energy metering program limit or July 1, 2017,
15whichever is earlier. A large electrical corporation reaches its
16program limit when the combined total peak demand of all
17electricity used by eligible customer-generators served by all the
18electric utilities in the large electrical corporation’s service area
19furnishing net energy metering to eligible customer-generators
20exceeds 5 percent of the aggregate customer peak demand of those
21electric utilities. For purposes of calculating a large electrical
22corporation’s program limit, “aggregate customer peak demand”
23means the highest sum of the noncoincident peak demands of all
24of the large electrical corporation’s customers that occurs in any
25calendar year. To determine the aggregate customer peak demand,
26every large electrical corporation shall use a uniform method
27approved by the commission. The program limit calculated
28pursuant to this paragraph shall not be less than the following:

29(i) For San Diego Gas and Electric Company, when it has made
30607 megawatts of nameplate generating capacity available to
31eligible customer-generators.

32(ii) For Southern California Edison Company, when it has made
332,240 megawatts of nameplate generating capacity available to
34eligible customer-generators.

35(iii) For Pacific Gas and Electric Company, when it has made
362,409 megawatts of nameplate generating capacity available to
37eligible customer-generators.

38(C) Every large electrical corporation shall file a monthly report
39with the commission detailing the progress toward the net energy
40metering program limit established in subparagraph (B). The report
P8    1shall include separate calculations on progress toward the limits
2based on operating solar energy systems, cumulative numbers of
3interconnection requests for net energy metering eligible systems,
4and any other criteria required by the commission.

5(D) Beginning July 1, 2017, or upon reaching the net metering
6program limit of subparagraph (B), whichever is earlier, the
7obligation of a large electrical corporation to provide service
8pursuant to a standard contract or tariff shall be pursuant to Section
92827.1 and applicable state and federal requirements.

10(d) Every electric utility shall make all necessary forms and
11contracts for net energy metering and net surplus electricity
12compensation service available for download from the Internet.

13(e) (1) Every electric utility shall ensure that requests for
14establishment of net energy metering and net surplus electricity
15compensation are processed in a time period not exceeding that
16for similarly situated customers requesting new electric service,
17but not to exceed 30 working days from the date it receives a
18completed application form for net energy metering service or net
19surplus electricity compensation, including a signed interconnection
20agreement from an eligible customer-generator and the electric
21inspection clearance from the governmental authority having
22jurisdiction.

23(2) Every electric utility shall ensure that requests for an
24interconnection agreement from an eligible customer-generator
25are processed in a time period not to exceed 30 working days from
26the date it receives a completed application form from the eligible
27customer-generator for an interconnection agreement.

28(3) If an electric utility is unable to process a request within the
29allowable timeframe pursuant to paragraph (1) or (2), it shall notify
30the eligible customer-generator and the ratemaking authority of
31the reason for its inability to process the request and the expected
32completion date.

33(f) (1) If a customer participates in direct transactions pursuant
34to paragraph (1) of subdivision (b) of Section 365, or Section 365.1,
35with an electric service provider that does not provide distribution
36service for the direct transactions, the electric utility that provides
37distribution service for the eligible customer-generator is not
38obligated to provide net energy metering or net surplus electricity
39compensation to the customer.

P9    1(2) If a customer participates in direct transactions pursuant to
2paragraph (1) of subdivision (b) of Section 365 or 365.1 with an
3electric service provider, and the customer is an eligible
4customer-generator, the electric utility that provides distribution
5service for the direct transactions may recover from the customer’s
6electric service provider the incremental costs of metering and
7billing service related to net energy metering and net surplus
8electricity compensation in an amount set by the ratemaking
9authority.

10(g) Except for the time-variant kilowatthour pricing portion of
11any tariff adopted by the commission pursuant to paragraph (4) of
12subdivision (a) of Section 2851, each net energy metering contract
13or tariff shall be identical, with respect to rate structure, all retail
14rate components, and any monthly charges, to the contract or tariff
15to which the same customer would be assigned if the customer did
16not use a renewable electrical generation facility, except that
17eligible customer-generators shall not be assessed standby charges
18on the electrical generating capacity or the kilowatthour production
19of a renewable electrical generation facility. The charges for all
20retail rate components for eligible customer-generators shall be
21based exclusively on the customer-generator’s net kilowatthour
22consumption over a 12-month period, without regard to the eligible
23customer-generator’s choice as to from whom it purchases
24electricity that is not self-generated. Any new or additional demand
25charge, standby charge, customer charge, minimum monthly
26charge, interconnection charge, or any other charge that would
27increase an eligible customer-generator’s costs beyond those of
28other customers who are not eligible customer-generators in the
29rate class to which the eligible customer-generator would otherwise
30be assigned if the customer did not own, lease, rent, or otherwise
31 operate a renewable electrical generation facility is contrary to the
32intent of this section, and shall not form a part of net energy
33metering contracts or tariffs.

34(h) For eligible customer-generators, the net energy metering
35calculation shall be made by measuring the difference between
36the electricity supplied to the eligible customer-generator and the
37electricity generated by the eligible customer-generator and fed
38back to the electrical grid over a 12-month period. The following
39rules shall apply to the annualized net metering calculation:

P10   1(1) The eligible residential or small commercial
2customer-generator, at the end of each 12-month period following
3the date of final interconnection of the eligible
4customer-generator’s system with an electric utility, and at each
5anniversary date thereafter, shall be billed for electricity used
6during that 12-month period. The electric utility shall determine
7if the eligible residential or small commercial customer-generator
8was a net consumer or a net surplus customer-generator during
9that period.

10(2) At the end of each 12-month period, where the electricity
11supplied during the period by the electric utility exceeds the
12electricity generated by the eligible residential or small commercial
13customer-generator during that same period, the eligible residential
14or small commercial customer-generator is a net electricity
15consumer and the electric utility shall be owed compensation for
16the eligible customer-generator’s net kilowatthour consumption
17over that 12-month period. The compensation owed for the eligible
18residential or small commercial customer-generator’s consumption
19shall be calculated as follows:

20(A) For all eligible customer-generators taking service under
21contracts or tariffs employing “baseline” and “over baseline” rates,
22any net monthly consumption of electricity shall be calculated
23according to the terms of the contract or tariff to which the same
24customer would be assigned to, or be eligible for, if the customer
25was not an eligible customer-generator. If those same
26customer-generators are net generators over a billing period, the
27net kilowatthours generated shall be valued at the same price per
28kilowatthour as the electric utility would charge for the baseline
29quantity of electricity during that billing period, and if the number
30of kilowatthours generated exceeds the baseline quantity, the excess
31shall be valued at the same price per kilowatthour as the electric
32utility would charge for electricity over the baseline quantity during
33that billing period.

34(B) For all eligible customer-generators taking service under
35contracts or tariffs employing time-of-use rates, any net monthly
36consumption of electricity shall be calculated according to the
37terms of the contract or tariff to which the same customer would
38be assigned, or be eligible for, if the customer was not an eligible
39customer-generator. When those same customer-generators are
40net generators during any discrete time-of-use period, the net
P11   1kilowatthours produced shall be valued at the same price per
2kilowatthour as the electric utility would charge for retail
3kilowatthour sales during that same time-of-use period. If the
4eligible customer-generator’s time-of-use electrical meter is unable
5to measure the flow of electricity in two directions, paragraph (1)
6of subdivision (c) shall apply.

7(C) For all eligible residential and small commercial
8customer-generators and for each billing period, the net balance
9of moneys owed to the electric utility for net consumption of
10electricity or credits owed to the eligible customer-generator for
11net generation of electricity shall be carried forward as a monetary
12value until the end of each 12-month period. For all eligible
13commercial, industrial, and agricultural customer-generators, the
14net balance of moneys owed shall be paid in accordance with the
15electric utility’s normal billing cycle, except that if the eligible
16commercial, industrial, or agricultural customer-generator is a net
17electricity producer over a normal billing cycle, any excess
18kilowatthours generated during the billing cycle shall be carried
19over to the following billing period as a monetary value, calculated
20according to the procedures set forth in this section, and appear as
21a credit on the eligible commercial, industrial, or agricultural
22customer-generator’s account, until the end of the annual period
23when paragraph (3) shall apply.

24(3) At the end of each 12-month period, where the electricity
25generated by the eligible customer-generator during the 12-month
26period exceeds the electricity supplied by the electric utility during
27that same period, the eligible customer-generator is a net surplus
28customer-generator and the electric utility, upon an affirmative
29election by the net surplus customer-generator, shall either (A)
30provide net surplus electricity compensation for any net surplus
31electricity generated during the prior 12-month period, or (B) allow
32the net surplus customer-generator to apply the net surplus
33electricity as a credit for kilowatthours subsequently supplied by
34the electric utility to the net surplus customer-generator. For an
35eligible customer-generator that does not affirmatively elect to
36receive service pursuant to net surplus electricity compensation,
37the electric utility shall retain any excess kilowatthours generated
38during the prior 12-month period. The eligible customer-generator
39not affirmatively electing to receive service pursuant to net surplus
40electricity compensation shall not be owed any compensation for
P12   1the net surplus electricity unless the electric utility enters into a
2purchase agreement with the eligible customer-generator for those
3excess kilowatthours. Every electric utility shall provide notice to
4eligible customer-generators that they are eligible to receive net
5surplus electricity compensation for net surplus electricity, that
6they must elect to receive net surplus electricity compensation,
7and that the 12-month period commences when the electric utility
8receives the eligible customer-generator’s election. For an electric
9utility that is an electrical corporation or electrical cooperative,
10the commission may adopt requirements for providing notice and
11the manner by which eligible customer-generators may elect to
12receive net surplus electricity compensation.

13(4) (A) An eligible customer-generator with multiple meters
14may elect to aggregate the electrical load of the meters located on
15the property where the renewable electrical generation facility is
16located and on all property adjacent or contiguous to the property
17on which the renewable electrical generation facility is located, if
18those properties are solely owned, leased, or rented by the eligible
19customer-generator. If the eligible customer-generator elects to
20aggregate the electric load pursuant to this paragraph, the electric
21utility shall use the aggregated load for the purpose of determining
22whether an eligible customer-generator is a net consumer or a net
23surplus customer-generator during a 12-month period.

24(B) If an eligible customer-generator chooses to aggregate
25pursuant to subparagraph (A), the eligible customer-generator shall
26be permanently ineligible to receive net surplus electricity
27compensation, and the electric utility shall retain any kilowatthours
28in excess of the eligible customer-generator’s aggregated electrical
29load generated during the 12-month period.

30(C) If an eligible customer-generator with multiple meters elects
31 to aggregate the electrical load of those meters pursuant to
32subparagraph (A), and different rate schedules are applicable to
33service at any of those meters, the electricity generated by the
34renewable electrical generation facility shall be allocated to each
35of the meters in proportion to the electrical load served by those
36meters. For example, if the eligible customer-generator receives
37electric service through three meters, two meters being at an
38agricultural rate that each provide service to 25 percent of the
39customer’s total load, and a third meter, at a commercial rate, that
40provides service to 50 percent of the customer’s total load, then
P13   150 percent of the electrical generation of the eligible renewable
2generation facility shall be allocated to the third meter that provides
3service at the commercial rate and 25 percent of the generation
4shall be allocated to each of the two meters providing service at
5the agricultural rate. This proportionate allocation shall be
6computed each billing period.

7(D) This paragraph shall not become operative for an electrical
8corporation unless the commission determines that allowing
9eligible customer-generators to aggregate their load from multiple
10meters will not result in an increase in the expected revenue
11obligations of customers who are not eligible customer-generators.
12The commission shall make this determination by September 30,
132013. In making this determination, the commission shall determine
14if there are any public purpose or other noncommodity charges
15that the eligible customer-generators would pay pursuant to the
16net energy metering program as it exists prior to aggregation, that
17the eligible customer-generator would not pay if permitted to
18aggregate the electrical load of multiple meters pursuant to this
19paragraph.

20(E) A local publicly owned electric utility or electrical
21cooperative shall only allow eligible customer-generators to
22aggregate their load if the utility’s ratemaking authority determines
23that allowing eligible customer-generators to aggregate their load
24from multiple meters will not result in an increase in the expected
25revenue obligations of customers that are not eligible
26customer-generators. The ratemaking authority of a local publicly
27owned electric utility or electrical cooperative shall make this
28determination within 180 days of the first request made by an
29eligible customer-generator to aggregate their load. In making the
30determination, the ratemaking authority shall determine if there
31are any public purpose or other noncommodity charges that the
32eligible customer-generator would pay pursuant to the net energy
33metering or co-energy metering program of the utility as it exists
34prior to aggregation, that the eligible customer-generator would
35not pay if permitted to aggregate the electrical load of multiple
36meters pursuant to this paragraph. If the ratemaking authority
37determines that load aggregation will not cause an incremental
38rate impact on the utility’s customers that are not eligible
39customer-generators, the local publicly owned electric utility or
40electrical cooperative shall permit an eligible customer-generator
P14   1to elect to aggregate the electrical load of multiple meters pursuant
2to this paragraph. The ratemaking authority may reconsider any
3determination made pursuant to this subparagraph in a subsequent
4public proceeding.

5(F) For purposes of this paragraph, parcels that are divided by
6a street, highway, or public thoroughfare are considered contiguous,
7provided they are otherwise contiguous and under the same
8ownership.

9(G) An eligible customer-generator may only elect to aggregate
10the electrical load of multiple meters if the renewable electrical
11generation facility, or a combination of those facilities, has a total
12generating capacity of not more than one megawatt.

13(H) Notwithstanding subdivision (g), an eligible
14customer-generator electing to aggregate the electrical load of
15multiple meters pursuant to this subdivision shall remit service
16charges for the cost of providing billing services to the electric
17utility that provides service to the meters.

18(5) (A) The ratemaking authority shall establish a net surplus
19electricity compensation valuation to compensate the net surplus
20customer-generator for the value of net surplus electricity generated
21by the net surplus customer-generator. The commission shall
22establish the valuation in a ratemaking proceeding. The ratemaking
23authority for a local publicly owned electric utility shall establish
24the valuation in a public proceeding. The net surplus electricity
25compensation valuation shall be established so as to provide the
26net surplus customer-generator just and reasonable compensation
27for the value of net surplus electricity, while leaving other
28ratepayers unaffected. The ratemaking authority shall determine
29whether the compensation will include, where appropriate
30justification exists, either or both of the following components:

31(i) The value of the electricity itself.

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

33(B) In establishing the rate pursuant to subparagraph (A), the
34ratemaking authority shall ensure that the rate does not result in a
35shifting of costs between eligible customer-generators and other
36bundled service customers.

37(6) (A) Upon adoption of the net surplus electricity
38compensation rate by the ratemaking authority, any renewable
39energy credit, as defined in Section 399.12, for net surplus
40electricity purchased by the electric utility shall belong to the
P15   1electric utility. Any renewable energy credit associated with
2electricity generated by the eligible customer-generator that is
3utilized by the eligible customer-generator shall remain the property
4of the eligible customer-generator.

5(B) Upon adoption of the net surplus electricity compensation
6rate by the ratemaking authority, the net surplus electricity
7purchased by the electric utility shall count toward the electric
8utility’s renewables portfolio standard annual procurement targets
9for the purposes of paragraph (1) of subdivision (b) of Section
10399.15, or for a local publicly owned electric utility, the renewables
11portfolio standard annual procurement targets established pursuant
12to Section 399.30.

13(7) The electric utility shall provide every eligible residential
14or small commercial customer-generator with net electricity
15consumption and net surplus electricity generation information
16with each regular bill. That information shall include the current
17monetary balance owed the electric utility for net electricity
18consumed, or the net surplus electricity generated, since the last
1912-month period ended. Notwithstanding this subdivision, an
20electric utility shall permit that customer to pay monthly for net
21energy consumed.

22(8) If an eligible residential or small commercial
23customer-generator terminates the customer relationship with the
24electric utility, the electric utility shall reconcile the eligible
25customer-generator’s consumption and production of electricity
26during any part of a 12-month period following the last
27reconciliation, according to the requirements set forth in this
28subdivision, except that those requirements shall apply only to the
29months since the most recent 12-month bill.

30(9) If an electric service provider or electric utility providing
31net energy metering to a residential or small commercial
32customer-generator ceases providing that electric service to that
33customer during any 12-month period, and the customer-generator
34enters into a new net energy metering contract or tariff with a new
35electric service provider or electric utility, the 12-month period,
36with respect to that new electric service provider or electric utility,
37shall commence on the date on which the new electric service
38provider or electric utility first supplies electric service to the
39customer-generator.

P16   1(i) Notwithstanding any other provisions of this section,
2paragraphs (1), (2), and (3) shall apply to an eligible
3customer-generator with a capacity of more than 10 kilowatts, but
4not exceeding one megawatt, that receives electric service from a
5local publicly owned electric utility that has elected to utilize a
6co-energy metering program unless the local publicly owned
7electric utility chooses to provide service for eligible
8customer-generators with a capacity of more than 10 kilowatts in
9accordance with subdivisions (g) and (h):

10(1) The eligible customer-generator shall be required to utilize
11a meter, or multiple meters, capable of separately measuring
12electricity flow in both directions. All meters shall provide
13time-of-use measurements of electricity flow, and the customer
14shall take service on a time-of-use rate schedule. If the existing
15meter of the eligible customer-generator is not a time-of-use meter
16or is not capable of measuring total flow of electricity in both
17directions, the eligible customer-generator shall be responsible for
18all expenses involved in purchasing and installing a meter that is
19both time-of-use and able to measure total electricity flow in both
20directions. This subdivision shall not restrict the ability of an
21eligible customer-generator to utilize any economic incentives
22provided by a governmental agency or an electric utility to reduce
23its costs for purchasing and installing a time-of-use meter.

24(2) The consumption of electricity from the local publicly owned
25electric utility shall result in a cost to the eligible
26customer-generator to be priced in accordance with the standard
27rate charged to the eligible customer-generator in accordance with
28the rate structure to which the customer would be assigned if the
29customer did not use a renewable electrical generation facility.
30The generation of electricity provided to the local publicly owned
31electric utility shall result in a credit to the eligible
32customer-generator and shall be priced in accordance with the
33generation component, established under the applicable structure
34to which the customer would be assigned if the customer did not
35use a renewable electrical generation facility.

36(3) All costs and credits shall be shown on the eligible
37customer-generator’s bill for each billing period. In any months
38in which the eligible customer-generator has been a net consumer
39of electricity calculated on the basis of value determined pursuant
40to paragraph (2), the customer-generator shall owe to the local
P17   1publicly owned electric utility the balance of electricity costs and
2credits during that billing period. In any billing period in which
3the eligible customer-generator has been a net producer of
4electricity calculated on the basis of value determined pursuant to
5paragraph (2), the local publicly owned electric utility shall owe
6to the eligible customer-generator the balance of electricity costs
7and credits during that billing period. Any net credit to the eligible
8customer-generator of electricity costs may be carried forward to
9subsequent billing periods, provided that a local publicly owned
10electric utility may choose to carry the credit over as a kilowatthour
11credit consistent with the provisions of any applicable contract or
12tariff, including any differences attributable to the time of
13generation of the electricity. At the end of each 12-month period,
14the local publicly owned electric utility may reduce any net credit
15due to the eligible customer-generator to zero.

16(j) A renewable electrical generation facility used by an eligible
17customer-generator shall meet all applicable safety and
18performance standards established by the National Electrical Code,
19the Institute of Electrical and Electronics Engineers, and accredited
20testing laboratories, including Underwriters Laboratories
21Incorporated and, where applicable, rules of the commission
22regarding safety and reliability. A customer-generator whose
23renewable electrical generation facility meets those standards and
24rules shall not be required to install additional controls, perform
25or pay for additional tests, or purchase additional liability
26insurance.

27(k) If the commission determines that there are cost or revenue
28obligations for an electrical corporation that may not be recovered
29from customer-generators acting pursuant to this section, those
30obligations shall remain within the customer class from which any
31shortfall occurred and shall not be shifted to any other customer
32class. Net energy metering and co-energy metering customers shall
33not be exempt from the public goods charges imposed pursuant to
34Article 7 (commencing with Section 381), Article 8 (commencing
35with Section 385), or Article 15 (commencing with Section 399)
36of Chapter 2.3 of Part 1.

37(l) A net energy metering, co-energy metering, or wind energy
38co-metering customer shall reimburse the Department of Water
39Resources for all charges that would otherwise be imposed on the
40customer by the commission to recover bond-related costs pursuant
P18   1to an agreement between the commission and the Department of
2Water Resources pursuant to Section 80110 of the Water Code,
3as well as the costs of the department equal to the share of the
4department’s estimated net unavoidable power purchase contract
5costs attributable to the customer. The commission shall
6incorporate the determination into an existing proceeding before
7the commission, and shall ensure that the charges are
8nonbypassable. Until the commission has made a determination
9regarding the nonbypassable charges, net energy metering,
10co-energy metering, and wind energy co-metering shall continue
11under the same rules, procedures, terms, and conditions as were
12applicable on December 31, 2002.

13(m) In implementing the requirements of subdivisions (k) and
14(l), an eligible customer-generator shall not be required to replace
15its existing meter except as set forth in paragraph (1) of subdivision
16(c), nor shall the electric utility require additional measurement of
17usage beyond that which is necessary for customers in the same
18rate class as the eligible customer-generator.

19(n) It is the intent of the Legislature that the Treasurer
20incorporate net energy metering, including net surplus electricity
21compensation, co-energy metering, and wind energy co-metering
22projects undertaken pursuant to this section as sustainable building
23methods or distributive energy technologies for purposes of
24evaluating low-income housing projects.

25

SEC. 2.  

No reimbursement is required by this act pursuant to
26Section 6 of Article XIII B of the California Constitution because
27a local agency or school district has the authority to levy service
28charges, fees, or assessments sufficient to pay for the program or
29level of service mandated by this act, within the meaning of Section
3017556 of the Government Code.



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