BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 550 (Hertzberg) - Net energy metering
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|Version: May 4, 2015 |Policy Vote: E., U., & C. 6 - 3 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 18, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 550 would specify the methodology by which
publically owned electric utilities (POU) are calculate the cap
on net energy metering (NEM) programs.
Fiscal
Impact:
Ongoing annual costs of $111,000 from the Energy Resources
Program Account (General Fund) to the CEC to collect and post
information from POUs regarding their NEM subscribership.
Unknown, but potentially minor, costs from the Energy
Resources Program Account (General Fund) to the CEC to approve
alternative estimation techniques.
Unknown cost shifts to the General Fund and various special
funds to the state as a ratepayer.
Background: Existing law requires that each electric utility offer a NEM
program to eligible customer-generators, upon request, on a
SB 550 (Hertzberg) Page 1 of
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first-come, first-served basis until the total rated generating
capacity used by eligible customer-generators 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 (CPUC) 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 CPUC adopted a
controversial decision that require 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.
Proposed Law:
This bill would require POUs and other non-IOUs to calculate
aggregate customer peak demand as a sum of the highest
noncoincident demand for electricity for each customer in its
jurisdiction.
This bill would allow the non-IOUs to determine aggregate
customer peak demand using an estimation technique that has been
determined to be reasonable by the California Energy Commission.
The POUs would be required to report quarterly with the CEC
detailing its progress toward meeting the program limit. The CEC
would be required to post this information on its website.
Related
Legislation: AB 327 (Perea) Chapter 611, Statutes of 2013
codified the requirement for IOUs to calculate aggregate
customer peak demand as a sum of each customer's noncoincident
peak demand.
SB 550 (Hertzberg) Page 2 of
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Staff
Comments: In order to collect the quarterly information from
the POUs and post it on its website, the CEC estimates that it
would need one additional position at the Energy Analyst
classification for an annual cost of $111,000.
This bill allows a POU to elect to use an estimation technique
that the Energy Commission has determined to be reasonable. It
is not clear how this determination would be made. Should the
CEC determine that the reasonable estimation technique is the
technique that is currently approved for the IOUs by the CPUC,
there would be no additional costs to the CEC. However, if this
language is interpreted to allow each POU to propose an
estimation technique that has to be reviewed and determined
reasonable by the CEC, there could be additional costs to the
CEC, possibly in the low hundreds of thousands of dollars for a
limited period of time.
Staff notes that full-retail NEM involves cost shifts to the
non-participating customers as the NEM customer is exempt from
paying transmission and distribution costs on the electricity
provided by the utility. Instead, these costs must be paid by
the non-NEM customers. In addition NEM customers are allowed to
use excess bill credit to offset their obligation to contribute
to public good programs. As those public good programs have
fixed costs, non-NEM customers have to make up the difference.
It is uncertain how much the new peak demand calculation in this
bill will ultimately increase NEM participation in the POUs.
However, staff notes that the state is a customer of the POUs,
and as a customer, the state may have additional costs to the
extent that the state is a non-NEM customer.
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