BILL ANALYSIS Ó SB 793 Page A Date of Hearing: June 22, 2015 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Anthony Rendon, Chair SB 793 (Wolk) - As Amended May 5, 2015 SENATE VOTE: 23-13 SUBJECT: Green Tariff Shared Renewables Program. SUMMARY: Permits a participating customer to subscribe to a Green Tariff Shared Renewables (GTSR) Program and receive a reasonably estimated bill credit and bill charge, as determined by the California Public Utilities Commission (CPUC), for a period of up to 20 years. Specifically, this bill: EXISTING LAW: a)Requires participating Investor Owned Utilities (IOUs) to file applications to establish a voluntary GTSR Program in their service area. (Public Utilities Code Section 2831) b)Requires the CPUC to issue a decision on the IOU's voluntary GTSR Program applications by July 1, 2014. (Public Utilities Code Section 2831) SB 793 Page B c)Specifies GTSR program criteria related maximum statewide program size, size of qualified facilities, location of facilities near customers, restrictions on market concentration, inclusion of disadvantaged communities, a 20-MW set aside within the GTSR program for the City of Davis, and restrictions to ensure that the costs of the program are not borne by non-participants. (Public Utilities Code Section 2833) d)Sunsets the statute January 1, 2019. (Public Utilities Code Section 2834) FISCAL EFFECT: Unknown. COMMENTS: 1)Author's Statement: "The CPUC issued a decision implementing parts of SB 43 (Wolk, Chapter 413, Statutes of 2013) in January 2015 that lays out the program design for the three IOU's GTSR programs. Unfortunately, the CPUC rules currently prevent customers from subscribing to their utility's GTSR program for a term of more than one year, a limitation that was not required nor contemplated in SB 43. Because the bill credits and charges can fluctuate year to year, this one-year maximum limitation prevents a customer from reasonably predicting their rate associated with subscribing to GTSR beyond the current year. This limitation is likely to significantly reduce program uptake, especially for customers who are considering making a long-term agreement with a specific renewable energy developer within the Enhanced Community Renewables portion of the GTSR programs." "SB 793 would have no effect on the overall customer costs or rates of the three IOUs in California. SB 43 requires that SB 793 Page C all costs of an IOU's green tariff shared renewables program be covered by participants of the program and that no costs be paid by ratepayers that are not participants of an IOU's green tariff shared renewables program. However, SB 793 may lessen the costs to participants that sign up for an IOU's green tariff shared renewables program." 2)What's a Green Tariff Shared Renewable Program? While rooftop solar is a strong and growing business in California, as much as 75% of households cannot participate because they are renters and don't own their roofs, they do not have strong enough credit, or their roof is too small or doesn't receive enough sunlight. The same is true of most businesses, 70% of whom rent or lease their facilities. Despite their inability to utilize renewable energy, these utility customers continue to pay into solar and renewable programs that fail to benefit them. Additionally, programs (MASH, SASH, Solar Share, etc.) designed to benefit low-income or rental utility customers by providing them the opportunity to utilize renewable energy either have no room for new participants or fail to provide consumers with access to affordable renewable energy. A GTSR allows a utility customer to voluntarily subscribe to a rate plan that provides renewable energy to that customer from a local renewable energy facility. The customer pays the costs for participating in this program, and other ratepayers who are not participating in this program do not bear the cost of the program. 3)Status of CPUC Proceeding . There is an ongoing proceeding to implement SB 43 (A.12-01-008 et al). The CPUC rendered a decision at the end of January 2015 to begin implementing SB 43. However, there are a host of other issues that remain to be determined by the CPUC in a later phase of the proceeding. The later phase is expected to begin in August or September 2015. This bill would not delay the current proceeding at the CPUC. SB 793 Page D 4)Need for this bill. According to the author, customers need to be able to enroll in the GTSR program for more than one year so that they can predict the billing rate associated with subscribing to GTSR beyond the current year. Having information that estimates bill credits and bill charges over a longer period of time can help a customer decide whether to enroll in this program. The CPUC decision (D15-01-051<1>) on GTSR, the CPUC notes that in this decision: We have eliminated the requirement that an IOU require a one-year enrollment minimum and early termination fee, provided that the IOU can demonstrate that ratepayer indifference can still be achieved. Longer terms and locked-in rates are slated for Phase IV. The decision goes on to state that: The GTSR Program may require up to a one-year enrollment term, with the option of continuing on a month-to-month basis at the end of the year. (Ordering Paragraph 46). Even though the CPUC has provided flexibility with respect to the enrollment period, the other issue relates to pricing. One stakeholder in the CPUC proceeding put it this way: "? in order to offer participants fair compensation for the long-term value of GTSR resources and pricing certainty for the term of their participation, which, for ECR projects, is -------------------------- <1> http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M146/K250/146250314.PDF SB 793 Page E going to be much longer than one year if projects are to be successfully developed. The CPUC issued a ruling on April 15, 2015, which will, among other things, consider options for customers to lock-in rates and have long-term contracts. The CPUC estimates a decision by November 2015. The CPUC's decision must set the GTSR rates "in a manner that ensures nonparticipant ratepayer indifference for the remaining bundled service, direct access, and community choice aggregation customers and ensures that no costs are shifted from participating customers to nonparticipating ratepayers," as specified in Public Utilities Code Section 2833(q). If SB 793 is enacted, the CPUC may need to consider directing the IOUs to include a disclosure to customers that choose to enroll for 20 years that the estimate of credits and charges are not a guarantee to those credits and charges. 5)20-year commitment: Current IOU rate plans are one-year commitments for customers and are terminated when a customer's life circumstance causes them to move, even if it occurs within the one-year commitment. As written, it is not clear whether a 20-year enrollment in GTSR would result in a debt obligation to the customer. This can impact whether or not a customer can continue to participate in the program (the duration of this commitment is a life-cycle generation - Yuppies, Generation X, Millenials, etc.), during which much can change in a person's life. For example, how would GTSR address changes that prevent a customer from meeting a 20-year enrollment commitment because of unexpected events (job change, a significant change in family circumstances such as SB 793 Page F death or divorce, moving to another utility service area, or change of residence). Commercial and government customers may be in a better position to make a 20-year commitment as their site ownership may not change as frequently as residential site ownership. The author may wish to consider clarifying this language: (o) A participating utility shall permit a participating customer to subscribe to the program andreceive a reasonably estimatedbe provided with a non-binding estimate of reasonably anticipated billcreditcredits and billchargecharges, as determined by the commission, for a period of up to 20 years. 6)Support and Opposition: Supporters state that SB 793 would give greater flexibility for customers and greater predictability for utilities, customers, and renewable energy financing entities because customers will receive a reasonably estimated bill credit and bill charge for a period of up to 20 years. Opponents state that there is no comparable rationale for allowing customers to receive a fixed bill credit for a period of two decades. They point out that the GTSR rate will adjust to reflect the actual cost of generation used to serve customers and is tied to actual market prices for electricity, natural gas costs, and the costs of a changing mix of SB 793 Page G generation in the utility portfolio. They point out it is not possible to realistically forecast these costs over a 20-year time horizon for the purposes of fixed bill credits for the entire period. 7)Related Legislation: SB 43 (Chapter 413, Statutes of 2013): Established, until January 1, 2019, a Shared Renewable Self Generation Program allowing IOU customers to purchase an interest in a "community renewable energy facility" and receive a bill credit for the generation component of the customer's electrical service. SB 843 (Wolk 2012): Would have established a new business model that would allow developers of renewable projects to sell electricity to customers of IOUs. Failed in Assembly Utilities Committee. SB 383 (Wolk 2012) was amended to deal with a different subject in the Assembly REGISTERED SUPPORT / OPPOSITION: Support Borrego Solar California Environmental Justice Coalition California Public Utilities Commission SB 793 Page H California Solar Energy Industries Association Environmental Defense Fund Sierra Club Solar Energy Industries Association Vote Solar Opposition TURN (unless amended) Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083