BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
AB 2573 - Leno Hearing Date:
June 20, 2006 A
As Amended: May 22, 2006 FISCAL B
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DESCRIPTION
Existing law (AB 594 (Leno), Chapter 790, Statutes of 2004)
requires Pacific Gas and Electric (PG&E) to credit the City and
County of San Francisco for any excess electricity exported to
the PG&E grid from up to five megawatts of solar generation
facilities that would serve municipal facilities in San
Francisco. Each facility must serve on-site load and may not be
larger than one megawatt. The required credit is equivalent to
the generation component of the appropriate time-of-use rate for
the electricity. If San Francisco begins to provide retail
service to PG&E customers, the provisions of AB 594 become
inoperative.
This bill increases the total amount of allowable on-site solar
generation from five megawatts to 15 megawatts and creates an
additional mechanism for San Francisco to receive credit for
solar generation produced at a remote site within or outside of
San Francisco and consumed at a city-owned site within or
outside of San Francisco. This bill eliminates the one megawatt
facility size limit and the provision rendering the statute
inoperative if San Francisco begins to provide retail service to
PG&E customers.
BACKGROUND
SB 656 (Alquist), Chapter 369, Statutes of 1995, required all
electric utilities to buy back any electricity generated by a
customer-owned solar or wind system. This buy-back program is
known as "net metering" because the electricity purchases of the
customer are netted against the electricity generated by the
customer's solar electric system. The generated electricity
spins the meter backward, making it equivalent to the customer
using less electricity.
Net metering was initially permitted for systems up to 10
kilowatts making it suitable for residential-sized applications
(a typical residential net-metered system is 2 - 4 kilowatts).
The total amount of capacity that could be net metered was
capped at 0.1 percent of the utility load. AB 29X (Kehoe),
Chapter 8, Statutes of 2001, expanded the net metering program
to large commercial and industrial customers by raising the
maximum size of the net-metered system to 1 megawatt and lifting
the cap on total net metered capacity. The provisions of AB 29X
relating to net metering were to sunset on January 1, 2003, but
were subsequently extended by AB 58 (Keeley), Chapter 836,
Statutes of 2002, which also replaced the cap at 0.5 percent of
utility peak load. SB 1 (Murray), pending in the Assembly,
increases the net-metering cap to 2.5 percent.
Because most municipal load in San Francisco is served by
electricity from Hetch Hetchy Water and Power (delivered via
PG&E's transmission and distribution system), the load is not
eligible for net metering. AB 594 created a surrogate program
designed for San Francisco municipal load, allowing solar
facilities to get credit for excess electricity production under
a limited form of net-metering, in which PG&E pays for excess
electricity at the time-of-use generation rate, rather than the
full retail rate.
Now, San Francisco wants to develop larger solar projects at
remote sites that will produce more electricity than is consumed
at that site. The remote sites could be inside or anywhere
outside of San Francisco. Instead of selling this surplus
electricity at its wholesale value to a retail utility, San
Francisco wants PG&E to be required to take the electricity as
an offset to electricity being consumed by the city at another
location.
COMMENTS
What's the difference between remote generation and on-site
generation? The difference is that remote generation requires
the utility to provide transmission and distribution services to
deliver it. Under this bill, San Francisco's remote solar
generation would be treated the same as on-site solar generation
has been treated in net-metering policy. For the first time,
remote solar would receive the equivalent of net-metering - a
one for one offset of generation and consumption, with no charge
for delivery. In effect, the distance between the generator and
the consumer would be ignored. In addition, the one megawatt
size limit in effect for net metering would not apply.
A leading argument for promoting on-site solar is that it
reduces congestion on the transmission and distribution grid.
The remote solar arrangement may offer some local congestion
relief benefit, depending on the proximity of the generation to
the load. However, this bill has no limit on proximity of the
generation to the load so it could result in either increased or
decreased congestion.
This bill assures that their will be no ongoing payment for
transmission and distribution services (beyond initial
interconnection costs), but it doesn't assure there will be no
costs. The provision requiring the "appropriate regulatory
agency" to ensure there is no cost shifting will only initiate a
case at the CPUC or FERC in which the parties will again argue
about the costs and merits of remote solar, with an uncertain
outcome. If FERC is the "appropriate regulatory agency," it
will not be bound by a state law requirement to prevent cost
shifting.
ASSEMBLY VOTES
Assembly Floor (64-15)
Assembly Appropriations Committee (16-1)
Assembly Natural Resources Committee
(10-0)
Assembly Utilities and Commerce Committee
(10-1)
POSITIONS
Sponsor:
San Francisco Public Utilities Commission
Support:
American Federation of State, County and Municipal Employees
California Solar Energy Industries Association
City and County of San Francisco
Clean Power Campaign
Environment California
League of California Cities
Planning and Conservation League
PV Manufacturers Alliance
PV Now
Vote Solar
Oppose:
Pacific Gas and Electric Company
Lawrence Lingbloom
AB 2573 Analysis
Hearing Date: June 20, 2006