BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2573|
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THIRD READING
Bill No: AB 2573
Author: Leno (D)
Amended: 8/28/06 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 6/20/06
AYES: Escutia, Cox, Alarcon, Bowen, Dunn, Dutton, Kehoe,
Murray
NO VOTE RECORDED: Battin, Simitian
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 64-15, 5/30/06 - See last page for vote
SUBJECT : Electricity: Hetch Hetchy Water and Power
solar generation
SOURCE : San Francisco Public Utilities Commission
DIGEST : This bill increases the amount of solar
generation permissible for the City and County of San
Franciscos net-metering facilities, and requires Pacific
Gas and Electric Company to accept San Francisco-generated
photovoltaic (solar) power at one location and provide
electricity to a San Francisco-designated remote location
up to the amount of electricity contemporaneously being
used by the remote location.
Senate Floor Amendments of 8/28/06 make various technical
changes and alter the procedure for determining the amount
CONTINUED
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San Francisco will pay Pacific Gas and Electric Company for
delivery (transmission and distribution) of electricity so
that it is more consistent with previous policy committee
amendments.
ANALYSIS : Existing law, AB 594 (Leno), Chapter 790,
Statutes of 2004, requires Pacific Gas and Electric Company
(PG&E) to credit the City for any excess electricity
exported to the PG&E grid from up to five megawatts for
solar generation facilities that would serve municipal
facilities in San Francisco. Each facility must serve
on-site lead 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.
The bill makes San Francisco responsible for scheduling the
electricity exported from remote sites. The bill requires
remote generation and load sites to have meters capable of
measuring electricity exports and usage. The bill requires
San Francisco to pay applicable distribution and
transmission rates, as specified.
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 purchase of the customer are netted against the
electricity generated by the customer's solar electric
system. The generated electricity spins the meter
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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 0l1 percent of the utility load.
AB 29X (Kehoe), Chapter 8, Statutes of 2001, First
Extraordinary Session, expanded the net metering program to
large commercial and industrial customers by raising the
maximum size of the 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 (Kelley), Chapter 836, Statutes of 2002, which
also replaced the cap at 0l5 percent of utility peak load.
SB 1 (Murray), pending on the Senate Unfinished Business
file, increases the net-metering cap.
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
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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
reduced 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 there 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 PUC 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/11/06)
San Francisco Public Utilities Commission (source)
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
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PV Manufacturers Alliance
PV Now
Vote Solar
OPPOSITION : (Verified 8/11/06)
Pacific Gas and Electric Company
ASSEMBLY FLOOR :
AYES: Aghazarian, Arambula, Baca, Bass, Berg, Bermudez,
Blakeslee, Calderon, Canciamilla, Chan, Chavez, Chu,
Cohn, Coto, De La Torre, Dymally, Emmerson, Evans,
Frommer, Garcia, Goldberg, Hancock, Harman, Jerome
Horton, Shirley Horton, Jones, Karnette, Keene, Klehs,
Koretz, Laird, Leno, Leslie, Levine, Lieber, Lieu, Liu,
Matthews, Montanez, Mullin, Nakanishi, Nation, Nava,
Negrete McLeod, Oropeza, Parra, Pavley, Plescia, Richman,
Ridley-Thomas, Sharon Runner, Ruskin, Saldana, Salinas,
Spitzer, Torrico, Tran, Umberg, Vargas, Villines, Wolk,
Wyland, Yee, Nunez
NOES: Benoit, Bogh, Cogdill, Daucher, DeVore, Haynes,
Houston, Huff, La Malfa, La Suer, Maze, Mountjoy, Niello,
Strickland, Walters
NO VOTE RECORDED: McCarthy
NC:cm 8/27/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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