BILL ANALYSIS
AB 560
Page 1
Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 560 (Skinner) - As Amended: April 16, 2009
Policy Committee:
UtilitiesVote:10-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases the existing cap on the amount of solar- or
wind-generated electricity that can be generated through
net-metering from 2.5% to 10% of each investor-owned utility's
aggregate peak demand.
FISCAL EFFECT
Minor absorbable costs to the Public Utilities Commission (PUC).
COMMENTS
1)Background . Under net-metering, the electric utility is
required to "buy back" any electricity generated by a
customer-owned generator as measured by an electric meter that
can measure the flow of electricity in both directions. SB
656 (Alquist)/Chapter 369 of 1995 capped net-metering at 0.1%
of the utilities load. AB 57 (Keeley)/Chapter 836 of 2002
increased the cap to 0.5%, and SB 1 (Murray)/Chapter 132 of
2006 further increased the cap to 2.5%. SB 1 implemented the
California Solar Initiative (CSI) which has the goals of
installing 3,000 megawatts (MW) of distributed
generation-sized solar energy systems in California by 2017
while creating a self-sustaining solar industry that can
operate without subsidies.
Even with the grant program created under the CSI and federal
tax credits, distributed generation solar energy is not
economical for the customer-generator unless the utility
participates in some form of a buy-back program such as
net-metering. According to recent estimates by the PUC, each
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IOU's share of the CSI's 3,000MW goal represents between 4.5%
to 5% of the utility's aggregate peak load, thus if the goals
of CSI are to be met, the 2.5% cap on net-metering must be
increased or a similar buy-back program must be put into
place.
As of December 2008, the total installed capacity of
net-metered customers, as a percentage of each investor-owned
utility's peak load was: 1.3% for PG&E; 0.5% for Southern
California Edison (SCE); and 0.6% for San Diego Gas & Electric
(SDG&E). While SCE and SDG&E will not come close to the
net-metering cap for several years, based on growth estimates,
the cap could be reached in PG&E's service territory in 2010.
The purpose of the net-metering cap is two-fold: first, to
insure that intermittent solar generation does not create grid
reliability problems; and second, to cap the subsidy provided
through net-metering. (The credit provided for wind- or
solar-generated power put back into the grid is at the
customer's retail cost, which includes not only the replaced
generation cost, but also the equivalent costs for
transmission, distribution, public good charges, and the
utility's rate of return. Since the customer-generator is
being paid the retail price, the add-on costs are shifted to
the utilities' other ratepayers.)
2)Evaluation Pending . The PUC is required to report to the
Legislature and the governor by January 1, 2010 on the costs
and benefits of net energy metering, to include options to
replace these economic costs and benefits with a mechanism
that more equitably balances the interests of participating
and nonparticipating customers.
3)Purpose . The sponsor of this bill, Solar Alliance, and other
supporters argue that the CSI and net-metering have been
successful and thus the cap should be either eliminated or
increased this year to a level exceeding the CSI's 3,000MW
goal. Supporters also argue that there is no evidence that
net metered solar power has any negative impact on grid
stability.
4)Comment . Given that the PUC evaluation is due January 1,
2010, and that the current cap could present a potential
short-term barrier only to prospective PG&E
customer-generators, it is unclear why the cap would need to
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be increased four-fold this year. A considerably smaller
increase at this time would seem more warranted, and would
provide the Legislature a better opportunity in 2011 to review
the PUC's net-metering evaluation.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081