BILL ANALYSIS
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|Hearing Date:September 10, 2009 |Bill No:AB |
| |560 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 560Author:Skinner
As Amended:September 4, 2009 Fiscal:Yes
SUBJECT: Net energy metering.
SUMMARY: Increases, from 2.5 percent to 5 percent, the percentage of
an electric utility's peak load that may be provided by customers
operating solar or wind systems under a net energy meeting tariff;
prohibits solar installations of greater than 250 kilowatts generating
capacity from being done by a C-46 licensee; and states that
contractors holding class C-46 licenses as of January 1, 2010, shall
be deemed qualified to take the class C-10 license examination.
Existing law, the Public Utilities Code:
1) Requires the state's investor owned utilities (IOUs), publicly
owned utilities (POUs), except the Los Angeles Department of Water
and Power, and any other entity offering retail electric service,
to credit all electricity generated by a customer-owned solar or
wind system against the customer's usage of electricity sold by the
utility, on a kilowatt hour basis, a procedure known as "net energy
metering" (NEM).
2) Caps participation by all utilities at 2.5 percent of each
utility's aggregate peak electricity demand.
Existing law, the Business and Professions Code:
1)Provides for the licensure and regulation of more than 316,000
contractors under the Contractors State License Law (Contractors
Law) by the Contractors State License Board (CSLB) within the
Department of Consumer Affairs (DCA).
2)Classifies contracting in three different branches, generally
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identified by letter identification:
A - general engineering contracting, B - general building contracting,
C - specialty contracting.
3)Provides that a C - specialty contractor is a contractor whose
operations involve the performance of construction work requiring
special skill and whose principal contracting business involves the
use of specialized building trades or crafts.
4)Authorizes CSLB to adopt reasonably necessary rules and regulations
for the classification of contractors in a manner consistent with
established usage and procedure as found in the construction
business, and limit the field and scope of operations to those the
contractor is classified and qualified for.
5)Provides for specified or restricted scope of practice of certain
specialty classifications such as: C-16 fire protection, C-15
flooring and floor covering, C-31 construction zone traffic control
and C-57 well drilling.
Existing Board Regulations:
1)Establishes the C-10 specialty classification for electrical
contractors.
2)Establishes the C-46 specialty classification for solar contractors.
This bill:
1) Increases, from 2.5 percent to 5 percent, the percentage of an
electric utility's peak load that may be provided by customers
operating solar or wind systems under a net energy meeting tariff.
2) Prohibits a C-46 licensed contractor from constructing, altering or
installing solar installations of greater than 250 kilowatts
generating capacity.
3) States that contractors holding class C-46 licenses as of January
1, 2010, shall be deemed qualified to take the class C-10 license
examination.
4) Includes chaptering amendments to protect the provisions of AB 920
and SB 7 if either, or both of those bills are chaptered and this
bill is chaptered last.
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FISCAL EFFECT: The Senate Appropriations Committee analysis dated
August 27, 2009, cites minor, absorbable costs to the special fund of
the Public Utilities Commission, and unknown increased electricity
costs to various state agencies, potentially up to $1 million per
year. Unknown costs for the change in the contractor license
classification provided in this measure.
COMMENTS:
1.Hearing on Floor Amendments. This bill is before the Committee to
hear the September 4, 2009 amendments made on the Senate Floor
relating to specialty contractor's licenses issued by the
Contractors State License Board. The amendments prohibit a C-46
solar contractor from constructing, altering, or installing, solar
system for a customer with the capacity to generate greater than 250
kilowatts of electricity. In addition, the bill states that
contractors holding class C-46 licenses as of January 1, 2010, shall
be deemed qualified to take the class C-10 license examination.
2.Purpose. This bill is sponsored by The Solar Alliance (Sponsor) in
order to increase the NEM cap to 5 percent. The Solar Alliance is a
national alliance of solar photovoltaic (PV) manufacturers,
integrators, and financiers dedicated to accelerating the deployment
of solar electric power in the United States by promoting
cost-effective state-based policies. The Sponsor believes that it
is necessary to increase the cap in 2009, because given California
solar market trends, the amount of CSI applications received in the
next 12-18 months in Pacific Gas & Electric's service territory is
likely to hit that utility's 2.5% net metering cap in the next year.
The Sponsor strongly believes that increasing the existing cap to
5% ensures the successful completion of the California Solar
Initiative's goal of installing 3,000 MW and successful market
growth after completion of the program.
3.Background.
a) California Solar Initiative. The CPUC established the CSI by
regulation in 2005. The goal of the CSI is to provide a
long-term subsidy for solar systems with incentives that are
reduced annually. SB 1 (Murray, Chapter 132, Statutes of 2006)
statutorily established the CSI policy goal of 3,000 MW of new,
solar-produced electricity by 2017. The CSI statewide budget is
$3.3 billion over 10 years, distributed between three distinct
program components: The California Solar Initiative ($2.167
million/ 1,940 MW); the New Solar Homes Partnership ($400
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million/ 360 MW); and Publicly Owned Utility Programs ($700
million/700 MW).
SB 1 required the CPUC, in consultation with the California Energy
Commission (GEC), to report to the Governor and Legislature on
the costs and benefits of net metering, wind energy co-metering,
and co-energy metering to participating customers with options to
replace those costs and benefits with a more equitable mechanism.
SB 1 further required the CSLB to review and, if needed, revise its
licensing classifications and examinations to ensure that
contractors authorized to perform work on solar energy systems
subject to the provisions of the Public Resources Code have the
requisite qualifications to perform the work.
To date, it does not appear as if the CSLB has reviewed or changed
any of the licensing classifications or examinations related to
performing work on solar energy systems .
b) Net Energy Metering. The primary benefit of the California
Solar Initiative (CSI) program is derived from the solar
customer's eligibility for NEM which is authorized under state
law separately from the CSI program. Utility customers that
generate power from a wind or solar system are eligible for NEM
under which the electricity purchases of the customer are netted
against the electricity generated by the customer's own solar or
wind electric system. When the sun is shining or the wind is
blowing, the generated electricity spins the meter backward,
making it financially equivalent to using less electricity for
the customer with the same effect as the electric utility paying
the customer the full retail price for the electricity. When the
sun stops shining and the wind stops blowing, the customer draws
electricity from the grid and their meter spins forward using the
credit on the meter. In theory, depending on weather patterns,
system size and customer behavior, the customer will have a zero
energy bill at the end of a 12-month cycle. All customer classes
are eligible for NEM.
c) Subsidized Costs. The full retail price of electricity
includes the utility's cost of generating, distributing and
transmitting the power, public goods programs (e.g., energy
efficiency), low-income customer assistance (e.g., CARE), energy
crisis costs and other charges not related to generation. By
compensating the solar or wind customer at the full retail rate,
the utility is using ratepayer funds to pay the solar or wind
customer at a rate well above the value of the generated power
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which is about one-third of the total cost of a typical
residential customer's bill. The solar or wind customer does not
pay transmission or distribution costs even though they are still
connected to the electrical grid and use it for all their
generation needs when the sun isn't shining and the wind isn't
blowing (approximately 18 hours a day). Consequently, those
unpaid transmission and distribution costs and public goods
charges are a subsidy, the cost of which is ultimately shifted to
all other ratepayers in the class.
By increasing from 2.5% to 5%, the percentage of an electric
utility's peak load that may be provided by customers operating
solar or wind systems, this bill would increase that subsidy.
4.Specialty Contractor Licenses. The CSLB licenses more than 316,000
licensed contractors in the state, in 43 different licensing
classifications. The CSLB has authority to establish specialty
contractor classifications (C- classifications) by regulation. In
certain cases, the Legislature has specified or restricted the scope
of practice of certain specialty classifications in statute, such
as: C-16 fire protection, C-15 flooring and floor covering, C-31
construction zone traffic control and C-57 well drilling. This bill
primarily concerns the two following specialty classifications:
a) C-10 Electrical Contractor. Places, installs, erects or
connects any electrical wires, fixtures, appliances, apparatus,
raceways, conduits, solar photovoltaic cells or any part thereof,
which generate, transmit, transform or utilize electrical energy
in any form or for any purpose.
b) C-46 Solar Contractor. Installs, modifies, maintains, and
repairs active solar energy systems. An active solar energy
system consists of components which are thermally isolated from
the living space for collection of solar energy and transfer of
thermal energy to provide electricity and/or heating and cooling
of air or water. Active solar energy systems include, but are not
limited to, forced air systems, forced circulation water systems,
thermosiphon systems, integral collector/ storage systems,
radiant systems, evaporative cooling systems with collectors,
regenerative rockbed cooling systems, photovoltaic cells, and
solar assisted absorption cooling systems. A C-46 licensee shall
not undertake or perform building or construction trades, crafts
or skills, except when required to install an active solar energy
system.
In 2005, SB 1 (Murray) included amendments that required prevailing
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wages be paid, and that C-46 licensed contractors be excluded from
participation unless they were licensed on or before Sept. 1, 2005.
The bill ultimately was made a two year bill, and was finally
enacted in 2006 without the contractor restrictions.
5.Related Legislation. The bill makes chaptering provisions by
incorporating changes to the Public Utilities Code proposed by AB
920 and SB 7, to be operative only if either AB 920 or SB 7 and this
bill are chaptered and become effective on or before January 1,
2010, and this bill is chaptered last.
AB 920 (Huffman) expands the current net-metering programs for wind
and solar, to allow the net-metered customers to sell any excess
electricity they produce over the course of a year to their electric
utility. The bill contains chaptering amendments to mirror the
provisions of
AB 560, if both bills are enacted. The bill has been referred to the
Senate Rules Committee.
SB 7 (Wiggins) allows net-metered customers who use wind and solar to
produce more electricity than they consume in a given year to carry
the credits for the excess production forward and apply those
credits against excess consumption for up to two years. The bill
has been placed on the Assembly's Inactive File.
6.Arguments in Support. In sponsoring the bill, Solar Alliance
(Sponsor) states that the contractor classification amendment
essentially reflects the industry practice. The Sponsor states:
"There are only 146 C-46 license only contractors in the state.
There are 331 C-46 combined with other license certification
contractors in the state who would be eligible to work on any size
system in the CSI program. There are 11,000 C-10 licensed
contractors, approximately 10% of C-10s are members of a labor
union. Under the CSI program to date, 27,000 installations are 250
KW and below with approximately 500 installations at 250 KW and
above. For the Solar Alliance companies who comprise 70% of the CSI
installations in the 250 KW and above category, the vast majority,
over 90% used C-10 licensed contractors for the systems larger than
250 KW. The Solar Alliance believes that if you look at the numbers,
the industry standard is reflected in the floor amendment.
California Business Properties Association , Building Owners and
Managers Association of California , California Building Industry
Association , International Council of Shopping Centers , and National
Association of Industrial and Office Properties are in support of
this bill and state: "In plain English, AB 560 will encourage more
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rooftop solar systems, encourage distributed energy, and decrease
that state's greenhouse gas emissions."
Western Electrical Contractors Association (WECA) supports the
amendments arguing that under existing law no work performed by a
C-46 solar contractor is required to be performed by a "state
certified electrician" because Labor Code 3099 ff. only applies to
work performed by a C-10 contractor. Thus the amendments will
require that larger solar projects are built by certified
electricians which should enhance safety. WECA argues that the 250
KW threshold means that ALL residential can still be performed by
C-46 licensees, and only when the very large commercial systems are
involved the law will require a C-10 license. WECA further argues
that a C-10 should perform the work in this size range as the
installations are more complex and will connect into more robust
electrical distribution systems.
WECA further states: "The bill 'waives' the experience requirement
for a C-46 that wants to obtain a C-10 license which should
alleviate any concern that C-10s are trying to dominate the solar
market. All they need to do is take and pass the C10 exam. All of
WECA`s members who hold a C-46 also have a C-10 license; many also
hold an A or B general license as well."
7.Arguments in Opposition. The California Solar Energy Industries
Association (CALSEIA) has taken an "oppose unless amended" position
on the bill. CALSEIA states that more than half of its 200 members
are solar (C-46) contractors, and argues that the bill "would make
it illegal for solar contractors to install solar projects in
California." CALSEIA states that "the September 4th amendment
allows companies and employees with no experience installing solar
to work on the largest solar projects. Current law already allows
several license holder classifications to install solar. AB 560
specifically targets solar contractors and makes them ineligible to
install solar projects." CALSEIA has suggested that an alternative
amendment would be to require all solar installers to be trained and
certified, similar to the State's current requirement for
electricians .
8.Technical Concerns by Contractors State License Board Staff. Staff
of the CSLB are concerned that by allowing any contractor holding
the Solar (C-46) license classification to take the C-10 license
exam, the bill would remove the CSLB's authority to determine
whether or not the contractor has the prerequisite experience
otherwise required under the law. The staff of the CSLB further
states:
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"The C-46 license classification includes both thermal and
photovoltaic (PV) solar systems. The September 4, 2009
amendment to AB 560 would limit the ability of
C-46 Solar contractors to perform PV work by forcing them to
install only residential systems. Only those with C-10
Electrical licenses could install systems over 250 kilowatts
which is about the size of a small commercial system. As the
C-46 license classification is designed specifically for
performing solar work, it does not make sense to place this
arbitrary limitation on trade practice. The C-10 Electrical
license classification is designed for contractors performing
many types of electrical work and therefore the examination
cannot assess competence on solar PV systems in the same depth
as the C-46 solar license examination. If AB 560 is enacted
with the proposed amendment, this could result in contractors
with less specific knowledge installing larger, more
expensive, eminently more dangerous systems.
"The second problem with AB 560 is allowing any contractor who
holds a C-46 license to qualify for the C-10 license
examination. CSLB regulations require four years of
journey-level experience to qualify for all license
classifications. If a C-46 solar contractor has performed
solar PV work at the journey level for four years, they most
likely qualify to take the C-10 Electrical license examination
under current regulations. However, a C-46 solar contractor
may only have experience performing solar thermal work. These
contractors should not be deemed qualified to take the
C-10 license examination. Enacting the September 4, 2009
amendment to AB 560 would circumvent the CSLB experience
requirements which were designed to ensure all contractors
possess the requisite experience to practice safely and
competently."
The CSLB has requested that the bill be amended to strike out the
provision authorizing a C-46 contractor to take the C-10 license
examination. On page 11, lines 28-30, strike out: "Contractors
holding class C-46 licenses as of January 1, 2010, shall be
deemed qualified to take the class C-10 license examination."
Committee staff notes that in reviewing the two license
examination study guides on the CSLB's website, the two
examinations are significantly different in scope and focus. The
C-10 electrical contractor examination is composed of: Planning
and Estimating (21%); Rough Wiring (25%); Finish Wiring and Trim
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(19%); Start-up, Troubleshooting and Maintenance (15%); Safety
(20%). The C-46 solar contractor license examination is composed
of: Planning and Estimating (21%); Solar Collector Installation
(14%); Solar Thermal Installation (16%); Photovoltaic (PV) System
Installation (23%); Service and Maintenance (11%); Safety (15%).
It would appear likely that many solar contractors may not be
able to pass the electrical contractor examination because of the
focus of the examination is a different scope from the license
that they already hold.
The Committee may wish to exercise caution about allowing
(effectively requiring) solar contractors to sit for the
electrical contractor examination, which they are neither
qualified to sit for, nor trained to successfully complete.
9.Policy Issues.
a) How would the bill's restrictions in excluding C-46
contractors from installing net metered projects over 250
kilowatts be enforced? The net metering agreement is an
agreement between the utility and the utility customer, and is
typically executed after the installation has already started
and frequently after the installation is complete. The
current language seems to infer that all utilities will
enforce a licensing requirement during or after construction
of a solar project.
The proponents of the bill should clarify how this provision
will be enforced since the net metering agreement is between
the utility and its customer and not between the utility and
the installation contractor.
b) Should the Legislature await action on the contractor
provisions of this bill until the CSLB makes a determination
regarding licensing classifications and examination? An
uncodified provision of SB 1 requires the CSLB to review and,
if needed, revise its licensing classifications and
examinations to ensure that contractors authorized to perform
work on solar energy systems subject to Chapter 8.8
(commencing with Section 25780) of Division 15 of the Public
Resources Code, have the requisite qualifications to perform
the work. While there is not a timeframe for completing this
review, it is unknown to the Committee whether the CSLB has
undertaken or completed this review.
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The Committee may wish to require the CSLB to complete its
review of the classifications and examinations necessary to
ensure that contractors authorized to perform solar work have
the required qualifications to perform the work.
NOTE: This bill was heard on July 7, 2009 by the -Senate Energy,
Utilities and Communications Committee and passed on a 9-1 vote. The
amendments relating to contractor classifications were amended into
the bill on September 4, 2009.
SUPPORT AND OPPOSITION:
Support:
The Solar Alliance (Sponsor)
Western Electrical Contractors Association
California Business Properties Association
Building Owners and Managers Association of California
California Building Industry Association
International Council of Shopping Centers
National Association of Industrial and Office Properties
Support listed by Senate Floor Analysis (verified 9/4/09):
AEE Solar, Inc.
Applied Materials
Borrego Solar Systems
Brightline Defense Project
California Interfaith Power and Light
California Public Utilities Commission
California Retailers Association
City of San Jose
Clean Power Campaign
Coalition for Clean Air
Conergy
County School Facilities Consortium
East Bay Municipal Utility District
Environment California
Evergreen Solar, Inc.
Family Winemakers of California
Friends of the Earth
Global Green USA
GRID Alternatives
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Inland Empire Utilities Agency
Kyocera International, Inc.
KyotoUSA
Large-scale Solar Association
Lennar Corporation
Macy's Inc.
Mainstream Energy Corporation
Natural Resources Defense Council
Pacific Environment
Pacific Gas and Electric
Planning and Conservation League
REC Solar, Inc.
San Francisco Board of Supervisors
Sharp Solar
Sierra Club California
Silicon Valley Leadership Group
SolarCity
Solar World California
Southern California Edison
SPG Solar, Inc.
Standard Pacific Homes
SunPower Corporation
SunTech American
Tioga Energy, Inc.
Tim Lewis Communities
Union of Concerned Scientists
US Green Building Council
Village at Heritage Springs, LLC
Vote Solar Initiative
Woodside Homes of Northern California
Opposition:
Associated Builders and Contractors
California Solar Energy Industries Association
Numerous individual solar contractors
Opposition listed by Senate Floor Analysis (verified 9/4/09):
Sempra Energy
Utility Reform Network
Consultant:G. V. Ayers
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