BILL ANALYSIS
AB 1947
Page 1
Date of Hearing: April 5, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1947 (Fong) - As Amended: March 25, 2010
SUBJECT : Solar energy.
SUMMARY : Permits a publicly owned utility (POU) to implement a
solar program that allows customers to offset part or all of
their electricity demand, with a solar energy system not located
on the premises of the consumer.
EXISTING LAW
1)Requires each POU to establish a nonbypassable charge to
promote energy efficiency and conservation, new investment in
renewable energy technology, research, and services for
low-income electricity customers.
2)Requires each POU to annually report to the California Energy
Commission (CEC) the amount of funds collected and expended
for renewable energy resource development and the utility's
status in implementing the Renewable Portfolio Standard (RPS),
which requires all electric utilities to procure at least 20%
of their generating capacity from renewable energy generating
sources by 2010.
3)Requires a POU to offer monetary incentives for the
installation of solar energy systems.
4)Establishes the California Solar Initiative (CSI), which sets
a goal for investor-owned utilities (IOUs) and POUs to install
3,000 megawatts of photovoltaic (PV) solar energy in
California within 10 years.
5)Requires POUs to initiate a public proceeding by January 1,
2008, to fund a solar energy program to support the goal
established by the CSI.
6)Establishes criteria for a POU's solar energy program,
including that the solar energy system be located on the same
premises of the end-use consumer where the consumer's own
electricity demand is located, and is intended to offset part
or all of that customer's demand.
7)Establishes a statewide expenditure goal for POUs' solar
programs at $784 million.
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8)Requires all investor-owned utilities and POUs that offer
net-metering to purchase all electricity produced from the
customer's wind or solar generator at a rate set by the
California Public Utilities Commission (CPUC) or POU. The rate
shall be set to provide the customer-generator "just and
reasonable" compensation for the surplus energy sales, leave
all other ratepayers indifferent, and shall not result in any
cost shifting to non-customer generators.
FISCAL EFFECT : Unknown.
COMMENTS : The purpose of this bill is to assist a POU with
achieving its CSI goals. In the IOU territories, because of
deregulation and the energy crisis, rates are high enough to
provide individual customers incentive to invest in solar PV
panels to offset their own load. This takes a substantial
investment of about $16,000-$20,000 for an average single-family
home and the payback period is usually about 5 years or less.
Because the Sacramento Municipal Utility District (SMUD) and
other POUs' retail prices can be substantially less, it takes
longer for the investment to pay off and customers are less
likely to invest in solar PV for financial reasons if they have
to install it on their own premises.
SMUD has created an alternative program that would enable those
customers who choose to contribute toward solar PV generation to
participate without having to make the substantial up-front
investment with such a lengthy pay-back period. Current law
precludes SMUD from implementing it because the law requires
that the solar energy system be located on the same premises of
the end-use customer where the customer's own electricity demand
is located.
1) Background : AB 1890 (Brulte) Chapter 864, Statutes of 1996,
required electricity providers to divest from its own generation
and provided POUs a 4-year grace period and many did not
"deregulate" immediately. Most POUs didn't divest from their
own municipally owned generation and purchase all generation
from the now defunct Power Exchange (PX), as AB 1890 required.
While private generators and power brokers severely manipulated
the PX and increased the IOUs' costs for wholesale generation,
some POUs that retained their own generation avoided the
manipulated market and the skyrocketing wholesale prices. As a
result, PG&E's highest tiered residential rate is 50
per kWh � and Sacrament Municipal Utility District's highest tiered
residential rate is 14.1
per kWh. �
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2) The California Solar Initiative : SB 1 (Murray) Chapter 132,
Statutes of 2006, created the CSI which required the electric
utilities to collect and invest about $3.3 billion over a
ten-year period for a declining rebate program with a goal of
installing 3,000 MW of solar PV on California roofs. To be
eligible for the CSI rebates the system must still be sized to
actual or projected load of the customer-generator at the time
the solar energy system is installed. Customers cannot
intentionally oversize a solar energy system and receive a CSI
rebate.
If the customer's future electricity usage is less than the
usage at the time of installation the customer will be under a
net-metered tariff that gives the customer a bill credit valued
at the retail rate of electricity for any excess the customer
produces during the year, but at the end of the year if bill
credits exceed the total electricity the customer consumed from
the utility the customer will be a net surplus producer and the
utility would owe the customer a credit for the net surplus
electricity. For an IOU customer, the net surplus electricity
would be valued at a rate set by the CPUC at a "just and
reasonable" rate that ensures no cost shifting. This rate is
likely less than the value associated with retail rate for the
electricity credited against their bill.
POUs are not regulated by the CPUC and instead are governed by
either an elected board or the municipality. As such, the CSI
requires each local publicly owned electric utility to offer
monetary incentives for the installation of solar energy systems
of at least $2.80 per installed watt, or for the electricity
produced by the solar energy system as determined by the
governing board. In addition, POUs are required to report to
the CEC the number of watts installed, number of applicants, the
amount of incentives awarded, and the contribution toward the
program. The POUs are prohibited from redirecting funds from
low-income ratepayers or energy efficiency programs. As such,
they must collect a surcharge or an amount embedded in rates.
3) SMUD's program : As directed by the CSI, SMUD has been
collecting the CSI but because of its lower rates, many
ratepayers who are paying the solar surcharge remain unable or
unwilling to install solar on their rooftops.
To more widely distribute the benefits of the CSI collections,
SMUD created a Solar Shares pilot program. Customers who choose
to participate in the Solar Shares program pay a monthly fee in
exchange for a portion of their electricity to come from locally
sourced solar. Those customers also receive a monthly credit on
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their electricity bill based on their proportion of the solar
energy system's expected output. SMUD's customers who choose to
participate in the Solar Shares program pay an additional
monthly charge of $6 and SMUD will meet 100% of that customer's
electricity needs with power from renewable resources. For $3
per month, 50% of that customer's electricity will be met with
renewable resources. Commercial customers can choose to pay an
additional monthly charge of $20 and SMUD will meet up to 2,000
kWh per month of the business' electricity needs from renewable
generation; the amount used by the average small business.
According to SMUD, by requiring on-site solar panels, many
ratepayers who pay for the CSI cannot take advantage of it.
SMUD lists a number of situations where rooftop solar PV doesn't
work. Renters or businesses that lease commercial space will
not install solar panels on someone else's property. Some roofs
may not generate the optimal output of the solar panels because
they are either shaded, steeply pitched, or facing north or
east.
4) What about the self-sustaining industry : SB 1 provided that
the CSI was to encourage and facilitate a self-sustaining solar
energy market that after 10 years. SB 1 intended to gradually
reduce the subsidies as the market became more robust. Upon
attaining a competitive industry (assumed after 3,000 MW of
installed solar PV), no additional subsidies would be needed.
One way to encourage a self-sustaining market was to require
many roof-top installations. Numerous small installations were
intended to spawn competitive manufacturing and installation
industries, thus, using market forces to keep prices as low as
they can be.
Some are concerned that SMUD's Solar Shares program, by allowing
customers to purchase "shares" or a proportion of a solar energy
system, the solar energy system will be a few large ones and not
the many individual systems initially envisioned by SB 1. SMUD
believes that this bill will not thwart the efforts of SB 1 with
regard to spawning a self-sustaining industry. AB 1947 will
limit the amount of the Solar Shares capacity to 20% of the
proportionate amount for the POU of the overall 3,000 megawatt
state goal. In addition, SMUD responds that this bill will
retain the maximum capacity of the IOUs, which does not allow
rebates for systems greater than 5 MW.
REGISTERED SUPPORT / OPPOSITION :
Support
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California Municipal Utilities Association (CMUA)
Sierra Club California
Sacramento Municipal Utility District (SMUD)
Opposition
None on file.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083