BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1947 - Fong Hearing Date: June 29,
2010 A
As Amended: June 17, 2010 FISCAL B
2
2
0
7
DESCRIPTION
Current law establishes the California Solar Initiative (CSI), a
$3.3 billion program to subsidize the installation of
photovoltaic (PV) systems for customers of the state's
investor-owned utilities (IOUs) and publicly owned utilities
(POUs).
Current law requires that the CSI solar system offset part or
all of the consumer's own electricity demand and that the system
be located on the same premises of the end-use consumer where
the consumer's own electricity demand is located.
This bill eliminates those requirements for systems in the
territories of the POUs under specified conditions.
BACKGROUND
California Solar Initiative (CSI) - Effective in 2007, the CSI
calls for the installation of 3,000 megawatts (MW) of new,
solar-produced electricity by 2016. Targeted expenditures under
the CSI, funded by ratepayers, are $3.3 billion over ten years,
distributed among three distinct program components: IOUs,
$2.167 million/1940 MW; New Solar Homes Partnership, $400
million/360 MW; and POUs $784 million/700 MW.
California now has over 736 MW of solar PV in the IOU
territories at over 43,000 residential, commercial and
governmental sites. This includes installed generation and
pending applications. The POUs have installed 26 MW of
generation at 7,712 sites and the NHSP reports 7.8 MW of solar
PV at 3,002 sites.
All CSI programs combined, California has approximately
installed 770 MW of solar generation on the customer's side of
the meter - 27% of goal.
SolarShares - Marketed as an alternative to the installation of
solar on a customer's roof, the SolarShares program is offered
to customers in the territory of the Sacramento Municipal
Utility District (SMUD). For a fixed monthly price over 20
years, the participating SMUD customer pays a fee of $258 to
$396 per year to the utility and in turn receives a bill credit
for the production of solar at a SMUD-owned site. The bill
credit ranges from $174 to $313 in the first year of
participation depending on the level of participation chosen by
the customer and the energy produced by the central solar farm.
Over the course of 20 years, the customer's fee remains the same
but the bill credit is scheduled to increase.
The central solar facility is located within the SMUD territory
and the power generated at the local solar farm is like any
utility-owned generation and generally provides service to all
customers except for purposes of customer billing for
participants. This program does however make the participating
customer feel like they are paying for and receiving green
power. In reality this power is just like any other green power
on the grid under the Renewable Portfolio Standard.
COMMENTS
1) Author's Purpose . Most utilities are making progress
towards meeting their share of the CSI's 3000 megawatt
goal. However, after four years of CSI experience and data
collection it has become clear that many ratepayers who are
paying the solar surcharge remain unable or unwilling to
install solar on their rooftop for the following reasons:
Renters - ratepayers who rent and businesses who lease
commercial space are all paying the solar surcharge but do
not own any roof space to install solar; Incompatible
roofs - ratepayers with tile roofs, steeply pitched roofs,
north or east facing roofs are paying the solar surcharge
but may not have the right orientation for installing
solar; Shading - ratepayers with rooftops that are shaded
by trees or other adjacent buildings are paying the solar
surcharge but may be prohibited from installing solar;
Cost - the upfront cost of purchasing a solar system may be
cost prohibitive for some ratepayers who nonetheless are
paying the solar surcharge; Payback - Ratepayers who pay
relatively low rates for electricity and/or use less
electricity have a harder time justifying the cost of solar
yet they too must pay the solar surcharge.
AB 1947 places downward pressure on rates by allowing POUs
to reach their SB 1 goal using larger solar systems that
cost less to build on a per kilowatt basis. Participating
solar customers likewise will benefit under AB 1947 through
their ability to subscribe to a larger solar energy system
that in many instances provides a shorter payback period
than traditional rooftop solar. The participating customer
also benefits by receiving all the solar attributes without
the maintenance requirements of a rooftop system. The
sponsors of the bill have provided the committee with a
cost/benefit comparison spreadsheet of their SolarShares
pilot project.
2) Basic Premise of CSI . This bill would allow SMUD, and
any other POU, to use ratepayer money collected for the CSI
program toward the costs of central-station solar located
in their service territory and sized up to 5 MW. That
generation could then be counted toward their CSI
obligation. SMUD's CSI obligation is 125 MW.
The fundamental premise of the CSI program is that the
solar system funded with CSI funds be sized and sited so
that the amount of electricity produced by the system
primarily offsets part or all of the customer's electrical
needs at the project site thereby displacing electric load
on the grid. This bill will eliminate that requirement for
a portion of the obligation of the POUs.
This bill authorizes the use of CSI ratepayer funds to fund
centralized generation owned and operated by the utility.
The immediate result is that the reduction of peak demand
as intended by the CSI is not achieved. In the long-term
the goals of zero net energy homes will be undermined and,
at a future time when energy storage technologies are
affordable and commercially available, the CSI generation
intended to be installed on the customer's side of the
meter will not exist to take advantage of the storage
technologies which would truly achieve the goal of zero net
energy homes.
3) POUs Challenge in Meeting CSI . There is a significant
chance that many if not all of the POUs will have
difficulty meeting their CSI goals primarily because
electricity rates in those territories are substantially
lower than those of the IOUs making the payback of a solar
investment out of reach for many customers. As an example,
the highest SMUD residential rate is $0.18 per kilowatt
hour (kWh). The highest residential rate for a PG&E
residential customer was at $.0.49 per kWh which was
adjusted last month to $0.40.
4) Solar & the CSI Have Limitations . The CSI program will
not bring solar to all which has frustrated many policy
makers and customers. For most customers solar will not be
an option in the near future simply due to its costs.
Customers who live in high-density housing will also be
challenged due to the space required for solar
installations; for many customers the pitch of their roof
is not suitable or the home is shaded too much. Rental
customers are also not likely to benefit from solar simply
because the property owner would carry the expense while
the renter would reap the power. Agricultural customers
with centralized load can benefit but load demand at the
far reaches of their property will remain separately
metered due to the cost and size of solar installations in
remote areas. These limitations were well known when the
program was adopted. The CSI program was not funded nor
were the authorized facilities sized to a level that will
serve all customer's needs. The program was provided with
a limited amount of funding, for a limited time, with a
limit on capacity to jump-start the solar industry and
start to introduce customers to self-generation.
The intent of the CSI program was that the industry would
be stimulated and the price of solar would come down making
the application more affordable. For high density housing
the CPUC is piloting a "virtual net metering" program as
part of its Multifamily Affordable Solar Housing program.
This pilot enables a multifamily housing owner to allocate
a solar system's benefits to tenants across multiple units.
If it is successful, the CPUC may consider making it
available to a broader range of CSI participants.
5) Ratepayer Impact . The funds collected from POU
customers to fund CSI installations would be redirected to
central, utility-owned power and unavailable to POU
customers for roof-top installations.
6) Related Legislation . AB 2296 (Saldana) permits CSI
systems to be installed anywhere near the customer's load
rather than the customer's side of the meter. Status: Set
for hearing in the Senate Energy, Utilities &
Communications Committee June 29, 2010.
ASSEMBLY VOTES
Assembly Utilities & Commerce 8-6
Assembly Floor 50-24
POSITIONS
Sponsor:
Sacramento Municipal Utility District
Support:
Sierra Club
Oppose:
None on file
Kellie Smith
AB 1947 Analysis
Hearing Date: June 29, 2010