BILL ANALYSIS
AB 2724
Page 1
Date of Hearing: April 12, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2724 (Blumenfield) - As Amended: March 23, 2010
SUBJECT : Renewable energy.
SUMMARY : Expands a program that allows a local government
entity to receive a credit on their electric bill for power
generated by a renewable energy facility owned by the local
government that generates more energy than is needed to serve
the electrical load at the site where the facility is located,
to also allow state government agencies to participate in the
program. Specifically, this bill :
1)Duplicates an existing program that allows a local government
entity and college campus to receive a credit on their
electric bill for power generated by a renewable energy
facility that is owned by the local government agency or
college campus, and re-states it as a separate program for
state agencies.
2)Precludes an electrical corporation from the obligation to
provide a bill credit when the combined statewide cumulative
generating capacity of all eligible state renewable facilities
within the investor-owned utilities' service territories
reaches 500 MW.
3)In implementing the California Solar Initiative (CSI),
requires the California Public Utilities Commission (CPUC) to
authorize the award of monetary incentives for a solar
generation system with a capacity of up to 5MW.
EXISTING LAW :
1)Provides that a city, county, city and county, special
district, school district, political subdivision, college
campus, other local public agency may elect to designate
another account or accounts controlled by the governmental
entity to receive bill credits for the electricity generated
by a renewable generating facility, not more than 1 MW, and
located within the boundaries of the governmental entity on
land owned or controlled by the governmental entity.
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2)Precludes an electrical corporation from the obligation to
provide a bill credit when the combined statewide cumulative
generating capacity of all eligible local government
facilities within the investor-owned utilities' service
territories reaches 250 MW.
3)No later than January 1, 2007, requires the Department of
General Services (DGS), in consultation with the California
Energy Commission (CEC), to ensure that solar energy equipment
is installed on all state buildings and state parking
facilities, where feasible (Gov. Code Sec. 14681).
4)No later than January 1, 2009, requires DGS, in consultation
with the CEC, to ensure that solar energy equipment is
installed on all state buildings, state parking facilities,
and state-owned swimming pools that are heated with fossil
fuels or electricity, where feasible (Gov. Code Sec. 14684.1).
5)Requires solar energy equipment to be installed where feasible
as part of the construction of all state buildings and state
parking facilities on which construction commences after
December 31, 2002 (Gov. Code Sec. 14684 (b)), and on which
construction commences on or after January 1, 2008 (Gov. Code
Sec. 14684.1(b)).
6)Requires electric corporations to offer customers with solar
electricity or wind generation a net-metered tariff where the
customer can sell back electricity produced from the solar or
wind facility that exceeds that customer's demand at that
moment in time as a bill credit, and requires the system to be
located on the customer's owned, leased, or rented premises,
and is sized with a capacity of not more than 1 MW.
7)Establishes the CSI, which provides $3.3 billion in
ratepayer-funded incentives with the goals of: installing
3,000 megawatts (MW) equivalent generation capacity of solar
photovoltaic (PV) panels, establishing a self-sufficient solar
industry in which solar energy systems are a viable mainstream
option for both homes and businesses in 10 years, and placing
solar energy systems on 50% of new homes in 13 years.
8)The CSI requires the CEC, in consultation with the CPUC and
others, to establish eligibility criteria for solar energy
systems receiving ratepayer-funded incentives that include the
following:
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a. The solar energy system is intended primarily to
offset part or all of the consumer's own electricity
demand.
b. The solar energy system is located on the same
premises of the end-use consumer where the consumer's own
electricity demand is located.
c. Defines solar energy system as a solar energy device
that produces at least 1 kW, and not more than 5 MW,
alternating current rated peak electricity, and that
meets or exceeds specific eligibility criteria.
FISCAL EFFECT : Unknown.
COMMENTS :
1) Background : AB 2466 (Laird), Chapter 540, Statutes of 2008,
allowed a local governmental entity to locate a renewable
electricity generating facility in one location and have the
utility credit the output of that facility against electricity
the local government consumes at another location. It required
the system to be sized to offset all or part of the electrical
load of the benefiting account.
AB 2466 allows governmental entities that had many different
electricity meters (and thus many accounts with a utility) to
produce renewable power at a location where they may have little
demand (like a parking lot or reservoir) and then use the
electricity to benefit another municipal building where demand
is high but may not be a suitable location on which to place
renewable generation. AB 2466 includes cities and counties,
school districts, special districts. AB 1031 (Blumenfield),
Chapter 380, Statutes of 2009, expanded eligibility to college
campuses.
2) Eligibility for CSI rebates : As the CPUC has begun
implementing the AB 2466 program, there has been significant
debate over whether the Legislature intended to allow cities
participating in this program to also be eligible for rebates
under the CSI. AB 2466 did not address CSI eligibility, but the
CSI requires that for a solar energy system to receive rebates
it must be "located on the same premises of the end-use consumer
where the consumer's own electricity
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demand is located." Under the AB 2466 program, the city would be
using a solar energy system to meet load on that premises where
it is located and on other premises controlled by the city.
Environment California is concerned that if state governments
are allowed CSI rebates for facilities sized up to 5 MW, it
could deplete the highest rebates of the CSI and leave the lower
rebates for actual home owners and small business owners. They
also state that one of the goals of the CSI is to spawn a robust
competitive market that will no longer need subsidies when the
funds are depleted. Having many small installations
accomplishes that goal by allowing customers to shop around for
installers. If the state increases the size of the facility
that would be eligible for CSI rebates, DGS can use
master-service agreements with its chosen contractor for all of
its installations and the industry is stifled. The author
offered to see if he could come up with a dollar figure that
would be the maximum that DGS can use from CSI funds if the CSI
funds could be provided for state facilities with a capacity of
up to 5 MW. A figure was not provided by the time of this
hearing. If an agreeable figure is provided, the committee may
wish to adopt that figure. However, if parties cannot agree,
and this committee does not wish to provide a maximum dollar
amount of CSI funds that state government facilities could tap,
this committee may wish to retain the current CSI rebate caps at
1 MW for rebates, and retain current law allowable size of
facilities at 5 MW.
3) The dilemma : There is a concern that if the eligibility is
extended to state facilities, the funds could be depleted sooner
than expected, won't last the entire 10 years, and reward those
contractors with existing state contracts or service agreements.
Fewer smaller or residential customers will have access to the
funds because the CSI, which is a declining rebate program,
could be depleted by a few large state projects, such as prisons
or large office complexes. Nevertheless, this bill would
maintain the requirement that the renewable energy system be
sized to offset all or part of the electrical load of the state
agency, and 5 MW is exceptionally large (capacity to serve about
3,500 homes).
4) Caps for sale : This bill states that an electrical
corporation is not obligated to provide a bill credit to the
state agency if the capacity of all eligible state renewable
generating facilities within the service territories of the
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state's three largest investor-owned utilities (IOUs) reach 500
MW.
The local distribution grids were designed to deliver
electricity to homes and businesses, not to collect power from
the customers. While all of the buy-back programs that have
been created in California are small enough in scale that
distribution systems can adequately handle the unscheduled
power, if the programs grow larger and larger there will be risk
of local grid failures. To protect against these risks every
other buy-back program has a cap on the total amount of power
that the utility must take. Current law provides a cap of 250
MW for local government and college facilities, 112.5 MW for
fuel cell generators, and 50 MW for eligible biogas digester
electric generating facility. A program that provides for
co-energy metering and wind energy metering requires places the
"must-take" cap at 2.5 percent of the electricity distribution
utility or cooperative's aggregate customer peak demand.
AB 578 (Blakeslee) Chapter 627, Statutes of 2008, required the
CPUC to study and submit a report to the Legislature and the
Governor on the impacts of distributed energy generation
(localized generation) on the state's distribution and
transmission grid, by January 1, 2010. The CPUC concluded that
as yet there are no noticeable impacts on the distribution and
transmission infrastructure, based on performed studies. With
the continued expected growth of distributed generation, the
CPUC recommends that the state develop consistent
interconnection policies, and continuously evaluate the effects
of distributed generation on distribution feeders and the
contributions toward reducing peak demand through existing
technology and technologies still being developed. The CPUC
will update this study by January 1, 2012.
In January 2010, the CPUC released its report on the costs and
benefits of net-energy metering. The CPUC estimated that on a
lifecycle basis, generation installed through 2008 will result
in a 20-year net present value costs to ratepayers of
approximately $230 million, or approximately $20 million per
year on an annualized basis. Net energy metering costs on a
levelized basis per kWh exported to the grid total approximately
$0.12 per kWh-exported (not including CSI incentives). The
levelized cost for residential customers at $0.19 per kWh is
substantially higher than for non-residential ($0.03 per kWh)
mainly because of residential customers' higher energy rates and
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the tiered rate structure. These costs appear in line with
PG&E's average total rate of $0.19 per kWh (March 1, 2010).
The CAISO and utilities are concerned about the additional 500
MW of unscheduled power being sent back up to the grid. To
address this uncertainty and to assure reliability, the author
agreed to accept an amendment that would provide the CAISO the
opportunity to veto an interconnection request. As such, this
committee may wish to add to Page 8, after line 32, insert: (5)
The CAISO has provided approval to allow the facility to
interconnect with the transmission system.
REGISTERED SUPPORT / OPPOSITION :
Support
California Native Plant Society (CNPS)
Department of General Services (DGS) (Sponsor)
Opposition
San Diego Gas & Electric (SDG&E)
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083