BILL ANALYSIS
AB 2724
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2724 (Blumenfield) - As Amended: April 19, 2010
SUBJECT : Governmental Renewable Energy Self-generation Program
SUMMARY : Expands the Local Government Renewable Energy
Self-generation Program and the California Solar Initiative
(CSI) to include executive state government agencies, which
would be eligible for monetary incentives for large solar
generation projects.
EXISTING LAW :
1)Establishes that the California Public Utilities Commission
(PUC) has regulatory authority over public utilities,
including electrical corporations.
2)Requires the California Energy Commission (CEC) to expand and
accelerate development of alternative sources of energy,
including solar resources.
3)Requires the CEC to develop and adopt regulations governing
solar devices, as defined, designed to encourage the
development and use of solar energy and to provide maximum
information to the public concerning solar devices.
4)Establishes energy efficiency as a priority in the procurement
of new energy generation for all utilities, second only to
energy use reduction.
5)Creates the California Solar Initiative (CSI), a $3.3 billion
declining rebate program to offset the cost of installing
solar panels on homes, businesses, and public buildings.
a) In order to be eligible for CSI rebates, among other
requirements, the solar energy project must be intended to
primarily offset part or all of the consumer's own
electricity demand, be no greater than one megawatt (MW) in
electrical generation capacity and not produce more
electricity than the customer's historic peak demand.
b) The CSI goal is a total of 3,000 MW of installed
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photovoltaic generated power by 2017.
6)Establishes the Local Government Renewable Energy
Self-generation Program (local program) that authorizes a
local government, as defined, to receive a bill credit in
exchange for electricity exported to the electrical grid from
an eligible renewable generating source, and establishes a
rate tariff for the account receiving the credit. The program
requires investor owned utilities (IOUs) to offer customers
with solar or wind generation that is no larger than one MW in
size, 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.
a) Caps 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 at five percent.
b) Removes an IOU's obligation to administer a net-metering
tariff to customers when the associated total statewide
solar-generated energy capacity in the local program
reaches 250 MW.
c) Requires that, in order to be eligible for the
net-metering tariff, the electrical generating system must
be located on the customer's property.
THIS BILL :
1)Establishes a Renewable Energy Self-generation Program for
state agencies (state program) based on the existing Local
Program.
2)Removes an IOU's obligation to administer a net-metering
tariff to customers when the associated statewide
solar-generated energy capacity threshold in the state program
reaches 500 MW.
3)Authorizes a state agency customer to receive a bill credit
for renewable energy it generates and exports onto the
electrical grid.
4)Increases the maximum size of the solar-generating facility
eligible for monetary incentive awards through the CSI from
one MW to five MW.
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5)Establishes that, in implementing the CSI, the PUC shall not
allocate more than one-half of one percent (0.005) for
eligible state renewable generating facilities that are larger
than one MW in capacity, with the actual rate determined by
the PUC on a per project basis.
6)Establishes that, in order for a state agency to qualify for
the state program, the PUC or the California Independent
System Operator (CAISO), as applicable, must approve
interconnection of the facility the distribution or
transmission system.
7)Establishes that IOUs shall own all renewable energy credits
associated with all electricity generated by participating
state facilities, whether exported to the grid or utilized
onsite.
FISCAL EFFECT : Unknown
COMMENTS :
1)Renewable Energy Self-Generation Program for government
customers. According to the current Local Governmental
Renewable Energy Self-Generation Program requirements, a local
renewable generation facility is eligible if the facility
meets the requirements of the California Renewables Portfolio
Standard Program, among others. Currently, the local
government is responsible for all costs associated with
interconnection with the distributed electrical grid, and
until the cumulative 250 MW threshold is reached, an IOU is
required to provide the net-metering tariff (bill credit) to
the local government customer.
According to the author, all costs associated with
interconnection of the facility with the grid are the
responsibility of a state agency, where the meaning of
interconnection remains consistent. Recent amendments
require, in order for a state agency to qualify for the
net-metering program, the PUC must provide approval to allow
the facility to interconnect with the distribution system or
the CAISO must provide approval to allow the facility to
interconnect with the transmission system. This amendment was
taken in order to address the concern of the CAISO of the
effect of a large addition of unscheduled power onto the grid
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and its effect on grid reliability.
2)California Solar Initiative financial incentive eligibility.
The CSI program currently has a remaining budget of $2.167
billion over 10 years, with the goal of reaching 1,940 MW of
installed solar capacity, part of the state goal of adding
3,000 MW of installed solar-generated electricity. Due to the
current one MW generation capacity limit, the CSI program
essentially limits itself to existing single-family homes, new
single-family homes, agricultural operations, commercial
buildings, industrial buildings, local government buildings,
non-profit organizations, and the solar schools program. The
CSI program provides declining monetary incentives through
rebates for the installation of the individual electrical
generation systems either with an expected performance-based
buy down, which is a one-time payment, or with a
performance-based incentives system with payments from the
utility company to the consumer over a period of five years,
the amount of which is based on performance.
Currently, if a customer installs a CSI-eligible system of
more than one MW of capacity, they are eligible to receive CSI
rebates for the first MW only. Recent amendments to the bill
indicate that in implementing the CSI, the PUC shall not
allocate more than one-half of one percent (0.005) for
eligible state renewable generating facilities that are larger
than one MW in capacity, and that the PUC shall determine this
amount for each eligible state renewable generating facility.
This language suggests that, unless the PUC directs otherwise,
all CSI eligible projects greater than one MW in capacity will
receive rebates that are subject to this flat rate for the
entire project, rather than having the first MW rebated
differently. This provision was added to address the concern
that, with the inclusion of monetary rebates awarded to larger
facilities, since a generation capacity of five MW is able to
serve the electrical load of approximately 3,500 single family
homes, the CSI fund would be depleted at a much faster rate
and therefore be more limited for use in smaller generation
operations such as single family homes, for which the
initiative was originally intended.
3)Bill leaves most state buildings out. The process created by
this bill to enable state agency utility customer to receive a
bill credit for excess energy produced by large solar projects
is available to customers of IOUs, but not POUs. Therefore,
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state buildings located in Sacramento County (SMUD), the City
of Los Angeles (LADWP), and other areas served by POUs will
not be eligible. The author and the committee may wish to
consider whether the bill should be amended to include a
similar bill credit process for state agency customers of
POUs.
4)Treatment of renewable energy credits is arbitrary and
inconsistent with existing related statutes. Recent
amendments provide that the utility shall own all renewable
energy credits (RECs) for all electricity generated, whether
exported or used onsite. This is a different standard than
applies to the existing Local Program, as well as the
net-metering program for smaller customer-owned solar
projects. These existing programs provide that any RECs
associated with net surplus electricity purchased by the
utility belong to the utility. However, any RECs associated
with electricity that is utilized by the customer remain the
property of the customer.
REGISTERED SUPPORT / OPPOSITION :
Support
Department of General Services (sponsor)
Opposition
None on file
Analysis Prepared by : Jessica Westbrook / NAT. RES. / (916)
319-2092