BILL ANALYSIS �
AB 864
Page 1
ASSEMBLY THIRD READING
AB 864 (Huffman)
As Amended April 28, 2011
Majority vote
UTILITIES & COMMERCE 13-0
APPROPRIATIONS 16-0
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|Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Harkey, |
| |Buchanan, Fong, Fuentes, | |Blumenfield, Bradford, |
| |Carter, Roger Hern�ndez, | |Charles Calderon, Campos, |
| |Huffman, Knight, Ma, | |Davis, Gatto, Hall, Hill, |
| |Nestande, Skinner, | |Lara, Mitchell, Nielsen, |
| |Swanson | |Norby, Solorio, Wagner |
| | | | |
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SUMMARY : Modifies the Public Utility Commission's (PUC's) Self
Generation Incentive Program (SGIP) as follows:
1)Increases the allowable capacity of distributed generation
(DG) projects for SGIP eligibility from five megawatts (MW) up
to 10 MW, but limits SGIP incentive payments for such projects
to five MW of capacity.
2)Limits incentive payments to DG resources with a capacity of
three MW unless the particular DG technology meets
cost-effectiveness rules established by the commission.
3)Requires incentive payments made for DG resources greater than
three MW and up to five MW to be based on a declining payment
schedule as determined by PUC.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs will be minor and absorbable for PUC to modify
SGIP program parameters per this bill.
COMMENTS :
Background and purpose : This bill would require that
distributed energy resources with a nameplate generating
AB 864
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capacity of up to 10 MWs are eligible for incentives, but would
limit the award of incentives to not more than five MWs of that
capacity. The bill would limit incentives being made available
for distributed energy resources with a nameplate generating
capacity above three MWs to those technologies that meet
cost-effectiveness rules established by the commission. The
bill would require that incentives made available for
distributed energy resources with a nameplate generating
capacity greater than three MWs be based on a declining schedule
determined by the PUC.
AB 970 (Ducheny), Chapter 329, Statutes of 2000, establishes
SGIP to encourage investment in new, environmentally superior
electricity generation. AB 2778 (Lieber), Chapter 617, Statutes
of 2006, extends the program to 2012. SB 412 (Kehoe), Chapter
182, Statutes of 2009, extends SGIP and expands eligibility to
technologies that achieve reductions in greenhouse gas
emissions. Currently, SGIP provides subsidies for up to 50% of
the cost of an eligible DG project. The maximum eligible system
size is five MW. For systems larger than one MW, the maximum
incentive is capped at three MW per site. However, incentives
are lower for projects above one MW on the portion of their SGIP
funded system(s) that exceed one MW for that site based upon a
tiered incentive structure approved by the PUC.
SGIP is funded at a level of $83 million each year, collected
from ratepayers, until December 31, 2011. According to the
author, there are electricity consumers who have the potential
to install projects using eligible technologies larger than five
MW, and such larger projects will provide greater greenhouse gas
(GHG) reduction benefits.
SGIP is different from NEM and FIT : In addition to SGIP
program, there are other programs that provide a financial
incentive to customers for self-generating electricity. The Net
Energy Metering (NEM) program is an electricity tariff billing
mechanism limited to solar electric and wind energy projects
that are no larger than one MW. NEM allows a utility customer
to offset electricity usage. The benefits are realized at the
end of the year when the customer is either billed or credited
for the net energy usage or production.
Under the California feed-in tariff (FIT) program, generators
(which may or may not be customers) are paid for electricity
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sold to the utility. The price paid for the electricity is
determined by the PUC.
Unlike NEM and FIT programs, SGIP offers upfront financial
incentives. Moreover, pursuant to PUC decision 05-05-011, the
customer generating the electron is allowed to keep the
renewable energy credit (REC); thus making this program very
attractive under the newly authorized Renewable Portfolio
Standard. This also has implications for GHG emissions trading
market that has yet to be established. In an effort to comply,
many large energy users see value in reducing their greenhouse
gas footprint by implementing onsite electrical generation
technology. Because of the current size to load requirement,
the customers that will be participating in the 5-10 MW range,
prescribed by this bill, are: very high energy users; cement
plants; steel mills; and, refineries. It should be noted that,
pursuant to the cap and trade regulations, these entities will
be afforded allowances that will assist them in complying with
AB 32 (N��ez and Pavley), Chaptered 488, Statutes of 2006.
Ratepayers contribute $83 million per year to fund SGIP
incentives. The average impact to a residential ratepayer is
around $5 per year. Customers participating in the utility
California Alternative Rates for Energy Programs do not
contribute to this program.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0000611