BILL ANALYSIS �
AB 1392
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Date of Hearing: April 4, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1392 (Committee on Utilities and Commerce) - As Introduced:
February 23, 2011
SUBJECT : Energy: California Solar Initiative.
SUMMARY : Deletes obsolete authority vested in the Public
Utilities Commission (PUC) to consider exempting from the
California Solar Initiative's time-variant tariff those
residential customers whose rates were protected under a rate
freeze adopted during the electricity crisis of 2000-01.
Specifically, this bill :
1) Deletes the permissive authority previously granted to the
PUC to exclude residential customers under the rate cap for
baseline quantities or usage by those customers of up to 130
percent of baseline quantities stemming from the 2000-01
electricity crisis when developing the time-variant tariff for
the California Solar Initiative (CSI).
EXISTING LAW:
1) Authorizes the PUC to fix the rates and charges for every
public utility and requires those rates and charges to be just
and reasonable.
2) Defines the "California Solar Initiative" as the program
providing ratepayer funded incentives for eligible solar energy
systems adopted by the PUC in Decision 06-01-024. However,
nothing in the CSI language contained in SB1 (Murray) Chaptered
132, Statutes of 2006, shall be construed to codifying PUC
Decision 06-01-024.
3) Requires the PUC to undertake implementation of the CSI and
authorizes the Commission to develop a time-variant tariff that:
a) creates the maximum incentive for ratepayers to
install solar energy systems so that the system's peak
electricity production coincides with peak electricity
demands; and
AB 1392
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b) assures ratepayers receive the due value for their
contribution to the purchase of the system and customers
with systems continue to have an incentive to use
electricity efficiently.
4) Authorizes the PUC in developing this time-variant rate to
exclude customers from a freeze on residential electricity rates
adopted during the electricity crisis of 2000-01.
FISCAL EFFECT : None.
BACKGROUND:
ABX1 1 : During the 2000-01energy crisis, the three large
investor owned utilities (Pacific Gas and Electric Company
(PG&E), Southern California Edison (SCE) and San Diego Gas and
Electric (SDG&E)) were subject to volatile wholesale prices due
in part to the market restructuring of AB 1890 (Brulte)
Chaptered 854, Statutes of 2006 and the subsequent actions of
market participants. Some investor owned utilities (IOUs) began
having balance sheet problems as they were paying more for
electricity than they could sell it to customers. The State
stepped in to ensure the IOUs could continue to provide service
to their customers and help stabilize the market through
long-term contracts.
ABX1 1 (Keeley) Chaptered 4, Statutes of 2001, authorized the
Department of Water Resources (DWR) to issue revenue bonds to
purchase power for the IOUs. ABX1 1 also prohibited the PUC
from increasing rates for usage under 130% of baseline until the
DWR bond charges were paid off. ("Baseline" is roughly the
amount needed to meet 60% of the typical residential customer's
usage, adjusted for climate and season.)
The California Solar Initiative : The CSI was originally
conceived by then Governor Schwarzenegger in his residential
"Million Solar Roofs" initiative. Ultimately the CSI was
implemented through efforts at the PUC and the Legislature. The
PUC adopted several regulatory decisions in 2006 and the
Legislature passed SB 1 (Murray) in 2006.
The CSI is overseen by the PUC and provides incentives for solar
system installations to customers of the state's three large
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IOUs. The CSI Program provides upfront incentives for solar
systems installed on existing residential homes, existing and
new commercial, industrial, government, non-profit, and
agricultural properties within IOU service territories.
An ABX1 1 Compromise : Residential customers are charged based
on the quantity of electricity used based on a block formula and
each successive block of electricity used is billed at an
increased per-unit price, in part to encourage conservation.
Each block is referred to as a "tier." ABX1 1 capped the lowest
two tiers of electricity usage: (1) baseline and (2) 130% of
baseline. Tiers are based on a customer's usage, not income
base.
By 2007, unintentional consequences were accruing to the
detriment of to commercial ratepayers due to the 2 tier ABX1 1
rate freeze. Further, it appeared that the rate freeze shielded
some residential customers from rising fuel costs as well as
some legislatively mandated and PUC-created programs.
Senator Kehoe introduced SB 695 in 2009 to address the ABX1 1
rate inequity as well as other post-crisis problems such as
direct access. The compromise language contained within SB 695
ended the 2 tier rate freeze from ABX1 1.
COMMENTS :
This bill seeks to delete obsolete authority vested in the PUC
that was granted while a rate freeze stemming from the 2000-01
electricity crisis was in place. That rate freeze has since
been removed and replaced in SB 695. The language to be deleted
in AB 1392 provided a ratepayer protection based on the 2000-01
rate freeze. This language is no longer needed as SB 695
implemented different ratepayer protections.
Legislative policy committees often author omnibus bills to
clean up non-controversial, obsolete code. While AB 1392 only
contains only one such clean up, it is similar to omnibus bills.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
AB 1392
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Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083