BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 370 (Blakeslee)
Hearing Date: 01/19/2012 Amended: As introduced
Consultant: Brendan McCarthy Policy Vote: EU&C 10-1
_________________________________________________________________
____
BILL SUMMARY: SB 370 permits agricultural electricity customers
who have installed solar or wind generation systems to aggregate
the electricity use of adjacent properties, in order to use the
excess generation from solar or wind systems to offset all of
the customer's electricity costs.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Public Utilities Commission $155 Special
*
rulemaking
Increased energy costs to Unknown Various
state agencies
* Public Utilities Commission Utilities Reimbursement Account.
_________________________________________________________________
____
STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Under current law, investor owned utilities and publicly owned
utilities (except the Los Angeles Department of Water and Power)
are required to credit any excess electricity generated by a
customer's solar or wind energy system against the customer's
electricity bill. In essence, this system allows a customer's
meter to spin backward when generation exceeds the customer's
use. This is referred to as "net energy metering". The amount of
net energy metering for each utility is capped at five percent
of the utility's aggregate peak energy demand. Under AB 920
(Huffman, 2009), net energy metering customers are allowed to
roll over excess generation credits (in other words, the
customer generated more electricity in a twelve month billing
cycle than the customer used) or the customer may be compensated
SB 370 (Blakeslee)
Page 1
for his or her excess electricity generation. The Public
Utilities Commission is in the process of determining the rates
at which customers will be compensated for excess generation.
SB 370 allows a net energy metering customer that owns multiple
adjacent or contiguous agricultural properties to aggregate the
electricity usage of those properties in order to offset the
customers electricity costs with any excess electricity
generated from the customer's solar or wind system. (Oftentimes,
agricultural customers will have several different meters for
equipment such as irrigation pumps that are spread across one or
more properties.) The bill prohibits agricultural net energy
metering customers that have aggregated their load across
multiple meters from receiving compensation for excess
generation under AB 920.
The Public Utilities Commission indicates that it will cost
about $155,000 to institute a rulemaking to establish rules to
implement the requirements of the bill.
In addition to the direct costs of this bill (or any bill
dealing with net energy metering) there are potential costs to
other ratepayers, of which the state makes up a large share. By
allowing customers to offset their electricity bills with their
own generation, current law essentially allows customers to sell
their electricity to their utility at the retail rate. However,
it is important to note that the retail cost of electricity is
made up of more than the cost of generating electricity. In
addition to the generation costs, retail rates include the costs
to construct and maintain the transmission and distribution
system, costs of public benefit programs, subsidies for low
income customers, and other taxes and fees. When a net energy
metering customer reduces his or her electricity bill to zero or
generates excess electricity, the customer avoids paying these
costs, even though most net energy metering customers draw
electricity from the grid at off-peak times and benefit from
public purpose programs. Thus, net energy metering customers are
subsidized by all other ratepayers. A recent study by the Public
Utilities Commission indicates that net energy metering
customers (in the aggregate) are subsidized in the amount of
about $20 million per year (the aggregate subsidy is probably
closer to $40 million today). When the state reaches its
existing goal of 2,550 megawatts of installed solar (under the
California Solar Initiative), the ratepayer subsidy for net
SB 370 (Blakeslee)
Page 2
energy metering is projected to be about $140 million per year.
By allowing agricultural users to aggregate their electricity
usage and offset that usage with their solar or wind generation,
the bill will allow net energy metering customers to offset more
of their electricity usage. This will increase the subsidies
paid by other ratepayers. The scope of this impact on ratepayers
is unknown. Staff notes that state agencies account for about
1.4 percent of total electricity use in the state, thus state
agencies are expected to pay about 1.4 percent of the increased
ratepayer costs from net energy metering under the bill.
AB 51 (Blakeslee, 2010) was substantially similar to this bill.
AB 51 was held on this committee's suspense file.
The proposed author's amendments rewrite the provisions of the
bill to conform to changes made in the codes by SB 489 (Wolk,
2010).