BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 489 (Wolk)
Hearing Date: 05/26/2011 Amended: 05/11/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 9-2
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BILL SUMMARY: SB 489 expands full retail net energy metering to
all types of renewable energy technologies that are allowed
under the state's Renewable Portfolio Standard.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Public Utilities Commission Likely costs of $150 to
$300Special *
rulemaking
Increased energy costs to Unknown costs Various
state agencies
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: SUSPENSE FILE.
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 full retail net energy metering. The
amount of full retail net energy metering for each utility is
capped at five percent of the utility's aggregate peak energy
demand. Under AB 920 (Huffman, 2009), full retail 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 for his or her excess electricity
generation. The Public Utilities Commission is in the process of
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determining the rates at which customers will be compensated for
excess generation.
SB 489 expands net energy metering by authorizing any renewable
energy technology that is allowed under the state's Renewable
Portfolio Standard to be eligible for full retail net energy
metering.
It is likely that the Public Utilities Commission will have to
adopt new rules or revise existing rules governing full retail
net energy metering to accommodate new technologies in the
program. Staff estimates the Commission will need one to two
additional positions to develop new rules or amend existing
rules.
In addition to the direct costs of this bill (or any bill
dealing with full retail 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 full retail 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 full retail net energy metering customers draw electricity
from the grid at off-peak times and benefit from public purpose
programs. Thus, full retail 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
energy metering is projected to be about $140 million per year.
Full retail net energy metering is capped in statute at 5
percent of an investor owned utility's demand. Currently, the
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investor owned utilities are about half-way to reaching the cap
(for example, Pacific Gas & Electric is at 2.2 percent).
By expanding the technologies that are eligible for full retail
net energy metering, the bill will very likely increase the
number of utility customers that participate in full retail net
energy metering. Expanding the number of customers that utilize
full retail net energy metering will increase the subsidy paid
to those customers, although in the long-run, the growth in such
subsidies will be constrained by the cap on full retail net
energy metering. Because state agencies make up about 1.4
percent of electricity use in the state, the state will pay a
proportional share of that subsidy cost.
The extent to which this bill will increase subsidies paid by
one class of ratepayer to another is unknown and will depend on
the number of customers that use new renewable energy
technologies to offset their electricity use.