BILL ANALYSIS �
SB 489
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Date of Hearing: June 27, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 489 (Wolk) - As Amended: June 16, 2011
SENATE VOTE : 31-7
SUBJECT : Electricity; Net Metering
SUMMARY : This bill expands net metering eligibility to include
other types of renewable energy generating facilities, as
defined. Specifically, this bill :
1)Would allow technologies not currently eligible for net
metering (NEM) to participate in utility-administered net
metering programs (biomass, solar thermal, geothermal, fuel
cells using renewable fuels, small hydroelectric generation
facilities, digester gas, municipal solid waste conversion,
landfill gas, ocean wave, ocean thermal, tidal current, and
any additions or enhances to a facility using these
technologies).
2)Retains current requirements that limit the maximum size of
the project to 1 Megawatt (MW), limits the generation from the
project to primarily offset on-site electricity demand and
limits the location of the project to on the premises owned,
rented, or leased by a customer of the electric utility.
3)Retains the total capacity cap for net metering at 5 percent
of the utility's aggregate peak demand.
4)Repeals an existing NEM program for biogas generator projects.
EXISTING LAW :
Establishes NEM for solar (typically photovoltaic, PV) and
wind electricity generating technologies. Requires the state's
investor owned utilities (IOUs) and publicly owned utilities
(POUs) (except the Los Angeles Department of Water and Power)
to provide a utility bill credit, based on the retail price of
electricity for every kilowatt-hour of electricity generated
by a customer-owned solar or wind system.
Establishes a pilot NEM for biogas generator projects up to 1
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MW and 3 biogas projects with generating capacity between 1
and 10MW.
Establishes NEM for fuel cells until 2013, on a first come
first serve basis for up to 45 MWs of capacity or 22.5 MWs of
capacity depending on the peak demand of an electrical utility
(45 MWs each in PG&E and SCE service areas and 22.5 MW in
SDG&E service area) and capped to a total of 112.5 MW.
Requires the IOUs and POUs to apply the customer's NEM credits
to the entire customer bill so that a net metered customer can
'zero out' their utility bill, which means that by virtue of
net metering, the following non-energy cost could be offset:
o Distribution costs (e.g. poles, wires,
transformers, service technicians, call centers, and
other customer services)
o Transmission costs (e.g. high voltage
transmission lines used to deliver remotely produced
energy at all hours, including renewables)
o Total Rate Adjustment Component - the cost
shift from lower tier below cost rates to the upper
tiers)
o California Solar Initiative (CSI)
o Self-Generation Incentive Program
o CARE (low-income support - residential only)
o Low-Income Energy Efficiency (LIEE -
residential only)
o Public Interest Energy Research (PIER)
o The Public Goods Charges for renewable energy,
energy efficiency, and demand reduction programs
o Nuclear decommissioning
Allows the NEM customer to connect their facility at no cost
to the net metering customer, regardless of whether
transmission or distribution upgrades are needed to
accommodate the new generation.
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Requires the state's investor owned utilities to provide
compensation or billing credits to the NEM utility customer
for excess generation to when the customers' net metered
systems produces more electricity than the customer used over
a fixed time period.
Limits the maximum project size for net metering to no more
than 1 MW
Requires IOUs and POUs to offer NEM to their customers until
the utility reaches 5 percent of each utility's aggregate peak
demand.
FISCAL EFFECT : Unknown
COMMENTS :
The author proposes to open NEM to all forms of renewable energy
to allow more utility customers to convert to renewable energy
and offset their electricity bills. The bill will also help the
state reach its greenhouse gas emissions and renewable energy
goals. The author states that the current net metering statutes
prevent cost-effective, clean renewable power from connecting to
the grid.
1)Background: NEM is a billing arrangement which allows a
renewable generator to get credit on their electricity bill
when the renewable generation facility produces more
electricity than is used on-site. For example, when the sun
is shining or the wind is blowing and the customer is not
using all of the electricity being produced, the electricity
meter spins backwards. When the sun stops shining and the
wind stops blowing, the customer draws electricity from the
grid and their meter spins forward. The credits from when the
meter was spinning backward are applied to the bill and used
to offset the times when the meter is spinning forward.
Utility customers who generate power from a wind or solar
system receive retail credits on their electricity bill. If a
customer accumulates enough credits over the 12-month billing
period, they will receive have a net zero energy bill. A
customer who has a net zero energy bill can still be a net
consumer of electricity because the credits may accrue at a
higher retail rate if the customer is on time of use rates and
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uses electricity in the evenings (billed to the customer at a
lower retail rate because it is off-peak pricing).
NEM shifts non-energy utility costs to non-participating
ratepayers because non-energy customer service costs can be
offset through the net metering billing credit (for example,
transmission and distribution costs typically comprise
one-half to two-thirds of a customer's billing). But,
non-energy costs are fixed and on-going expenses so these
costs are shifted to the remaining ratepayers - those who are
not on NEM billing arrangements. As more NEM projects are
added to the utility system this cost-shifting increases to
the non-net metered customers.
In March 2010, the California Public Utilities Commission
(PUC) issued a report which analyzed the cost of NEM to
non-NEM ratepayers. Based on 386 megawatts of installed
rooftop solar, the cost to non-NEM ratepayers was estimated at
$20 million per year. Installed rooftop solar is now over 800
MW so that cost has now at least doubled. Although the total
net cost of the NEM at that point was less than one-tenth of
one percent of total utility revenue average net cost, the
more telling cost that was reported was that full retail NEM
amounted to a cost of $0.12 per kilowatt hour (kWh) to non-NEM
ratepayers. Sempra suggests that net metering statutes be
revised to ensure that this cost-shifting does not occur.
In 2010, the Legislature raised the aggregate cap on net
metering from 2% to 5% in order to ensure that the amount of
MWs available under the net metering cap would be sufficient
in order to meet the goals of the CSI, administered by the
PUC. The CSI has a goal of connecting 1,940 MW of
customer-side renewable generation by 2016 (an additional
1,100 MW of customer-side generation is administered by the
Energy Commission and POUs). According to the most recent
information from the PUC (1st Quarter, 2011), the status of
the IOU caps are as follows:
Pacific Gas & Electric: 2.10% (peak load is 20,833 MW)
Southern California Edison: 0.97% (peak load is 23, 163
MW)
San Diego Gas & Electric: 2.05% (peak load is 4,642 MW)
1)Why limit NEM to only two renewable electricity technologies?
This bill establishes the definition of an 'eligible renewable
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facility' by reference to a section in the Public Resources
Code that defines eligible technologies under the State's
Renewable Portfolio Standard (RPS). By referencing this
particular statute, the bill would require that in order to
qualify for net metering, projects would be those eligible to
meet the State's RPS. This will allow other renewable
electric generation technologies to participate in NEM
programs, rather than limit NEM to two forms of renewable
electric generation.
2)What about the capacity cap? If this bill is enacted, the net
metering cap could be reached sooner, before all of the MWs
have been subscribed under the CSI and the fuel cell NEM.
3)Is this bill solving the problem? Part of the impetus for this
legislation may be related to barriers that small renewable
developers are experiencing currently with procedures and
policies that make interconnection to the electricity grid
impossible from an economic and time perspective. From as
early as 2009, small renewable developers have filed numerous
comments at the PUC and the California Independent System
operator regarding draconian, expensive, and lengthy
interconnection rules that require typically more than a year
and thousands of dollars just to get a preliminary response on
whether or not a new small generator can interconnect to the
electricity grid. While some of these delays can be caused by
necessary safety reviews to identify transmission and
distribution system upgrades necessary to accommodate new
generation. But not all of the delays are due to safety
reviews. The PUC and the regulated utilities are working on
reforming the interconnection process, although there is no
identified deadline for when the reforms will be implemented
or if the time period for receiving a response on an
interconnection request will be made reasonable.
As a result of real frustrations with the interconnection
process for small generators, NEM appears to be an attractive
solution because the NEM statute requires the utility to
interconnect NEM customers within 30 business days.
4)Is NEM for everyone? For utility customers with little on-site
electricity demand the NEM arrangement will not be a solution
for them because the size of a NEM project is limited to the
amount of electricity consumed on site. These potential
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renewable generators will continue to be frustrated by an
interconnection process. A streamlined, functional
interconnection process and a reasonable payment for
electricity delivered to the grid would probably serve the
broader public interest to develop localized renewable
generation and help deliver more renewable electricity to the
grid.
5)Code clean-up needed. This bill deletes a code section which
is referenced in the statute establishing the NEM for fuel
cells.
The author may wish to consider a technical amendment to
address the deletion of a code reference in use in another
statute.
RELATED LEGISLATION
SB 585 (Kehoe) would expand the PUC's authority to collect
ratepayer funds to address a budget shortfall that would prevent
reaching the PUC's portion of the State solar incentive program.
SB 843 (Wolk) would establish a 'Community-based' self
generation program to allow ratepayers to elect for a
paid-'subscription' to receive renewably-generated electricity
via an arrangement that would be administered, in part, by the
local electric utility.
REGISTERED SUPPORT / OPPOSITION :
Support
Agricultural Council of California (AgCouncil)
Agricultural Energy Consumers Association (AECA)
Almond Hullers & Processors Association
California Certified Organic Farmers(CCOF)
California Climate and Agriculture Network (CalCAN) (sponsor)
California Compost Coalition
California Farm Bureau Federation
California Grain & Feed Association
California Public Utilities Commission (CPUC)
California Refuse Recycling Council (CRRC)
California Rice Commission
California Seed Association
California Warehouse Association (CWA)
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Californians Against Waste
Center for Land Based Learning
Clean World Partners, LLC
Clover Flat Landfill (CFL)
Community Alliance with Family Farmers (CAFF)
Dixon Ridge Farms
Earthbound Farm
Ecological Farming Association
Environmental Defense Fund (EDF)
First Northern Bank
Food and Water Watch
Full Belly Farm
Hedgerow Farms
Inland Empire Utilities Agency (IEUA)
Intermountain Disposal, Inc.
Lagier Ranches
Linda J. Seifert, Solano County Board of Supervisors, District 2
Moira Burke, Solano County farmer
Morris Grassfed Beef
National Center for Appropriate Technology (NCAT)
Occidental Arts& Ecology Center
Pacific Egg and Poultry Association
Pacific Institute
Pena's Disposal Company, Inc.
Phippin Bros.
Planning and Conservation League
Ralf Sauter, Okuye Almond Farm
Rich Rominger, Farmer, Secretary California Department of Food
and Agriculture 1977-1982; Deputy Secretary U. S. Department of
Agriculture 1993-2001
Ridge Vineyards, Inc.
Rominger Brothers Farms, Inc.
Roots of Change
Sierra Orchards
Soil Born Farms
Sustainable Agriculture Education (SAGE)
Sustainable Conservation
Swanton Berry Farms
Synergex International Corporation
Travaille & Phippen, Inc.
Upper Valley Disposal Service (UVDS)
Valley Fig Growers
Yolo County Board of Supervisors
Opposition
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California Municipal Utilities Association (CMUA)
Pacific Gas and Electric Company (PG&E)
San Diego Gas & Electric (SDG&E)
Southern California Edison (SCE)
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083