BILL ANALYSIS �
SB 489
Page 1
Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 489 (Wolk) - As Amended: June 30, 2011
SENATE VOTE : 31-7
SUBJECT : Electricity: net energy metering
SUMMARY : Expands renewable energy technologies eligible for net
metering from solar, wind, and biogas digester generators to any
"renewable electrical generation facility," as defined.
EXISTING LAW :
1)Requires all electric utilities (investor-owned,
publicly-owned and cooperative), except the Los Angeles
Department of Water and Power, to credit all electricity
generated by a customer-owned solar or small wind generator
against the customer's usage of electricity sold by the
utility, a procedure known as "net metering."
2)Provides compensation for "net surplus" for certain customers
(i.e. if the customer generates more electricity than the
customer consumes in a 12-month period).
3)Generally limits the maximum size of individual projects to
one megawatt (MW), limits the generation from the project to
primarily offset on-site electricity demand, limits the
location of the project to on the premises owned, rented, or
leased by a customer of the electric utility, and caps the
total capacity for net metering projects within any utility to
five percent of the utility's aggregate peak demand.
4)Establishes a separate "co-energy metering" program for local
publicly-owned electric utilities, as well as a "wind energy
co-metering" program for wind projects from 50 kilowatts (kW)
to one MW, where compensation is calculated based on the
generation component of the utility's rate, rather than the
full bundled rate.
5)Establishes a separate pilot net metering program for biogas
digester generator projects up to one MW, but permits up to
three biogas projects with generating capacity up to 10 MW.
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6)Establishes a separate net metering program for fuel cell
generators up to one MW installed through 2013.
THIS BILL :
1)Expands renewable energy technologies eligible for net
metering from solar, wind, and biogas digester generators to
any "renewable electrical generation facility," as defined
(i.e. biomass, solar thermal, photovoltaic, wind, geothermal,
fuel cells using renewable fuels, small hydroelectric
generation of 30 megawatts or less, digester gas, municipal
solid waste conversion, landfill gas, ocean wave, ocean
thermal, or tidal current).
2)Repeals the existing net metering statute specific to biogas
digester projects.
FISCAL EFFECT : Unknown
COMMENTS :
1)Net metering background. Since 1996, state law has required
electric utilities to buy back electricity generated by a
customer-owned solar or wind system. This buy-back program is
known as "net metering" because the electricity purchases of
the customer are netted against the electricity generated by
the customer's own solar or wind electric system. The
generated electricity spins the meter backward, making it
financially equivalent to using less electricity for the
customer.
Net metering was initially permitted for systems up to 10 kW
making it suitable for residential-sized applications (a
typical residential net-metered system is two to four kW).
The total amount of capacity that could be net metered was
capped at 0.1 percent of the utility load.
The boundaries of net metering have been expanded
progressively via a string of statutes over the past 10 years.
Individual project size has been increased 100 fold, to one
megawatt, and total utility capacity has been increased 50
fold, to five percent to allow larger and more solar energy
systems. Net-metered customers are also now entitled to
compensation for surplus electricity they produce over the
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course of a year to their electric utility. In addition,
special statutes have been enacted to offer net metering to
biogas digester and fuel cell projects.
In 2010, the Public Utilities Commission (PUC) published its
report on the costs and benefits of net energy metering, as
required by law. The report concluded that the estimated
average net cost of net energy metering is "$0.12 per
kilowatt-hour (kWH) exported, which is relatively high on a
cents per kWh basis." The PUC report justifies the higher
price by noting that net energy metering is not designed as an
energy procurement program, and "the volume of energy exported
to the utilities is small compared to the total solar
generation and it is de minimis compared to the total energy
procured by the utilities."
2)Nut metering? According to the author:
Only (wind and solar) generators can take advantage of the
(net metering) program's streamlined approach to getting
renewable energy on line quickly. Connecting all other
forms of clean renewable energy to the electric grid
requires going through the longer, more arduous, and very
expensive Feed-In-Tariff process. For smaller energy
producers, the costs?often outweigh the benefits?
The impetus for this bill is Dixon Ridge Farms, a producer of
organic walnuts near Winters:
Since 2007, Dixon Ridge Farms has embarked on a program to
decrease energy use, increase energy efficiency and produce
our own renewable energy using non-food sources?our
renewable energy is produced by a BioMax 50kW generator
fueled by gasified walnut shells?and a 16 kW solar array.
To date, we have reduced energy use by about 20% and
produce about 25% of our own energy. It is possible to
reduce use by another 20% and produce another 45% allowing
us to?produce more than we use. However?Dixon Ridge Farms
has met resistance from PG&E and PUC rules. In order to
generate more energy, we need to connect to the grid, a
task that PG&E refuses to allow?
Utility opponents contend that net metering amounts to a
subsidy borne by the utilities' other customers and expanding
eligibility to lower-cost renewable technologies magnifies the
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subsidy. Under net metering, customers are compensated for
energy at the full retail rate, which includes any usage-based
transmission and distribution charges, so utilities (and their
non-participating customers) are forced to pay for more than
the value of the energy produced and prevented from collecting
for transmission and distribution services used to serve the
net metering customer.
It is worth noting that this bill maintains the five percent
cap on total net-metered load, so it seems to give other
renewable technologies a slice without making the net metering
pie any bigger.
3)Eligibility is broad, but application is likely fairly narrow.
While this bill extends eligibility to all RPS-eligible
technologies, only some are suitable for the small-scale,
customer-owned, onsite applications essential for net
metering. As a practical matter, this bill appears to be
suited for biomass-fueled projects like Dixon Ridge and
possibly small hydroelectric projects. Although private small
hydro is a very small niche, the author and the committee may
wish to consider whether it is necessary and appropriate to
include small hydro in net metering, particularly existing
projects that may have operated under existing rules for many
years.
4)Keep it local. Opponents point out that the bill, by
referencing the definition of "renewable electrical generation
facility" in Section 25741 of the Public Resources Code, makes
out-of-state resources eligible for net metering. Because of
the nature of net metering, it is not possible that a
net-metered generator could be located outside California - it
must be located on the premises of a California utility
customer. However, a CEC interpretation regarding RPS
eligibility raises the possibility that an in-state natural
gas generator could be considered eligible for net metering if
it contracts for biogas from an out-of-state landfill or
digester source. The author and the committee may wish to
consider avoiding this possibility by requiring that net
metering customers rely on local sources of fuel.
5)Equal treatment for wind? While this bill would make all
renewable energy sources, including wind, eligible for full
net metering, it leaves in place an existing "wind energy
co-metering" statute for wind projects from 50 kW to one MW,
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where compensation is calculated based on the generation
component of the utility's rate, rather than the full bundled
rate. The author and the committee may wish to consider
clarifying the treatment of these larger net-metered wind
projects.
6)Fuel cell emission standard is outdated. This bill makes
conforming amendments to an existing fuel cell net metering
statute which references a definition of "ultra-clean and
low-emission distributed generation" in Section 353.2 of the
Public Utilities Code that is outdated and no longer
applicable. The author and the committee may wish to consider
relying on the distributed generation emission standards in
Section 379.6 instead.
REGISTERED SUPPORT / OPPOSITION :
Support
Agricola
Agricultural Council of California
Agricultural Energy Consumers Association
Almond Hullers & Processors Association
American Farmland Trust
California Clean Energy Fund
California Climate and Agriculture Network
California Compost Coalition
California Farm Bureau Federation
California Grain & Feed Association
California Public Utilities Commission
California Refuse Recycling Council
California Rice Commission
California Seed Association
California Warehouse Association
Californians Against Waste
Capstone Turbine Corporation
CCOF
Center for Land Based Learning
Clean World Partners
Clover Flat Landfill
Community Alliance with Family Farmers
Dixon Ridge Farms
Earthbound Farm
Ecological Farming Association
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Environmental Defense Fund
First Northern Bank
Food & Water Watch
Full Belly Farm
Hedgerow Farms
Inland Empire Utilities Agency
Intermountain Disposal
Lagier Ranches
Morris Grassfed Beef
National Center for Appropriate Technology
Occidental Arts & Ecology Center
Pacific Egg and Poultry Association
Pacific Institute
Pe�a's Disposal Company
Phippen Bros.
Planning and Conservation League
Ridge Vineyards
Rominger Brothers Farms
Roots of Change
SAGE
Sierra Orchards
Soil Born Farms
Solano County Second District Supervisor Linda J. Seifert
Sustainable Agriculture Education
Sustainable Conservation
Swanton Berry Farm
Synergex International Corporation
Travaille and Phippen
Valley Fig Growers
Yolo County Board of Supervisors
Opposition
California Municipal Utilities Association
Pacific Gas and Electric Company
Southern California Edison
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092