BILL ANALYSIS �
SB 489
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 489 (Wolk) - As Amended: July 12, 2011
Policy Committee:
UtilitiesVote:13-0
Natural Resources 6-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill expands the types of renewable energy generation that
are eligible for net metering. Specifically, this bill:
1)Allows the following technologies not currently eligible for
net metering to participate in utility-administered net
metering programs: biomass, solar thermal, geothermal, fuel
cells using renewable fuels, small hydroelectric generation
facilities of 30 megawatts (MW) or less, 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 program requirements limiting project size to
1 MW, limiting generation from a project to primarily offset
on-site electricity demand, and limiting project location to
the premises owned, rented, or leased by a customer of the
electric utility.
3)Retains the current total capacity cap for net metering at 5%
of the utility's aggregate peak demand.
FISCAL EFFECT
Any costs for the Public Utilities Commission (PUC) to expand
technologies eligible for the net metering program would be
minor and absorbable.
COMMENTS
SB 489
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1)Purpose . This bill is intended to open net metering to all
forms of renewable energy to allow more utility customers to
convert to renewable energy and offset their electricity
bills. The author states that the current net metering
statutes prevent cost-effective, clean renewable power from
connecting to the grid.
2)Background . Under net-metering, the electric utility is
required to "buy back" wind- or solar-generated electricity of
a customer-owned generator, as measured by an electric meter
that can measure the flow of electricity in both directions.
SB 656 (Alquist)/Chapter 369 of 1995 capped net-metering at
0.1% of the utilities' peak load. AB 57 (Keeley)/Chapter 836
of 2002 increased the cap to 0.5%, SB 1 (Murray)/Chapter 132
of 2006 further increased the cap to 2.5%, and most recently,
AB 510 (Skinner)/Chapter 6 of 2010 increased the cap to 5%.
According to the PUC's most recent information (first quarter
of 2011) net metering represents the following share of the
investor-owned electrical utilities' peak loads: 2.1% for
PG&E, 0.97% for Southern California Edison, and 2.05% for San
Diego Gas & Electric.
The purpose of the net-metering cap is two-fold: first, to
insure that intermittent solar generation does not create grid
reliability problems; and second, to cap the subsidy provided
through net-metering. (The credit provided for wind- or
solar-generated power put back into the grid is at the
customer's retail cost, which includes not only the replaced
generation cost, but also the equivalent costs for
transmission, distribution, public good charges, and the
utility's rate of return. Since the customer-generator is
being paid the retail price, the add-on costs are shifted to
the utilities' other ratepayers.)
By expanding the list of eligible resources under the net
metering program, SB 489 will likely alter the mix of projects
within program and hasten the point at which the current 5%
cap would be reached. Since the bill does not increase the
current cap, while the mix of generation resources may change,
any cost shift associated with net metering would not change.
SB 489 could result in reduced cost impacts on non-net
metering customers to the extent it results in more
participating generation by non-residential customers, whose
lower utility rates result in smaller bill credits per
kilowatt hour when compared to residential customers. (Most of
SB 489
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the new generation resources allowed in the program under the
bill would not be suitable for a residential customer.)
3)Opposition . San Diego Gas & Electric and Southern California
Edison are opposed to expanding eligibility for a program they
argue is need of overhaul given the cost shifting in the
existing program.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081