BILL ANALYSIS �
SB 489
Page 1
SENATE THIRD READING
SB 489 (Wolk)
As Amended July 12, 2011
Majority vote
SENATE VOTE :31-7
UTILITIES & COMMERCE 13-0 NATURAL
RESOURCES 6-1
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|Ayes:|Bradford, Fletcher, |Ayes:|Chesbro, Brownley, |
| |Buchanan, Fong, Fuentes, | |Dickinson, Grove, |
| |Furutani, Beth Gaines, | |Huffman, Monning |
| |Roger Hern�ndez, | | |
| |Williams, Ma Nestande, | | |
| |Skinner, Valadao | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Knight |
| | | | |
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APPROPRIATIONS 12-4
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly, Nielsen, Norby, | | |
| |Wagner | | |
| | | | |
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SUMMARY : This bill expands net metering eligibility to include
other types of renewable energy generating facilities, as
defined. Specifically, this bill :
1)Allows 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
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that meet certain criteria, 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% of the
utility's aggregate peak demand.
4)Repeals an existing NEM program for biogas generator projects.
EXISTING LAW :
1)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.
2)Establishes a pilot NEM for biogas generator projects up to 1
MW and 3 biogas projects with generating capacity between 1
and 10 MW.
3)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 Pacific Gas & Electric (PG&E) and Southern
California Edison (SCE) service areas and 22.5 MW in San Diego
Gas & Electric (SDG&E) service area] and capped to a total of
112.5 MW.
4)Requires 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:
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a) Distribution costs (e.g., poles, wires, transformers,
service technicians, call centers, and other customer
services)
b) Transmission costs (e.g., high voltage transmission
lines used to deliver remotely produced energy at all
hours, including renewables)
c) Total Rate Adjustment Component - the cost shift from
lower tier below cost rates to the upper tiers)
d) California Solar Initiative (CSI)
e) Self-Generation Incentive Program
f) CARE (low-income support - residential only)
g) Low-Income Energy Efficiency (LIEE - residential only)
h) Public Interest Energy Research (PIER)
i) The Public Goods Charges for renewable energy, energy
efficiency, and demand reduction programs
j) Nuclear decommissioning
5)Allows 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
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generation.
6)Requires the state's investor owned utilities to provide
compensation or billing credits to 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.
7)Limits the maximum project size for net metering to no more
than 1 MW.
8)Requires IOUs and POUs to offer NEM to their customers until
the utility reaches 5% of each utility's aggregate peak
demand.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, any costs for PUC to expand technologies eligible for
the net metering program would be minor and absorbable.
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.
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.
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
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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. Although the total net cost of 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.
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 CSI, administered by PUC. According
to the most recent information from PUC (1st Quarter, 2011), the
status of IOU caps are as follows:
1)Pacific Gas & Electric: 2.10% (peak load is 20,833 MW)
2)Southern California Edison: 0.97% (peak load is 23,163 MW)
3)San Diego Gas & Electric: 2.05% (peak load is 4,642 MW)
Why limit NEM to only two renewable electricity technologies?
This bill establishes the definition of an "eligible renewable
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.
This bill establishes additional criteria for fuel cell and
hydroelectric facilities. This bill provides that a small
hydroelectric generation facility is not eligible for NEM if it
will cause an adverse impact on in-stream beneficial uses or
cause a change in the volume or timing of stream-flow. Specific
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to NEM eligibility for fuel cells, this bill would require that
the fuel cell technology achieve reductions in emissions of
greenhouse gases and meets emission requirements.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0002052