BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 594|
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UNFINISHED BUSINESS
Bill No: SB 594
Author: Wolk (D), et al.
Amended: 8/23/12
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE APPROPRIATIONS COMMITTEE : 4-2, 8/31/12
(pursuant to Senate Rule 29.10)
AYES: Kehoe, Alquist, Price, Steinberg
NOES: Walters, Dutton
NO VOTE RECORDED: Lieu
ASSEMBLY FLOOR : 58-10, 8/30/12 - See last page for vote
SUBJECT : Energy: net energy metering
SOURCE : Author
DIGEST : This bill authorizes a utility customer to
aggregate the electricity use from adjacent properties
owned by the customer, to be offset by the energy generated
by a single renewable energy system.
Assembly Amendments delete the Senate version of the bill
relating to local public health laboratories and (1) add
language that would condition the authorization, to
aggregate the electrical load of the meters, upon the
commission making a determination that permitting eligible
customer-generators to aggregate their load from multiple
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meters will not result in an increase in the expected
revenue obligations of customers who are not eligible
customer-generator; (2) add language that states an
electric utility that is a local publicly owned electric
utility or electrical cooperative, the bill would condition
this authorization upon the utility's ratemaking authority,
as defined, making a determination that permitting
aggregation will not result in an increase in the expected
revenue obligations of customers who are not eligible
customer-generators; (3) incorporate additional changes,
proposed by AB 2165, to be operative only if AB 2165 and
this bill are both chaptered and become effective on or
before January 1, 2013, and this bill is chaptered last;
and (4) and make clarifying and technical changes.
ANALYSIS : Existing law:
1.Requires every electric utility, as defined, to make
available to an eligible customer-generator, as defined,
a standard contract or tariff for net energy metering on
a first-come-first-served basis until the time that the
total rated generating capacity used by eligible
customer-generators exceeds five percent of the electric
utility's aggregate customer peak demand.
2.Requires the electric utility, upon an affirmative
election by the eligible customer-generator to receive
service pursuant to this contract or tariff, to either:
A. Provides net surplus electricity compensation for
any net surplus electricity generated in the 12-month
period, or
B. Allows the eligible customer-generator to apply the
net surplus electricity as a credit for kilowatt hours
subsequently supplied by the electric utility to the
surplus customer-generator.
1.Establishes a net energy metering program that is
available to an eligible fuel cell customer-generator, as
defined.
2.Requires that the net metering calculation be made by
measuring the difference between the electricity supplied
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to the eligible fuel cell customer-generator and the
electricity generated by the eligible fuel cell
customer-generator and fed back to the electrical grid
over a 12-month period.
3.Requires that an electrical corporation determine if the
eligible fuel cell customer-generator was a net consumer
or producer of electricity during the 12-month period.
For purposes of making this determination, existing law
requires that the electrical corporation aggregate the
electrical load of the eligible fuel cell
customer-generator under the same ownership.
This bill:
1.Allows the electric utility to use the sum of the
electric load on multiple electric meters located on
property adjacent or contiguous to the property on which
the generation facility is located, if those properties
are solely owned, leased, or rented by the eligible
customer-generator.
2.Allows the customer-generator to use the sum of the load
for purposes of establishing the maximum size generation
renewable generation to be used for both NEM credits and
maximum rebates allowed through the California Solar
Initiative.
3.Allows aggregation of electricity usage of multiple
meters for purposes of establishing the maximum project
size for fuel cell customer-generation.
4.Prohibits an electric utility customer who uses
aggregated NEM from receiving compensation for surplus
kilowatt-hours.
5.Prevents implementation of NEM aggregation if Public
Utilities Commission (PUC) determines NEM aggregation
would result in a cost shift to non-participating
ratepayers.
6.Requires NEM aggregation customers to remit payment for
billing services.
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7.Prohibits a publicly owned utility from offering
aggregated NEM if it would cause a rate impact on non-NEM
customers within that publicly owned utility's service
area.
8.Adds chaptering language to ensure that the provisions in
AB 2165 (Hill), relating to Fuel Cell NEM are not
impacted by the provisions in this bill.
Background
California is seeking to reduce its greenhouse gas
emissions to 1990 levels by 2020, with over a quarter of
those reductions coming from the energy sector, and has
adopted a 33 percent Renewable Portfolio Standard goal.
Governor Jerry Brown has also called for 12,000 megawatts
of new distributed generation in California. To achieve
these goals, the Legislature had created several renewable
energy programs. Some are designed to facilitate large,
utility scale energy systems, while others, like the NEM
program, promote small-scale distributed energy production.
NEM allows customers to install clean, renewable energy
systems on-site for the purpose of generating power and
receiving a financial credit on their utility bill for that
power at the full retail rate. This rate compensates
customers for the power they generate without requiring
their power use to coincide with their system's production.
This program is capped at five percent of each utility's
peak demand, meaning utilities must allow customers to
install these distributed generation systems and credit
their bills until the power generated by the facilities in
the utility territory equals five percent of the overall
peak customer demand.
NEM is an important tool for reaching our renewable energy
goals; however, significant obstacles continue to block
some customers from efficiently and economically
participating in the program. Specifically, customers with
multiple meters, for example, farmers with separate meters
for each of their irrigation pumps and other functions, are
currently required to have separate renewable facilities
for each meter to utilize NEM. This is incredibly costly
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and inefficient. Nor does it allow the ability to optimize
the location of the renewable facility on the property,
since the incentive is to join the facility with the
largest energy usage. This bill removes this obstacle by
allowing customers to aggregate all the energy consumed at
each of their meters located on the same property as the
renewable energy facility, or on their contiguous property,
and net that use against the power produced at a single
renewable facility.
These customers would still be required to follow all the
rules and limitations currently in place for the NEM
program, including the program's five percent cap and
limiting the system size to meet the load of the meters
on-site, with an overall system size limit of one megawatt.
Comments
According to the author's office, customers with multiple
meters, for example, farmers with separate meters for each
of their irrigation pumps and other functions, are
currently required to have separate renewable facilities
for each meter to utilize NEM. This bill removes this
obstacle by allowing customers to aggregate all the energy
consumed at each of their meters located on the same
property as the renewable energy facility, or on their
contiguous property, and net that use against the power
produced at a single renewable facility.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time cost of about $150,000 (special fund) for the
Public Utilities Commission to undertake a proceeding
to determine whether the bill would increase costs for
non-participating ratepayers.
Ongoing costs of about $120,000 (special fund) to
oversee the program by the Public Utilities Commission.
SUPPORT : (Verified 8/31/12)
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Ag Biomass Center, Inc.
Agricultural Energy Consumers Association
American Farmland Trust
BTL Enterprises
California Climate and Agriculture Network
California Compost Coalition
California Cotton Ginners and Growers Association
California Farm Bureau Federation
California League of Food Processors
California Off-Highway Vehicle Association
California Poultry Federation
California Solar Energy Industry Association
Clean World Partners
City of American Canyon
Coalition for Adequate School Housing
Community Alliance with Family Farmers
Del Mesa Carmel
Dixon Ridge Farms
Domaine Carneros Winery
Environment California
Far Niente Winery
First Northern Bank
Four Winds Grocers
Fully Belly Farms
Gasser Foundation
Green Build Energy Group
Hedgerow Farms
Lundberg Family Farms
Mainstream Energy
Mira International
Napa County
Napa Mill
Napa Valley Vintners
Quattrocci Kwok Architects
Recolte Energy
Regional Council of Rural Counties
Ridge Vineyards
School Energy Coalition
Sierra Club California
Solar Energy Industry Association
Sonoma Valley Unified School District
Sustainable Agriculture Education
Sustainable Conservation
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Sustainable Napa County
Swanton Berry Farms, Inc.
United Cerebral Palsy of the North Bay
Vista Livestock Company
Vote Solar
Western Agricultural Processors
Wine Institute
OPPOSITION : (Verified 8/31/12)
California Municipal Utilities Company
Pacific Gas and Electric Company
San Diego Gas & Electric Company
Southern California Edison
ARGUMENTS IN SUPPORT : Environment California, " strongly
supports SB 594 (Wolk & Blakeslee), which will allow
largely precluded sectors of California's economy (i.e.
farmers, ranchers and schools) to participate in the
state's successful net metering program and help the state
to meet its renewable energy goals.
"SB 594 will: Help businesses, schools, and government
agencies overcome a substantial obstacle to investing in
renewable energy, by allowing them to install one renewable
energy facility sized to offset their aggregated on-site
load (up to one megawatt), instead of installing separate
facilities at each meter.
"SB 594 will NOT: Create any new programs or financial
obligations. Administration will fall under the umbrella of
existing renewable energy programs. Implementation is
contingent on the CPUC determining that there are no
additional costs to non-participant ratepayers.
"Change the existing 5% cap on net metered capacity within
the state, nor does it change the maximum system size of
one megawatt."
ARGUMENTS IN OPPOSITION : San Diego Gas and Electric
Company states in opposition, "SB 594 provides that
'customers with multiple meters' located on property
"adjacent or contiguous to the property on which the
generation facility is located" would be eligible for NEM
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as if the generator was located behind their meter. This
bill creates an obvious fiction for selected customers:
specifically, customers who have no generation on-site
whatsoever are treated as if they were generating all of
their electricity on-site. Even though these customers
depend on the utility for 100% of their service
requirements, including the use of the transmission and
distribution system to deliver energy to them, SB 594 would
allow the NEM customers to evade payment for that service,
and instead would force non-generating customers to assume
those costs.
"This is not the first time the legislature has considered
expanding NEM to cover locations where no generation is
actually located. AB 1223 in 2007; AB 2519 in 2010; AB 51
in 2010; and SB 370 in 2011, all proposed similar programs,
but limited them only to agricultural customers. In each
case, the legislature did not approve the proposal,
recognizing that it would create unknown additional costs
to non-generating customers, while allowing the generating
customers to avoid payment for the use of the wires upon
which they are clearly depending to ensure their energy
load is served. In this case, SB 594 is not limited to
agricultural customers, but would even further expand
eligibility for such a fiction to anyone who happens to
have a generator on a contiguous location.
"NEM is already unfair to non-generating customers, forcing
them to pay not only for their own utility costs, but also
the costs to serve NEM customers. Customers receiving NEM
service do not contribute fully to the costs of their use
of the transmission and distribution system, nor to a
number of other costs of service, including the costs of
important public policy programs, such as energy efficiency
efforts and the low-income assistance program. This
requirement to shift costs to non-generating customers
currently results in a cost shift of more than $16 million
each year for SDG&E alone, but that cost shift is rapidly
escalating as more customers elect to add generation. This
is neither sustainable nor fair to non-participating
customers. SB594 exacerbates this problem by allowing
additional customers to shift their electricity costs to
non-participating customers, built on the pretense that
sites with no generation on them at all should be treated
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as if they did have generation.
"The California Solar Initiative was designed to provide an
incentive for distributed solar for a limited number of
years, with a declining incentive as the cost of solar
declines. In contrast, the NEM subsidy is based on the
opposite formula. Despite the fact that the cost of solar
has declined, the subsidy paid by non-generating customers
has steadily increased and the rate of increase of this
subsidy has quickened.
"SB 594 makes the current NEM pricing structure worse and
even more confusing, and increases costs to others merely
to benefit those customers who happen to occupy adjacent
sites. For these reasons, SDG&E must oppose SB 594 and
respectfully requests a 'No' vote."
ASSEMBLY FLOOR : 58-10, 8/30/12
AYES: Achadjian, Alejo, Allen, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Davis, Dickinson, Eng,
Feuer, Fletcher, Fong, Galgiani, Gatto, Gordon, Grove,
Hall, Hayashi, Roger Hern�ndez, Hill, Huber, Hueso,
Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Mitchell,
Monning, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V.
Manuel P�rez, Portantino, Skinner, Swanson, Torres,
Valadao, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Beth Gaines, Hagman, Harkey, Jones, Knight, Mansoor,
Miller, Morrell, Smyth, Wagner
NO VOTE RECORDED: Ammiano, Cook, Donnelly, Fuentes,
Furutani, Garrick, Gorell, Halderman, Logue, Mendoza,
Silva, Solorio
RM:n 8/31/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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