BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1537
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     SB 1537 (Kehoe) - As Amended:  May 1, 2012 

          Policy Committee:                              
          UtilitiesVote:10-2

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No 

           SUMMARY  

          This bill prohibits the Public Utilities Commission (PUC), until 
          January 1, 2014, from adopting any new charges that only apply 
          to customers with a net metering tariff.  Specifically, this 
          bill prohibits the PUC from adopting any new demand charge, 
          standby charge, customer charge, minimum monthly charge, 
          interconnection charge, or other fixed charge that applies only 
          to customers receiving electric service pursuant to a net energy 
          metering (NEM) contract or tariff. 

           FISCAL EFFECT  

          Negligible fiscal impact to the PUC.   

           COMMENTS  

           1)Purpose  .  According to the author, "A recent filing by San 
            Diego Gas & Electric (SDG&E), subsidiary of Sempra Energy, 
            exposed solar producers' vulnerability to drastic electric 
            rate restructuring.  In SDG&E's filing they proposed to 
            increase certain charges paid by solar producers by over 600% 
            while only increasing the same charge to non-solar producers 
            by 52%."

           2)Background  .  NEM allows commercial and residential electricity 
            customers to receive credits on their utility bills for 
            on-site renewable energy generation in excess of their 
            electric load that is exported to the electric grid.  The 
            price is set by the applicable retail rate under the 
            customer's existing contract.  In 2011, SDG&E, as part of its 
            general rate case, proposed a new rate element called a 








                                                                  SB 1537
                                                                 Page  2

            Network Use Charge (NUC) for all customers.  The impact of the 
            NUC would have been to charge customers for their actual use 
            of the electric distribution grid as power comes in from the 
            grid and, in the case of solar customers, as power is exported 
            to the grid. The solar industry complained that the NUC charge 
            would adversely impact the market for solar because the 
            facility economics would be undermined. The PUC dismissed the 
            NUC proposal from the rate case. 

           3)Opposition  . Opponents, which include the PUC and SDG&E, argue 
            the bill is unnecessary and could overburden non-NEM 
            customers.  The PUC argues that the bill is legislative 
            ratemaking and that the intent of the bill is covered by 
            existing law, which prohibits a utility from imposing new 
            charges on eligible renewable customer-generators.  SDG&E 
            states that, "customers receiving NEM service do not pay the 
            full costs of the services that they receive from the 
            utility."  
          Analysis Prepared by  :    Israel Salas / Chuck Nicol / APPR. / 
          (916) 319-2081