BILL ANALYSIS �
AB 2649
Page 1
Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2649 (Mullin) - As Amended: April 21, 2014
SUBJECT : Net energy metering: military bases
SUMMARY : This bill allows U.S. military installations to
exceed the one megawatt limit on net energy metering (NEM) as
specified and allows privatized military housing to be treated
as separate for purposes of the one megawatt NEM limit.
Specifically, this bill :
1)Authorizes a U.S. military installation to exceed the NEM one
megawatt capacity limitation when either:
a) The total capacity of all renewable electrical
generation facilities on the military installation does not
exceed 100% of the minimum daytime load measured in the
previous 12 months, or
b) The total capacity of all renewable electrical
generation facilities on the military installation does not
result in the export of electricity beyond the meter and
the military installation adopts reasonable and
cost-effective control methods to ensure the generation of
electricity from renewable electrical generation facilities
does not exceed load.
1)Provides that each physically separate and distinct building
within privatized residential housing communities on
contiguous military properties is a separate premise for
purposes of the NEM one megawatt capacity limitation.
EXISTING LAW
a)Requires most electric utilities to offer net energy metering
to their customers who use renewable energy on their premises
with a total capacity of not more than 1 megawatt (MW) and is
tended primarily to offset part or all of the customer's own
electrical requirements. (Public Utilities Code 2827)
b)Provides that an electrical corporation is not obligated to
provide NEM to a direct access customer and that an electrical
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corporation may recover from the customer's electricity
service provider the incremental cost of metering and billing
services and the cost of providing net surplus compensation.
(Public Utilities Code 2827(f)
c)Requires that electrical corporations to complete requests for
a NEM interconnection agreement be processed within 30 working
days. (Public Utilities Code 2827(e)(2))
d)Requires the California Public Utilities Commission (PUC) to
establish a new NEM tariff to replace the existing NEM tariff
and specifies an implementation schedule. (Public Utilities
Code 2827.1)
e)States that customers who are not subject to the new NEM
tariff that the PUC will be developing, are:
1) Exempt from standby charges on the electrical generating
capacity or the kilowatt-hour production of a renewable
electrical generation facility. Provides that charges for
all retail rate components be based on the
customer-generator's net kilowatt-hour consumption over a
12-month period, without regard to the eligible
customer-generator's choice as to from whom it purchases
electricity that is not self-generated.
2) Prohibits any new or additional demand charge, standby
charge, customer charge, minimum monthly charge,
interconnection charge, or any other charge.
(Public Utilities Code 2827(g))
a)Requires NEM customers to pay Department of Water and Power
bond charges. (Public Utilities Code 2827(l))
b)Allows the PUC to allow projects greater than one megawatt
that do not have significant impact on the distribution grid
to be built to the size of the onsite load if the projects
with a capacity of more than one megawatt are subject to
reasonable interconnection charges established pursuant to the
commission's Electric Rule 21 and applicable state and federal
requirements. (Public Utilities Code 2827.1(b)(5)
c)Provides that an electric utility is not obligated to provide
NEM or net surplus compensation if a customer participates in
direct transactions with an electric service provider that
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does not provide distribution service for the direct
transactions. (Public Utilities Code 2827 (f)(1))
d)Provides that a an electric utility that provides distribution
service for customers who receive electricity via direct
transactions may recover from the customer's electric service
provider the incremental costs of metering and billing service
related to net energy metering and net surplus electricity
compensation. (Public Utilities Code 2827(f)(2))
e)Federal Executive Order 13423 (January 2007) establishes goals
for improving energy efficiency and reducing greenhouse gas
emissions through reduction of energy intensity by 3 percent
annually through the end of fiscal year 2015, or 30 percent by
the end of fiscal year 2015, relative to the baseline of the
agency's energy use in fiscal year 2003.
f)Federal Executive Order 13514 (October 2009) establishes the
policy of the United States for agencies to increase their
energy efficiency and reduce energy intensity.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement. "This bill increases access to the
existing NEM program in helpful ways that support the state's
achievement of distributed, renewable generation policy goals
and U.S. military goals associated with renewable generation
and energy security."
2)What's the problem? AB 2649 addresses physical and
administrative challenges to expanding on-site generation on
military facilities and one financial challenge:
a) Military housing located on-base does not normally have
metering on each housing unit. As a result, the maximum
size for NEM is limited to 1 MW at the meter. There could
be more than a thousand homes served by that meter, each of
which are likely candidates for rooftop solar. If each home
had rooftop solar it would exceed the NEM cap.
b) Military bases are very large electricity consumers and
the 1 MW limit is too restrictive for them to participate
in NEM. When they attempt to construct non-NEM projects
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they have encountered costly interconnection studies, fees
and difficult technical requirements, and lengthy
processing time.
c) Military base electricity bills have large assessments
for nonbypassable charges. The exemptions from
nonbypassable charges that are allowed for NEM customers
would help reduce military utility bills.
Even though the PUC has the authority to allow an increase to
the NEM capacity cap, the PUC may have to open a proceeding to
do this and may not be able to render a decision in time to
allow project developers to be certain they can access the 30%
Federal Solar Investment Tax Credit for renewable energy
projects. This tax credit will expire on December 31, 2016
unless it is extended.
1)Will this solve the problem? It is unclear whether the current
language in the bill will address the barriers for military
facilities. Many of the military facilities receive
electricity from the Western Area Power Administration (WAPA)
and some receive WAPA electricity via a contract with Shell
Energy North America. This power is delivered via the utility
transmission and distribution system. Military facilities pay
around 3 cents per kilowatt-hour for WAPA electricity. It not
known what Shell Energy North America charges the military for
WAPA electricity.
According to WAPA, they do not have a NEM tariff and it will
likely take several years to create one because they need to
hold a public rate-making process, coordinate the effort
across 15 states, and may need approval from the U.S.
Department of Energy.
Military bases are located in the service areas of PG&E, SCE,
and SDG&E. According to the PUC it has not established a rule
or procedure for how WAPA and direct access customers are
treated under the NEM statute and they state that each IOU
handles it differently. The PUC would likely need to open a
proceeding and take comments in order to establish a
consistent process and address how to administer collection of
metering and billing charges from electricity service
providers.
2)Is this the only option? Military representatives state that
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they intend to consume all generation produced by the on-site
generation facilities that they would like to build, i.e.,
they will not export any generation back to the IOU
transmission or distribution lines. They estimate that the
total amount of on-site generation they will construct is
around 100 MW, spread among different bases located in
different IOU service areas.
Current utility interconnection agreements allow generation
that is isolated from utility distribution system and sized up
to 50% of the customer's minimum load. In addition, the
agreements do not obligate a customer from entering into an
interconnection agreement for this type of generation.
Isolated generation means that the Generating Facility is
prevented from becoming interconnected with an IOU
Distribution System by means of a transfer switch or operating
scheme specifically designed and engineered for such
operation. Current statutes obligate customers to notify the
utility of this type of generation. It is unclear whether
military facilities have attempted to use this option.
While the 50% sizing requirement for isolated systems is
currently in interconnection agreements, for the purpose of
military facilities with generation that is isolated from the
grid, it may be appropriate to allow them to build on-site
generation that does not exceed 100% of their minimum daytime
load because they can consume this electricity on site without
export to the grid - as long as the generation is constructed
in a manner that does not allow generation to flow back to the
IOU transmission or distribution lines.
Because of the technical nature of providing more than 100% of
the load, if the military believes this is needed to generate
more than 100% of their minimum daytime load this should be
determined by the PUC so that the PUC has an opportunity to
address safety, reliability, or affordability issues that
might arise if this were allowed.
The military facilities would like to preserve the option to
enter into an interconnection agreement but would like to
ensure that the agreements are made in a timely manner.
The author may wish to consider an amendment that would allow
military facilities, including privatized military housing, to
generate up to 100% of their average minimum daytime load if
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the generation is connected in a manner that prevents any
electricity from feedback back to the utility distribution
system.
The author may wish to consider an amendment that would make
clear in statute that a military facility is not obligated to
enter into an interconnection agreement unless it elects to do
so for independent generation that is no larger than the
average minimum daytime electrical load.
The author may wish to consider an amendment specifying that
if a military facility elects to enter into an interconnection
agreement for an independent generation system the IOU must
complete the agreement within 30 working days and not be
subject to interconnection fees or studies.
3)What about the non-energy charges? Currently, military
facilities are assessed "departing load charges." This means
that if a military facility reduces it energy consumption
through any means (self-generation, energy efficiency, energy
conservation, etc.) the amount that they are assessed for
public purposes programs and other charges does not change.
The larger military facilities located in San Diego County are
in the area impacted by the closure of the San Onofre Nuclear
Generation Station. Load reductions in that area are likely to
benefit all ratepayers with respect to electricity
reliability.
The author may wish to consider an amendment specifying that
military facilities are to be assessed charges based on actual
usage of electricity delivered via the IOU transmission or
distribution system.
This will ensure that military facilities will continue to pay
public purpose and other charges on the generation that is
delivered via the IOU transmission or distribution system. It
will also ensure that military facilities are not assessed
charges for the generation facilities or any other action
taken by the military facilities.
4)Interconnection costs and studies. Rules regarding
interconnecting a generation facility to the grid require fees
and reliability studies in most cases. In addition, utilities
may require metering and weather data for interconnected
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facilities so that it can better plan and react to changes in
output from these generation facilities in order to ensure
that all customers receive safe and reliable service. This is
particularly important for larger generation using solar or
wind, where the output can vary substantially due to weather
or wind conditions. These facilities do provide generation to
the IOU distribution or transmission system so it makes a
difference in terms of how much generation is dispatched so
that the total generation meets the needs of the customers. An
exception from fees and studies was granted for NEM customers
because they are sized to their annual load and the size of
the systems are limited to 1 MW.
The military facilities would like to have the same
interconnection that NEM customers receive. This will allow
them to move forward on projects quickly. Because they will
consume all generation on site they will not impact grid
reliability.
The author may wish to consider an amendment that provides
military facilities with interconnection requirements that
address the barriers the military has experienced with respect
to timely interconnection, interconnection fees and studies,
such as telemetry, special metering, or other studies.
5)Should other customer receive the same treatment as proposed
in the amendments with respect to departing load charges? The
U.S. Military provides safety and security to citizens of the
U.S. and other nations. Military personnel put their lives at
risk to perform this service. As a branch of the federal
government they do not pay income taxes and cannot 'write off'
their energy expenses on their annual tax return. They
estimate the amount of self-generation they intend to build is
around 100 MW statewide and the proposed amendments provide a
limit (no more than 100% of their average minimum daily load).
Commercial and industrial utility customers can expense their
energy costs, which can help reduce their overall state and
federal tax burden. They are allowed under current
interconnection rules to install isolated self-generation as
explained in the IOU interconnection agreement. However, many
of them will continue to be subjected to the departing load
charges explained in the utility tariffs and authorized by
current statute.
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At some time in the future the Legislature may want to
consider addressing the subject of departing load charges. But
expanding this beyond military facilities should first be
analyzed with respect to potential impacts (costs and
benefits) to ratepayers to cover expenses authorized by the
PUC or to consider whether there are effective ways to reduce
those expenses without diminishing services that the
Legislature has deemed essential (such as low-income
assistance programs and research and development programs).
6)Proposed amendments.
Amendment 1
In the title, strike out lines 1 and 2 and insert:
An act to add Article 9.5 (commencing with Section 389) to
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities
Code, relating to public utilities.
Amendment 2
On page 2, before line 1, insert:
SECTION 1. Article 9.5 (commencing with Section 389) is added to
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities
Code, to read: Article 9.5. Federal Facilities
389. The Legislature finds and declares all of the following:
(a) The United States Department of Defense provides national
defense and global security which benefit Californians and
California's economy.
(b) The United States Department of Defense facilities located
in California provide more than seventy billion dollars
($70,000,000,000) in direct spending and 300,000 jobs in
California.
(c) The United States Department of Defense is working to
achieve energy efficiency and renewable energy goals to meet
both presidential and departmental directives.
(d) The amount of electricity that the United States Department
of Defense facilities located in California seek to generate on
their own premises will serve their own electricity needs and
will not export electricity.
(e) Military bases approximate small cities in electrical load,
diversity of land uses, and size.
(f) Given the crucial contribution of our military, California
should assist military facilities in California to achieve their
energy independence goals.
(g) The military owns and maintains its electric distribution
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system. Generation serving the military's own electricity load
without export should not require upgrades to this distribution
system. Even if upgrades are necessary, the military and not
ratepayers will bear these costs.
(h) At the request of the Governor and the electrical
corporations, military bases have historically demonstrated
their commitment and ability to provide demand reduction
management at times of grid emergencies.
(j)Development of additional energy facilities on military
bases and military family housing will create opportunities for
jobs for veterans at a time when many California service members
are reentering the workforce and can provide skilled workers.
Established programs, such as "Helmets to Hardhats," also
provide valuable and needed career transition from the
battlefield to the civilian community.
SEC. 2.
389.3. (a) For the purposes of this article, the following shall
apply:
(1) "Facilities" means any of the following:
(A) Military bases and facilities.
(B) Privatized military housing.
(C) United States Coast Guard facilities.
(2) "Independent generation facility" means an electrical
generation facility that is 1) sized to provide no more than 100
percent of a facility's average minimum daytime load, measured
in the prior 12 months, 2) prevented from exporting electricity
to an electrical corporation's distribution system through a
double throw switch or operating scheme specifically designed
and engineered for such operation, and 3) operates in parallel
with the electrical transmission and distribution system. An
independent generation facility is required to notify the
electrical corporation pursuant to subdivision (b) of section
119085 of the Health and Safety Code.
(3) "Military bases and facilities" mean those establishments as
defined in section 101(a)(4) of Title 10 of the United States
Code.
(4) "Privatized military housing" means housing facilities
managed by a private entity for the purposes of providing
housing to active duty service members and their family members
that are not individually metered for purposes of calculating
electricity charges paid to an electrical corporation.
(5) "Standby demand" means the entire reserved capacity needed
to serve the electrical load of a facility that is regularly
served by the facility's independent generation facility when
that generation facility experiences a partial or complete
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outage.
(b)(1) The facilities shall not be obligated to enter into an
interconnection agreement for an independent generation
facility.
(2) If a facility requests an interconnection agreement for an
independent generation facility, the electrical corporation
shall ensure that the request is processed in a time period not
to exceed 30 working days from the date of receipt of the
completed application by the electrical corporation.
(3) An electrical corporation shall not impose any requirements
or fees on an interconnection request, for example, telemetry or
metering devices, electric grid reliability studies, fees for
electric grid reliability studies, interconnection charges, or
be required to pay the costs of any studies the electrical
corporations deems necessary, if a military facility requests an
interconnection agreement.
(c) On or before April 1, 2015, the commission shall, for a
facility, do both of the following:
(1) Require an electrical corporation to calculate and assess,
based on the actual metered consumption of electricity provided
from either the electrical corporation or an electric service
provider that delivers electricity through the distribution
system of the electrical corporation for the facility's billing
period, the following charges:
(A) The competition transition charge imposed pursuant to
Section 330.
(B) The charge imposed pursuant to Section 367 commonly known as
the power charge indifference adjustment.
(C) The nuclear decommission charge imposed pursuant to Section
379.
(D) The charge imposed pursuant to Section 366.1 to recover
bond-related costs pursuant to an agreement between the
commission and the Department of Water Resources pursuant to
Section 80110 of the Water Code.
(E) The charge imposed pursuant to Section 379.6 for the support
the self-generation incentive program.
(F) The charges imposed pursuant to Section 381 and 384 for the
support of public interest programs.
(G) Transmission and distribution charges as approved by the
Commission on the applicable tariff.
(2) (A) Establish a standby charge for a facility that is based
on the facility's standby demand. The standby demand shall be
designated by the facility and remain at that level for a
minimum of 12 months unless the electrical corporation
determines that the standby demand needs to be adjusted to meet
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the actual demand.
(B) Upon an electrical corporation's determination that the
facility's designated standby demand is too low and does not
reflect the actual level of needed reserved capacity, over any
15 minute period or through onsite verification, the electrical
corporation shall increase the standby demand to reflect the
actual needed reserve capacity.
(C) Upon an electrical corporation's determination that the
facility's designated standby demand is too high, over any 15
minute period or through onsite verification, the electrical
corporation shall decrease the standby demand to reflect the
actual needed reserve capacity.
(D) If the standby demand is adjusted by the electrical
corporation, another adjustment in the standby demand shall not
be made for 12 months from the adjustment.
(E) To the extent authorized by federal law, a facility shall
notify the electrical corporation of permanent or material
changes in the size, type, and operations of the facility for
future adjustments to the standby demand.
(3) The commission shall require electrical corporations to
implement the provisions of this section through an Advice
Letter prior to April 1, 2015.
(d) Any activities undertaken on a facility's premises that
reduce demand for electrical corporation supplied electricity,
such as energy efficiency, load reduction, or independent
generation are not subject to charges assessed on electricity
delivered from the electrical corporation's distribution system
or other charge of any kind that would increase a facilities
costs beyond those of other customers in the rate class to which
the facility would otherwise be assigned if independent
generation was not installed at the facility.
389.5. Notwithstanding this article, military bases and
facilities, at their sole discretion, may develop eligible
energy generation projects authorized pursuant to section 2827
or 2827.1 of the Public Utilities Code or through an electrical
corporation's Generating Facility Interconnection Rule 21, as
applicable and pursuant to applicable rules or tariffs.
(d) The commission may adjust the size limit on for independent
generation facilities on military bases and facilities if it
determines that this can be done in a manner that does not
affect the safety or reliability of electricity service to other
customers of the electrical corporation.
SEC. 3.
No reimbursement is required by this act pursuant to Section 6
of Article XIII B of the California Constitution because the
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only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime
or infraction, eliminates a crime or infraction, or changes the
penalty for a crime or infraction, within the meaning of Section
17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
Amendment 3
On page 2, strike out lines 1 to 14, inclusive, and strike out
pages 3 to 19, inclusive
Amendment 4
SEC. 4.
This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to allow renewable energy development on military
installations in support of the state's energy policies and the
United States military's renewable energy and national security
goals, as well as to support military families and veterans
hiring programs, it is necessary that this act take effect
immediately.
REGISTERED SUPPORT / OPPOSITION :
Support
California Center for Sustainable Energy (CCSE)
California Solar Energy Industry Association (CalSEIA)
Department of Defense, Regional Environmental Coordinator,
District 9
Environmental Entrepreneurs (E2)
Natural Resources Defense Council (NRDC)
San Diego Military Advisory Council (SDMAC)
Solar Energy Industries Association (SEIA)
SolarCity
Sunrun, Inc.
Vote Solar
Opposition
California Coalition of Utility Employees (CCUE)
California State Association of Electrical Workers
California State Pipe Trades Council
Pacific Gas and Electric (PG&E)
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Southern California Edison (SCE)
Southern California Public Power Authority (SCPPA)
Western States Council of Sheet Metal Workers
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083