BILL ANALYSIS
AB 26 X2
Page 1
ASSEMBLY THIRD READING
AB 26 X2 (Calderon)
As Introduced May 17, 2001
Majority vote
SUMMARY : Requires electrical corporations to waive standby
charges for eligible customers that have installed a
microgeneration facility or a renewable facility after 90 days
from the effective date of this bill. Facilities are eligible
if:
1)Operated in parallel with the electrical corporation's
transmission and distribution systems;
2)Fully compliant with the best available control technology;
or,
3)It is a renewable facility of less than one megawatt (MW) that
does not meet the definition of conventional power source, as
defined in Public Utilities Code Section 2805.
EXISTING LAW :
1)Requires that standby charges apply for all customers that
also generate electricity and provide electricity supply for
sale into the grid.
2)Defines a standby charge as that for providing standby
generation, transmission and distribution facilities to a
private energy producer employing other than a conventional
power source for the generation of electricity.
FISCAL EFFECT : Unknown
COMMENTS : This bill seeks to restructure standby charges for
microgeneration and small renewable energy generating customers
of electrical corporations for which the cumulative load may not
exceed one MW total, and which are located within the service
territory of the electrical corporation. The restructuring is
sought to realign the charges so those with more costs pay a
higher standby charge than those microgenerators who do not
impose significant costs. The realignment is sought in
recognition of the potential that these small generating
facilities have for enhancing reliability, power quality and
providing other demonstrable benefits to the electrical
AB 26 X2
Page 2
transmission and distribution systems.
AB 83 X1 (Keeley), sought to expand the statutory definition of
a customer-generator to include more customers groups and to
include those with generating facilities above the current 10
kilowatt capacity to up to one MW of generation. This bill
sought to realign the standby charges provided in current
tariffs of electrical corporations for these customers.
Rate Structure/Revenue Impacts. This bill seeks to encourage
larger scale microgeneration and renewable generation from
traditional standby customers of electrical corporations. The
standby charges provide revenue under the current rate
structure, and if existing standby customers within the
definition of this bill and new standby customers brought in by
the broader generation capacity allowed for in this bill
experience rate reductions for standby charges, there will be a
revenue shortfall.
The detriment posed by such a shift in the rate structure needs
to be measured against the demonstrable benefit of adding more
microgeneration customers into the mix of generation supply.
The author has not quantified how much additional generation
will be achieved through removal of standby charges for
renewable and other microgeneration facilities with capacity of
up to one MW. Similarly, the author has not identified how many
existing customer generators will now face significantly lower
standby charges and how much of a revenue shift this bill will
cause.
It is beneficial to all customers if additional generation
supply is provided and if some demand on the existing grid is
reduced by converting some customers into microgenerator
customers. In the long run receiving the potential of hundreds
or even thousands of additional MWs of capacity consistently
will both assist in meeting system demand and in normalizing
wholesale prices. In the short term, existing customers should
not be penalized through cost shifting within the existing rate
structure, by paying higher rates to balance for lost revenue
from standby charge reductions and due to constrained
electricity supply.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916)
319-2083
AB 26 X2
Page 3
FN: 0000897