BILL ANALYSIS                                                                                                                                                                                                                   1
               1





             SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                            DEBRA BOWEN, CHAIRWOMAN
          

          AB 26XX - Calderon                                      
          Hearing Date:  August 29, 2001       A
          As Amended:  August 28, 2001       FISCAL           B
                                                                       
            X
                                                                       
            2

                                                                       
            2
                                                                       
            6

                                   DESCRIPTION
           
           Existing law  provides five- and ten-year waivers of  
          "standby charges" for specified distributed generation (DG)  
          installations and requires the California Public Utilities  
          Commission (CPUC) to require investor-owned utilities to  
          establish new, cost-based tariffs applicable to customers  
          using DG.

           This bill  requires the CPUC, in establishing these new  
          tariffs, to consider coincident peak load and the  
          reliability of a customer's DG, so that customers with more  
          reliable DG and those that reduce peak demand pay lower  
          rates.

                                    BACKGROUND
           
          DG is typically considered to be a site-specific generation  
          resource which is owned by the customer and used to meet  
          some or all of that customer's energy needs, including  
          electricity and, in many applications, heating.

          Examples of DG units range from a residential rooftop solar  
          array to an collection of large combustion turbines at a  
          commercial office building or industrial facility.  DG can  
          be used for reliability back-up (standby or emergency  
          generation), to meet base load requirements, to meet  











               peaking requirements, or to meet all on-site requirements,  
               and sell power to adjacent sites ("over the fence"  
               transactions).

               For a customer that owns a DG unit that is connected to the  
               utility distribution system, on-site generation is  
               complemented by power purchased through, and delivered by,  
               the utility.  Depending on the reliability, capacity and  
               purpose of the DG unit, the customer may, at various times,  
               buy some or all of its power from the utility, or "sell"  
               power back to the utility through a net-metering  
               arrangement.

               SB 28X (Sher), Chapter 12, Statutes of 2001, included  
               provisions establishing five- and ten-year waivers of  
               "standby charges" for specified DG installations and  
               requiring investor-owned utilities to establish new,  
               cost-based tariffs applicable to customers using DG.




































                                     COMMENTS

          More of the same.   SB 28X was constructed to reward the  
          most efficient, reliable, peak demand-reducing DG  
          installations by offering a longer waiver for more  
          efficient units and requiring customers to pay real-time  
          rates to qualify for the waiver.  This bill applies a  
          similar principle to the cost-based tariffs that will be in  
          effect after the waivers established by SB 28X expire.  

                                 ASSEMBLY VOTES
           

          Assembly Floor                               (78-0)

                                    POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
          Pacific Gas and Electric Company

           Oppose:
           
          None on file
          



























               Lawrence Lingbloom 
               AB 26XX Analysis
               Hearing Date:  August 29, 2001