BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                                 THIRD READING


          Bill No:  AB 26XX
          Author:   Calderon (D)
          Amended:  8/28/01 in Senate
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  9-0, 8/29/01
          AYES:  Bowen, Morrow, Alarcon, Battin, Dunn, Murray,  
            Poochigian, Sher, Vincent

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT :    Electrical energy:  electrical corporations:   
          tariffs

           SOURCE  :     Author


           DIGEST  :    This bill requires the California Public  
          Utilities Commission, when establishing new tariffs for  
          customers using distributed energy resources, to consider  
          specified factors so that customers with more efficient  
          units pay a lower cost.

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

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          This bill requires the PUC, 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 a 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 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 is 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  







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          similar principle to the cost-based tariffs that will be in  
          effect after the waivers established by SB 28X expire.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/29/01)

          Pacific Gas and Electric Company


          NC:cm  9/7/01   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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