BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 26XX| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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. CONTINUED AB 26XX Page 2 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 AB 26XX Page 3 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 **** END ****