BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                    AB 58|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 445-6614         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  AB 58
          Author:   Keeley (D), et al
          Amended:  8/6/02 in Senate
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  8-0, 6/25/02
          AYES:  Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher,  
            Vasconcellos

           ASSEMBLY FLOOR  :  69-0, 1/22/02 - See last page for vote


           SUBJECT  :    Net energy metering

           SOURCE  :     Author


           DIGEST  :    This bill makes a number of substantive changes  
          to existing net metering rules.

           ANALYSIS  :    Current law requires all energy service  
          providers, which include investor-owned electric utilities  
          (IOUs), municipal utilities, or any other entity offering  
          retail electric service, to credit all electricity  
          generated by a customer-owned solar or wind system against  
          the customer's usage of electricity sold by the utility, a  
          procedure known as "net metering".

          Current law allows net metering customers to employ solar  
          or wind electric generation systems as large as 1 megawatt  
          (Mw).  This size limitation is reduced to 10 kilowatts (kw)  
          as of January 1, 2003.

                                                           CONTINUED





                                                                 AB 58
                                                                Page  
          2

          This bill deletes that sunset, allowing net metering for  
          systems up to 1 Mw to continue indefinitely.
           
           Current law doesn't limit the overall amount of net metered  
          capacity in any energy service provider's service area.  As  
          of January 1, 2003, the overall amount of net metered  
          capacity is limited to one-tenth of one percent of the peak  
          electrical demand for each utility.

          This bill raises the total cap on net metered capacity  
          tenfold, to one percent of the peak electric demand for  
          each energy service provider.
           
           This bill requires eligible net metered customers with a  
          capacity of greater than 10 kw but less than 1 Mw to use  
          time-of-use meters to measure electricity consumed and  
          generated, and to value the electricity appropriate to the  
          time of use.  The electricity produced by the net metered  
          customer is credited at the value for electric generation  
          at that time of use.

          This bill requires that net metered customers are  
          responsible for non-generation charges based on the net  
          kilowatt hours (kwh) consumed.
           
           This bill requires energy service providers to make all  
          necessary forms and contracts for net metered service  
          available on the Internet.

          This bill requires the State Public Utilities Commission  
          (PUC) to assess the economic and environmental costs and  
          benefits of net metering and report to the Legislature by  
          January 1, 2007.

           Background  

          In 1995, the Legislature passed SB 656 (Alquist), Chapter  
          369, Statutes of 1995, which required all electric  
          utilities to buy back any electricity generated by a  
          customer-owned solar and wind systems system.  This  
          buy-back program is known as "net metering" because the  
          electricity purchases of the customer are netted against  
          the electricity generated by the customer's solar electric  
          system.  The generated electricity spins the meter  







                                                                 AB 58
                                                                Page  
          3

          backward, making it equivalent to the customer using less  
          electricity. Thirty-five states have net metering programs  
          today with the maximum size of the net metered system  
          limited to 100 kw.

          Net metering was initially permitted for systems up to 10  
          kw making it suitable for residential-sized applications.  
          (A typical residential net-metered system is 2 kw - 4 kw).   
          The total amount of capacity that could be net metered was  
          capped at 0.1 percent of the utility load.  In 2001, the  
          Legislature passed AB 29X (Kehoe), Chapter 8, Statutes of  
          the First Extraordinary Session of 2001, which expanded the  
          net metering program to large commercial and industrial  
          customers by raising the maximum size of the net-metered  
          system to 1 Mw and lifting the cap on total net metered  
          capacity.  Because of concerns over the effect of these  
          changes, the provisions of AB 29X relating to net metering  
          were sunsetted on January 1, 2003.  

          There are about 2,200 net-metered customers today, with  
          pending applications for an additional 700.  Total  
          net-metered capacity is about 6 Mw, with an additional 3 Mw  
          pending.  Including the pending projects, total net-metered  
          capacity in California is only about 0.02 percent of  
          utility peak load.

          This bill makes a number of substantive changes to existing  
          net metering rules.  Conceptually, the bill changes the  
          concept of net metering from one where the net metered  
          customer is treated the same as a non-net metered customer  
          to one where the net metered customer is considered a  
          generator whose output is paid for at the utility's cost. 

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

           SUPPORT  :   (Verified  8/6/02)

          Abel Greenhouse Company
          Brummitt Energy Associates Inc.
          CAL-AIR, Inc.
          California Construction Authority
          California Solar Energy Industries Association
          City of Arcata







                                                                 AB 58
                                                                Page  
          4

          City of Santa Rosa
          Clean Power Campaign
          Coalition of California Utility Employees
          Dale Enterprises
          Enertron Consultants
          Harmony Farm Supply & Nursery
          International Brotherhood of Electrical
            Workers, Local 332
          Marin County Community Development
            Agency
          National Solar Power
          Offline Independent Energy Systems
          Office of Ratepayer Advocates
          PFG Energy Capital
          Powerlight Solar Electric Systems
          Real Goods Design & Consulting Group
          Schott Applied Power
          Shell Solar Industries
          Short Electric
          Sierra Club
          Solar Depot
          Solar Technologies
          UNI-SOLAR
          Verve Enterprises
          15 Individuals


           ASSEMBLY FLOOR  
          AYES: Aanestad, Alquist, Aroner, Ashburn, Bogh, Briggs,  
            Calderon, Bill Campbell, Canciamilla, Cardenas, Cardoza,  
            Cedillo, Chan, Chavez, Chu, Cogdill, Corbett, Correa,  
            Cox, Daucher, Diaz, Dickerson, Dutra, Firebaugh, Florez,  
            Frommer, Goldberg, Havice, Hollingsworth, Jackson,  
            Keeley, Kehoe, Kelley, Koretz, La Suer, Leach, Leonard,  
            Liu, Longville, Lowenthal, Maddox, Maldonado, Matthews,  
            Migden, Nakano, Negrete McLeod, Oropeza, Robert Pacheco,  
            Rod Pacheco, Pavley, Pescetti, Reyes, Runner, Salinas,  
            Shelley, Simitian, Steinberg, Strickland, Strom-Martin,  
            Thomson, Vargas, Washington, Wayne, Wiggins, Wright,  
            Wyland, Wyman, Zettel, Hertzberg

          NC:kb  8/7/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE







                                                                 AB 58
                                                                Page  
          5


                                ****  END  ****