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 ****