BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 58
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 58 (Keeley)
          As Amended August 6, 2002
          Majority vote
           
           ----------------------------------------------------------------- 
          |ASSEMBLY:  |69-0 |(January 22,    |SENATE: |34-2 |(August 14,    |
          |           |     |2002)           |        |     |2002)          |
           ----------------------------------------------------------------- 
            
           Original Committee Reference:   U & C.  

           SUMMARY  :  Changes existing rules applicable to net electricity  
          metering.

           The Senate amendments  :

          1)Eliminate a sunset on authorization for net metering in  
            existing law, thereby allowing net metering for systems up to  
            one (1) megawatt (MW) to continue indefinitely.

          2)Raise the cap on the total amount of net-metered capacity from  
            one-tenth of one percent of the peak electrical demand for  
            each utility to one percent of the peak electric demand for  
            each energy service provider.

          3)Require eligible net metered customers with a capacity of  
            greater than 10 kilowatts (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.

          4)Credit the electricity produced by the net-metered customer at  
            the value for electric generation at that time of use.

          5)Provide that net-metered customers must pay the non-generation  
            related charges of the utility based on the net kilowatt-hours  
            consumed.

          6)Require the California 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.

           EXISTING LAW  : 









                                                                  AB 58
                                                                  Page  2

          1)Requires all energy service providers, which include  
            investor-owned electric utilities, municipal utilities, and  
            the like, to credit all electricity generated by a  
            customer-owned solar or wind system against the customer's  
            usage of electricity sold by the utility, which is known as  
            "net metering."

          2)Allows net metering customers to employ solar or wind electric  
            generation systems as large as (1) MW.  Effective January 1,  
            2003, the size limitation is reduced to 10 kW.  

          3)Limits, effective January 1, 2003, the overall amount of net  
            metered capacity to one-tenth of one percent of the peak  
            electrical demand for each utility.

           


          AS PASSED BY THE ASSEMBLY  , this bill:

          1)Required electric service providers to process a net metering  
            application in the same time frame within which requests for  
            new electric service from similarly situated customers are  
            handled, but not to exceed one month in any event.

          2)Directed electric service providers that are unable to process  
            the request within the specified time frame to notify  
            customers-generators and PUC of the reason therefor, and the  
            date on which the request will be completed.  

          3)Required electric service providers to make all necessary  
            forms and contracts for net energy metering available for  
            download from the Internet. 

          4)Specified that customer generation of electricity, entitled  
            under current law to net metering terms in effect on the date  
            of installation, to be so entitled regardless of a change in  
            customer or ownership of the energy system.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  In 1995, the Legislature passed SB 656 (Alquist),  
          Chapter 369, Statutes of 1995, requiring electric utilities to  
          buy back any electricity generated by a customer-owned solar  
          electric system.  This buy-back program is known as "net  








                                                                  AB 58
                                                                  Page  3

          metering" because the net electricity generated by a customer is  
          credited against electricity consumed.

          At the outset, net metering was allowed for systems up to 10 kW  
          capacity, making it suitable for residential applications.   
          Typically, a residential net-metered system is from (2) to (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 X1 29 (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 by lifting the cap on total net metered capacity.  These  
          provisions sunset January 2003, but are continued indefinitely  
          by this bill. 

          There are an estimated 2,200 net-metered customers today, with  
          applications pending for an additional 700 customers.  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 about 0.02% of utility peak load.
           

          Analysis Prepared by  :    Paul Donahue / U. & C. / (916) 319-2083  


                                                              FN: 0006462