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