BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 58| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ CONFERENCE COMPLETED Bill No: AB 58 Author: Keeley (D), et al Amended: Conference Report #1, 8/27/02 Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 8-0, 6/25/02 AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher, Vasconcellos SENATE FLOOR : 34-2, 8/14/02 AYES: Ackerman, Alarcon, Alpert, Battin, Brulte, Burton, Chesbro, Costa, Dunn, Escutia, Figueroa, Haynes, Johannessen, Karnette, Knight, Kuehl, Machado, Margett, McPherson, Monteith, Murray, O'Connell, Oller, Ortiz, Perata, Polanco, Poochigian, Romero, Scott, Sher, Soto, Speier, Torlakson, Vasconcellos NOES: Bowen, McClintock 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 CONTINUED AB 58 Page 2 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. 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: 1. Allows net metering for customers of investor-owned utilities using solar energy systems of up to 1000 kw. 2. Allows net metering for customers of investor-owned utilities using wind energy systems of up to 50 kw. 3. Net metering customers must reimburse the State Department of Water Resources for charges that would otherwise be imposed on the customer to recover bond-related charges as well as long-term contract costs, as determined by the commission. 4. Allows co-metering for customers of investor-owned utilities using wind energy systems of between 50 kw and 1000 kw. Co-metering credits customers for the electricity they generate at time-of-use rates and at the generation rate the utility charges its customers. 5. Net metering and co-metering customers must pay public goods charges. 6. Limits total net metering in the service area of investor-owned utilities to one-half of one percent of peak load. 7. Allow municipal utilities to permit net metering or co-metering, and exempts the Los Angeles Department of AB 58 Page 3 Water and Power from any net metering or co-metering requirements. 8. Prohibits cost shifting resulting from net metering between customer classes. 9. Allows the Energy Commission to establish a separate, higher solar energy system rebate level for solar energy systems installed on affordable housing projects. 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 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 AB 58 Page 4 capacity in California is only about 0.02 percent of utility peak load. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/6/02 - Unable to reverify at time of writing) Abel Greenhouse Company Brummitt Energy Associates Inc. CAL-AIR, Inc. California Construction Authority California Solar Energy Industries Association City of Arcata 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, AB 58 Page 5 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 8/29/02 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****