BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                    AB 58|
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                              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





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          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  







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              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  







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          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,  







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            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

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