BILL ANALYSIS AB 58 Page A PROPOSED CONFERENCE REPORT NO. 1 - August 27, 2002 AB 58 (Keeley) As Amended August 6, 2002 Majority vote ------------------------------------------------------------------ |ASSEMBLY: | |(January 22, |SENATE: | |(August 14, | | | |2002) | | |2002) | ------------------------------------------------------------------ (vote not relevant) (vote not relevant) ASSEMBLY CONFERENCE VOTE : 3-0 SENATE CONFERENCE VOTE :3-0 ----------------------------------------------------------------- |Ayes:|Keeley, Pescetti, Wright |Ayes:|Morrow, Bowen, Alarcon | | | | | | | | | | | ----------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY : Changes existing rules applicable to net electricity metering. Specifically, the conference committee amendments : 1)Eliminate a sunset on net-metering authorization in existing law, thereby allowing net metering for systems up to one (1) megawatt (MW) to continue indefinitely. 2)Require the California Energy Commission (CEC), in administering the public goods charge (PGC)<1> funds, to establish a separate rebate for eligible emerging renewable technologies for affordable housing projects, allowing CEC to set reasonable limits on the total amount of funds so dedicated. 3)Establish "co-metering" as an option for local publicly owned electric utilities, whereby the utility can elect to apply a --------------------------- <1> Existing law requires public utilities to collect a separate rate charge to fund cost-effective energy efficiency, public interest renewable energy research, and related "public goods" programs. AB 58 Page B generation-to-generation<2> energy and time-of-use<3> credit formula. 4)Raise the cap on the total amount of net-metered capacity from one-tenth of 1% (0.1%) of the peak electrical demand for each utility to one half of 1% (0.5%) of the peak electric demand for each energy service provider. 5)Provide that if the California Public Utilities Commission (PUC) determines that there are cost or revenue obligations for an electric corporation that may not be recovered from customer-generators, those obligations shall not be shifted to any other customer class. 6)Provide that net-metering and co-metering customers shall not be exempt from PGC. 7)Provide that net-metering customers shall reimburse bond related and power purchase costs of the Department of Water Resources that are attributable to net-metering customers. 8)Exempt from the net-metering program any local publicly owned electric utility that serves greater than 750,000 customers and that also conveys water to its customers -- i.e., the City of Los Angeles Department of Water & Power. 9)Grandfather existing net-metering projects and those for which local and state permits have been acquired by entitling those projects to the net metering benefits in place at the time. 10)Apply co-metering to wind energy projects greater than 50 kilowatts. 11)Require PUC to assess the economic and environmental costs and benefits of net metering and report to the Governor and the Legislature by January 1, 2007. --------------------------- <2> Under this billing system, all the electricity going in gets billed at full retail, which includes transmission costs, etc, that the utility must account for, while the electricity going out to the utility is billed at a rate covering only the cost of generation of the electricity. <3> A typical time-of-use customer would pay a higher electrical rate during peak-use hours, and in return would be charged a lower rate at night, in the morning, and on weekends. AB 58 Page C EXISTING LAW : 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. The Senate amendments : 1)Eliminate a sunset on authorization for net metering in AB 58 Page D 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 PUC to assess the economic and environmental costs and benefits of net metering and report to the Legislature by January 1, 2007. 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 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. In 2001, the Legislature passed AB X1 29 (Kehoe), Chapter 8, Statutes of 2001, the First Extraordinary Session, 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. AB 58 Page E Photovoltaic (PV) solar system cells are generally made from thin wafers of silicon, the second most abundant substance on earth, the same substance that makes up sand. To make the wafers, the silicon is heated to extreme temperatures, and chemicals, usually boron and phosphorous, are added. The addition of these chemicals makes the silicon atoms unstable (the electrons less tightly held). When photons of sunlight hit a solar panel, some are absorbed into the solar cells, where their energy releases some of the modified silicon's electrons. Introducing batteries to a PV system allows electricity to be stored when the sun is shining. This electricity can then be used to provide power after the sun goes down. Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083 FN: 0007615