BILL ANALYSIS                                                                                                                                                                                                    




                                                                  AB 58
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          PROPOSED CONFERENCE REPORT NO.  1   -  August 27, 2002
          AB 58 (Keeley)
          As Amended August 6, 2002
          Majority vote

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          |ASSEMBLY:  |     |(January 22,   |SENATE: |      |(August 14,     |
          |           |     |2002)          |        |      |2002)           |
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                    (vote not relevant)                     (vote not  
               relevant)

           ASSEMBLY CONFERENCE VOTE  :   3-0     SENATE CONFERENCE VOTE  :3-0  
           
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          |Ayes:|Keeley, Pescetti, Wright   |Ayes:|Morrow, Bowen, Alarcon   |
          |     |                           |     |                         |
          |     |                           |     |                         |
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          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.











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            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
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           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
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            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
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          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  

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