BILL ANALYSIS AB 2228 Page A Date of Hearing: April 15, 2002 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Roderick D. Wright, Chair AB 2228 (Negrete McLeod) - As Amended: April 11, 2002 SUBJECT : Public utilities: net energy metering. SUMMARY : Establishes a pilot program for users of agricultural biogas digesters to participate in utility net energy metering programs. Specifically, this bill : 1)Defines an eligible customer-generator as a customer of an electric service provider (ESP) who uses a biogas electrical generating facility, with a system capacity of one megawatt (MW) or less, located on the customer's premises, is interconnected and operates in parallel with the electric grid, and is intended primarily to offset part or all of the customer's own electrical requirements. 2)Requires eligible participants in the pilot program to have received all or part of the funding for the biogas generation system from state or federal government sources for the new biogas digester equipment. 3)Requires program participants to abide by the terms and conditions contained within the applicable net energy metering contract or tariff. 4)Relieves ESP from providing net metering services in the pilot program once the combined total biogas generation provided by the eligible biogas customer-generators in the ESP's service territory equals 10 megawatts. EXISTING LAW: 1)Requires every ESP to develop a standard contract or tariff providing for net energy metering, to be available to eligible customer-generators. 2)Defines "net energy metering" as measuring the difference between electricity supplied through the electric grid, and electricity generated by an eligible customer-generator, and fed back to the electric grid over a 12-month period. AB 2228 Page B 3)Defines "eligible customer-generator" as a customer of an ESP who uses a solar or a wind turbine electrical generating facility, or a hybrid system of both, with a system capacity of one MW or less,<1> located on the customer's premises, is interconnected and operates in parallel with the electric grid, and is intended primarily to offset part or all of the customer's own electrical requirements. 4)Appropriates $15 million in grants to be used for pilot projects designed to encourage the development of biogas digestion power production technologies. 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 metering" because the net electricity generated by a customer is credited against electricity consumed. In 1998, AB 1755 (Keeley), [Chapter 855, Statutes of 1998], clarified the definition of net energy metering and expanded the eligibility for net energy metering. More recently, AB 918 (Keeley), [Chapter 1043, Statutes of 2000], and AB 29X1 (Kehoe), [Chapter 8, Statutes of 2001], modified the net metering program, adding temporary provisions to expand eligible customer classes to include all commercial, industrial and agricultural customers, and increased the allowable facility size to 1 MW. Project size Under the existing net metering program, larger projects (up to 1 MW) are net metering-eligible through the end of this year, at which time the maximum size of a project eligible for net metering is 10 kilowatts. This measure allows agricultural biogas digester-generator projects up to 1 MW in size, raising subsidy issues. Burdens vs. benefits --------------------------- <1> After January 1, 2003, only customers with system capacity of 10 kilowatts or less are eligible for net metering. AB 2228 Page C At last week's hearing, several Members of the Committee discussed views about what appropriate Legislative and public policy should be concerning distributed generation, net metering and other special energy programs and incentives that are subsidized to a greater or lesser degree by other non-participating ratepayers. In general, Members suggested that the beneficiaries of these incentives and subsidies should themselves provide benefits to the ratepayers or the state in return for those enjoyed -- or at least do no economic harm to the remaining customers on the grid. Examples might be, providing power to the grid during peak demand times of the day, agreeing to power interruption during times when energy reserves are deficient. Last year the Legislature enacted SB X1 5<2> (Sher), which among other things appropriated $15 million in grants for pilot projects that encourage biogas digestion power production technologies. Sponsors of this measure have indicated willingness to advance the policies articulated in SB X1 5, which requires distribution of grant funds to projects offering "immediate benefits in peak energy demand reduction and more efficient use of energy," even though all grants funds under that bill may have already been encumbered. The sponsors are considering things such as, further limits to the project-specific load, as well as service territory-wide megawatt limits, and living under a "time of use" tariff pricing and billing contract. REGISTERED SUPPORT / OPPOSITION : Support Inland Empire Utilities Agency Opposition California Solar Energy Industries Association Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083 --------------------------- <2> Chap. 7, Stats. 2001 AB 2228 Page D