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  



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          <2> Chap. 7, Stats. 2001








                                                                  AB 2228
                                                                  Page D