BILL ANALYSIS
AB 2307
Page 1
Date of Hearing: May 8, 2002
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Darrell Steinberg, Chair
AB 2307 (Kehoe) - As Amended: April 23, 2002
Policy Committee: Utilities and
Commerce Vote: 13-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Extends by two years (until June 2005) the existing deadline
by which distributed energy resources must commence operation
in order to qualify for a waiver of electrical corporation
standby fees through June 1, 2011.
2)Requires that, if the Public Utilities Commission (PUC)
determines there are net costs that would otherwise be borne
by ratepayers due to the waiver of standby charges, those
costs will instead be borne by operators who install
distributed generation pursuant to (1).
FISCAL EFFECT
Minor absorbable special fund costs to the PUC to determine
whether there are net costs that should be borne by distributed
generators.
COMMENTS
1)Background . As part of 2001-02 First Extraordinary Session,
the Legislature passed SB X1 28 (Sher), which established the
standby fee waiver provisions until June 2011 for non-diesel
fuel "distributed generation" (DG) that commences operation
between May 2001 and June 2003 and has a capacity of 5
megawatts or less. DG can be used as backup power, to meet
base or peak load needs, or to sell to adjacent sites in an
"over-the-fence" transaction. Customers who operate a DG unit
connected to the utility's distribution system normally
AB 2307
Page 2
supplement on-site generation with power purchased from the
public utility. Grid-connected DG customers pay a standby
charge to the utility, based on the installed capacity of the
DG unit, to reserve the capacity needed to serve that
customer.
In July 2001, the PUC adopted interim standby rate design
policies for onsite generation facilities that are
interconnected to, and operate in parallel with, the
distribution system. Pursuant to SB X1 28, the commission is
requiring the electrical corporations to establish new tariffs
for DG customers by January 2003.
2)Purpose . According to the author, the 2003 deadline to install
DG equipment and thereby take advantage of the standby fee
waiver is too soon for businesses to make significant
investments in DG systems, particularly in light of the fact
that the DG industry is relatively new. This bill would
provide an additional two years for entities to install DG and
still receive the standby fee waiver. In order to address
concerns regarding cost-shifting among ratepayers due to the
fee waiver, the bill was amended in the policy committee to
require any costs that would otherwise be shifted, as
determined by the PUC, to instead be borne by the new DG
customers.
3)Opposition . Both Pacific Gas and Electric and Southern
California Edison are opposed to the bill. Opponents indicate
that the recent amendment directing the PUC to ensure that
costs are borne by those who install new DG does not remove
their opposition to this bill. Opponents believe that the
PUC's current rulemaking hearing already covers cost
determinations for DG, and therefore believe that this bill
adds nothing to that process.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081