BILL ANALYSIS
AB 2307
Page A
ASSEMBLY THIRD READING
AB 2307 (Kehoe)
As Amended April 23, 2002
Majority vote
UTILITIES AND COMMERCE 13-2 APPROPRIATIONS 22-0
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|Ayes:|Pescetti, Calderon, Bill |Ayes:|Steinberg, Bates, |
| |Campbell, John Campbell, | |Alquist, Aroner, Cohn, |
| |Canciamilla, Cardenas, | |Corbett, Correa, Daucher, |
| |Diaz, Kelley, La Suer, | |Diaz, Firebaugh, |
| |Maddox, Papan, Reyes, | |Goldberg, Maldonado, |
| |Simitian | |Negrete McLeod, Robert |
| | | |Pacheco, Papan, Pavley, |
| | | |Runner, Simitian, |
| | | |Washington, Wiggins, |
| | | |Wright, Zettel |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wright, Horton | | |
| | | | |
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SUMMARY : Extends by two years the deadline by which distributed
energy resources (DER) must commence operation in order to
qualify for the waiver of electrical corporation standby fees,
which is in effect until June 1, 2011.
EXISTING LAW :
1)Defines DER for purposes of standby fee waivers as electric
generation technology that:
a) Commences initial operation between May 1, 2001 and June
1, 2003;<1>
b) Is located within a single facility;
c) Has a capacity of five megawatts or less;
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<1> Except that gas-fired distributed energy resources that are
not operated in a combined heat and power application must begin
operation no later than September 1, 2002.
AB 2307
Page B
AB 2307
Page C
d) Serves onsite loads or over-the-fence<2> transactions;
e) Is powered by a fuel other than diesel; and,
f) Complies with applicable air emission standards of the
State Air Resources Board.
2)Provides that all standby charges imposed by electrical
corporations, on customers who have installed distributed
generation equipment that is in operation by June 1, 2003,
shall be waived until June 1, 2011, except that gas-fired
units enjoy the waiver only until June 2006.
3)Specifies that if the California Public Utilities Commission
(PUC) determines that this bill results in net costs that
would otherwise be borne by ratepayers, those net costs shall
be borne by the operators of DER that commence initial
operation between June 1, 2003, and May 31, 2005.
4)Specifies that each customer with DER to participate in a
real-time metering and pricing<3> program when available.
5)Requires each electrical corporation to consider non-utility
owned DER as a possible alternative to investments in its
distribution system.
FISCAL EFFECT : Minor absorbable special fund costs to PUC to
determine whether there are net costs that should be borne by
distributed generators.
COMMENTS : Last year, the Legislature passed SB 28 X1 (Sher),
Chapter 12, Statutes of 2001, which established the standby fee
waiver provisions for DER, which is also known as "distributed
generation" (DG). Power generated onsite by DG is normally used
to meet some of the energy needs of a utility customer. 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.
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<2> Examples of over-the-fence transactions include, electric
power sold to entities located on land immediately adjacent to
the generation site, and sales to an electric company or to a
state or local agency.
<3> Under real time metering and pricing, rates for energy
purchased reflect the actual cost to the electrical corporation
of energy it buys at the time it is consumed by the customer.
AB 2307
Page D
Customers who operate a DG unit that is connected to the
utility's distribution system normally supplement on-site
generation with power purchased from the public utility.
Grid-connected DG customers pay a standby charge to the utility
to reserve the capacity need to serve that customer. The
standby charges are based on the installed capacity of DG unit.
Last year's legislation suspended standby fees until June 2011
for DG units with a capacity of five megawatts or less.
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 DG industry is
relatively new.
The California Energy Commission is actively promoting the
development of standardized interconnection rules on a statewide
basis, providing outreach services to publicly owned utilities,
irrigation districts, and electric cooperatives to accommodate
further development of DG.
In July 2001, PUC adopted interim standby rate design policies
for onsite generation facilities that are interconnected to and
operate in parallel with the distribution system.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083
FN: 0004721