BILL ANALYSIS
AB 594
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Date of Hearing: August 18, 2004
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 594 (Leno) - As Amended: July 21, 2004
SUBJECT : Private energy producers: Hetch Hetchy Water and
Power solar generation.
SUMMARY : Establishes a net metering program between the City
and County of San Francisco through Hetch Hetchy Water and Power
photovoltaic generation facilities and Pacific Gas and Electric
(PG&E). Specifically, this bill :
1)Requires the development of a net metering program between
PG&E and the Hetch Hetchy Water and Power photovoltaic
generation facilities owned by the City and County of San
Francisco.
2)Requires the total amount of electricity eligible for
participation in the net metering program to five megawatts of
peak generation capacity and requires that no single
photovoltaic generation project exceed one megawatt of peak
generation capacity.
3)Requires that the photovoltaic project use a single or
multiple time of use (TOU) meters that measure electricity
flow in both directions. If the project needs to retrofitted
with these meters or doesn't have the capability of separately
measuring total flow of energy in both directions then the
City and County of San Francisco is responsible for purchasing
and installing it.
4)Specifies that the amount of electricity delivered to the
electric grid under this agreement is the property of PG&E.
This bill prohibits the City and County of San Francisco from
selling electricity from the projects under this agreement to
third parties.
5)Specifies that ownership and use of the environmental
attributes associated with the electricity under this
agreement is to be determined by the California Public
Utilities Commission (PUC) in accordance with the California
Renewable Portfolio Standard (RPS) (SB 1078 (Sher), [Chapter
516, Statutes of 2002]).
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6)Specifies that PG&E is responsible for identifying TOU tariff
for each site of a photovoltaic project under this agreement
and that electricity exported will be monetary credit to be
applied monthly as a credit or offset against the monthly
bill. PUC is allowed to increase the credit to reflect any
additional value derived from the location or environmental
attributes of the designated project.
7)Specifies that monthly charges and credit amounts are subject
to accounting true ups and are to be performed annually.
Under the agreement the City and County of San Francisco can
only use the credit or offset to reduce the obligation for the
invoice amount owed to PG&E and if there is no invoiced
obligation then there is no credit or offset.
8)Specifies that the net metering agreements become inoperative
if the City and County of San Francisco engages in retail
sales of electricity to customers in PG&E territory as a
result of community choice aggregation or municipalization.
EXISTING LAW :
1)Specifies limited term co metering programs for biogas
disgester customer generators
(AB 2228 (Negrete McLeod), [Chapter 845, Statutes of 2002]),
eligible fuel cell customer generators (AB 1214 (Firebaugh),
[Chapter 661, Statutes of 2003]) and a biomass generator in
Dinuba, California (SB 1038 (Sher), [Chapter 515, Statutes of
2002]).
2)Specifies co metering programs for eligible customer generator
utilizing wind energy
(AB 58 (Keeley), [Chapter 836, Statutes of 2002]) and
photovoltaic electricity generation facility in Davis,
California (SB 1038).
3)Defines a customer generator eligible to participate in net
metering to be no more than
1 megawatt that is located on the customer's owned, leased, or
rented premises and who's electricity produced is primarily to
offset part or all of the customer's own electrical needs. A
customer generator can be residential, small commercial below
20 kilowatts, commercial, industrial, or agricultural customer
of an electric service provider who uses solar or a wind
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turbine electrical generating facility, or a hybrid system of
both.
4)Requires most electrical corporations and local publicly owned
electric utilities excluding those that serve more than
750,000 customers and convey water to its customers to develop
a standard contract or tariff for net metering. The contract
shall be made available on a first come first serve basis up
to the point where the total rated generating capacity used by
eligible customer generators exceeds one half of 1 percent of
the electric service providers aggregate customer peak demand.
5)Defines co metering requirements between eligible customer
generators and local publicly owned electric utilities with a
capacity of more than 10 kilowatts but no more than 1
megawatt.
FISCAL EFFECT : Minor absorbable costs.
COMMENTS :
The Senate Amendments completely change the subject matter of
this bill as it left the Assembly. Previously this bill dealt
with California Environmental Quality Act exemptions for
projects that consist of re-striping an existing paved right of
way for bicycle lanes. The Senate amendments changed this bill
to allow for a co metering agreement between Hetch Hetchy Water
and Power photovoltaic electricity generation facilities owned
and designated by the City and County of San Francisco.
History of Net Metering: Net metering was established by SB 656
(Alquist), [Chapter 369, Statutes of 1995], to mainly help
residential customers who installed solar panels on their homes.
The purpose of net metering allowed for homeowners to capture
the electricity cost savings by installing solar panels through
receiving a credit or offset on their monthly bills as a result
of putting electricity back on the grid from the power generated
from their solar panels.
The Electricity Resource Plan (ERP) for the City and County of
San Francisco (CCSF) proposes increasing renewable generation to
50 MW by 2015. Currently the Moscone Convention Center has been
retrofitted with solar panels that produce 688 kW of electricity
and a second site is proposed that will be 600 kW at a
wastewater treatment plant.
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Currently Hetch Hetchy Water and Power supplies most of the
electricity to CCSF but is unable to participate in either co
metering or net metering programs established by SB 656 or ABX
29 (Kehoe) [Chapter 8, Statutes of 2001] and extended by AB 58.
This proposal between PG&E and CCSF would allow electricity to
be placed back on the grid during non-high use times. Under
this proposal PG&E would require that CCSF utilize meters that
will separately record the total flow of electricity in both
directions so that PG&E will be able to continue to charge
transmission and distribution, and public goods charges unlike
in a typical net metering arrangement.
The net metering proposal between Hetch Hetchy Water and Power
photovoltaic generation facilities and PG&E would be capped at
five megawatts of peak generation total and each single
photovoltaic generation project would be capped at one megawatt
of peak generation capacity. The benefits for PG&E as a result
of this net metering agreement come from the lower costs of
purchasing this electricity under TOU tariffs versus retail
rates and having the electricity purchased meet its RPS
requirements under state law.
Broader concerns regarding net metering and co metering statutes
in PU code. Since the passage of AB 656 in 1995 the Legislature
has tried to streamline net metering and co metering programs
with the passage of ABX 29 but have been unsuccessful in making
the statutes governing this area of electrical policy coherent.
While AB 656 was mainly designed to provide an incentive
mechanism for residential homeowners to buy and install
photovoltaic customer generation the current program has grown
to include larger and larger types of customer generation
facilities that seems to resemble a business subsidy program.
As noted in the existing law portion of the analysis there are
at least 5 specific programs that have been placed in statute
that establish co metering with investor owned utilities - all
of which have happened in last four years. While net metering
and co metering have a place in encouraging the development of
renewable resources in the future the committee should consider
reviewing the long term consequences of this growing area of
customer generation. The release of the PUC report in January
2005 on the economic and environmental costs and benefits of net
metering to customer generators, ratepayers, and utilities will
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be good start toward assessing what changes should be made.
REGISTERED SUPPORT / OPPOSITION :
Support
Pacific Gas & Electric
San Francisco Public Utilities Commission
Opposition
None on file.
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083