BILL ANALYSIS                                                                                                                                                                                                              1
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                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                               DEBRA BOWEN, CHAIRWOMAN
          

          SB 874 -  Bowen                                   Hearing Date:   
          April 22, 2003             S
          As Amended:         April 10, 2003           FISCAL       B
                                                                        
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                                      DESCRIPTION
           
           Current law  authorizes customers to install specified electric  
          generation systems which, when electricity is produced, turn the  
          customer's electric meter backward, a process known as "net  
          metering."

           This bill  requires the California Public Utilities Commission  
          (CPUC) to adopt regulations which require utilities to respond  
          expeditiously to a customer's request to net meter.  If the  
          utility believes it will have to alter the electric grid to  
          comply with the request, the utility is required to clearly  
          describe and justify those alterations.  The CPUC is required to  
          resolve any disputes.

                                      BACKGROUND
           
          SB 656 (Alquist), Chapter 369,  Statutes of 1995, required all  
          electric utilities to buy back any electricity generated by a  
          customer-owned solar and wind system.  This buy-back program is  
          known as "net metering" because the electricity purchases of the  
          customer are "netted" against the electricity generated by the  
          customer's solar electric or wind system.  The generated  
          electricity spins the meter backwards, making it equivalent to  
          the customer using less electricity.  California is one of  
          thirty-five states with a net metering program.

          As originally created, the net metering program applied  
          primarily to residential applications because the size was  
          limited to 10 kilowatts (kw).  Recent changes to the program  
          have increased the maximum size to 1,000 kw so commercial and  
          industrial users could take advantage of the technology.  That  
          change allows large solar and wind electric generation  
          facilities to be placed in areas where generation has never  
          existed, which consequently could require changes to be made to  








          the electric grid.  Only the utility can determine whether any  
          changes are indeed necessary, but arguably, the utility may not  
          have a great deal of incentive to make those changes since  
          accommodating a net metering system means it will be losing part  
          or all of a customer's electrical load.  This bill requires the  
          CPUC to develop regulations to ensure the utility doesn't drag  
          its feet on a net metering system request.

          There are about 2,200 net-metered customers today, with pending  
          applications for an additional 700.  Total net-metered capacity  
          is about 6 megawatts (MW), with an additional 3 MW pending.  On  
          a typical hot summer day, electric demand is about 50,000 MW.










































                                       COMMENTS
           
           Giving The CPUC The Referee's Whistle  .  Increasing the maximum  
          size of net metered installations has increased the points of  
          friction between net metered customers and the serving  
          utilities.  A net metered customer would like to get their  
          system on line as soon as possible and not have to pay for any  
          electrical grid-related upgrades.  While the utility may have  
          little incentive to bring a net metered customer on line  
          quickly, it does have a responsibility to ensure that any system  
          upgrades associated with bringing that net metered customer on  
          line aren't unfairly shifted to other utility customers.

          This bill takes no position on how disputes should be resolved.   
          Rather, it directs the CPUC to create a process for resolving  
          differences of opinion on how quickly systems should be  
          installed and how any costs associated with grid improvements  
          should be apportioned.

                                       POSITIONS
           
           Sponsor:
          
          Author

           Support:
           
          AMECO
          California Solar Energy Industries Association
          EcoEnergies
          Light Energy Systems
          Performance Solar Inc.
          POCO Solar Energy
          Six Rivers Solar, Inc.
          SoCal Solar Energy
          Team Solar Inc.

           Oppose:
           
          None on file


          
















          Randy Chinn 
          SB 874 Analysis
          Hearing Date:  April 22, 2003