BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 874| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 874 Author: Bowen (D), et al Amended: 4/10/03 Vote: 21 SENATE ENERGY, U. & C. COMMITTEE : 7-0, 4/22/03 AYES: Bowen, Alarcon, Battin, Dunn, McClintock, Murray, Sher SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SUBJECT : Net energy metering SOURCE : Author DIGEST : This bill requires the Public Utilities Commission to adopt regulations relating to a customer's request to net meter and create a process for resolving differences of opinion on how quickly systems should be installed and how costs should be apportioned. ANALYSIS : 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 State Public Utilities Commission (PUC) 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 CONTINUED SB 874 Page 2 clearly describe and justify those alterations. The PUC 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 PUC 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 six megawatts (MW), with an additional 3 MW pending. On a typical hot summer day, electric demand is about 50,000 MW. Comments Giving the PUC the Referee's Whistle . Increasing the maximum size of net metered installations has increased the points of friction between net metered customers and the SB 874 Page 3 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 PUC 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 5/6/03) 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. NC:nl 5/7/03 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****