BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                   SB 874|
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                                 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  
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          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  







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          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

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