BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 67|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 67
Author: Levine (D)
Amended: 9/1/05 in Senate
Vote: 21
SEN. ENERGY, UTIL. AND COMM. COMMITTEE : 10-0, 6/30/05
AYES: Escutia, Morrow, Alarcon, Battin, Bowen, Cox, Dunn,
Kehoe, Murray, Simitian
NO VOTE RECORDED: Campbell
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-1, 5/27/05 - See last page for vote
SUBJECT : Energy: rates: report to the Legislature:
fuel cell
customer-generators
SOURCE : Clean Power Campaign
DIGEST : This bill (1) requires the President of the
California Public Utilities Commission (PUC) to annually
appear before the Legislature to report on electric and gas
utility costs, (2) expresses legislative intent that the
PUC reduce electricity and natural gas rates to the lowest
amount possible, and (3) extends the 2006 sunset on the
fuel cell net metering program to 2010.
Senate Floor Amendments of 9/1/05 add the provisions
extending the sunset on the fuel cell net metering program.
CONTINUED
AB 67
Page
2
Senate Floor Amendments of 8/24/05 (1) exempt small
electric and gas utilities so that the California Public
Utilities Commission would be required to report only on
the rates of large utilities (i.e., Pacific Gas and
Electric, Southern California Edison, San Diego Gas and
Electric, and Southern California Gas), and (2) make
technical, clarifying changes to the intent language and
operative reporting provisions of the bill.
ANALYSIS :
Public Utility Rates . Existing law (1) requires all
charges demanded or received by any public utility for any
product or commodity shall be just and reasonable, and (2)
prohibits a public utility from changing any rate or so
alter any classification, contract, practice, or rule as to
result in any new rate, except upon a showing before the
PUC and a finding by the PUC that the new rate is
justified.
This bill includes a statement of legislative intent that
the PUC reduce electricity and natural gas rates to the
lowest amount possible.
This bill requires the President of the PUC to appear
annually before the Senate and Assembly policy committees
to report on the costs of programs and activities conducted
by electrical corporations with at least one million retail
customers in California and gas corporations with at least
500,000 retail customers in California. The report will be
required to include the following:
1.Each statutorily mandated program and its annual costs to
ratepayer.
2.Each program mandated by the PUC and its annual cost to
ratepayers.
3.The cost of long-term energy purchase contracts and
revenue bonds issued during the electricity crisis and
administered by the Department of Water Resources (DWR).
4.All other costs currently recovered in retail sales, as
CONTINUED
AB 67
Page
3
determined by the PUC.
Fuel Cell Net Metering Program . Existing law:
1.Requires investor-owned utilities (IOUs), municipal
utilities or any other entity offering retail electric
service, to credit all electricity generated by a
customer-owned solar or wind system up to one megawatt
(MW) in size against the customer's usage of electricity,
a procedure known as "net metering."
2.Provides partial net metering to customer-owned fuel cell
electric generation facilities. The net metered customer
only gets credit at the generation rate, rather than the
full retail rate offered to solar generation. The
program sunsets January 1, 2006. (AB 1214 [Firebaugh],
Chapter 661, Statutes of 2003)
This bill extends the fuel cell net metering program by
replacing the sunset with a provision permitting a fuel
cell facility commencing operation before January 1, 2010
to be eligible for net metering for the life of the
facility.
Background - Rates
Since early 2001, the electricity rates set by the PUC for
customers of the state's major IOUs have exceeded the IOUs'
ongoing cost of service, far exceeding the rates of
in-state municipal utilities or any neighboring state, and
ranking among the highest in the nation.
Prior to 2001, IOU rates had been "frozen" pursuant to AB
1890 (Brulte), Chapter 856, Statutes of 1996. In addition
to freezing rates at 1996 levels for a four-year transition
period, AB 1890 guaranteed a 10 percent reduction in retail
rates for small customers, and promised larger rate
reductions once the transition period was over.
In 2001, the PUC increased rates for the customers of
Southern California Edison (SCE) and Pacific Gas & Electric
(PG&E) a combined average of four cents per kilowatt hour
to pay for the high-cost of power. San Diego Gas &
Electric (SDG&E) rates have also increased, although in
CONTINUED
AB 67
Page
4
smaller increments. While DWR has claimed a significant
share of electricity rates for its ongoing operating costs
and payments on bonds it issued to finance its high-cost
power purchases in 2001, the IOU's have also collected an
extra measure of rates that would otherwise be dedicated to
buying electricity. Under the PUC's 2001 rate increase
decisions, these extra rates were subject to refund to
utility customers.
The IOUs accumulation of excess rates has long since
matched their historic procurement debts, leaving little
excuse for continuing today's high rates. However, the PUC
has, for the most part, maintained higher rates and
expanded their purposes to include improving the financial
health of the IOUs, subsidizing direct access and
distributed generation, and buying "reliability insurance"
in the form of minimum reserve margins. The 2001 rate
increases averaged 40 percent. According to the PUC, SCE
rates have been reduced 13 percent and PG&E rages have been
reduced eight percent since. As a result, current rates
remain 27-32 percent above pre-crisis levels. The PUC has
not provided an account of the use of this revenue or a
schedule for achieving further rate reductions.
Background - Fuel Cell Net Metering Program
SB 656 (Alquist), Chapter 369, Statutes of 1995, required
all electric utilities to buy back any electricity
generated by a customer-owned solar or 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 own solar or
wind electric system. The generated electricity spins the
meter backward, making it financially equivalent to using
less electricity for the customer.
Net metering has also been extended partially to larger
solar facilities and to non-solar renewable facilities by
giving credit at the utility's generation rate (akin to a
wholesale rate, rather than full retail rate) for
electricity produced. in 2003, AB 1214 (Firebaugh),
Chapter 661, Statutes of 2003, created a program providing
partial net metering to customer-owned fuel cell electric
generation projects. Under AB 1214, the net-metered
CONTINUED
AB 67
Page
5
customer only gets credit at the generation rate, rather
than the full retail rate offered to solar customers. AB
1214 sunsets January 1, 2006.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/25/05)
Clean Power Campaign (source)
ASSEMBLY FLOOR :
AYES: Aghazarian, Baca, Bass, Benoit, Berg, Bermudez,
Blakeslee, Bogh, Calderon, Canciamilla, Chan, Chavez,
Chu, Cogdill, Cohn, Coto, Daucher, De La Torre, DeVore,
Dymally, Emmerson, Evans, Frommer, Garcia, Goldberg,
Harman, Jerome Horton, Shirley Horton, Houston, Huff,
Jones, Karnette, Keene, Klehs, Koretz, La Malfa, La Suer,
Laird, Leno, Leslie, Levine, Lieber, Liu, Matthews, Maze,
McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nation,
Nava, Negrete McLeod, Niello, Parra, Pavley, Plescia,
Richman, Sharon Runner, Ruskin, Saldana, Salinas,
Spitzer, Strickland, Torrico, Tran, Umberg, Villines,
Walters, Wolk, Wyland, Yee, Nunez
NOES: Arambula
NO VOTE RECORDED: Gordon, Hancock, Haynes, Oropeza,
Ridley-Thomas, Vargas
NC:cm 9/7/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED