BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
AB 1348 - Runner Hearing Date:
June 30, 2005 A
As Amended: May 2, 2005 FISCAL B
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DESCRIPTION
Current law provides for discounts for large-scale photovoltaic
(PV) installations through the California Public Utilities
Commission (CPUC).
Current law allows large-scale PV installations to net meter, a
mechanism that permits the PV customers to run their electric
meter backwards when the PV installation is generating
electricity.
Current law allows large-scale PV installations to avoid
stand-by charges.
This bill requires the CPUC to approve a special rate for
electrical service offered to the Antelope Valley Fairgrounds
(AVF) which, in combination with the discount for PV
installations and other PV benefits, will result in a 10-year
payback for the PV system.
This bill requires biennial reporting on the actual electricity
usage and electrical production by AVF.
BACKGROUND
PV systems have benefited from state and federal ratepayer and
taxpayer subsidies for many years. (See the committee analysis
of SB 1 (Murray and Campbell) for a complete discussion.) Large
commercial-sized PV installations, such as that envisioned by
this bill, are eligible for a subsidy of $3.50/watt from the
Self-Generation Incentive Program (SGIP) administered by the
CPUC. This subsidy is 40%-50% of the system cost. In addition,
PV systems benefit from subsidies created by net metering and
avoidance of stand-by charges.
This bill authorizes the AVF Energy Efficiency and PV Synergy
Demonstration project. The purpose of this project is to
examine the potential synergies between energy efficiency
projects and PV installations.
AVF is a 135 acre complex with several buildings and an RV park.
The buildings include two 4000 square foot pavilions that are
available for rent and a Turf Club for watching and wagering on
horse races. Numerous events are held at the AVF, including the
fair, garden shows, demolition derbys and rodeos. AVF is
located in Lancaster.
AVF would like to install a 630 kilowatt PV system. This is a
very large system; an average residential PV system is 3
kilowatts. AVF has applied for the CPUC's SGIP rebate which, if
approved, will reduce the PV project cost by more than $2.2
million. To further reduce the cost of the project, this bill
also requires Southern California Edison (SCE) to provide the
AVF with discounted electric service so that the combination of
the electric discount and PV rebate makes the PV system pay for
itself in ten years.
COMMENTS
1. Another Solar Subsidy - This Committee recently passed
SB 1, which creates a ten-year subsidy program for
residential and commercial PV systems that will cost
ratepayers $2.5 billion, according to supporters. This
bill does the concept of a PV subsidy one better by also
layering on an additional ratepayer subsidy in the form of
reduced electric rates for this customer only, guaranteeing
that this solar project will pay for itself in 10 years.
According to the terms of the bill, the cost of this
additional subsidy will be shouldered by commercial
customers, not residential customers.
2. Little Gain for Ratepayers - The point of this bill is
to examine the potential synergies resulting from a
combination of energy efficiency measures and PV. But is
this a question worth studying? All new California
buildings must comply with current energy efficiency
building standards. So every PV installation on new
buildings will test whether such installations make sense,
with the risk that such installations are not cost
effective being shouldered by the building owner. With
3000 MW of new PV required under SB 1, the AVF's
circumstances will not be unique. The reporting
requirements built into SB 1 will assure that information
gleaned from these projects will improve California's PV
programs. There seems to be little additional information
gained from studying this project, and therefore little
reason to ask ratepayers to further subsidize this
installation.
3. No Risk to AVF - Supporters assert that this bill is
necessary to insulate the AVF from any risks that the PV
system won't pay for itself in 10 years. But what are
those risks? There is the risk that the PV system won't
perform as advertised, but shouldn't that risk be born by
the seller/manufacturer of the PV system, rather than
ratepayers? There is the risk that electric rates
increase, but increasing electric rates will improve the PV
system payback because the electricity generated by the PV
system will be worth more. There is the risk that electric
rates decrease, but while lower electric rates lengthen the
PV system payback, the PV system owner will benefit from
lower electricity bills. Under all these scenarios there
seems to be little risk to AVF and therefore little reason
for this bill. If AVF believes that the PV installation is
too risky for them they can simply decline to install the
PV system and pay the usual electricity bills like everyone
else.
SCE believes that AVF's PV system may well pay for itself
within 10 years given California's generous PV subsidies
and that the additional ratepayer subsidy provided for in
this bill will not be needed.
4. Only One Beneficiary - The special electric rate
required by this bill will be available to only one
customer, the Antelope Valley Fairgrounds. It is extremely
unusual to establish a discounted rate for a single
customer.
ASSEMBLY VOTES
Assembly Floor (74-0)
Assembly Appropriations Committee (18-0)
Assembly Utilities and Commerce Committee
(8-0)
POSITIONS
Sponsor:
Antelope Valley Fairgrounds
Support:
Southern California Edison
Oppose:
None on file
Randy Chinn
AB 1348 Analysis
Hearing Date: June 30, 2005