BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1
Author: Murray (D), et al
Amended: 6/29/06
Vote: 21
SENATE ENERGY, UTILITIES & COMMUN. COMM. : 10-0, 4/26/05
AYES: Escutia, Morrow, Alarcon, Battin, Campbell, Cox,
Dunn, Kehoe, Murray, Simitian
NO VOTE RECORDED: Bowen
SENATE APPROPRIATIONS COMMITTEE : 8-4, 5/26/05
AYES: Migden, Alarcon, Alquist, Escutia, Florez, Murray,
Ortiz, Romero
NOES: Aanestad, Ashburn, Battin, Poochigian
NO VOTE RECORDED: Dutton
SENATE FLOOR : 30-5, 6/1/05
AYES: Alarcon, Alquist, Campbell, Cedillo, Chesbro, Cox,
Denham, Ducheny, Dunn, Dutton, Escutia, Figueroa, Florez,
Kehoe, Kuehl, Lowenthal, Maldonado, Migden, Morrow,
Murray, Ortiz, Perata, Poochigian, Romero, Scott,
Simitian, Soto, Speier, Torlakson, Vincent
NOES: Aanestad, Ackerman, Battin, Hollingsworth,
McClintock
NO VOTE RECORDED: Ashburn, Bowen, Machado, Margett, Runner
ASSEMBLY FLOOR : 49-19, 6/29/06 - See last page for vote
SENATE ENERGY, UTILITIES & COMMUN. COMM. : 9-0, 8/8/06
AYES: Escutia, Alarcon, Battin, Bowen, Cox, Dunn, Dutton,
Kehoe, Murray
NO VOTE RECORDED: Simitian
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SUBJECT : Electricity: solar energy: net metering
SOURCE : Author
DIGEST : This bill makes changes to the California Solar
Initiative, which is implemented by the California Public
Utilities Commission.
Assembly Amendments delete most of the prior provisions.
As it left the Senate, the bill established the Million
Solar Roofs Initiative. That program was subsequently
implemented as the California Solar Initiative (CSI). This
bill now contains the specific statutory changes required
for the CSI and the language necessary to, among other
things, (1) include municipal utilities, (2) raise the net
metering cap, (3) establish a cost cap of $3.4 billion, and
(4) impose some constraints on the program.
ANALYSIS : Current law and regulations establish subsidy
programs for the installation of solar photovoltaic (PV)
systems administered by California Energy Commission (CEC)
and the California Public Utilities Commission (CPUC).
These programs, known collectively as the California Solar
Initiative (CSI), provide $3.2 billion in subsidies through
rebates for the installation of photovoltaic projects.
Current law requires investor-owned utilities (IOUs) to
increase their existing level of renewable resources by one
percent of sales per year until a portfolio of 20 percent
renewable resources is achieved by no later than 2017.
Municipal electric utilities are not subject to these
standards, but are required to implement and enforce their
own renewable resource procurement programs.
This bill establishes goals of installing 3000 MW of solar
generation capacity, establishing a self-sufficient solar
industry, and placing PV systems on 50 percent of new homes
in 13 years.
This bill requires the CPUC, in implementing the CSI, to:
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1.Adopt a subsidy that declines not less than an average of
seven percent per year, and shall be zero as of December
31, 2016.
2.Adopt performance-based subsidies (e.g. subsidies that
pay based on the amount of electricity produced) by
January 1, 2008 for all large PV systems and for half of
all medium-sized systems. Peformance-based subsidies are
encouraged, but not required, for smaller systems.
Performance-based incentives shall also decline at an
average of not less than seven percent per year.
This bill authorizes the CPUC to award $101 million in
subsidies for solar thermal systems.
This bill authorizes the CPUC to award $50 million for
solar research and development.
This bill requires municipal utilities to establish solar
energy programs in support of the 3000 MW goal. Such
programs shall be established by January 1, 2008 and shall
cost $784 million.
This bill establishes an aggregate cost cap for these solar
programs of $3.4 billion.
This bill prohibits the CPUC from imposing the cost of the
CSI on low income customers and bars the CPUC from imposing
a surcharge on natural gas to pay for the CSI.
This bill requires the CEC to commence a proceeding by July
1, 2006, and conclude that proceeding within three years,
to consider if and when solar energy systems should be
required on new buildings.
This bill requires sellers of production homes, as defined,
to offer PV systems on new homes for which tentative
subdivision maps are completed on or after January 1, 2011.
This bill raises the net metering cap from 0.5 percent to
2.5 percent.
This bill requires the CEC to establish eligibility
criteria, installation guidelines, and equipment rating
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standards for solar energy systems receiving ratepayer
subsidies. The CEC is also required to perform random
performance audits on PV systems.
This bill requires the Contractors' State Licensing Board
to review and, if needed, revise its licensing
classifications to ensure that PV contractors have the
proper qualifications.
Background
As passed by the Senate in 2005, this bill established the
Governor's Million Solar Rooftops proposal. Because this
bill did not pass the Assembly in 2005, the CPUC instead
created a solar program by regulation, known as the
California Solar Initiative. That program is similar to
the one envisioned in this bill, though there are important
differences noted below. Rather than create a solar
program, the current version of this bill now creates
limits on the CPUC's solar program and includes municipal
utilities, over which the CPUC has no jurisdiction.
California Solar Initiative
After the 2005 session adjourned without passing this bill,
the CPUC established the CSI by regulation. The CSI shares
the goals and basic mechanism of this bill, which is to
provide a long-term subsidy for photovoltaic systems with
incentives that are reduced annually. But the CSI differs
from this bill in important ways, some of which are due to
the jurisdictional limitations of the CPUC and others which
are differences in policy.
The major difference is that the cost of the program
increased substantially. The last 2005 version of this
bill had a cost cap of $2.5 billion. This amount reflects
what the solar industry said it would take to accomplish
the goals of the program. But the CPUC's CSI raised the
cost cap to $3.2 billion. The CPUC has never justified the
cost-effectiveness of the higher price tag. And the
increased program cost will not lead to more installed
solar capacity. Part of the cost increase will cover $160
million in new R&D expenditures. Funding is also made
available for a solar water heating subsidy program. And
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the CPUC allows $250 million to be spent on utility
administration. The cost of the CSI is recovered
exclusively from CPUC-regulated utility customers, both gas
and electric.
Importantly, the CSI does not raise the net metering cap.
Net metering is a major benefit to PV customers because it
allows the customer to sell his excess electricity
production back to the utility at retail rates. Because
net metering creates an additional, substantial subsidy,
the amount of PV capacity that can be net metered has been
limited by statute. PG&E and Southern California Edison
are nearing their limit. Consequently, a bill raising the
net metering cap is required for any significant solar
capacity to be added.
Current Subsidies
Even without the CSI, solar energy is already heavily
subsidized. For commercial customers federal tax credits
and accelerated depreciation cover about 50 percent of the
cost of the system. Accelerated depreciation for state tax
purposes is worth another six percent.
Since 1976 California has provided $1.1 billion in tax
credits and another $1 billion in rebates for solar energy
systems, resulting in over 160 MW of solar power. State
and federal policy has been generous to the solar industry.
And, just as high gasoline prices make alternative
transportation fuels more attractive, so too do high (and
rising) electric prices make solar more attractive.
California -- a Green Energy Leader
By any measure, California has been a leader in the pursuit
of alternative energy sources and energy efficiency. Every
year customers of California's IOUs, through a surcharge on
CPUC-regulated utility bills, pay at least an extra $228
million to fund energy efficiency and conservation, $135
million for renewable energy, and $62.5 million for energy
research, development and demonstration. Legislation
authorizing the surcharge was enacted in 1996 (AB 1890,
Brulte, Chapter 854, Statutes of 1996) and again in 2000
(AB 995,Wright, Chapter 1051, Statutes of 2000), both on a
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bipartisan basis. Authorization of a 5-year spending plan
for some of these funds is pending again this year in SB
1250 (Perata). California's Renewable Portfolio Standard
is a further major commitment to renewable energy. It
requires electric utilities to increase their purchase of
renewable energy by 1 percent of total energy needs
annually until 20 percent of their energy is from renewable
sources.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/8/06)
Governor's Administration
Office of the Attorney General
Oakland City Mayor Jerry Brown
Sacramento City Mayor Heather Fargo
San Diego City Council Member Donna Frye
San Francisco County Board of Supervisors
San Francisco Mayor Gavin Newsom
San Jose City Mayor Ron Gonzalez
Akeena Solar
Alliance for Nuclear Responsibility
American Federation of State, County and Municipal
Employees
American Lung Association
American Solar Energy Society
Bluewater Network
Borrego Solar
California Alliance For Consumer Protection
California Building Officials
California Interfaith Power and Light
California League of Conservation Voters
California Public Interest Research Group
California Public Utilities Commission
California Solar Energy Industries Association
Carville Sierra, Inc.
City of Aliso Valley
City of Berkeley
City of Irvine
City of Santa Cruz
City of Sebastopol
Clarum Homes
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Clean Power Campaign
Coalition for Clean Air
Community Environmental Council
Cooperative Community Energy
East Bay Municipal Utility District
Energy Independence Now
Environment California
Global Green USA
Gray Panthers
Green Lease, Inc.
Greenpeace USA
Henry T. Perea, Councilmember 7th District
Industrial Environmental Association
KYOCERA International, Inc.
Marin County Board of Supervisors
Merced/Mariposa County Asthma Coalition
National Wildlife Federation
New Vision Technologies
NorCal Solar
Northern California Power Agency
Our Children's Earth
Pacific Environment
Pacific Gas and Electric Company (if amended)
Physicians for Social Responsibility
Planning and Conservation League
Powerlight Solar Electric Systems
Public Citizen
PV Manufacturers Alliance
Rainforest Action Network
Real Goods
Relational Culture Institute
Sempra Energy (if amended)
Sharp Solar
Sierra Club California
Solar Integrated Technologies
SolarWorks
South Coast Air Quality Management District
Stopwaste.org
Sun Power and Geothermal Energy
The Better World Group
Union of Concerned Scientists
Vote Solar
Working Assets
World Council for Renewable Energy
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Yolo County Board of Supervisors
Several individuals
OPPOSITION : (Verified 8/8/06)
The Utility Reform Network
ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Blakeslee,
Calderon, Canciamilla, Chan, Chu, Cohn, Coto, Daucher, De
La Torre, Dymally, Frommer, Garcia, Goldberg, Hancock,
Jerome Horton, Shirley Horton, Jones, Karnette, Keene,
Klehs, Koretz, Laird, Leno, Levine, Lieber, Lieu, Maze,
Montanez, Mullin, Nava, Oropeza, Pavley, Richman,
Ridley-Thomas, Ruskin, Saldana, Salinas, Torrico, Tran,
Umberg, Vargas, Wolk, Yee, Nunez
NOES: Aghazarian, Benoit, Bogh, Cogdill, DeVore, Haynes,
Houston, Huff, La Malfa, La Suer, Leslie, Mountjoy,
Nakanishi, Niello, Plescia, Spitzer, Strickland, Walters,
Wyland
NO VOTE RECORDED: Chavez, Emmerson, Evans, Liu, Matthews,
McCarthy, Nation, Negrete McLeod, Parra, Sharon Runner,
Villines
NC:nl 8/9/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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