BILL ANALYSIS
SB 816
Page 1
Date of Hearing: June 13, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 816 (Kehoe) - As Amended: April 13, 2005
SENATE VOTE : 37-0.
SUBJECT : Electric Service Providers: net metering.
SUMMARY : Increases the net-metering cap in the San Diego Gas
and Electric (SDG&E) service territory to permit SDG&E to "buy
back" more electricity generated by its customers.
EXISTING LAW requires electric-service providers (ESPs) to
credit all electricity generated by a customer-owned solar or
wind system against the customer's usage of electricity sold by
the utility, known as "net metering." Current law requires ESPs
to offer net metering until net-metering customers account for
0.5% of the ESP's aggregate peak demand.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to permit SDG&E to increase the amount of net-metering capacity
that SDG&E can offer to its customers. Increasing the SDG&E cap
to 50 MW, as this bill proposes, would provide SDG&E several
years of net-metering expansion at the current pace, or room for
dramatic short-term expansion.
Background : 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 was initially permitted for systems up to 10
kilowatts (kW) making it suitable for residential-sized
applications (a typical residential net-metered system is 2 to 4
kW). The total amount of capacity that could be net metered was
capped at 0.1% of the ESP's load. ABX1 29 (Kehoe), Chapter 8,
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Statutes of 2001, expanded the net metering program to large
commercial and industrial customers by raising the maximum size
of the net-metered system to one MW and lifting the cap on total
net-metered capacity. The provisions of AB 29X relating to net
metering were to sunset on January 1, 2003, but were
subsequently extended by AB 58 (Keeley), Chapter 836, Statutes
of 2002, which also increased the cap to 0.5% of utility peak
demand.
Why Single out SDG&E: According to the author, SDG&E is the
only investor-owned utility that is close to meeting the
existing net-metering cap of 0.5%. The author states that
available remaining net-metering capacity will be fully utilized
within the next year when currently proposed projects are
installed. According to SDG&E, it had 8.68 MW (1,638 customers)
of installed net metering capacity as of August 2004, a bit less
than half of the 0.5% cap. It has another 3.98 MW (549
customers) in the process for a total of 12.66 MW, which is
about two-thirds of the 0.5% cap.
In addition, the City of San Diego has a goal of installing 50
MW of renewable energy by 2014 and collaborated with SDG&E in
establishing that goal. Net metering provides an incentive for
customers to install renewable energy sources. Without an
adjustment to the cap, SDG&E would not be able to offer net
metering to new customers, which may impede the City's ability
to attain its renewable energy goal.
The other large utilities, such as Pacific Gas and Electric
Company (PG&E) and Southern California Edison (SCE) are not
proponents of increasing the net-metering caps in their service
territories. Because the meter spins backward to offset the
effect of the actual amount of electricity consumed, the
utilities end up "paying" the full retail price for generation
that was not consumed by the net-meter customer, which includes
transmission, distribution, and public goods surcharges (PGC).
The full retail price is far more expensive than the wholesale
generation cost of energy and these arrangements can be
financially detrimental to the utility and to the utilities'
conventionally metered customers.
The Public Goods Surcharge: A PGC is assessed on a customer's
bill to fund low-income and medically dependent residential
customers, weatherization, and energy efficient appliances. The
surcharge is based on the quantity of electricity consumed.
SB 816
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Because net metering turns the meter backward, it has the effect
of decreasing the reported amount of electricity consumed, thus,
decreasing the amount of PGC assessed to net-metered customers.
An increase in the net metering cap would allow more solar and
wind customers to avoid paying their share of the PGC and may
have the effect of either decreasing the level of service to
low-income customers, and/or shifting costs toward non-solar and
wind customers by increasing their PGC assessment.
RELATED LEGISLATION : AB 1547 (Levine) would raise the
net-metering cap statewide to 1.5% of a utility's load.
SB 1 (Murray and Campbell) would raise the net metering cap
statewide to 5% of a utility's load.
REGISTERED SUPPORT / OPPOSITION :
Support
San Diego Gas and Electric (sponsor)
City of San Diego
San Diego Association of Governments
Sempra Energy
Opposition
None on file.
Analysis Prepared by : Gina Mandy / U. & C. / (916) 319-2083