BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
920 (Huffman)
Hearing Date: 08/17/2009 Amended: As introduced
Consultant: Brendan McCarthy Policy Vote: EU&C 6-4
AB 920 (Huffman)
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BILL SUMMARY: This bill requires electric utilities to allow
customers with their own solar or wind systems to roll over any
excess generation credits not used in a 12 month period or to be
compensated by the utility at a rate determined by the Public
Utilities Commission.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Regulatory oversight $125 $335 $210 Special
*
Increased electricity costs Unknown Various
for state agencies
* Public Utilities Commission Utilities Reimbursement Account
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense file.
Under current law, the state has encouraged consumers to install
solar and wind electricity generation systems through the Self
Generation Incentive Program and the California Solar
Initiative.
Under current law, customers of investor owned utilities and
public utilities (except the Los Angeles Department of Water and
Power) that have installed solar or wind generation systems are
eligible to have the electricity generated by their system
credited against their own use of electricity. Essentially,
electricity generated by a customer's solar or wind system
causes the customer's electricity meter to spin backwards when
the generation exceeds the customer's electricity use. This
concept is referred to as "net energy metering". Under current
law, if a customer's electricity generation exceeds the amount
of electricity use, the value of the excess generation is lost
to the customer.
Current law caps participation in net energy metering at 2.5
AB 920 (Huffman)
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percent of a utility's aggregate peak electricity demand. Rates
of net energy metering vary between utilities. According to the
Public Utilities Commission, at the end of 2008, net energy
metering in Pacific Gas & Electric's service territory reached
1.3 percent of peak electricity demand; in Southern California
Edison's service territory it was 0.5 percent of peak demand; in
San Diego Gas & Electric's service territory it was 0.6 percent
of peak demand. The Commission expects Pacific Gas & Electric to
reach the 2.5 percent cap by the end of 2009.
Staff notes that the cost of generating electricity makes up
only about one-third of a retail electricity customer's bill.
The costs for transmission and distribution of electricity,
public goods program costs, costs to subsidize low income
customers, and costs for future decommissioning of nuclear power
plants are also included in a customer's bill and make up about
two-thirds of the retail cost of electricity. Customers who
participate in net energy metering can avoid paying any of these
non-generation costs because their own generation can reduce
their electricity bill to zero.
This bill requires utilities to allow customers with solar or
wind systems to roll over any electricity generation in excess
of their use during a 12 month billing cycle or to compensate
customers for the cost of the excess generation. The Public
Utilities Commission will be required to determine the rate at
which customers will be compensated for excess generation.
The Commission indicates that the bill will require it to
convene a proceeding to determine the appropriate rate for
compensating customers for excess generation, something the
Commission has not previously done. In addition, the Commission
will be required to oversee the program on an ongoing basis to
ensure the compensation rate is appropriate.
The bill requires the Commission to establish the compensation
rate such that it does not result in shifting costs between net
energy metering customers and other customers. However, because
net energy metering customers are already subsidized by other
ratepayers (because they may not be required to pay for
distribution costs, public goods charges, etc.), to the extent
that this bill encourages additional participation in net energy
metering, it may cause increased costs for other customers.
Because state agencies are significant consumers of electricity,
any subsidies paid for by ratepayers may increase costs to state
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agencies. The scope of this impact is unknown.
SB 7 (Wiggins) allows net energy metering customers to roll over
excess generation to two subsequent 12 month billing cycles. SB
7 does not include compensation for unused excess generation. SB
7 is in the Assembly Appropriations Committee.
AB 560 (Skinner) will increase the cap on net energy metering to
5 percent of peak demand. AB 560 will be heard in this
committee.