BILL ANALYSIS SB 656 Date of Hearing: June 12, 1995 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mickey Conroy, Chair SB 656 (Alquist) - As Amended: June 7, 1995 SUBJECT Public utilities: energy metering DIGEST Existing law: 1) Vests the California Public Utilities Commission (CPUC) with the regulatory authority over public utilities. 2) Requires a utility to pay independent electricity producers the actual cost the utility avoids but not producing the energy itself. This bill would require every electric utility in the state that offers residential service, whether or not the entity is subject to the jurisdiction of the CPUC, to develop a standard tariff providing for net energy metering to eligible customer-generators. This bill would only apply to those systems that produce up to 10 kW and would be restricted to 0.1% of a utilities peak demand. FISCAL EFFECT Minor/absorbable cost to the CPUC. COMMENTS 1) According to the sponsor, California Solar Energy Industries Association, this bill removes a significant obstacle to the - continued - SB 656 Page 1 SB 656 installation of residential photovoltaic solar energy systems, many of which are manufactured in California. The systems cost between $30,000 and $40,000 each with a system life of 25 years. The systems are primarily designed to offset the customer's own electricity use. 2) This bill concerns residential customers who employ the use of their own solar energy generation and also obtain power from the traditional power sources of utility. The bill would require the utility, whether municipal or investor-owned to provide a specific contract for the sale of unconsumed customer generated energy back to the utility. "Net energy metering" would determine the conditions of the sale. Net energy metering is a method of subtracting the excess energy produced by the resident from the energy received from the utility. The customer would have a meter that would measure the flow of electricity both to and from a resident. The tariff would establish a set price for which the excess electricity generated by the customer would be sold back to the utility. If the customer generated a surplus of electricity at the end of the month, the the utility would pay the customer according to the contracted rate. In other words, the electricity supplied by the utility would be "netted out" against the electricity sold to the utility. 3) The concept embodied in this bill is available to CPUC regulated utility customers as one of the options available in Standard Offer No. 1 contracts. In order to take advantage of those type of contracts a generator must be certified as a qualified facilities (QF) pursuant to federal law. According to the CPUC, the main effect of CPUC regulated utilities and their customers is to make net sales arrangements available to customers without them becoming QF's first. The addition of net energy metering customers who are not QF's should have no adverse effects on utilities or ratepayers since there is no cap on the number of power - continued - SB 656 Page 2 SB 656 producers that could accept a net sales agreement under Standard Offer No. 1. 4) Opposition claims that the purpose of this measure is to provide an electric ratepayer subsidy to purchasers of expensive residential photovoltaic systems. They claim that the accounting system by which the kwh are supplied to the utility would be "netted out" against kwh sold to the utility. This approach assumes that such kwh have the same value, when they are not. A kwh delivered to a customer is a retail commodity while a kwh sold to the utility is a wholesale commodity and the prices for the two commodities are different. Instead of netting out kilowatt hours sold, opposition believes a more accurate system would net out the relative prices of the commodities that have been exchanged. Furthermore, while the amount of money that would be involved is small, it is the principal where the opposition objects, particularly at a time when the legislature and the CPUC are attempting to reduce electric rates. 5) Turn disagrees that residential ratepayers will will bear additional costs. While utilities do average their distribution and transmission costs over all ratepayers, they believe that net energy metering will offer potential for systemwide efficiencies, including diminished peakload requirements and lowered distribution costs. SUPPORT California Solar Energy Industries Assn., (Sponsor) California Energy Commission, Sacramento ASE, Solar Energy Society, La Crescenta Advanced Photovoltaic Systems, Inc., San Bruno APT - Ananda Power Technologies, Inc., Nevada City Becker Electric/Solar Quest, North San Juan CEERT - Center for Energy Efficiency and Renewable Technologies, - continued - SB 656 Page 3 SB 656 Sacramento Earth Care, Ukiah Electron Connection, Hornbrook Independent Energy, Inc. - Goldline, San Diego IPP - Independent Power Providers, North Fork Gen-Sun Electric Solar systems, Lucerne Valley Glidden Construction Company, Santa Barbara Goldline Electronic Controls, San Diego Heliotrope General, Spring Valley Home Power Magazine Land and Sea Solar, Santa Cruz NRDC - Natural Resources Defense Council, San Francisco Off-Line, Independent Energy Systems, North Fork Pacific Solar, Belmont PowerLight Corporation, Berkeley Real Goods, Ukiah SEA - Solar Engineering Applications, Santa Clara Seacrest Builders, Laguna Beach SES - Solar Electric Specialties Company, Santa Barbara SEIA - Solar Energy Industries Assocaition, Washington, D.C. Siemens (ROLM Communications), Santa Clara Siemens Solar Industries, Camarillo Sierra Solar Solar Depot, San Rafael Solec International, Inc., Hawthorne Solar Self-Help, Inc., Concord Solarex (several areas) Southern California Edison Company TURN - Toward Utilitiy Rate Normalization, San Francisco U.L.C. Enterprises UNI-SOLAR - United Solar Systems Corporation, San Diego Utility Consumer's Action Network, San Diego UPC - Utility Power Group, Chatsworth Western Energy Services, Inc., Laguna Hills Mr. Michael Williams, Citizen, Mount Shasta Mr. Philip G. Mullen, Citizen, La Crescenta Ms. Brenda Hinton, Citizen, Ukiah - continued - SB 656 Page 4 SB 656 OPPOSITION Pacific Gas & Electric - continued - SB 656 Page 5