BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 918| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 918 Author: Keeley (D) Amended: 8/25/00 in Senate Vote: 21 SENATE INSURANCE COMMITTEE : Not Relevant SENATE ENERGY, U.&C. COMMITTEE : 7-0, 8/24/00 AYES: Bowen, Alarcon, Hughes, Kelley, Peace, Solis, Vasconcellos SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : Not Relevant SUBJECT : Public utilities: net energy metering SOURCE : California Solar Energy Industries Association DIGEST : This bill provides clarification of the Public Utilities Code law providing for net energy metering for small solar and wind energy system owners. ANALYSIS : Current law requires every electrical corporation to offer net energy metering. When a net energy metering customer consumes more energy that he or she produces, the customer shall pay the electrical corporation based on the average retail price per kilowatt-hour. This bill changes that calculation by requiring that for CONTINUED AB 918 Page 2 each month a customer's energy consumption exceeds the amount of energy produced, that net consumption shall be valued as if that were the customer's actual consumption. In those months where the customer's energy production exceeds their amount of consumption, that net energy production shall be valued at the same price the electrical corporation would charge. This calculation is made each month and the total shall be tallied and paid after 12 months. This bill provides that if a net energy metering customer changes electrical corporations, a new 12 month period will begin with the start of service with the new electrical corporation. This bill provides that if a net energy metering customer buys electricity from anyone other than the electrical corporation, the electrical corporation may recover the incremental costs related to the net energy metering from the customer's supplier of electricity. Background In 1995, the Legislature passed SB 656 (Alquist), Chapter 369, Statutes of 1995, which required all electric utilities to buy back any electricity generated by a customer-owned solar electric 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 solar electric system. In other words, when the customer buys electricity, the meter spins forward. When the customer generates electricity, the meter spins backward. The number of customers who can take advantage of net metering is limited by statute and is only available to customers who have wind or solar electric generating systems. In 1998, the Legislature passed AB 1755 (Keeley), Chapter 855, Statutes of 1998, which clarified the definition of net energy metering and expanded the eligibility for net energy metering. Comments AB 918 Page 3 Changing The Way Net Usage Is Billed . This bill provides additional specificity to the valuation of the net energy consumed or produced by a net metering customers by treating the net usage as if it were the customer's total usage. For example, if a customer consumes 1,000 kwh of electricity and their wind turbine produces 600 kwh of electricity in a month, the customer would owe the utility for 400 kwh of electricity priced at the level that any 400 kwh (residential) customer who doesn't use net metering would pay. Extending on that example, if the first 250 kwh of usage is considered baseline usage and, therefore, priced at a lower rate, the customer would pay for 250 kwh at the lower rate and 150 kwh at the higher non-baseline rate. Absent this bill, the customer would be billed for those 400 kwh at the "average retail price" for the customer class. Calculating the average retail price requires determining the amount of usage at baseline and non-baseline rates across the entire customer class recognizing the changes to those rates over the 12 month period. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes No fiscal impact on the state. Minor, absorbable costs for the Public Utilities Commission Utilities Reimbursement Account. SUPPORT : (Verified 8/24/00) California Solar Energy Industries Association (source) Clean Power Campaign Pacific Gas and Electric Sacramento Municipal Utility District NC:cm 8/29/00 Senate Floor Analyses AB 918 Page 4 SUPPORT/OPPOSITION: SEE ABOVE **** END ****