BILL ANALYSIS
AB 560
Page 1
ASSEMBLY THIRD READING
AB 560 (Skinner)
As Amended April 16, 2009
Majority vote
UTILITIES AND COMMERCE 10-3
APPROPRIATIONS 11-5
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|Ayes:|Fuentes, Blakeslee, De La |Ayes:|De Leon, Ammiano, Charles |
| |Torre, Carter, Fong, | |Calderon, Krekorian, |
| |Huffman, Krekorian, | |Fuentes, Monning, |
| |Skinner, Swanson, Torrico | |John A. Perez, Price, |
| | | |Skinner, Solorio, |
| | | |Torlakson |
|-----+--------------------------+-----+--------------------------|
|Nays:|Duvall, Tom Berryhill, |Nays:|Nielsen, Duvall, Harkey, |
| |Fuller | |Miller, Audra Strickland |
| | | | |
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SUMMARY : Increases the current cap on the amount of
electricity that can be generated under the net-energy metering
program from 2.5% to 10% of each utility's aggregate peak
demand.
EXISTING LAW :
1)Creates the California Solar Initiative (CSI), a $3.3 billion
declining rebate program to offset the cost of installing
solar panels on homes, businesses, and public buildings. The
program requires that in order to be eligible for CSI rebates,
among other requirements, the solar energy must be intended to
primarily offset part or all of the consumer's own electricity
demand (the panels cannot produce more electricity than the
customer's historic peak demand).
2)Requires investor owned utilities (IOUs) to offer customers
with solar or wind generation that is no larger than 1
megawatt in size, a net-metered tariff where the customer can
sell back electricity produced from the solar or wind facility
that exceeds that customer's demand at that moment in time as
a kilowatthour (kWh) bill credit against electricity that the
customer receives from the utility when their renewable
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facility produces less than the customer is consuming.
3)Caps the total amount of solar and wind generation that can be
subject to net-metering at 2.5% of each electric utility's
aggregate peak demand.
4)Requires all publicly owned utilities (POUs) other than the
Los Angeles Department of Water and Power (LADWP) to offer a
net-metering tariff as provided in (2), or offer a co-metering
tariff where the bill credit is based only on the cost of
generation and not the entire retail rate. Exempts LADWP from
the net-metering and co-metering requirements.
FISCAL EFFECT : Minor absorbable costs to the Public Utilities
Commission (PUC).
COMMENTS : According to the author, the purpose of this bill is
to remove unnecessary barriers to meeting the goals of CSI. Net
metering is an important piece of the overall financing of
rooftop solar, without net-metering few solar installations
would be economically viable.
Under net-metering, the electric utility is required to "buy
back" any electricity generated by a customer-owned generator as
measured by an electric meter that can measure the flow of
electricity in both directions. When the customer generates
electricity, he/she uses most of it for his or her own facility.
Any excess electricity passes through the meter and is
distributed to the electricity grid. At the end of the year,
the electric corporation calculates the amount of electricity
distributed to the grid by the customer and reduces the
customer's annual bill by the amount of electricity generated by
the customer. This results in the utility "buying" the excess
power and paying for it in the form of a bill credit.
Utilities currently only have to offer net metering until the
load served by net metering represents 2.5% of the utilities
total load. The cap was set in SB 1 (Murray), Chapter 132,
Statutes of 2006. SB 1 implemented CSI which has the goals of
installing 3,000 megawatts (MW) of distributed generation sized
solar energy system in California by 2017, while creating a
self-sustaining solar industry that can operate without
subsidies. If the goals of CSI are to be met, the 2.5% cap on
net-metering must be increased or a similar buy back program
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must be put into place.
At the time SB 1 passed, it was generally understood that the
2.5% cap was not sufficient to meet the 3,000 MW solar goals.
However, the cap was set at 2.5% to give the Legislature the
opportunity to review the effectiveness of CSI and of
net-metering at the mid-point of the program. At the time SB 1
was approved the assumption was the 2.5% cap would not be
reached until after 2010.
To help ensure the Legislature could fully review the success of
CSI, SB 1 required PUC to provide reports on CSI and on the cost
and benefits of net metering. PUC is required to report to the
Legislature and the Governor by January 1, 2010, on the costs
and benefits of net energy metering, to include options to
replace these economic costs and benefits with a mechanism that
more equitably balances the interests of participating and
nonparticipating customers.
While SCE and SDG&E will not come close to the net-metering cap
for several years, based on estimates of the growth of PG&E
program it is possible that the cap will be reached in their
service territory in 2010. If the cap were reached before the
Legislature could increase the cap or an alternative program was
put into place, CSI would likely come to a halt in PG&E's
service territory.
The sponsor of this bill, Solar Alliance, and other supporters
believe that since CSI has been successful and net-metering is a
key part of that success, the cap on net metering should be
eliminate entirely or increased to a level that exceeds the
3,000 megawatt goal of CSI this year. They argue, "If California
expects to achieve the goals of the California Solar Initiative,
continue to be a leader in the deployment of solar, and build a
sustainable, long term renewable energy economy, then the cap on
net metering must be lifted." The supporters also argue that
there is no evidence that the net-metered solar power creates
any negative impact on grid stability so this is no longer a
valid reason to cap net metering.
PG&E and SCE support increasing the cap enough to keep the
net-metering program going through 2010 until the Legislature
can fully review PUC's reports on the cost and benefits of CSI
and net-metering, they do not support eliminating the cap or
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increasing the cap to 5% until after the reports to the
Legislature are completed. They believe that the reports should
provide the Legislature with the needed information to assess
the value and possible future risks of net-metering.
TURN is also opposed to increasing the cap at this time, unless
the cap increase is coupled with other changes to the
net-metering program that TURN believes will help ensure that
the non-customer generator ratepayers receive some benefit from
the subsidy. Specifically, TURN would like to change current
rules that provide that the customer generator owns all of the
Renewable Energy Credits associated with that generation, even
for electricity that is sold to the utility.
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083
FN: 0000564