On October 12th, California Governor Schwarzenegger announced that he had signed Assembly Bill 920 as one of several bills “to reduce greenhouse gas emissions and create jobs in California.”
Assembly Bill 920 amends section 2827 of the California Public Utilities Code to require utilities to pay customers, if a customer’s solar or wind generator produces more electricity during a 12-month period than the customer consumes at that location.
Section 2827 refers to this as “net surplus energy” (“Net Surplus”). This changes existing law which requires a utility to net customer generation against consumption during a 12-month period (“net energy metering”), but allows the utility to keep the Net Surplus without payment.
Section 2827 applies to both investor-owned utilities (IOUs) and publicly-owned utilities (POUs), which are referred to in Section 2827 as “electric utility.” However, there is an exception for the Los Angeles Department of Water and Power.
An electric utility’s obligation to purchase is limited to 2.5% of that utility’s peak customer demand. Customers qualify for the program on a first-come, first-served basis until the cap is reached.
To qualify for Net Surplus compensation, the customer must use a solar or wind generator with a capacity not in excess of 1 megawatt located on premises owned, leased, or rented by the customer. Payment will be based on an aggregation of 12 months’ generation and usage. Every electric utility is required to process a request for an interconnection agreement for Net Surplus compensation within 30 days from receipt of a completed application.
Rates for Net Surplus are to be established by January 1, 2011. The payment will be determined, in the case of IOUs by the California Public Utilities Commission and in the case of POUs by the elected body responsible for setting rates. The rate shall provide the customer with “just and reasonable compensation for the value” of the Net Surplus. The ratemaking authority is also required to (a) determine “whether compensation will include, where appropriate justification exists, either or both…the value of the electricity itself” and the value of the renewable attributes and (b) ensure that the rate does not result in a shifting of costs among customers. As will be observed, there are obvious tensions which will, no doubt, result in protracted discussion.
Purchases of Net Surplus shall count to fulfill an electric utility’s renewables portfolio standard target set forth in Public Utilities Code sections 399.15(b)(1) for IOUs and 387 for POUs.
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