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HomeMy WebLinkAbout2015-10-27 - AGENDA REPORTS - ENERGY METERING SUCCESSORS PGM (2)Agenda Item: 18 CITY OF SANTA CLARITA Q) AGENDA REPORT NEW BUSINESS i, CITY MANAGER APPROVAL: 1 DATE: October 27, 2015 SUBJECT: CALIFORNIA PUBLIC UTILITIES COMMISSION NET ENERGY METERING SUCCESSOR PROGRAM DEPARTMENT: City Manager's Office PRESENTER: Matthew Levesque RECOMMENDED ACTION City Council discuss and provide direction to staff BACKGROUND At the October 13, 2015, City Council meeting, at the request of Mayor McLean, the City Council directed staff to place an item on the agenda for the October 27, 2015, City Council meeting to discuss rate structure changes to Net Energy Metering (NEM) programs offered by California's three Investor Owned Utilities (IOU), which must be adopted by the California Public Utilities Commission (CPUC) by December 31, 2015. NEM programs are special billing arrangements in which residential and commercial customers with a solar energy system (system) are credited for any excess energy generated by their system that is sent back into the electric utility grid. The current NEM rate structure credits customers who sell any excess energy generated from their systems back to their service provider at the same retail rate the customer pays for receiving electricity when not using their own system. The current discussion over future NEM programs offered by IOUs is taking place as a result of Assembly Bill 327 (AB 327), Chapter 611, Statutes of 2013, which requires that revised NEM program rate structures for all IOUs be adopted by December 31, 2015. The NEM rate structures are required to go into effect on either July 1, 2017, or when each IOU reaches an NEM program cap that is equal to 5% of total customer peak demand. Each IOU has a different NEM program cap based on the size of their customer base. For Southern California Edison (SCE) the total customer peak demand is 44,807 Megawatts (MW). In order to reach their 5% program cap, SCE will need to generate 2,240 MW through their NEM program. As of September 2015, SCE has reached 2.86% of the 5% NEM program cap. CPUC staff are under the impression that each IOU will reach their 5% NEM program cap Page 1 Packet Pg. 190 prior to the July 1, 2017, deadline. As part of the deliberation process for developing a new NEM rate structure, the CPUC has engaged with IOUs, as well as solar industry organizations. The specific elements CPUC is tasked with considering in formulating new rates are listed in California Public Utilities Code Section 2827.1 and include the following: 1. Ensure that the standard contract or tariff made available to eligible customers ensures that customer -sited renewable distributed generation continues to grow sustainably and include specific alternatives designed for growth among residential customers in disadvantaged communities. 2. Establish terms of service and billing rules for eligible customers. 3. Ensure that the standard contract or tariff made available to eligible customers is based on the costs and benefits of the renewable electrical generation facility. 4. Ensure that the total benefits of the standard contract or tariff to all customers and the electrical system are approximately equal to the total costs. 5. Allow projects greater than one megawatt that do not have significant impact on the distribution grid to be built to the size of the onsite load if, the projects with a capacity of more than one megawatt are subject to reasonable interconnection charges. 6. Establish a transition period during which eligible customers taking service under a net energy metering tariff or contract shall be eligible to continue service under the previously applicable net energy metering tariff for a length of time to be determined by the commission. Any rules adopted by the commission shall consider a reasonable expected payback period based on the year the customer initially took service under the tariff or contract. 7. The commission shall determine which rates and tariffs are applicable to customers only during a rulemaking proceeding. Any fixed charges for residential customer generators that differ from the fixed charges allowed pursuant to subdivision (f) of Section 739.9 shall be authorized only in a rulemaking proceeding involving every large electrical corporation. The commission shall ensure customer generators are provided electric service at rates that are just and reasonable. In summer 2015, the CPUC accepted proposals from parties of the proceeding to develop an NEM successor program. A total of 12 proposals were submitted to the CPUC by IOUs, as well as groups representing the solar industry, recommending changes to NEM program rate structures. Examples of NEM program concepts that CPUC is considering are outlined below. SCE has proposed a one-time $75 interconnection fee and unspecified "engineering review fees" to cover the costs of connecting a system to the electrical grid. Additionally, SCE has proposed to implement a monthly base charge of $3 per kilowatt of a system and reduce the credit provided to customers who send electricity back to the grid from 15 cents per kilowatt-hour to 8 cents per kilowatt-hour. Similar to SCE, Pacific Gas and Electric (PG&E) has proposed the addition of an Page 2 Packet Pg. 191 interconnection fee, adding a new base fee of $3 for each kilowatt of a system, reducing the credit paid to customers who generate energy back into the grid from the current retail rate to 9 cents per kilowatt-hour, and reducing the netting period, which is how long solar customers can carry bill credits forward, from one year to one month. San Diego Gas and Electric (SDG&E) has proposed a $280 interconnection fee and to either increase the credit paid to residential customers who generate energy back into the grid from 4 cents per kilowatt-hour to 11 cents per kilowatt-hour or charge a $21 fixed monthly access fee. SDG&E has also proposed to reduce the netting period from one year to one month. The CPUC held hearings October 5-7, 2015, regarding specific questions on a limited number of proposals. The purpose of these hearings was for clarification related to specific aspects of certain proposals and was not intended for the CPUC to render any decision at that time. Future opportunities to provide comment on a new NEM program would be for the City Council to transmit position letters to CPUC or to participate in the public comment portion of a CPUC hearing. While written and verbal comments will continue to be accepted by CPUC, and will be included in the official record, the comments do not hold equal bearing to comments submitted by individuals or organizations that have been granted party status to the proceeding. According to the CPUC, the formation of a new NEM program is very fluid. The recommendations contained within the proposals will be reviewed by an administrative law judge who is responsible for preparing a final decision on a new NEM program and making a recommendation to the CPUC. After the administrative law judge has issued a recommendation for a new NEM program, the CPUC must wait 30 days before taking any action, which can include adopting, modifying, or recommending a different program. Any official action taken by CPUC will be applied to all IOUs in California. There are four scheduled CPUC hearings slated to take place before the end of the year, with action most likely to occur at one of two meetings in December. AB 327 also directs the CPUC to establish a transition period for those customers with existing systems that participate in an NEM program. The transition period allows existing NEM customers, as well as any new NEM customers enrolled in a program prior to new rates taking effect, to secure existing NEM program rates for a period of 20 years from the date of installation. ALTERNATIVE ACTION Other direction as determined by the City Council. FISCAL IMPACT No additional resources, beyond those contained within the adopted Fiscal Year 2015/16 City budget, are required for implementation of the recommended action. Page 3 Packet Pg. 192