Renewable power increases allowed in amended bill

By CMTA Staff

Capitol Update, Aug. 22, 2012 Share this on FacebookTweet thisEmail this to a friend

AB 327 (Henry Perea, D-Fresno) would fix residential electric rate design to lower rates for customers who use large volumes of electricity – usually in the summer months for air conditioning. High rates for such customers are supposed to encourage conservation, but ever higher rates in the top tiers are higher than can be reasonably absorbed. The utilities are pushing this bill to flatten out the tiered rates to avoid a customer rate-revolt during hot summer months. CMTA supports this policy because sensible residential rate design reduces the chance that high costs will be shifted to industrial customers if politically sensitive residential customers object to paying these costs. 

Now AB 327 has been amended to include provisions to further renewable energy objectives. “Net Energy Metering” (NEM) is a way to encourage customer generation such as solar panels by allowing customers to avoid energy, distribution and other service charges by spinning the meter backwards when energy is put onto the grid. AB 327 would now expand NEM beyond current limits. AB 327 would also allow the California Public Utility Commission (CPUC) to order utilities to purchase renewable electricity beyond the current “renewable portfolio standard” (RPS) limit of 33 percent by 2020. 

There are only a few weeks left in the legislative session. We are disappointed that AB 327 is being used as a vehicle to force these expansions without the benefit of full policy hearings during the normal legislative calendar. Beyond this process issue, CMTA opposes the grant of additional authority to the CPUC to exceed the current RPS without limitation. The RPS target is an exception to the general rule, in law, that utilities must purchase electricity supplies in competitive markets to obtain the best value for customers. The legislature should remain in firm control of this policy. Finally, the NEM is a subsidy for customer generation paid for by customers not using self-generation. It is now being studied by the CPUC to determine whether the cost of NEM is fully worth the benefits. This report is due to be completed by October 2013.  Until this report is complete, policymakers are in the dark on the cost impacts of expanding the NEM. 

For these reasons, CMTA will move to an “oppose unless amended” to remove the recent amendments to AB 327. 

For more information about the prospect of higher energy costs, see the Blog on CARE below. 

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