Solar Legislation Would Be Costly for Large Users

By CMTA Staff

Capitol Update, July 1, 2005 Share this on FacebookTweet thisEmail this to a friend

The Schwarzenegger Administration’s ambitious "Million Solar Roofs Initiative," could cost large energy users much more than they will benefit from the solar-generated power.

At an informational hearing of the Assembly Utilities and Commerce Committee on June 27th, SB 1(Kevin Murray, D-Los Angeles) announced his intention to put a cost cap in the bill to limit program costs.  The cap on customers’ bills would be .098 cents per killowatthour (kWh), to generate $2.5 billion over 10 years to fund the program.  The cap applies to both the $2.5 billion and the .098 cents/kWh needed to generate it.  Given that it is a usage-based cap, it subjects large energy users to much greater costs than smaller users.

According to Murray, the cap would limit most residential customers’ cost responsibility to less than 60 cents a month.  But the situation would be far different for energy-intensive manufacturers, whose bills could rise by tens of thousands of dollars per month just to fund the program.  

CMTA, which has an "oppose unless amended" position on the bill, has proposed a different cost allocation methodology – one  that would not unfairly burden large energy users.

The proposed language spreads the program cost among customer classes based on the distribution costs for each customer class, and overall demand profiles and peak usage.  It would have the effect of avoiding significant additional costs on the industrial class, who already pay exorbitantly high rates.

Manufacturers in California now pay nearly twice as much as their counterparts in other western states.  They also pay a disproportionate share of peak power costs in California since they largely have flat loads and thus do not drive demand during peak periods.  

The decision as to whether the CMTA-proposed amendments will be put into the bill is likely to be decided on July 6th when the bill will be voted on in the Assembly Utilities and Commerce Committee.
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