- Governor Signs Renewable Energy Bills to Expand Feed-in Tariff Program
- November 11, 2009 | Authors: Sophie A. Akins; Robert W. Hargreaves
- Law Firms: Best Best & Krieger LLP - San Diego Office; Best Best & Krieger LLP - Indian Wells Office
Governor Schwarzenegger approved two significant renewable energy bills, Senate Bill 32 (SB 32) and Assembly Bill 920 (AB 920), both of which expand the utilities’ obligation to pay customers for excess power generated by the customers’ renewable energy facilities, such as wind and solar projects. These laws go into effect on January 1, 2010.
SB 32 permits utilities to meet their renewable portfolio requirements by purchasing electricity from larger-scale renewable energy facilities of up to 3 megaWatts (mW) in size; a twofold increase from the previous 1.5 mW size limit. SB 32 also modifies the feed-in tariff (FIT) that utilities must pay customers for such renewable energy. Under previous law, the utility could purchase electricity from a renewable facility at a rate established by the California Public Utilities Commission (PUC). SB 32 requires the California PUC to consider, in establishing the FIT, the time-of-delivery value of electricity, as well as the average price of natural gas generation plus the benefits created by reduced grid transmission costs, reduced emissions and promotion of new technologies. In order to be eligible to receive the new FIT, customers must enter into 10, 15 or 20 year agreements with their local utility and, most significantly, must reimburse the State for any incentives received by the renewable facility.
AB 920 also promotes the sale of energy generated by a renewable project into the grid to the local utility. Under AB 920, all homeowners, businesses and other commercial customers who operate solar or wind systems that generate surplus power will be eligible to receive a payment from their local utility for surplus power. Pursuant to AB 920, customers must affirmatively opt-in to the local utilities’ program in order to be eligible to receive payment for surplus renewable energy. Under the State’s current net metering law, local agencies such as water districts, cities and school districts lose surplus renewable electricity (i.e. the local utility receives it for free). By permitting customers to choose to either: (1) receive a check for the extra energy they produce or (2) have the credit rolled into future utility bills under net-metering, AB 920 encourages customers to install solar or wind systems and conserve the energy they produce.