SECTIONS 2821-2829 - California Statutes

PUBLIC UTILITIES CODE

SECTION 2821-2829

2821. (a) The commission shall approve and establish equitable
charges to be paid by an electrical corporation which purchases
electricity or electrical generating capacity, or both, from any
private energy producer employing other than a conventional power
source for the generation of electricity.
(b) The commission, on its own motion or on application of an
electrical corporation or a private energy producer, may also specify
the prices, terms, and conditions for the purchase or sale of
electricity or electrical generating capacity, or both, between an
electrical corporation and a private energy producer, and these
prices, terms, and conditions, so specified, shall be considered
reasonable and prudent for all purposes. The commission may act to
specify these prices, terms, and conditions on its own motion or on
application of an electrical corporation or a private energy
producer.
(c) Every private energy producer employing hydroelectric
facilities, who executes a contract with an electrical corporation on
or after January 1, 1988, or prior to that date, for the purchase of
electricity or electrical generating capacity, or both, shall obtain
and provide proof of compliance by the private energy producer with
all state laws relating to the control, appropriation, use, and
distribution of water, including, but not limited to, the obtaining
of applicable licenses and permits. The private energy producer shall
also provide proof of compliance with the federal Clean Water Act.
(d) (1) For the purpose of providing proof of compliance with all
state laws relating to the control, appropriation, use, and
distribution of water, the electrical corporation shall require the
private energy producer to provide either of the following:
(A) Certification from the State Water Resources Control Board
that a water right permit has been issued for the operation of the
hydroelectric facility.
(B) Certification from the State Water Resources Control Board
that, in the opinion of the board, the private energy producer
possesses riparian rights or other water rights which authorize the
operation of the hydroelectric facility.
(2) The requirements of paragraph (1) shall apply only to
contracts involving hydroelectric projects which have not been
accepted by the electrical corporation for commercial operation prior
to May 18, 1987.
(3) Every contract executed by a private energy producer who is in
violation of paragraph (1) is void and unenforceable on and after
whichever of the following dates applies:
(A) February 29, 1988, for contracts involving hydroelectric
projects which have been accepted by the electrical corporation for
commercial operation on or after May 18, 1987, and prior to January
1, 1988.
(B) The 60th day after a project has been accepted by the
electrical corporation for commercial operation, for contracts
involving hydroelectric projects which are accepted by the electrical
corporation for commercial operation on or after January 1, 1988.
(4) The commission shall disallow, for purposes of establishing
rates for an electrical corporation, all amounts expended for the
purchase of electricity pursuant to a contract that is void and
unenforceable under this subdivision.
(e) (1) For the purposes of providing proof of compliance with the
federal Clean Water Act, the electrical corporation shall require
the private energy producer to provide a statement from the State
Water Resources Control Board that certification pursuant to Section
401 of the federal Clean Water Act has either been granted or waived
by the board for operation of the hydroelectric facility. The board
shall not waive certification unless the board finds that there is
reasonable assurance that the project shall comply with all
applicable requirements of the federal Clean Water Act and state
water quality laws. If the board cannot make this finding within the
period provided for certification, the board shall either certify
upon conditions that provide reasonable assurance of compliance or
deny certification.
(2) The requirements of paragraph (1) shall apply only to
contracts involving hydroelectric projects which have not been
accepted by the electrical corporation for commercial operation prior
to January 1, 1992.
(3) Every contract executed by a private energy producer who is in
violation of paragraph (1) is void and unenforceable on and after
whichever of the following dates applies:
(A) March 1, 1993, for contracts involving hydroelectric projects
which are accepted by the electrical corporation for commercial
operation between January 1, 1992, and December 31, 1992.
(B) The 60th day after having been accepted by the electrical
corporation for commercial operation, for contracts involving
hydroelectric projects which are accepted by the electrical
corporation for commercial operation on or after January 1, 1993.
(4) The commission shall disallow, for purposes of establishing
rates for an electrical corporation, all amounts expended for the
purchase of electricity pursuant to a contract that is void and
unenforceable under this subdivision.
(f) Subdivision (d) does not apply to any private energy producer
if all of the following conditions are met:
(1) The electrical corporation did not make timely written demand
for the proof of compliance required by paragraph (1) of subdivision
(d).
(2) On or before the date the project was accepted by the
electrical corporation for commercial operation, the private energy
producer was in fact in compliance with all applicable state laws
relating to the control, appropriation, use, and distribution of
water, including, but not limited to, those laws that require the
obtaining of all applicable entitlements.
(3) Prior to October 14, 1991, the private energy producer has
provided proof of the applicable certification from the State Water
Resources Control Board pursuant to subparagraph (A) of paragraph (1)
of subdivision (d), which proof contains further certification from
the State Water Resources Control Board of the existence of the
condition identified in paragraph (2) of subdivision (f).
(g) For purposes of meeting the requirements of subdivision (d) or
(e), or of providing certification required under Section 26013 of
the Public Resources Code, the private energy producer shall furnish
information as is reasonably required by the State Water Resources
Control Board to document a claim of right, a certification, or a
waiver. Every private energy producer requesting certification and a
statement from the board pursuant to subdivisions (d) and (e), or to
Section 26013 of the Public Resources Code, shall pay to the board at
the time of filing the request, a fee of two hundred fifty dollars
($250) to cover the reasonable cost of the board in evaluating and
processing the certification request.
(h) As used in this section, "Federal Clean Water Act" means the
federal Water Pollution Control Act (Sections 1251 et seq. of Volume
33 of the United States Code) and acts amendatory thereof or
supplementary thereto.

2821.5. The Legislature finds and declares all of the following:
(a) Small power producers provide important alternative sources of
electrical energy.
(b) The commission is required to approve and establish equitable
charges to be paid by electrical corporations which purchase
electricity or electrical generating capacity, or both, from
qualifying small power producers.
(c) The commission recognized the importance of developing
standard offer contracts based on long-run avoided costs in order to
encourage the development of qualifying small power producers. On
September 7, 1983, in Decision 83-09-054, the commission approved
interim standard offer No. 4, which established a long-term power
purchase contract.
(d) Many pioneer small power producers operating prior to
September 7, 1983, did so under power purchase contracts based on
short-term energy prices and long-term capacity prices. When interim
standard offer No. 4 was approved, the commission allowed its
provisions to be offered to qualified facility projects which had not
yet obtained construction financing or otherwise entered a contract
and started construction. Pioneer small power producers with existing
contracts were not allowed to switch to the new interim standard
offer No. 4 until their existing contracts were no longer in effect.
(e) On April 17, 1985, pursuant to Decision 85-04-075, the
commission suspended all payment options offered under interim
standard offer No. 4 due to the contrasting of excessive energy
capacity, and the conclusion that prices were too high.
(f) Many qualifying small power producers who were operating under
contracts made prior to September 7, 1983, were thus precluded by
the commission from adopting interim standard offer No. 4, and may be
required to accept new prices and terms which provide less
compensation than the suspended interim standard offer No. 4.
(g) These financially stressed qualifying small power producers
assert they were unfairly denied the opportunity to adopt interim
standard offer No. 4 by the commission. They also assert that much of
the capacity contracted for under the suspended interim standard
offer No. 4 will never be constructed. They further allege that they
are being forced to close small powerplants which are currently in
operation while producers with interim standard offer No. 4 contracts
are constructing new plants.

2822. The commission shall approve and establish standby charges
for electrical corporations. The commission may act in this regard on
its own motion or on application of an electrical corporation or a
private energy producer.

2823. The commission shall approve and establish charges for
transmission service. The commission may act in this regard on its
own motion or on application of an electrical corporation or a
private energy producer.

2824. (a) The commission shall conduct a review of the charges paid
by electrical corporations for electricity generated from other than
conventional power sources and furnished to such corporations.
Following such review, the commission shall consider adjustments in
such charges to encourage the generation of electricity from other
than conventional power sources.
(b) The commission shall conduct a review of standby charges
charged by electrical corporations. Following such review, the
commission shall consider adjustments in such charges to encourage
the utilization of electricity generated from other than conventional
power sources and to enable electrical corporations to review the
costs of providing standby service.
(c) The commission shall conduct a review of charges for
transmission service made by electrical corporations for the
transmission of electricity generated from other than conventional
power sources. Following such review, the commission shall consider
adjustments in such charges to encourage the generation of
electricity from other than conventional power sources.

2826. (a) The commission shall establish requirements for the
administration of power purchase contracts between electrical
corporations and private energy producers. For any project which has
not received all regulatory permits at the time of the commission's
review of a proposed project deferral agreement, the commission
shall, at a minimum, apply both of the following requirements:
(1) Prohibit payments by an electrical corporation to a private
energy producer to defer the construction of a private energy project
unless the private energy producer agrees to repay all deferral
payments charged to ratepayers in the event the project is not
constructed and operating by the time the deferral period expires.
(2) Require the private energy producer to provide adequate
security to ensure repayment of those ratepayer charges.
(b) Subdivision (a) does not apply to a power purchase contract
between an electrical corporation and a private energy producer which
is a major customer of the electrical corporation, if the contract
is negotiated pursuant to procedures prescribed by the commission and
for the purpose of retaining that customer.

2826.5. (a) As used in this section, the following terms have the
following meanings:
(1) "Benefiting account" means an electricity account, or more
than one account, mutually agreed upon by Pacific Gas and Electric
Company and the City of Davis.
(2) "Bill credit" means credits calculated based upon the
electricity generation component of the rate schedule applicable to a
benefiting account, as applied to the net metered quantities of
electricity.
(3) "PVUSA" means the photovoltaic electricity generation facility
selected by the City of Davis, located at 24662 County Road, Davis,
California, with a rated peak electricity generation capacity of 600
kilowatts, and as it may be expanded, not to exceed one megawatt of
peak generation capacity.
(4) "Net metered" means the electricity output from the PVUSA.
(5) "Environmental attributes" associated with the PVUSA include,
but are not limited to, the credits, benefits, emissions reductions,
environmental air quality credits, and emissions reduction credits,
offsets, and allowances, however entitled resulting from the
avoidance of the emission of any gas, chemical, or other substance
attributable to the PVUSA.
(b) The City of Davis may elect to designate a benefiting account,
or more than one account, to receive bill credit for the electricity
generated by the PVUSA, if all of the following conditions are met:
(1) A benefiting account receives service under a time-of-use rate
schedule.
(2) The electricity output of the PVUSA is metered for time of use
to allow allocation of each bill credit to correspond to the
time-of-use period of a benefiting account.
(3) All costs associated with the metering requirements of
paragraphs (1) and (2) are the responsibility of the City of Davis.
(4) All electricity delivered to the electrical grid by the PVUSA
is the property of Pacific Gas and Electric Company.
(5) PVUSA does not sell electricity delivered to the electrical
grid to a third party.
(6) The right, title, and interest in the environmental attributes
associated with the electricity delivered to the electrical grid by
the PVUSA are the property of Nuon Renewable Ventures USA, LLC.
(c) A benefiting account shall be billed on a monthly basis, as
follows:
(1) For all electricity usage, the rate schedule applicable to the
benefiting account, including any surcharge, exit fee, or other cost
recovery mechanism, as determined by the commission, to reimburse
the Department of Water Resources for purchases of electricity,
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(2) The rate schedule for the benefiting account shall also
provide credit for the generation component of the time-of-use rates
for the electricity generated by the PVUSA that is delivered to the
electrical grid. The generation component credited to the benefiting
account may not include the surcharge, exit fee, or other cost
recovery mechanism, as determined by the commission, to reimburse the
Department of Water Resources for purchases of electricity, pursuant
to Division 27 (commencing with Section 80000) of the Water Code.
(3) If in any billing cycle, the charge pursuant to paragraph (1)
for electricity usage exceeds the billing credit pursuant to
paragraph (2), the City of Davis shall be charged for the difference.
(4) If in any billing cycle, the billing credit pursuant to
paragraph (2), exceeds the charge for electricity usage pursuant to
paragraph (1), the difference shall be carried forward as a credit to
the next billing cycle.
(5) After the electricity usage charge pursuant to paragraph (1)
and the credit pursuant to paragraph (2) are determined for the last
billing cycle of a calendar year, any remaining credit resulting from
the application of this section shall be reset to zero.
(d) Not more frequently that once per year, and upon providing
Pacific Gas and Electric Company with a minimum of 60 days notice,
the City of Davis may elect to change a benefiting account. Any
credit resulting from the application of this section earned prior to
the change in a benefiting account that has not been used as of the
date of the change in the benefit account, shall be applied, and may
only be applied, to a benefiting account as changed.
(e) Pacific Gas and Electric Company shall file an advice letter
with the Public Utilities Commission, that complies with this
section, not later than 10 days after the effective date of this
section, proposing a rate tariff for a benefiting account. The
commission, within 30 days of the date of filing, shall approve the
proposed tariff, or specify conforming changes to be made by Pacific
Gas and Electric Company to be filed in a new advice letter.
(f) The City of Davis may terminate its election pursuant to
subdivision (b), upon providing Pacific Gas and Electric Company with
a minimum of 60 days notice. Should the City of Davis sell its
interest in the PVUSA, or sell the electricity generated by the
PVUSA, in a manner other than required by this section, upon the date
of either event, and the earliest date if both events occur, no
further bill credit pursuant to paragraph (2) of subdivision (b) may
be earned. Only credit earned prior to that date shall be made to a
benefiting account.
(g) The Legislature finds and declares that credit for a
benefiting account for the electricity output from the PVUSA are in
the public interest in order to value the production of this unique,
wholly renewable resource electricity generation facility located in,
and owned in part by, the City of Davis. Because of the unique
circumstances applicable only to the PVUSA a statute of general
applicability cannot be enacted within the meaning of subdivision (b)
of Section 16 of Article IV of the California Constitution.
Therefore, this special statute is necessary.

2827. (a) The Legislature finds and declares that a program to
provide net energy metering combined with net surplus compensation,
co-energy metering, and wind energy co-metering for eligible
customer-generators is one way to encourage substantial private
investment in renewable energy resources, stimulate in-state economic
growth, reduce demand for electricity during peak consumption
periods, help stabilize California's energy supply infrastructure,
enhance the continued diversification of California's energy resource
mix, reduce interconnection and administrative costs for electricity
suppliers, and encourage conservation and efficiency.
(b) As used in this section, the following terms have the
following meanings:
(1) "Co-energy metering" means a program that is the same in all
other respects as a net energy metering program, except that the
local publicly owned electric utility has elected to apply a
generation-to-generation energy and time-of-use credit formula as
provided in subdivision (i).
(2) "Electrical cooperative" means an electrical cooperative as
defined in Section 2776.
(3) "Electric utility" means an electrical corporation, a local
publicly owned electric utility, or an electrical cooperative, or any
other entity, except an electric service provider, that offers
electrical service. This section shall not apply to a local publicly
owned electric utility that serves more than 750,000 customers and
that also conveys water to its customers.
(4) "Eligible customer-generator" means a residential customer,
small commercial customer as defined in subdivision (h) of Section
331, or commercial, industrial, or agricultural customer of an
electric utility, who uses a solar or a wind turbine electrical
generating facility, or a hybrid system of both, with a capacity of
not more than one megawatt that is located on the customer's owned,
leased, or rented premises, and is interconnected and operates in
parallel with the electric grid, and is intended primarily to offset
part or all of the customer's own electrical requirements.
(5) "Net energy metering" means measuring the difference between
the electricity supplied through the electric grid and the
electricity generated by an eligible customer-generator and fed back
to the electric grid over a 12-month period as described in
subdivisions (c) and (h).
(6) "Net surplus customer-generator" means an eligible
customer-generator that generates more electricity during a 12-month
period than is supplied by the electric utility to the eligible
customer-generator during the same 12-month period.
(7) "Net surplus electricity" means all electricity generated by
an eligible customer-generator measured in kilowatthours over a
12-month period that exceeds the amount of electricity consumed by
that eligible customer-generator.
(8) "Net surplus electricity compensation" means a per
kilowatthour rate offered by the electric utility to the net surplus
customer-generator for net surplus electricity that is set by the
ratemaking authority pursuant to subdivision (h).
(9) "Ratemaking authority" means, for an electrical corporation or
electrical cooperative, the commission, and for a local publicly
owned electric utility, the local elected body responsible for
setting the rates of the local publicly owned utility.
(10) "Wind energy co-metering" means any wind energy project
greater than 50 kilowatts, but not exceeding one megawatt, where the
difference between the electricity supplied through the electric grid
and the electricity generated by an eligible customer-generator and
fed back to the electric grid over a 12-month period is as described
in subdivision (h). Wind energy co-metering shall be accomplished
pursuant to Section 2827.8.
(c) (1) Every electric utility shall develop a standard contract
or tariff providing for net energy metering, and shall make this
standard contract or tariff available to eligible
customer-generators, upon request, on a first-come-first-served basis
until the time that the total rated generating capacity used by
eligible customer-generators exceeds 5 percent of the electric
utility's aggregate customer peak demand. Net energy metering shall
be accomplished using a single meter capable of registering the flow
of electricity in two directions. An additional meter or meters to
monitor the flow of electricity in each direction may be installed
with the consent of the eligible customer-generator, at the expense
of the electric utility, and the additional metering shall be used
only to provide the information necessary to accurately bill or
credit the eligible customer-generator pursuant to subdivision (h),
or to collect solar or wind electric generating system performance
information for research purposes. If the existing electrical meter
of an eligible customer-generator is not capable of measuring the
flow of electricity in two directions, the eligible
customer-generator shall be responsible for all expenses involved in
purchasing and installing a meter that is able to measure electricity
flow in two directions. If an additional meter or meters are
installed, the net energy metering calculation shall yield a result
identical to that of a single meter. An eligible customer-generator
that is receiving service other than through the standard contract or
tariff may elect to receive service through the standard contract or
tariff until the electric utility reaches the generation limit set
forth in this paragraph. Once the generation limit is reached, only
eligible customer-generators that had previously elected to receive
service pursuant to the standard contract or tariff have a right to
continue to receive service pursuant to the standard contract or
tariff. Eligibility for net energy metering does not limit an
eligible customer-generator's eligibility for any other rebate,
incentive, or credit provided by the electric utility, or pursuant to
any governmental program, including rebates and incentives provided
pursuant to the California Solar Initiative.
(2) An electrical corporation shall include a provision in the net
energy metering contract or tariff requiring that any customer with
an existing electrical generating facility and meter who enters into
a new net energy metering contract shall provide an inspection report
to the electrical corporation, unless the electrical generating
facility and meter have been installed or inspected within the
previous three years. The inspection report shall be prepared by a
California licensed contractor who is not the owner or operator of
the facility and meter. A California licensed electrician shall
perform the inspection of the electrical portion of the facility and
meter.
(3) (A) On an annual basis, beginning in 2003, every electric
utility shall make available to the ratemaking authority information
on the total rated generating capacity used by eligible
customer-generators that are customers of that provider in the
provider's service area and the net surplus electricity purchased by
the electric utility pursuant to this section.
(B) An electric service provider operating pursuant to Section 394
shall make available to the ratemaking authority the information
required by this paragraph for each eligible customer-generator that
is their customer for each service area of an electric corporation,
local publicly owned electric utility, or electrical cooperative, in
which the eligible customer-generator has net energy metering.
(C) The ratemaking authority shall develop a process for making
the information required by this paragraph available to electric
utilities, and for using that information to determine when, pursuant
to paragraphs (1) and (4), an electric utility is not obligated to
provide net energy metering to additional eligible
customer-generators in its service area.
(4) An electric utility is not obligated to provide net energy
metering to additional eligible customer-generators in its service
area when the combined total peak demand of all electricity used by
eligible customer-generators served by all the electric utilities in
that service area furnishing net energy metering to eligible
customer-generators exceeds 5 percent of the aggregate customer peak
demand of those electric utilities.
(5) By January 1, 2010, the commission, in consultation with the
Energy Commission, shall submit a report to the Governor and the
Legislature on the costs and benefits of net energy metering, wind
energy co-metering, and co-energy metering to participating customers
and nonparticipating customers and with options to replace the
economic costs and benefits of net energy metering, wind energy
co-metering, and co-energy metering with a mechanism that more
equitably balances the interests of participating and
nonparticipating customers, and that incorporates the findings of the
report on economic and environmental costs and benefits of net
metering required by subdivision (n).
(d) Every electric utility shall make all necessary forms and
contracts for net energy metering and net surplus electricity
compensation service available for download from the Internet.
(e) (1) Every electric utility shall ensure that requests for
establishment of net energy metering and net surplus electricity
compensation are processed in a time period not exceeding that for
similarly situated customers requesting new electric service, but not
to exceed 30 working days from the date it receives a completed
application form for net energy metering service or net surplus
electricity compensation, including a signed interconnection
agreement from an eligible customer-generator and the electric
inspection clearance from the governmental authority having
jurisdiction.
(2) Every electric utility shall ensure that requests for an
interconnection agreement from an eligible customer-generator are
processed in a time period not to exceed 30 working days from the
date it receives a completed application form from the eligible
customer-generator for an interconnection agreement.
(3) If an electric utility is unable to process a request within
the allowable timeframe pursuant to paragraph (1) or (2), it shall
notify the eligible customer-generator and the ratemaking authority
of the reason for its inability to process the request and the
expected completion date.
(f) (1) If a customer participates in direct transactions pursuant
to paragraph (1) of subdivision (b) of Section 365 with an electric
service provider that does not provide distribution service for the
direct transactions, the electric utility that provides distribution
service for the eligible customer-generator is not obligated to
provide net energy metering or net surplus electricity compensation
to the customer.
(2) If a customer participates in direct transactions pursuant to
paragraph (1) of subdivision (b) of Section 365 with an electric
service provider, and the customer is an eligible customer-generator,
the electric utility that provides distribution service for the
direct transactions may recover from the customer's electric service
provider the incremental costs of metering and billing service
related to net energy metering and net surplus electricity
compensation in an amount set by the ratemaking authority.
(g) Except for the time-variant kilowatthour pricing portion of
any tariff adopted by the commission pursuant to paragraph (4) of
subdivision (a) of Section 2851, each net energy metering contract or
tariff shall be identical, with respect to rate structure, all
retail rate components, and any monthly charges, to the contract or
tariff to which the same customer would be assigned if the customer
did not use an eligible solar or wind electrical generating facility,
except that eligible customer-generators shall not be assessed
standby charges on the electrical generating capacity or the
kilowatthour production of an eligible solar or wind electrical
generating facility. The charges for all retail rate components for
eligible customer-generators shall be based exclusively on the
customer-generator's net kilowatthour consumption over a 12-month
period, without regard to the eligible customer-generator's choice as
to from whom it purchases electricity that is not self-generated.
Any new or additional demand charge, standby charge, customer charge,
minimum monthly charge, interconnection charge, or any other charge
that would increase an eligible customer-generator's costs beyond
those of other customers who are not eligible customer-generators in
the rate class to which the eligible customer-generator would
otherwise be assigned if the customer did not own, lease, rent, or
otherwise operate an eligible solar or wind electrical generating
facility is contrary to the intent of this section, and shall not
form a part of net energy metering contracts or tariffs.
(h) For eligible customer-generators, the net energy metering
calculation shall be made by measuring the difference between the
electricity supplied to the eligible customer-generator and the
electricity generated by the eligible customer-generator and fed back
to the electric grid over a 12-month period. The following rules
shall apply to the annualized net metering calculation:
(1) The eligible residential or small commercial
customer-generator shall, at the end of each 12-month period
following the date of final interconnection of the eligible
customer-generator's system with an electric utility, and at each
anniversary date thereafter, be billed for electricity used during
that 12-month period. The electric utility shall determine if the
eligible residential or small commercial customer-generator was a net
consumer or a net surplus customer-generator during that period.
(2) At the end of each 12-month period, where the electricity
supplied during the period by the electric utility exceeds the
electricity generated by the eligible residential or small commercial
customer-generator during that same period, the eligible residential
or small commercial customer-generator is a net electricity consumer
and the electric utility shall be owed compensation for the eligible
customer-generator's net kilowatthour consumption over that 12-month
period. The compensation owed for the eligible residential or small
commercial customer-generator's consumption shall be calculated as
follows:
(A) For all eligible customer-generators taking service under
contracts or tariffs employing "baseline" and "over baseline" rates,
any net monthly consumption of electricity shall be calculated
according to the terms of the contract or tariff to which the same
customer would be assigned to, or be eligible for, if the customer
was not an eligible customer-generator. If those same
customer-generators are net generators over a billing period, the net
kilowatthours generated shall be valued at the same price per
kilowatthour as the electric utility would charge for the baseline
quantity of electricity during that billing period, and if the number
of kilowatthours generated exceeds the baseline quantity, the excess
shall be valued at the same price per kilowatthour as the electric
utility would charge for electricity over the baseline quantity
during that billing period.
(B) For all eligible customer-generators taking service under
contracts or tariffs employing time-of-use rates, any net monthly
consumption of electricity shall be calculated according to the terms
of the contract or tariff to which the same customer would be
assigned, or be eligible for, if the customer was not an eligible
customer-generator. When those same customer-generators are net
generators during any discrete time-of-use period, the net
kilowatthours produced shall be valued at the same price per
kilowatthour as the electric utility would charge for retail
kilowatthour sales during that same time-of-use period. If the
eligible customer-generator's time-of-use electrical meter is unable
to measure the flow of electricity in two directions, paragraph (1)
of subdivision (c) shall apply.
(C) For all eligible residential and small commercial
customer-generators and for each billing period, the net balance of
moneys owed to the electric utility for net consumption of
electricity or credits owed to the eligible customer-generator for
net generation of electricity shall be carried forward as a monetary
value until the end of each 12-month period. For all eligible
commercial, industrial, and agricultural customer-generators, the net
balance of moneys owed shall be paid in accordance with the electric
utility's normal billing cycle, except that if the eligible
commercial, industrial, or agricultural customer-generator is a net
electricity producer over a normal billing cycle, any excess
kilowatthours generated during the billing cycle shall be carried
over to the following billing period as a monetary value, calculated
according to the procedures set forth in this section, and appear as
a credit on the eligible commercial, industrial, or agricultural
customer-generator's account, until the end of the annual period when
paragraph (3) shall apply.
(3) At the end of each 12-month period, where the electricity
generated by the eligible customer-generator during the 12-month
period exceeds the electricity supplied by the electric utility
during that same period, the eligible customer-generator is a net
surplus customer-generator and the electric utility shall, upon an
affirmative election by the eligible customer-generator, either (A)
provide net surplus electricity compensation for any net surplus
electricity generated during the prior 12-month period, or (B) allow
the eligible customer-generator to apply the net surplus electricity
as a credit for kilowatthours subsequently supplied by the electric
utility to the surplus customer-generator. For an eligible
customer-generator that does not affirmatively elect to receive
service pursuant to net surplus electricity compensation, the
electric utility shall retain any excess kilowatthours generated
during the prior 12-month period. The eligible customer-generator not
affirmatively electing to receive service pursuant to net surplus
electricity compensation shall not be owed any compensation for the
net surplus electricity unless the electric utility enters into a
purchase agreement with the eligible customer-generator for those
excess kilowatthours. Every electric utility shall, by January 31,
2010, provide notice to eligible customer-generators that they are
eligible to receive net surplus electricity compensation for net
surplus electricity, that they must elect to receive net surplus
electricity compensation, and that the 12-month period commences when
the electric utility receives the eligible customer-generator's
election. The commission may, for an electric utility that is an
electrical corporation or electrical cooperative, adopt requirements
for providing notice and the manner by which eligible
customer-generators may elect to receive net surplus electricity
compensation.
(4) (A) The ratemaking authority shall, by January 1, 2011,
establish a net surplus electricity compensation valuation to
compensate the net surplus customer-generator for the value of net
surplus electricity generated by the net surplus customer-generator.
The commission shall establish the valuation in a ratemaking
proceeding. The ratemaking authority for a local publicly owned
electric utility shall establish the valuation in a public
proceeding. The net surplus electricity compensation valuation shall
be established so as to provide the net surplus customer-generator
just and reasonable compensation for the value of net surplus
electricity, while leaving other ratepayers unaffected. The
ratemaking authority shall determine whether the compensation will
include, where appropriate justification exists, either or both of
the following components:
(i) The value of the electricity itself.
(ii) The value of the renewable attributes of the electricity.
(B) In establishing the rate pursuant to subparagraph (A), the
ratemaking authority shall ensure that the rate does not result in a
shifting of costs between solar customer-generators and other bundled
service customers.
(5) (A) Upon adoption of the net surplus electricity compensation
rate by the ratemaking authority, any renewable energy credit, as
defined in Section 399.12, for net surplus electricity purchased by
the electric utility shall belong to the electric utility. Any
renewable energy credit associated with electricity generated by the
eligible customer-generator that is utilized by the eligible
customer-generator shall remain the property of the eligible
customer-generator.
(B) Upon adoption of the net surplus electricity compensation rate
by the ratemaking authority, the net surplus electricity purchased
by the electric utility shall count toward the electric utility's
renewables portfolio standard annual procurement targets for the
purposes of paragraph (1) of subdivision (b) of Section 399.15, or
for a local publicly owned electric utility, the renewables portfolio
standard annual procurement targets established pursuant to Section
387.
(6) The electric utility shall provide every eligible residential
or small commercial customer-generator with net electricity
consumption and net surplus electricity generation information with
each regular bill. That information shall include the current
monetary balance owed the electric utility for net electricity
consumed, or the net surplus electricity generated, since the last
12-month period ended. Notwithstanding this subdivision, an electric
utility shall permit that customer to pay monthly for net energy
consumed.
(7) If an eligible residential or small commercial
customer-generator terminates the customer relationship with the
electric utility, the electric utility shall reconcile the eligible
customer-generator's consumption and production of electricity during
any part of a 12-month period following the last reconciliation,
according to the requirements set forth in this subdivision, except
that those requirements shall apply only to the months since the most
recent 12-month bill.
(8) If an electric service provider or electric utility providing
net energy metering to a residential or small commercial
customer-generator ceases providing that electric service to that
customer during any 12-month period, and the customer-generator
enters into a new net energy metering contract or tariff with a new
electric service provider or electric utility, the 12-month period,
with respect to that new electric service provider or electric
utility, shall commence on the date on which the new electric service
provider or electric utility first supplies electric service to the
customer-generator.
(i) Notwithstanding any other provisions of this section, the
following provisions shall apply to an eligible customer-generator
with a capacity of more than 10 kilowatts, but not exceeding one
megawatt, that receives electric service from a local publicly owned
electric utility that has elected to utilize a co-energy metering
program unless the local publicly owned electric utility chooses to
provide service for eligible customer-generators with a capacity of
more than 10 kilowatts in accordance with subdivisions (g) and (h):
(1) The eligible customer-generator shall be required to utilize a
meter, or multiple meters, capable of separately measuring
electricity flow in both directions. All meters shall provide
time-of-use measurements of electricity flow, and the customer shall
take service on a time-of-use rate schedule. If the existing meter of
the eligible customer-generator is not a time-of-use meter or is not
capable of measuring total flow of energy in both directions, the
eligible customer-generator shall be responsible for all expenses
involved in purchasing and installing a meter that is both
time-of-use and able to measure total electricity flow in both
directions. This subdivision shall not restrict the ability of an
eligible customer-generator to utilize any economic incentives
provided by a governmental agency or an electric utility to reduce
its costs for purchasing and installing a time-of-use meter.
(2) The consumption of electricity from the local publicly owned
electric utility shall result in a cost to the eligible
customer-generator to be priced in accordance with the standard rate
charged to the eligible customer-generator in accordance with the
rate structure to which the customer would be assigned if the
customer did not use an eligible solar or wind electrical generating
facility. The generation of electricity provided to the local
publicly owned electric utility shall result in a credit to the
eligible customer-generator and shall be priced in accordance with
the generation component, established under the applicable structure
to which the customer would be assigned if the customer did not use
an eligible solar or wind electrical generating facility.
(3) All costs and credits shall be shown on the eligible
customer-generator's bill for each billing period. In any months in
which the eligible customer-generator has been a net consumer of
electricity calculated on the basis of value determined pursuant to
paragraph (2), the customer-generator shall owe to the local publicly
owned electric utility the balance of electricity costs and credits
during that billing period. In any billing period in which the
eligible customer-generator has been a net producer of electricity
calculated on the basis of value determined pursuant to paragraph
(2), the local publicly owned electric utility shall owe to the
eligible customer-generator the balance of electricity costs and
credits during that billing period. Any net credit to the eligible
customer-generator of electricity costs may be carried forward to
subsequent billing periods, provided that a local publicly owned
electric utility may choose to carry the credit over as a
kilowatthour credit consistent with the provisions of any applicable
contract or tariff, including any differences attributable to the
time of generation of the electricity. At the end of each 12-month
period, the local publicly owned electric utility may reduce any net
credit due to the eligible customer-generator to zero.
(j) A solar or wind turbine electrical generating system, or a
hybrid system of both, used by an eligible customer-generator shall
meet all applicable safety and performance standards established by
the National Electrical Code, the Institute of Electrical and
Electronics Engineers, and accredited testing laboratories, including
Underwriters Laboratories and, where applicable, rules of the
commission regarding safety and reliability. A customer-generator
whose solar or wind turbine electrical generating system, or a hybrid
system of both, meets those standards and rules shall not be
required to install additional controls, perform or pay for
additional tests, or purchase additional liability insurance.
(k) If the commission determines that there are cost or revenue
obligations for an electrical corporation, as defined in Section 218,
that may not be recovered from customer-generators acting pursuant
to this section, those obligations shall remain within the customer
class from which any shortfall occurred and may not be shifted to any
other customer class. Net energy metering and co-energy metering
customers shall not be exempt from the public goods charges imposed
pursuant to Article 7 (commencing with Section 381), Article 8
(commencing with Section 385), or Article 15 (commencing with Section
399) of Chapter 2.3 of Part 1. In its report to the Legislature, the
commission shall examine different methods to ensure that the public
goods charges remain nonbypassable.
(l) A net energy metering, co-energy metering, or wind energy
co-metering customer shall reimburse the Department of Water
Resources for all charges that would otherwise be imposed on the
customer by the commission to recover bond-related costs pursuant to
an agreement between the commission and the Department of Water
Resources pursuant to Section 80110 of the Water Code, as well as the
costs of the department equal to the share of the department's
estimated net unavoidable power purchase contract costs attributable
to the customer. The commission shall incorporate the determination
into an existing proceeding before the commission, and shall ensure
that the charges are nonbypassable. Until the commission has made a
determination regarding the nonbypassable charges, net energy
metering, co-energy metering, and wind energy co-metering shall
continue under the same rules, procedures, terms, and conditions as
were applicable on December 31, 2002.
(m) In implementing the requirements of subdivisions (k) and (l),
an eligible customer-generator shall not be required to replace its
existing meter except as set forth in paragraph (1) of subdivision
(c), nor shall the electric utility require additional measurement of
usage beyond that which is necessary for customers in the same rate
class as the eligible customer-generator.
(n) It is the intent of the Legislature that the Treasurer
incorporate net energy metering, including net surplus electricity
compensation, co-energy metering, and wind energy co-metering
projects undertaken pursuant to this section as sustainable building
methods or distributive energy technologies for purposes of
evaluating low-income housing projects.

2827.5. The Legislature finds and declares that the repeal of the
provisions of the net metering program for large customers merely
reflects a legislative desire to revisit and more closely evaluate
the cumulative value and effect of the state's policy regarding
renewable energy sources on the economics of investment in solar and
wind sources for large net metering customers and to ensure further
legislative discussion regarding this issue.

2827.7. Generation eligible for net energy metering that has all
local and state permits required to commence construction on or
before December 31, 2002, and has completed construction on or before
September 30, 2003, shall be entitled, regardless of any change in
customer or ownership of the energy system, for the life of the
installation, to the net energy metering terms in effect on the date
the local and state permits were acquired.

2827.8. Notwithstanding any other provisions of this article, the
following provisions apply to an eligible customer-generator
utilizing wind energy co-metering with a capacity of more than 50
kilowatts, but not exceeding one megawatt, unless approved by the
electric service provider.
(a) The eligible customer-generator shall be required to utilize a
meter, or multiple meters, capable of separately measuring
electricity flow in both directions. All meters shall provide
"time-of-use" measurements of electricity flow, and the customer
shall take service on a time-of-use rate schedule. If the existing
meter of the eligible customer-generator is not a time-of-use meter
or is not capable of measuring total flow of energy in both
directions, the eligible customer-generator is responsible for all
expenses involved in purchasing and installing a meter that is both
time-of-use and able to measure total electricity flow in both
directions. This subdivision shall not restrict the ability of an
eligible customer-generator to utilize any economic incentives
provided by a government agency or the electric service provider to
reduce its costs for purchasing and installing a time-of-use meter.
(b) The consumption of electricity from the electric service
provider for wind energy co-metering by an eligible
customer-generator shall be priced in accordance with the standard
rate charged to the eligible customer-generator in accordance with
the rate structure to which the customer would be assigned if the
customer did not use an eligible wind electrical generating facility.
The generation of electricity provided to the electric service
provider shall result in a credit to the eligible customer-generator
and shall be priced in accordance with the generation component,
excluding surcharges to cover the purchase of power by the Department
of Water Resources, established under the applicable structure to
which the customer would be assigned if the customer did not use an
eligible wind electrical generating facility.

2827.9. (a) (1) The Legislature finds and declares that a pilot
program to provide net energy metering for eligible biogas digester
customer-generators would enhance the continued diversification of
California's energy resource mix and would encourage the installation
of livestock air emission controls that the State Air Resources
Board believes may produce multiple environmental benefits.
(2) The Legislature further finds and declares that the net energy
metering pilot program authorized pursuant to this section for
eligible biogas digester customer-generators, which nets out
generation charges against generation charges on a time-of-use basis,
furthers the intent of Chapter 7 of the Statutes of 2001, First
Extraordinary Session, by facilitating the implementation of energy
efficiency programs in order to reduce consumption of energy, reduce
the costs associated with energy demand, and achieve a reduction in
peak electricity demand.
(b) As used in this section, the following definitions apply:
(1) "Electrical corporation" means an electrical corporation, as
defined in Section 218.
(2) (A) "Eligible biogas digester customer-generator" means a
customer of an electrical corporation that meets both of the
following criteria:
(i) Uses a biogas digester electrical generating facility with a
capacity of not more than one megawatt that is located on or adjacent
to the customer's owned, leased, or rented premises, is
interconnected and operates in parallel with the electric grid, and
is sized to offset part or all of the eligible biogas digester
customer-generator's own electrical requirements.
(ii) Is the recipient of local, state, or federal funds, or who
self-finances pilot projects designed to encourage the development of
eligible biogas digester electrical generating facilities.
(B) Notwithstanding subparagraph (A), up to three large biogas
digester electrical generating facilities with a generating capacity
of more than one megawatt and not more than 10 megawatts, otherwise
meeting the criteria of this section, shall be eligible for
participation in the pilot program.
(3) "Eligible biogas digester electrical generating facility"
means a generating facility used to produce electricity by either a
manure methane production project or as a byproduct of the anaerobic
digestion of biosolids and animal waste.
(4) "Net energy metering" means measuring the difference between
the electricity supplied through the electric grid and the difference
between the electricity generated by an eligible biogas digester
customer-generator and fed back to the electric grid over a 12-month
period as described in subdivision (e). Net energy metering shall be
accomplished using a time-of-use meter capable of registering the
flow of electricity in two directions. If the existing electrical
meter of an eligible biogas digester customer-generator is not
capable of measuring the flow of electricity in two directions, the
eligible biogas digester customer-generator shall be responsible for
all expenses involved in purchasing and installing a meter that is
able to measure electricity flow in two directions. If an additional
meter or meters are installed, the net energy metering calculation
shall yield a result identical to that of a time-of-use meter.
(c) Every electrical corporation shall file with the commission a
standard tariff providing for net energy metering for eligible biogas
digester customer-generators, consistent with this section. Every
electrical corporation shall make this tariff available to eligible
biogas digester customer-generators upon request, on a
first-come-first-served basis, until the combined statewide
cumulative rated generating capacity used by the eligible biogas
digester customer-generators in the service territories of the three
largest electrical corporations in the state reaches 50 megawatts. An
eligible biogas digester customer-generator shall be eligible for
the tariff for the life of the eligible biogas digester electrical
generating facility.
(d) Each net energy metering contract or tariff shall be
identical, with respect to rate structure, all retail rate
components, and any monthly charges, to the contract or tariff to
which the same customer would be assigned if the customer was not an
eligible biogas digester customer-generator, except as set forth in
subdivision (e). Any new or additional demand charge, standby charge,
customer charge, minimum monthly charge, interconnection charge, or
other charge that would increase an eligible biogas digester
customer-generator's costs beyond those of other customers in the
rate class to which the eligible biogas digester customer-generator
would otherwise be assigned are contrary to the intent of this
legislation, and shall not form a part of net energy metering
tariffs.
(e) The net energy metering calculation shall be made by measuring
the difference between the electricity supplied to the eligible
customer-generator and the electricity generated by the eligible
customer-generator and fed back to the electric grid over a 12-month
period. The following rules shall apply to the annualized metering
calculation:
(1) The eligible biogas digester customer-generator shall, at the
end of each 12-month period following the date of final
interconnection of the eligible biogas digester customer-generator's
system with an electrical corporation, and at each anniversary date
thereafter, be billed for electricity used during that period. The
electrical corporation shall determine if the eligible biogas
digester customer-generator was a net consumer or a net producer of
electricity during that period. For purposes of determining if the
biogas digester customer-generator was a net consumer or a net
producer of electricity during that period, the electrical
corporation shall aggregate the electrical load of a dairy operation
under the same ownership, including, but not limited to, the
electrical load attributable to milking operations, milk
refrigeration, and water pumping located on property adjacent or
contiguous to the dairy. Each aggregated account shall be billed and
measured according to a time-of-use rate schedule.
(2) At the end of each 12-month period, where the electricity
supplied during the period by the electrical corporation exceeds the
electricity generated by the eligible biogas digester
customer-generator during that same period, the eligible biogas
digester customer-generator is a net electricity consumer and the
electrical corporation shall be owed compensation for the eligible
biogas digester customer-generator's net kilowatthour consumption
over that same period. The compensation owed for the eligible biogas
digester customer-generator's consumption shall be calculated as
follows:
(A) The generation charges for any net monthly consumption of
electricity shall be calculated according to the terms of the tariff
to which the same customer would be assigned to or be eligible for if
the customer was not an eligible biogas digester customer-generator.
When those eligible biogas digester customer-generators are net
generators during any discrete time-of-use period, the net
kilowatthours produced shall be valued at the same price per
kilowatthour as the electrical corporation would charge for retail
kilowatthour sales for generation, exclusive of any surcharges,
during that same time-of-use period. If the eligible biogas digester
customer-generator's time-of-use electrical meter is unable to
measure the flow of electricity in two directions, paragraph (4) of
subdivision (b) shall apply. All other charges, other than generation
charges, shall be calculated in accordance with the eligible biogas
digester customer-generator's applicable tariff and based on the
total killowatthours delivered by the electrical corporation to the
eligible biogas digester customer-generator. To the extent that
charges for transmission and distribution services are recovered
through demand charges in any particular month, no standby
reservation charges shall apply in that monthly billing cycle.
(B) The net balance of moneys owed shall be paid in accordance
with the electrical corporation's normal billing cycle.
(3) At the end of each 12-month period, where the electricity
generated by the eligible biogas digester customer-generator during
the 12-month period exceeds the electricity supplied by the
electrical corporation during that same period, the eligible biogas
digester customer-generator is a net electricity producer and the
electrical corporation shall retain any excess kilowatthours
generated during the prior 12-month period. The eligible biogas
digester customer-generator shall not be owed any compensation for
those excess kilowatthours.
(4) If an eligible biogas digester customer-generator terminates
service with the electrical corporation, the electrical corporation
shall reconcile the eligible biogas digester customer-generator's
consumption and production of electricity during any 12-month period.
(f) No biogas digester electrical generating facility shall be
eligible for participation in the tariff established pursuant to this
section, that has not commenced operation by December 31, 2009. A
biogas digester customer-generator shall be eligible for the tariff
established pursuant to this section, only for the operating life of
the eligible biogas digester electrical generating facility.
(g) No biogas digester electrical generating facility that is
subject to the best available control technology (BACT) requirements
shall be eligible for participation in the tariff pursuant to this
section unless the biogas digester electrical generating facility has
installed the best available control technology as required by the
regional air pollution control district at the time of installation
to ensure the maximum feasible reductions in toxic and criteria
pollutants.
(h) On or before December 31, 2008, the commission, in
collaboration with the State Air Resources Board, shall report to the
Legislature all of the following information:
(1) The impact of the pilot program on emissions of air
pollutants.
(2) The impact of the pilot program on the reliability of the
transmission and distribution grid.
(3) The impact of the pilot program on ratepayers.

2827.10. (a) As used in this section, the following terms have the
following meanings:
(1) "Electrical corporation" means an electrical corporation, as
defined in Section 218.
(2) "Eligible fuel cell electrical generating facility" means a
facility that includes the following:
(A) Integrated powerplant systems containing a stack, tubular
array, or other functionally similar configuration used to
electrochemically convert fuel to electric energy.
(B) An inverter and fuel processing system where necessary.
(C) Other plant equipment, including heat recovery equipment,
necessary to support the plant's operation or its energy conversion.
(3) "Eligible fuel cell customer-generator" means a customer of an
electrical corporation that meets all the following criteria:
(A) Uses a fuel cell electrical generating facility with a
capacity of not more than one megawatt that is located on or adjacent
to the customer's owned, leased, or rented premises, is
interconnected and operates in parallel with the electric grid while
the grid is operational or in a grid independent mode when the grid
is nonoperational, and is sized to offset part or all of the eligible
fuel cell customer-generator's own electrical requirements.
(B) Is the recipient of local, state, or federal funds, or who
self-finances projects designed to encourage the development of
eligible fuel cell electrical generating facilities.
(C) Uses technology that meets the definition of an "ultra-clean
and low-emission distributed generation" in subdivision (a) of
Section 353.2.
(4) "Net energy metering" has the same meaning as that term is
defined in Section 2827.9.
(b) Every electrical corporation shall, not later than March 1,
2004, file with the commission a standard tariff providing for net
energy metering for eligible fuel cell customer-generators,
consistent with this section. Every electrical corporation shall make
this tariff available to eligible fuel cell customer-generators upon
request, on a first-come-first-served basis, until the total
cumulative rated generating capacity used by the eligible fuel cell
customer-generators equals 45 megawatts within the service territory
of the electrical corporation for an electrical corporation with a
peak demand above 10,000 megawatts, or equals 22.5 megawatts within
the service territory of the electrical corporation for an electrical
corporation with a peak demand of 10,000 megawatts or below. The
combined statewide cumulative rated generating capacity used by the
eligible fuel cell customer-generators in the service territories of
all electrical corporations in the state may not exceed 112.5
megawatts.
(c) In determining the eligibility for the cumulative rated
generating capacity within an electrical service area, preference
shall be given to facilities which, at the time of installation, are
located in a community with significant exposure to air contaminants
or localized air contaminants, or both, including, but not limited
to, communities of minority populations or low-income populations, or
both, based on the ambient air quality standards established
pursuant to Section 39607 of the Health and Safety Code.
(d) Each net energy metering contract or tariff shall be
identical, with respect to rate structure, all retail rate
components, and any monthly charges, to the contract or tariff to
which the customer would be assigned if the customer was not an
eligible fuel cell customer-generator. Any new or additional demand
charge, standby charge, customer charge, minimum monthly charge,
interconnection charge, or other charge that would increase an
eligible fuel cell customer-generator's costs beyond those of other
customers in the rate class to which the eligible fuel cell
customer-generator would otherwise be assigned are contrary to the
intent of the Legislature in enacting the act adding this section,
and may not form a part of net energy metering tariffs.
(e) The net metering calculation shall be carried out in
accordance with Section 2827.9.
(f) A fuel cell electrical generating facility shall not be
eligible for participation in the tariff established pursuant to this
section unless it commenced operation before January 1, 2014. A fuel
cell customer-generator shall be