Living in Sacramento, it is easy to get sucked up into the hype that state legislators here are always on the verge of changing the entire world. Yet I do think that two pieces of legislation heading for Gov. Jerry Browns signature this fall are worth talking about. They address two power sources solar energy and natural gas having the greatest impact on the way we power up our lives today.
The first is Assembly Bill 327, which addresses the topic of net metering for rooftop solar photovoltaic (PV) systems and rate reform. Net metering is the favored policy in the U.S. to allow owners of solar PV systems the ability to use the grid as a giant battery, shifting any excess power generation to the host utility grid for use by other utility customers, and then taking back energy from the grid when the sun isnt shining. Across the nation, utilities complain that as more customers generate their own power under net metering, the costs to maintain the power grid that benefits us all is imposed upon a smaller and smaller set of customers who do not generate a large portion of their own power needs.
Amazingly enough, AB 327 creates a seemingly unlimited market for not only solar PV, but all forms of renewable energy in California:
• It removes the scheduled suspension of net metering that was to go into effect at the end of this year, which would have shut down the burgeoning market for solar PV throughout much of the state, including those areas served in Northern California by Pacific Gas and Electric.
• It eliminates uncertainly over how the current cap on amounts of net metering is calculated, a major bone of contention between the solar industry and utilities, and provides a framework for permanently removing the net metering cap altogether.
• It removes the current 33 percent ceiling on the states renewable portfolio standard, or RPS, which, in essence, means there is also no cap on Californias wholesale renewable energy supplies such as wind farms operating in nearby Solano County.
PG&E, with a nation-leading 90,000 customers taking advantage of net metering, supported AB 327, as did the solar lobby and ratepayer advocates, but only after a series of last-minute amendments brokered, in large part, by Gov. Browns office. The utilities signed off on the bill when they were allowed to charge customers utilizing net metering a $10 annual fee, which historically has been opposed by the solar lobby.
All told, net metering supports more than 1,400 megawatts of clean electricity from 134,000 homes and businesses in California, the equivalent amount of power from a power plant larger than 150 percent of the capacity of Rancho Seco, SMUDs shuttered nuclear reactor. The battle over net metering is still brewing across the U.S., but this California deal may take some of the acrimony out of the debate and point a path forward for compromise.
Gov. Brown announced Friday that he had signed into law the other bill worth noting. Senate Bill 4 addresses natural gas fracking, a phenomenon that has been credited with lowering natural gas prices to record lows, but, according to critics, at the expense of clean water and air. Just as utilities had been attacking net metering, the American Petroleum Institute had been seeking to undermine RPS laws on the basis that they increase costs to consumers, with todays low-cost natural gas being the better alternative. (SB 4 also addresses the process of acidizing, which is uniquely suited to Monterey Shale deposits, which may contain as much as 15 billion barrels of oil.)
SB 4 is another example of a rare compromise between environmentalists, many of whom called for an outright ban of fracking, and industry, which maintained that a laissez faire approach was necessary to lower Californias historically high energy prices. Perhaps the greatest impact of the legislation is that for the first time in the nation, companies will need to reveal the chemicals they use during the extraction process. With this data, regulators will be able to trace whether these chemicals leach into water aquifers, helping to build a more complete understanding of the impacts fracking may have. Fracking may increase the incidence of earthquakes, a concern that appears to have provided extra motivation for regulatory oversight here in California.
With the passage of both of these bills, Gov. Brown has proved his ability to force a middle path. Given his legacy with helping to create the worlds renewable energy industry over two decades ago, he is proving that hands-on experience still counts in the legislative arena.
This commentary was modified from the original to correct the volume of oil thought to be contained in the Monterey Shale.
Peter Asmus has been writing about energy policy for 25 years and is author of Introduction to Energy in California by the University of California Press.