April 11, 2012 Récolte Energy Letter of Support for SB 594

April 11, 2012

The Honorable Lois Wolk
Senator, 5th Senate District
State Capitol, Room 5114
Sacramento, CA 95814

Re: Support for SB 594

Dear Senator Wolk:

I am writing to express my support for SB 594.

I am the President of Récolte Energy, a Napa Valley based energy consultancy. We develop renewable energy (RE) projects for wineries, school districts, and non-profits.

The development of these RE projects, if they can be developed at all, is constrained by regulations that were designed for an earlier era and result in my clients incurring huge costs and having to deal with layer upon layer of cascading and unnecessary complexities.

My clients typically have multiple meters. If they want to offset the electricity bills associated with these meters, they have to apply for separate rebates for each of their meters; and finance, engineer, design, install, interconnect, monitor, and receive net energy metering bills for, separate RE systems. These discrete rebate applications, RE systems, interconnection agreements, and billing complexities add to the large program and project costs and unnecessary frustrations on projects that already face significant challenges.

This is at least the fifth year that a bill to allow meter aggregation has been introduced in the California legislature. Meter aggregation is usually opposed on the grounds that it results in cost shifting and “wheeling” of electricity. Meter aggregating RE customers are accused of getting a free ride off of infrastructure paid for by all rate payers. This is just not correct and only creates additional barriers to entry for large classes of the utilities’ customers.

These misconceptions have been uncovered during the proceedings and workshops around Virtual Net Metering (VNM) at the CPUC over the last two years. Here are the facts:

1.      A RE customer uses the same distribution infrastructure on his property whether he has an aggregated RE system or discrete RE systems. Because the aggregated RE system is sized to aggregated load, no more electricity is produced onsite with an aggregated RE system than with multiple RE systems.

2.      The rate design for a distribution network within a customer’s property is required to be ratepayer neutral. It is the customer, not the ratepayer, who generally pays for the distribution network within his property. He pays for it, either wholly upfront or partially upfront and the balance over ten years, through revenues that the utility calculates and collects based on his projected loads. If the utility does not realize its revenues because the projected loads were overestimated, the utility “deficiency bills” the customer for the unrealized revenue, to maintain ratepayer cost neutrality.

3.      Once installed, the distribution network within a customer’s property is deeded to the utility. The utility takes over operations and maintenance (O&M) of the conductor. The customer retains responsibility over O&M of the remaining parts of the distribution network, including the substructure, pull boxes, risers, and conduits. The parts of the distribution network that are likely to fail lie within the customer’s, not the utility’s, responsibility. Again, there are no additional O&M costs for a distribution network on a customer’s property for an aggregated RE system compared to discrete RE systems.

VNM, in which the output of a single photovoltaic (PV) system sized to offset the aggregated load of multiple meters, “virtually” offsets the usage associated these meters, was introduced to help low income housing residents participate in the California Solar Initiative. VNM is currently deployed without wheeling being an issue, because the PV system is sized to offset on-site load and the meters are on one or contiguous premises.

SB 594 will similarly enable other disenfranchised customers with multiple-meters on a single property or contiguous properties, who are contributing to the ratepayer base, but cannot participate in net metering to do so. With SB 594, a customer will be able to size and install a RE system to offset the combined load of these meters, without any negative consequences to other ratepayers.

SB594 has my support. I wish you success in making this bill law.


Gopal Shanker