HomeMy WebLinkAboutStaff Report 8718
City of Palo Alto (ID # 8718)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 12/11/2017
City of Palo Alto Page 1
Summary Title: Extending Net Energy Metering to December 31, 2017
Title: Staff Recommendation That Council Adopt a Resolution Extending the
Net Energy Metering (NEM) Program to all Eligible Customer-Generators
Until the City's Total Distributed Generation Demand Exceeds 10.8MW, or
Until December 31, 2017, Whichever Occurs Later
From: City Manager
Lead Department: Utilities
Recommendation
Staff recommends that the City Council (Council):
1. Adopt a resolution (Attachment A) extending the Net Energy Metering (NEM) Program to
all eligible customer-generators until the City’s total distributed generation demand
exceeds 10.8 MW, or until December 31, 2017, whichever occurs later.
Background and Discussion
NEM is a billing mechanism designed to promote the installation of renewable distributed
generation which, under state law, requires utilities to compensate eligible customers at the
full retail rate for electricity generated by their on-site systems, such as solar photovoltaic
(solar PV) systems. Public Utilities Code section 2827(c)(4)(A) requires electric utilities to offer
NEM to eligible customers until the distributed generation demand of those customers
exceeds 5% of the utility’s aggregate peak demand. On November 7, 2016, Council adopted
a resolution determining that 5% of the City’s total demand, commonly referred to as the
“NEM cap,” was 10.8 MW (Staff Report 7346). Distributed generation installed exceeding the
10.8 MW “cap” would not qualify for NEM, and would instead be permitted to participate in a
NEM Successor Program adopted by the Council on August 22, 2016 (Staff Report 7150).
As of November 27, 2017 the City was 739 kW from reaching 10.8 MW of distributed
generation demand. Progress toward this level has been slow and steady over the last year.
But based on customer inquiries about the program, staff is aware of a number of customers
poised to submit projects into the NEM program, in large part because many of these
customers are also participating in a regional solar group buy program which closes to new
customers on December 31, 2017. Because there has been ample capacity in the City’s NEM
program to-date, customers have been working through the multi-step distributed generation
City of Palo Alto Page 2
installation, reservation, and connection process with the expectation that adequate NEM
capacity would remain throughout the calendar year. A rapid closure of the program, going
from 739 kW to 0 kW in under three weeks, will cause significant disruption to a number of
customers with distributed generation projects already in the planning process.
To accommodate CPAU customers in the process of setting up distributed generation, and
allow for an orderly wind-down of the City’s NEM program, staff proposes continuing to offer
NEM eligibility until the total distributed generation demand exceeds 5% of CPAU’s aggregate
peak demand, or until December 31, 2017, whichever comes later. Staff anticipates the total
additional demand within the NEM program resulting from this administrative change would
be roughly 500-600 kW. Staff also intends to make an administrative change extending the
time applicants have to complete their projects from six months to one year based on
requests from the Palo Alto Unified School District (PAUSD) and other customers who have
struggled to complete projects within six months. Given the short timeline remaining until
December 31, 2017, and the multi-step NEM planning and application process, Staff does not
expect to receive additional NEM applications for projects besides those already in progress.
Resource Impact
The total cost impact to the Electric Fund associated with this proposal is estimated to be
$2,000-$5,000 per year over twenty years. Staff expects that the cost impact would only be
significantly higher in the unlikely event additional large commercial project applications are
received by December 31, 2017, and those projects export significant amounts of solar
energy to the grid. This is because nearly all of the energy generated by non-residential
NEM customers is typically used on-site, and the bulk of NEM costs occur when energy is
exported to the grid.
Policy Implications
Adoption of the proposed resolution supports the Local Solar Plan by allowing for a
smoother transition from NEM to the NEM Successor Program while continuing to offer
positive customer service to solar customers with projects in the planning process.
Environmental Review
Council’s adoption of the proposed resolution does not meet the California Environmental
Quality Act’s (CEQA) definition of “project” under California Public Resources Code Sec.
21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental
activity which will not cause a direct or indirect physical change in the environment , thus no
environmental review is required.
Attachments:
Attachment A: NEM Extension Resolution
ATTACHMENT A
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NOT YET APPROVED
Resolution No. ____
Resolution of the Council of the City of Palo Alto Extending the Net Energy
Metering (NEM) Program to all Eligible Customer-Generators Until the City’s
Total Distributed Generation Demand Exceeds 10.8 MW, or Until December 31,
2017, Whichever Occurs Later
RECITALS
A. Currently distributed generation installed in Palo Alto may be eligible for the
City’s Net Energy Metering (NEM) Program if it meets program criteria. The City is required
by state law, Public Utilities Code section 2827(c)(4)(A), to offer this Program until total
installed distributed generating capacity taking advantage of the program exceeds 5% of
the utility’s aggregate peak demand.
B. On November 7, 2016 the Council adopted Resolution 9638 establishing a
method for calculating the amount of distributed generating capacity equal to 5% of the
utility’s aggregate peak demand, resulting in a NEM Program capacity of 10.8 MW.
C. On August 22, 2016, the Council of the City of Palo Alto approved a rate
schedule for its NEM Successor Program, (E-EEC-1) which will apply to distributed
generation after the total installed distributed generating capacity taking advantage of the
NEM Program exceeds 5% of the utility’s aggregate peak demand.
D. As of November 27, 2017, the amount of capacity available in the NEM
Program was 739 kW, which can appear to customers to be a significant amount of
capacity. But based on customer inquiries about the program, staff is aware of a
number of customers poised to submit projects into the NEM Program, at the moment
such that the program is likely to close abruptly.
E. It is in the best interests of the City and its electric utility customers to
accommodate CPAU customers in the process of setting up distributed generation, and
to smoothly transition from the current NEM Program to the NEM Successor Program,
and the E-EEC-1 rate schedule.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The City will accept applications to the NEM program until the City’s
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total distributed generation demand exceeds 10.8 MW, , as defined in Resolution 9638
approved November 16, 2017, or until 5:30 PM on December 31, 2017, whichever occurs
later. Any applications submitted after that time will be placed on a wait list in case
project cancellations result in the total installed NEM Program capacity dropping below
10.8 MW.
SECTION 2. Council’s adoption of this resolution does not meet the California
Environmental Quality Act’s (CEQA) definition of “project” under California Public Resources
Code Sec. 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative
governmental activity which will not cause a direct or indirect physical change in the
environment , thus no environmental review is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Administrative Services
General Manager of Utilities