BILL ANALYSIS AB 44 Page 1 Date of Hearing: April 22, 2009 ASSEMBLY COMMITTEE ON APPROPRIATIONS Kevin De Leon, Chair AB 44 (Blakeslee) - As Amended: March 31, 2009 Policy Committee: UtilitiesVote:14-0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill: 1)Requires the Public Utilities Commission (PUC) to develop a time-variant tariff providing incentives for the application of "energy storage facilities," as defined, that are cost-beneficial to ratepayers. 2)Authorizes the PUC to approve an increase of 0.5% to 1% in the rate-of-return otherwise allowed an investor-owned utility (IOU) for investment in energy storage facilities meeting specified requirements. FISCAL EFFECT Ongoing special fund costs of about $160,000 annually for 1.5 positions associated with conducting a ratemaking proceeding to design and establish the incentive-based tariff and monitor implementation, including the impacts on ratepayers. [Public Utilities Reimbursement Account.] COMMENTS 1)Background . Current law requires all retail sellers of electricity, by 2010, to meet at least 20% of the retail sales using electricity from renewable resources-the Renewable Portfolio Standard (RPS). Legislation has been introduced to increase RPS goal to 33% by 2020. It is believed this higher goal can only be met through heavy reliance on wind and solar energy, however, both of these energy sources are intermittent, producing electricity when the wind is blowing AB 44 Page 2 or the sun is out. This intermittency could create reliability problems for the electricity grid, since solar and wind energy cannot be counted on to be available at the same time there is demand for electricity. One way to resolve this reliability issue would be energy storage devices, which convert electricity into some other form of energy so it can be stored and converted back to electricity at a later point. Batteries are the most common form of energy storage device currently in use, however, there are no commercially available batteries that can cost-effectively store the large amounts of electricity produced by large scale wind farms or solar facilities. Another form of electricity storage already in use in California is pumped storage, where water is pumped up into a reservoir at night and then released through turbines during the daytime to produce electricity. Additionally, research is underway to develop storage devices using compressed air, flywheels, and fuel cells. 2)Purpose . The author is seeking to provide incentives to expand the use of energy storage devices while ensuring that allowances for such deploying such devices will be cost-effective for ratepayers. The author envisions the development of storage devices that are owned and operated by the IOUs and owned by private parties that could buy renewable power from developers or the utility and then sell that power back to the utility at a later time. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081