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