BILL NUMBER: AB 2514	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 20, 2010
	AMENDED IN SENATE  AUGUST 17, 2010
	AMENDED IN SENATE  AUGUST 2, 2010
	AMENDED IN SENATE  JULY 15, 2010
	AMENDED IN SENATE  JUNE 21, 2010
	AMENDED IN ASSEMBLY  MAY 28, 2010
	AMENDED IN ASSEMBLY  APRIL 28, 2010
	AMENDED IN ASSEMBLY  APRIL 14, 2010
	AMENDED IN ASSEMBLY  APRIL 7, 2010

INTRODUCED BY   Assembly Member Skinner

                        FEBRUARY 19, 2010

   An act to amend Section 9620 of, and to add Chapter 7.7
(commencing with Section 2835) to Part 2 of Division 1 of, the Public
Utilities Code, relating to energy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2514, as amended, Skinner. Energy storage systems.
   Under existing law, the Public Utilities Commission (CPUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. The existing Public Utilities Act requires
the CPUC to review and adopt a procurement plan for each electrical
corporation in accordance with specified elements, incentive
mechanisms, and objectives. The existing California Renewables
Portfolio Standard Program (RPS program) requires the CPUC to
implement annual procurement targets for the procurement of eligible
renewable energy resources, as defined, for all retail sellers,
including electrical corporations, community choice aggregators, and
electric service providers, but not including local publicly owned
electric utilities, to achieve the targets and goals of the program.
   The existing Warren-Alquist State Energy Resources Conservation
and Development Act establishes the State Energy Resources
Conservation and Development Commission (Energy Commission), and
requires it to undertake a continuing assessment of trends in the
consumption of electricity and other forms of energy and to analyze
the social, economic, and environmental consequences of those trends
and to collect from electric utilities, gas utilities, and fuel
producers and wholesalers and other sources, forecasts of future
supplies and consumption of all forms of energy.
   Existing law requires the CPUC, in consultation with the
Independent System Operator (ISO), to establish resource adequacy
requirements for all load-serving entities, as defined, in accordance
with specified objectives. The definition of a "load-serving entity"
excludes a local publicly owned electric utility. That law further
requires each load-serving entity to maintain physical generating
capacity adequate to meet its load requirements, including peak
demand and planning and operating reserves, deliverable to locations
and at times as may be necessary to provide reliable electric
service. Other existing law requires that each local publicly owned
electric utility serving end-use customers to prudently plan for and
procure resources that are adequate to meet its planning reserve
margin and peak demand and operating reserves, sufficient to provide
reliable electric service to its customers. That law additionally
requires the utility, upon request, to provide the Energy Commission
with any information the Energy Commission determines is necessary to
evaluate the progress made by the local publicly owned electric
utility in meeting those planning requirements, and requires the
Energy Commission to report the progress made by each utility to the
Legislature, to be included in the integrated energy policy reports.
Under existing law, the governing body of a local publicly owned
electric utility is responsible for implementing and enforcing a
renewables portfolio standard for the utility that recognizes the
intent of the Legislature to encourage renewable resources, while
taking into consideration the effect of the standard on rates,
reliability, and financial resources and the goal of environmental
improvement.
   This bill would require the CPUC, by March 1, 2012, to open a
proceeding to determine appropriate targets, if any, for each
load-serving entity to procure viable and cost-effective energy
storage systems and, by October 1, 2013, to adopt an energy storage
system procurement target, if determined to be appropriate, to be
achieved by each load-serving entity by December 31, 2015, and a 2nd
target to be achieved by December 31, 2020. The bill would require
the governing board of a local publicly owned electric utility, by
March 1, 2012, to open a proceeding to determine appropriate targets,
if any, for the utility to procure viable and cost-effective energy
storage systems and, by October 1, 2014, to adopt an energy storage
system procurement target, if determined to be appropriate, to be
achieved by the utility by December 31, 2016, and a 2nd target to be
achieved by December 31, 2021. The bill would require each
load-serving entity and local publicly owned electric utility to
report certain information to the CPUC, for a load-serving entity, or
to the Energy Commission, for a local publicly owned electric
utility. The bill would make other technical, nonsubstantive
revisions to existing law. The bill would exempt from these
requirements an electrical corporation that has 60,000 or fewer
customers within California and a public utility district that
receives all of its electricity pursuant to a preference right
adopted and authorized by the United States Congress pursuant to a
specified law.
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the CPUC
is a crime.
   Because certain of the provisions of this bill require action by
the CPUC to implement, a violation of these provisions would impose a
state-mandated local program by creating a new crime. Because
certain of the bill's requirements are applicable to local publicly
owned electric utilities, the bill would impose a state-mandated
local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for specified reasons.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) Expanding the use of energy storage systems can assist
electrical corporations, electric service providers, community choice
aggregators, and local publicly owned electric utilities in
integrating increased amounts of renewable energy resources into the
electrical transmission and distribution grid in a manner that
minimizes emissions of greenhouse gases.
   (b) Additional energy storage systems can optimize the use of the
significant additional amounts of variable, intermittent, and offpeak
electrical generation from wind and solar energy that will be
entering the California power mix on an accelerated basis.
   (c) Expanded use of energy storage systems can reduce costs to
ratepayers by avoiding or deferring the need for new fossil
fuel-powered peaking powerplants and avoiding or deferring
distribution and transmission system upgrades and expansion of the
grid.
   (d) Expanded use of energy storage systems will reduce the use of
electricity generated from fossil fuels to meet peak load
requirements on days with high electricity demand and can avoid or
reduce the use of electricity generated by high carbon-emitting
electrical generating facilities during those high electricity demand
periods. This will have substantial cobenefits from reduced
emissions of criteria pollutants.
   (e) Use of energy storage systems to provide the ancillary
services otherwise provided by fossil-fueled generating facilities
will reduce emissions of carbon dioxide and criteria pollutants.
   (f) There are significant barriers to obtaining the benefits of
energy storage systems, including inadequate evaluation of the use of
energy storage to integrate renewable energy resources into the
transmission and distribution grid through long-term electricity
resource planning, lack of recognition of technological and
marketplace advancements, and inadequate statutory and regulatory
support.
  SEC. 2.  Chapter 7.7 (commencing with Section 2835) is added to
Part 2 of Division 1 of the Public Utilities Code, to read:
      CHAPTER 7.7.  ENERGY STORAGE SYSTEMS


   2835.  For purposes of this chapter, the following terms have the
following meanings:
   (a) (1) "Energy storage system" means commercially available
technology that is capable of absorbing energy, storing it for a
period of time, and thereafter dispatching the energy. An "energy
storage system" may have any of the characteristics in paragraph (2),
shall accomplish one of the purposes in paragraph (3), and shall
meet at least one of the characteristics in paragraph (4).
   (2) An "energy storage system" may have any of the following
characteristics:
   (A) Be either centralized or distributed.
   (B) Be either owned by a load-serving entity or local publicly
owned electric utility, a customer of a load-serving entity or local
publicly owned electric utility, or a third party, or is jointly
owned by two or more of the above.
   (3) An "energy storage system" shall be cost effective and either
reduce emissions of greenhouse gases, reduce demand for peak
electrical generation, defer or substitute for an investment in
generation, transmission, or distribution assets, or improve the
reliable operation of the electrical transmission or distribution
grid.
   (4) An "energy storage system" shall do one or more of the
following:
   (A) Use mechanical, chemical, or thermal processes to store energy
that was generated at one time for use at a later time.
   (B) Store thermal energy for direct use for heating or cooling at
a later time in a manner that avoids the need to use electricity at
that later time.
   (C) Use mechanical, chemical, or thermal processes to store energy
generated from renewable resources for use at a later time.
   (D) Use mechanical, chemical, or thermal processes to store energy
generated from mechanical processes that would otherwise be wasted
for delivery at a later time.
   (b) "Load-serving entity" has the same meaning as defined in
Section 380.
   (c) "New" means, in reference to an energy storage system, a
system that is installed and first becomes operational after January
1, 2010.
   (d) "Offpeak" means, in reference to electrical demand, a period
that is not within a peak demand period.
   (e) "Peak demand period" means a period of high daily, weekly, or
seasonal demand for electricity. For purposes of this chapter, the
peak demand period for a load-serving entity shall be determined, or
approved, by the commission and shall be determined, or approved, for
a local publicly owned electric utility, by its governing body.
   (f) "Procure" and "procurement" means, in reference to the
procurement of an energy storage system, to acquire by ownership or
by a contractual right to use the energy from, or the capacity of,
including ancillary services, an energy storage system owned by a
load-serving entity, local publicly owned electric utility, customer,
or third party. Nothing in this chapter, and no action by the
commission, shall discourage or disadvantage development and
ownership of an energy storage system by an electrical corporation.
   2836.  (a) (1) On or before March 1, 2012, the commission shall
open a proceeding to determine appropriate targets, if any, for each
load-serving entity to procure viable and cost-effective energy
storage systems to be achieved by December 31, 2015, and December 31,
2020. As part of this proceeding, the commission may consider a
variety of possible policies to encourage the cost-effective
deployment of energy storage systems, including refinement of
existing procurement methods to properly value energy storage
systems.
   (2) The commission shall adopt the procurement targets, if
determined to be appropriate pursuant to paragraph (1), by October 1,
2013.
   (3) The commission shall reevaluate the determinations made
pursuant to this subdivision not less than once every three years.

   (4) Nothing in this section prohibits the commission's evaluation
and approval of any application for funding or recovery of costs of
any ongoing or new development, trialing, and testing of energy
storage projects or technologies outside of the proceeding required
by this chapter. 
   (b) (1) On or before March 1, 2012, the governing board of each
local publicly owned electric utility shall initiate a process to
determine appropriate targets, if any, for the utility to procure
viable and cost-effective energy storage systems to be achieved by
December 31, 2016, and December 31, 2021. As part of this proceeding,
the governing board may consider a variety of possible policies to
encourage the cost-effective deployment of energy storage systems,
including refinement of existing procurement methods to properly
value energy storage systems.
   (2) The governing board shall adopt the procurement targets, if
determined to be appropriate pursuant to paragraph (1), by October 1,
2014.
   (3) The governing board shall reevaluate the determinations made
pursuant to this subdivision not less than once every three years.
   (4) A local publicly owned electric utility shall report to the
Energy Commission regarding the energy storage system procurement
targets and policies adopted by the governing board pursuant to
paragraph (2), and report any modifications made to those targets as
a result of a reevaluation undertaken pursuant to paragraph (3).
   2836.2.  In adopting and reevaluating appropriate energy storage
system procurement targets and policies pursuant to subdivision (a)
of Section 2836, the commission shall do all of the following:
   (a) Consider existing operational data and results of testing and
trial pilot projects from existing energy storage facilities.
   (b) Consider available information from the California Independent
System Operator derived from California Independent System Operator
testing and evaluation procedures.
   (c) Consider the integration of energy storage technologies with
other programs, including  energy efficiency or other means
of reducing electrical demand   demand-side management
or other means of achieving the purposes identified in Section 2837
 that will result in the most efficient use of generation
resources and cost-effective energy efficient grid integration and
management.
   (d) Ensure that the energy storage system procurement targets and
policies that are established are technologically viable and cost
effective.
   2836.4.  (a) An energy storage system may be used to meet the
resource adequacy requirements established for a load-serving entity
pursuant to Section 380 if it meets applicable standards.
   (b) An energy storage system may be used to meet the resource
adequacy requirements established by a local publicly owned electric
utility pursuant to Section 9620 if it meets applicable standards.
   2836.6.  All procurement of energy storage systems by a
load-serving entity or local publicly owned electric utility shall be
cost effective.
   2837.  Each electrical corporation's renewable energy procurement
plan, prepared and approved pursuant to Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1, shall require the utility
to procure new energy storage systems that are appropriate to allow
the electrical corporation to comply with the energy storage system
procurement targets and policies adopted pursuant to Section 2836.
The plan shall address the acquisition and use of energy storage
systems in order to achieve the following purposes:
   (a) Integrate intermittent generation from eligible renewable
energy resources into the reliable operation of the transmission and
distribution grid.
   (b) Allow intermittent generation from eligible renewable energy
resources to operate at or near full capacity.
   (c) Reduce the need for new fossil-fuel powered peaking generation
facilities by using stored electricity to meet peak demand.
   (d) Reduce purchases of electricity generation sources with higher
emissions of greenhouse gases.
   (e) Eliminate or reduce transmission and distribution losses,
including increased losses during periods of congestion on the grid.
   (f) Reduce the demand for electricity during peak periods and
achieve permanent load-shifting by using thermal storage to meet
air-conditioning needs.
   (g) Avoid or delay investments in transmission and distribution
system upgrades.
   (h) Use energy storage systems to provide the ancillary services
otherwise provided by fossil-fueled generating facilities.
   2838.  (a) (1) By January 1, 2016, each load-serving entity shall
submit a report to the commission demonstrating that it has complied
with the energy storage system procurement targets and policies
adopted by the commission pursuant to subdivision (a) of Section
2836.
   (2) By January 1, 2021, each load-serving entity shall submit a
report to the commission demonstrating that it has complied with the
energy storage system procurement targets and policies adopted by the
commission pursuant to subdivision (a) of Section 2836.
   (b) The commission shall ensure that a copy of each report
required by subdivision (a), with any confidential information
redacted, is available on the commission's Internet Web site.
   2838.5.  Notwithstanding any provision of this chapter, the
requirements of this chapter do not apply to either of the following:

   (a) An electrical corporation that has 60,000 or fewer customer
accounts within California.
   (b) A public utility district that receives all of its electricity
pursuant to a preference right adopted and authorized by the United
States Congress pursuant to Section 4 of the Trinity River Division
Act of August 12, 1955 (Public Law 84-386).
   2839.  (a) (1) By January 1, 2017, a local publicly owned electric
utility shall submit a report to the Energy Commission demonstrating
that it has complied with the energy storage system procurement
targets and policies adopted by the governing board pursuant to
subdivision (b) of Section 2836.
   (2) By January 1, 2022, a local publicly owned electric utility
shall submit a report to the Energy Commission demonstrating that it
has complied with the energy storage system procurement targets and
policies adopted by the governing board pursuant to subdivision (b)
of Section 2836.
   (b) The Energy Commission shall ensure that a copy of each report
or plan required by subdivisions (a) and (b), with any confidential
information redacted, is available on the Energy Commission's
Internet Web site, or on an Internet Web site maintained by the local
publicly owned electric utility that can be accessed from the Energy
Commission's Internet Web site.
   (c) The commission does not have authority or jurisdiction to
enforce any of the requirements of this chapter against a local
publicly owned electric utility.
  SEC. 3.  Section 9620 of the Public Utilities Code is amended to
read:
   9620.  (a) Each local publicly owned electric utility serving
end-use customers, shall prudently plan for and procure resources
that are adequate to meet its planning reserve margin and peak demand
and operating reserves, sufficient to provide reliable electric
service to its customers. Customer generation located on the customer'
s site or providing electric service through arrangements authorized
by Section 218, shall not be subject to these requirements if the
customer generation, or the load it serves, meets one of the
following criteria:
   (1) It takes standby service from the local publicly owned
electric utility on a rate schedule that provides for adequate backup
planning and operating reserves for the standby customer class.
   (2) It is not physically interconnected to the electric
transmission or distribution grid, so that, if the customer
generation fails, backup power is not supplied from the electricity
grid.
   (3) There is physical assurance that the load served by the
customer generation will be curtailed concurrently and commensurately
with an outage of the customer generation.
   (b) Each local publicly owned electric utility serving end-use
customers shall, at a minimum, meet the most recent minimum planning
reserve and reliability criteria approved by the Board of Trustees of
the Western Systems Coordinating Council or the Western Electricity
Coordinating Council.
   (c) Each local publicly owned electric utility shall prudently
plan for and procure energy storage systems that are adequate to meet
the requirements of Section 2836.
   (d) A local publicly owned electric utility serving end-use
customers shall, upon request, provide the Energy Commission with any
information the Energy Commission determines is necessary to
evaluate the progress made by the local publicly owned electric
utility in meeting the requirements of this section.
   (e) The Energy Commission shall report to the Legislature, to be
included in each integrated energy policy report prepared pursuant to
Section 25302 of the Public Resources Code, regarding the progress
made by each local publicly owned electric utility serving end-use
customers in meeting the requirements of this section.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act or because costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.