BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2514
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          ASSEMBLY THIRD READING
          AB 2514 (Skinner)
          As Amended  May 28, 2010
          Majority vote 

           UTILITIES & COMMERCE             8-6                NATURAL  
          RESOURCES             6-3       
           
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          |Ayes:|Buchanan, Carter, Fong,   |Ayes:|Chesbro, Brownley, De     |
          |     |Furutani, Ammiano, Ma,    |     |Leon, Hill, Ammiano,      |
          |     |Skinner, Bradford         |     |Skinner                   |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Knight, Tom Berryhill,    |Nays:|Gilmore, Knight, Logue    |
          |     |Fletcher, Fuentes,        |     |                          |
          |     |Swanson, Villines         |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           APPROPRIATIONS      12-5                                        
           
           ----------------------------------------------------------------- 
          |Ayes:|Fuentes, Ammiano,         |     |                          |
          |     |Bradford,                 |     |                          |
          |     |Charles Calderon, Coto,   |     |                          |
          |     |Davis,                    |     |                          |
          |     |Monning, Ruskin, Skinner, |     |                          |
          |     |Solorio, Torlakson,       |     |                          |
          |     |Torrico                   |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Conway, Harkey, Miller,   |     |                          |
          |     |Nielsen, Norby            |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Requires California Public Utilities Commission (PUC)  
          to establish procurement targets for energy storage systems for  
          all load-serving entities for 2015 and 2020, and requires the  
          governing board of each publicly owned utility (POU) to adopt  
          energy storage system procurement targets to be achieved by 2016  
          and 2021 and report their progress to the California Energy  
          Commission (CEC).   Specifically,  this bill  :

          1)Declares, among other things, that energy storage systems are  








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            necessary and that there is inadequate evaluation of the use  
            of energy storage and inadequate statutory and regulatory  
            support.

          2)On or before March 1, 2012, requires PUC to open a proceeding  
            to establish procurement targets for each IOU for viable and  
            cost-effective energy storage systems, and adopt energy  
            storage system procurement targets to be achieved by each IOU  
            by December 31, 2015, and a second target to be achieved by  
            December 31, 2020.

          3)On or before October 1, 2014, requires the governing board of  
            each POU to adopt procurement targets for the utility for  
            viable and cost-effective energy storage systems and adopt  
            energy storage system procurement targets to be achieved by  
            December 31, 2016, and a second target to be achieved by  
            December 31, 2021.

          4)As part of PUC proceeding, permits PUC to consider a variety  
            of possible policies to encourage the cost-effective  
            deployment of energy storage systems, including incentives and  
            refinement of existing procurement methods to properly value  
            energy storage systems, and permits PUC to apply different  
            policies to different load serving entities.

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee:

          1)Ongoing special fund costs to PUC of $1.1 million for nine  
            positions to establish a regulatory program for energy storage  
            through a ratemaking proceeding, monitor compliance with the  
            commission decisions, monitor procurement of storage services  
            and evaluate the cost- effectiveness of such procurement  
            through an annual compliance proceeding, and monitor the  
            impacts on ratepayers of energy storage technologies.

          2)Costs to CEC would be absorbable, except one position might be  
            needed in the future, at a cost of $100,000, to review POU  
            compliance with the 2016 and 2021 targets.

           COMMENTS  :  The most common form of energy storage device in use  
          today is batteries.  However, there are no commercially  
          available batteries that could cost-effectively store the large  
          amounts of electricity that can be produced by large-scale wind  








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          farms or solar facilities.  Another form of electricity storage  
          that is already in use in California is pump storage, where  
          water is pumped into a reservoir at night and then released  
          through turbines during the day to produce electricity.   
          Additional research is taking place to develop other storage  
          devices using compressed air, flywheels, fuel cells, and other  
          innovative technologies.

          Since May 2008, the California Independent System Operator  
          (CAISO) has been coordinating a stakeholder process to identify  
          the issues associated with integrating different types of energy  
          storage technology on the electric power grid.  CAISO launched  
          18-month pilot projects in July 2009, and is expected to be  
          complete by December 2010.  The three IOUs are running a study  
          to develop cost-effectiveness methods for storage (permanent  
          load shifting) and ways to deliver incentives to end-use  
          customers to motivate customer investments in demand-side  
          storage.

          Pacific Gas and Electric (PG&E) is piloting an energy storage  
          project that includes a 4 MW Sodium Sulphur (NaS) battery  
          project.  PG&E states that the cost is "extremely expensive" at  
          about $4 million per MW. It is also implementing a 300 MW  
          compressed air energy storage (CAES) Kern Demonstration Project  
          that uses a porous rock reservoir in Kern County near where  
          4,500 MW of new wind is projected to connect to the grid.  The  
          total cost of the facility is estimated to be $356 million.

          Southern California Edison (SCE) is engaged in three energy  
          storage pilots.  They are scheduled to be complete in 2012,  
          2014, and 2015.   

           
           Analysis Prepared by  :    Gina Adams / U. & C. / (916) 319-2083 


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