BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                  AB 2514|
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                                 THIRD READING

          Bill No:  AB 2514
          Author:   Skinner (D)
          Amended:  8/23/10 in Senate
          Vote:     21

           SENATE ENERGY, U.&C. COMMITTEE  :  8-2, 6/29/10
          AYES:  Padilla, Corbett, Florez, Kehoe, Lowenthal,  
            DeSaulnier, Simitian, Wright
          NOES:  Dutton, Strickland
          NO VOTE RECORDED:  Cox

           ASSEMBLY FLOOR  :  41-28, 6/3/10 - See last page for vote

           SUBJECT  :    Energy storage systems

           SOURCE :     Attorney General
                      California Labor Federation

           DIGEST  :    This bill requires the Public Utilities  
          Commission (PUC) to determine appropriate targets, if any,  
          for load serving entities to procure energy storage  
          systems.  This bill requires load serving entities to meet  
          any targets adopted by the Commission by 2015 and 2020.   
          This bill requires publicly owned utilities to set their  
          own targets for the procurement of energy storage and then  
          meet those targets by 2016 and 2021.

           Senate Floor Amendments  of 8/20/10 clarify that the PUC may  
          approve investor-owned utility contracts for energy storage  
          projects before during and after the proceeding required by  


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          this bill which mandates that the PUC consider a  
          procurement mandate for energy storage, and clarify the  
          issues that the PUC must consider in determining energy  
          storage procurement targets.  These amendments address the  
          concerns of any remaining opposition.

           ANALYSIS  :    Under current law, load serving entities  
          (including both investor owned utilities and energy service  
          providers) are regulated by the Public Utilities Commission  
          (PUC).  Current law requires load serving entities to  
          increase their procurement of renewable energy by one  
          percent per year, such that renewable energy sources make  
          up twenty percent of a load serving entity's electricity  
          supply by December 31, 2011.  This requirement is referred  
          to as the Renewable Portfolio Standard.  Current law  
          exempts publicly owned utilities from the Renewable  
          Portfolio Standard and instead requires publicly owned  
          utilities to implement their own renewable energy plans.

          This bill requires the PUC to determine the appropriate  
          targets, if any, for load serving entities to procure  
          energy storage systems.  The Commission is required to  
          develop the targets by October 1, 2013.  Load serving  
          entities are required to meet those targets, if any, by  
          2015 and 2020.

          This bill requires publicly owned utilities to establish  
          their own targets for procurement of energy storage systems  
          by October 1, 2014 and meet those targets, if any, by 2016  
          and 2021.  Publicly owned utilities are required to report  
          their progress in meeting their targets to the Energy  

          This bill requires investor owned utilities to integrate  
          the energy storage system targets into their renewable  
          energy procurement plans.

          This bill's requirements do not apply to investor owned  
          utilities that provide electric service to customers  
          outside California and have 60,000 or fewer customers  
          inside California.

           What is Energy Storage  ?  One of the distinctive  
          characteristics of the electric power sector is that the  


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          amount of electricity that can be generated is relatively  
          fixed over short periods of time, although demand for  
          electricity fluctuates throughout the day.  Developing  
          technology to store electrical energy so it can be  
          available to meet demand whenever needed would represent a  
          major breakthrough in electricity distribution.  Helping to  
          try and meet this goal, electricity storage devices can  
          manage the amount of power required to supply customers at  
          times when need is greatest, which is during peak load.   
          These devices can also help make renewable energy, the  
          output of which cannot be controlled by grid operators,  
          smooth and dispatchable.  Storage devices can provide  
          frequency regulation to maintain the balance between the  
          network's load and power generated.  Thus, energy storage  
          holds substantial promise for transforming the electric  
          power industry.

           Types of Energy Storage  .  Battery storage and pump hydro  
          storage systems have been around for many years, so the  
          concept of energy storage is not new.  Large pump storage  
          facilities have been proven to be very effective in  
          shifting large quantities of low-cost, off-peak energy  
          production to delivery during high cost on-peak energy  
          periods by using excess electricity to pump water uphill  
          into a reservoir.  When power is needed, the water can run  
          down through turbines, much like a traditional  
          hydroelectric dam.  However, large pump hydro storage  
          facilities are quite costly, and there are very few  
          locations where they can be built.

          California has a number of pump storage facilities.  One of  
          the largest facilities is the Helms Pump Storage Facility  
          that was built in the early 1980s with three units.  Each  
          unit is rated at 400 MW in generation mode and 310 MW in  
          pumping mode for a total of 1,200 MW generating mode and  
          -930 MW pumping mode.  The facility is owned and operated  
          by PG&E.

          Pump hydro storage is the largest and most viable storage  
          technology available with nearly 123,000 MW deployed around  
          the world.  Excluding pump hydro storage only 2,128 of  
          installed energy storage technologies exist worldwide which  


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                 Batteries - electrical energy is stored for  
               later use in chemical form.

                 Thermal Storage - air conditioners create ice  
               at night then power rates are low.  This stored  
               ice then runs a cooling system during the  
               afternoon, when power costs are highest and the  
               power grid is most stressed;

                 Flywheels - convert electrical energy to  
               kinetic energy then back again very rapidly; and

                 Compressed Air - electricity is used to compress  
               air into storage tanks or a large underground  
               cavern.  The compressed air is used to spin turbines  
               when electricity is needed.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          The PUC indicates that in order to develop targets and  
          oversee the implementation of those targets by load serving  
          entities, it will need about $1,000,000 per year in  
          additional staff resources.

           SUPPORT  :   (Verified  8/20/10)

          Attorney General (co-source)
          California Labor Federation (co-source)
          American Federation of State and County and Municipal  
            Employees, AFL-CIO
          Asian Health Services
          California Nurses Association
          California Professional Firefighters
          Sierra Club CA
          State Building and Construction Trades Council of CA

           OPPOSITION  :    (Verified  8/17/10)

          California Chamber of Commerce
          California Taxpayers' Association
          California Business Properties Association
          California Retailers Association
          California Bankers Association


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          California Manufacturing and Technology Association
          California Aerospace Technology Association

           ARGUMENTS IN SUPPORT  :    California often experiences peak  
          electricity demand growth that increases at a rate faster  
          than electricity can be generated.  Currently, backup  
          fossil fuel electricity generation is frequently used to  
          keep up with the demand.  The California Energy Commission  
          predicts that this peak electricity demand will increase by  
          15 percent by the year 2020.  

          This bill encourages California to incorporate energy  
          storage to the energy grid thereby decreasing our reliance  
          on fossil fuels, coping with increasing energy demand, and  
          advancing California toward its renewable energy goals.   
          Renewable energy sources such as solar-generated  
          photo-voltaic power and wind-generated power are widely  
          used globally, but these renewable resources generate power  
          intermittently.  This energy is not used efficiently due to  
          California's electricity grid design which does not utilize  
          storage.  This bill will help integrate energy storage into  
          utility planning and procurement which will help California  
          reach the renewable energy goals it has committed to.

           ASSEMBLY FLOOR  : 
          AYES:  Ammiano, Arambula, Bass, Beall, Blumenfield,  
            Bradford, Brownley, Caballero, Charles Calderon, Carter,  
            Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,  
            Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hill,  
            Huber, Huffman, Jones, Lieu, Bonnie Lowenthal, Ma,  
            Monning, Nava, V. Manuel Perez, Ruskin, Saldana, Skinner,  
            Swanson, Torlakson, Torres, Yamada, John A. Perez
          NOES:  Adams, Anderson, Bill Berryhill, Blakeslee, Conway,  
            Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines,  
            Garrick, Gilmore, Hagman, Harkey, Hayashi, Jeffries,  
            Knight, Logue, Miller, Nestande, Niello, Nielsen, Norby,  
            Silva, Smyth, Tran, Villines
          NO VOTE RECORDED:  Tom Berryhill, Block, Buchanan,  
            Hernandez, Mendoza, Portantino, Salas, Solorio, Audra  
            Strickland, Torrico, Vacancy


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          DLW:do:kc  8/23/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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