BILL ANALYSIS
SB 17
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Date of Hearing: June 22, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
SB 17 (Padilla) - As Amended: May 5, 2009
SENATE VOTE : 38-0
SUBJECT : Electricity: smart grid systems.
SUMMARY : Requires the California Public Utilities Commission
(PUC), in consultation with other state agencies and key
stakeholders, to determine the requirements for a smart grid
deployment plan and requires the utilities to submit smart grid
plans to the PUC.
EXISTING LAW :
1)The federal Energy Independence and Security Act of 2007:
a) Requires the National Institute of Standards and
Technology to be the lead agency to develop standards and
protocols for the smart grid.
b) Creates a research, development, and demonstration
program for smart grid technologies at the Department of
Energy.
c) Provides federal matching funds for portions of
qualified smart grid investments.
d) Requires each state regulatory authority and each
nonregulated utility to initiate within 1 year (December
2008), and complete within 2 years (December 2009),
consideration of whether to allow utilities cost recovery
for nonadvanced grid technologies, deployment of a
qualified smart grid system, and implementation of the
provision of price information to customers on a
no-less-than daily basis.
2)The federal American Reinvestment and Recovery Act of 2009
(ARRA) authorizes the Department of Energy to award $4 billion
in grants ranging from $500,000 to $20 million for smart grid
technology deployments and grants of $100,000 to $5 million
for the deployment of grid monitoring devices.
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3)State law requires investor owned utilities (IOUs) to operate
its electric distribution grid in a safe, reliable, efficient,
and cost-effective manner and authorizes the PUC to give each
IOU a reasonable opportunity to fully recover from all
customers the costs of operating the distribution system.
THIS BILL :
1)Requires the PUC, in consultation with the CEC, the CAISO, and
other key stakeholders, to determine the requirements for a
smart grid deployment plan and adopt standards and protocols
to ensure functionality and interoperability developed by
public and private entities, by July 1, 2010.
2)Requires each electrical corporation to develop and submit a
smart grid deployment plan to the PUC for approval by July 1,
2011.
3)Requires the PUC, in consultation with the CEC, the CAISO, and
electrical corporations, to evaluate the impact of smart grid
technology deployment on major initiatives and policies.
4)Requires the PUC to annually report to the Governor and the
Legislature on the PUC's recommendations for a smart grid,
including the costs and benefits to ratepayers.
5)Requires each publicly owned electric utility with more than
100,000 service connections to develop a smart grid deployment
plan, by January 1, 2011.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to advance California's clean energy policies by improving
reliability and efficiency in power distribution through the
deployment of smart grid technology.
1) Smart grid technology : Conceptually, the term "smart grid"
has been used rather liberally to reference a transformed
electricity transmission and distribution network or "grid" that
uses two-way communications, advanced sensors, and distributed
computers. This two-way communication is intended to improve
the efficiency, reliability and safety of power delivery and
use. Smart Grid is called several other things, including
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"Smart Power Grid," "Smart Electric Grid," "Intelligrid,"
"FutureGrid," etc.
In the past a number of projects have been labeled "smart" but
turned out not to be smart solely on its own. For example, for
a smart grid to be able to provide real-time price information,
the grid must be coupled with smart meters, smart appliances,
smart thermostats, and/or plug-in hybrid vehicles, or other
customer-funded "add-ons." This bill requires the PUC to
identify the protocols that define what the smart grid will be
for California and provide direction on its development and when
it will be operational.
2) Federal efforts toward smart grid applications : Title 13 of
the federal Energy Act characterizes a Smart Grid but doesn't
actually define it. The Energy Act states that a smart grid
would mean modernizing the nation's electricity grid to meet
future demand growth and achieve certain characteristics. Those
characteristics include, among other things, an increase in the
use of digital information; the development and incorporation of
demand response, demand-side resources, and energy efficiency
resources; the deployment of "smart" technologies, such as
real-time and automated, interactive technologies for appliances
and consumer devices; and the identification and decrease of
unreasonable or unnecessary barriers to the adoption of smart
grid technologies.
The Energy Act requires the Secretary of the Department of
Energy to report to Congress, no later than one year after
enactment, and every two years thereafter, of the status of
smart grid deployments nationwide and any regulatory or
government barriers to continued deployment. In addition, it
requires the Secretary to establish a Smart Grid Advisory
Committee to advise the Secretary, and a Smart Grid Task Force
to ensure awareness, coordination, and integration of the
activities of the federal government related to smart-grid
technologies and practices.
The Energy Act establishes a research and demonstration program
and provides up to 50% of the cost of grid technology
investments made as part of a demonstration project. It also
requires the coordination of the smart grid framework that
includes protocols and model standards to achieve
interoperability of smart grid devices and systems. When
utilities invest in smart-grid applications, the Energy Act
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provides reimbursement of 20% of qualifying smart grid
investments.
The Energy Act requires the PUC to initiate within one year, and
complete within two years, consideration of whether to allow
utilities cost recovery from "nonadvanced grid technologies,"
"deployment of a qualified smart grid system" and implementation
of the provision of price information to customers on a
no-less-than daily basis. As such, the PUC commenced the
proceeding by December 2008, and is expected to complete it by
December 2009.
In response to the ARRA, the Department of Energy is planning
workshops aimed at reaching agreement on national smart grid
standards. Over the next few months, DOE plans to award funds
to a range of projects by utilities, system vendors, states,
local governments and universities. The bulk of DOE funds, $3.4
billion, are set aside for grants. That includes $615 million
for smart grid regional demonstration projects, utility-scale
storage, and monitoring projects. Another $600 million in
grants will cover up to 50% of grid technology deployment
project costs.
3) Is smart grid a smart investment : It's unclear what
benefits will be derived from the smart grid investments. In
older service territories, the utility customers call and the
utility can almost immediately identify where the outage is and
dispatch line crews. In newer service territories like a
majority of San Diego Gas and Electric's territory, the
distribution system is underground. A smart grid would enable
SDG&E to immediately dispatch crews to the exact location of the
outage instead of having to expend resources trying to locate
the blown underground transformer or other faulty appendage.
The PUC has a rulemaking underway to consider policies for
California's IOUs to develop a smarter electric grid in the
state. The proceeding will consider setting policies, standards
and protocols to guide the development of a smart grid system
and facilitate integration of new technologies such as
distributed generation, storage, demand-side technologies, and
electric vehicles.
The CEC funded a smart grid research project under the Public
Interest Energy Research program. The research identified new
and emerging technologies that would impact a smart grid,
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concerns about ensuring incompatible systems and/or large
capital investments with short-term benefits, and the need to
foster open access, competition and commercial growth of
cost-effective, new technologies. Preliminary research shows
the state could play a key role in defining the smart grid of
the future for California and if left alone, many systems most
likely will not be compatible. Future smart grid research
planned by the CEC includes assessing smart grid technologies
and functional areas through micro-grid demonstration projects.
REGISTERED SUPPORT / OPPOSITION :
Support
AT&T
California Public Utilities Commission (CPUC) (with amendments)
Clean Power Campaign (with amendments)
Natural Resources Defense Council (NRDC)
Office of Mayor Antonio Villaraigosa, City of Los Angeles
Optimal Technologies (U.S.), Inc.
Sempra Energy
Sierra Club California
Southern California Edison (SCE)
TechNet
Valley Industry and Commerce Association
Valley Industry and Commerce Association (VICA)
Opposition
Michael Ross
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083