Amended in Assembly May 7, 2014

Amended in Assembly April 21, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1499

Introduced by Assembly Member Skinner

January 9, 2014

An act to amend Section 379.6 of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

AB 1499, as amended, Skinner. Electricity: self-generation incentive program.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. Existing law requires the Public Utilities Commission to administer, until January 1, 2016, a self-generation incentive program for distributed generation resources and to separately administer solar technologies pursuant to the California Solar Initiative. The Public Utilities Commission, in consultation with the State Energy Resources Conservation and Development Commission, may authorize electrical corporations to annually collect not more than the amount authorized for the program in the 2008 calendar year through December 31, 2014.

This bill would extend the authority of the begin delete PUC end delete begin insert Public Utilities Commission end insert to authorize electrical corporations to continue making the annual collections through December 31, 2017. The bill would extend the Public Utilities Commission’s administration of the program to January 1, 2019.

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Existing law limits eligibility for incentives under the self-generation incentive program to distributed energy resources that the Public Utilities Commission, in consultation with the State Air Resources Board, determines will achieve reductions in emissions of greenhouse gases pursuant to the California Global Warming Solutions Act of 2006.

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This bill would further limit eligibility for incentives under the self-generation incentive program to distributed energy resource technologies that the Public Utilities Commission determines meet specified additional requirements. The bill would require the commission to determine a capacity factor for each distributed energy recourse technology.

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This bill would require the Public Utilities Commission to evaluate the self-generation incentive program’s overall success and impact based on specified performance measures and to evaluate the self-generation incentive program’s progress toward reducing barriers to the adoption of distributed energy resources and the self-generation incentive program’s effectiveness in providing certain capabilities generally related to grid reliability.

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This bill would require the Public Utilities Commission, on or before July 1, 2015, to update the factor for avoided greenhouse gas emissions based on certain information. The bill would require the Public Utilities Commission, in allocating funds between eligible technologies, to consider the relative amount and cost of certain factors. The bill would require recipients of the self-generation incentive program funds to provide to the Public Utilities Commission and the State Air Resources Board relevant data and would subject them to inspection to verify equipment operation and performance.

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Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the program that is extended under the provisions of this bill are within the act and a decision or order of the commission implements the program requirements, a violation of these provisions would impose a state-mandated local program by expanding the definition of a crime.

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 a specified reason.

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.  

Section 379.6 of the Public Utilities Code is
amended to read:

379.6.  

(a) (1)  It is the intent of the Legislature that the
self-generation incentive program increase deployment of
distributed generation and energy storage systems to facilitate the
integration of those resources into the electrical grid, improve
efficiency and reliability of the distribution and transmission
system, and reduce emissions of greenhouse gases, peak demand,
and ratepayer costs. It is the further intent of the Legislature that
the begin delete commission, in future proceedings, end delete begin insert commission end insert provide for an
equitable distribution of the costs and benefits of the program.

(2)  The commission, in consultation with the Energy
Commission, may authorize the annual collection of not more than
the amount authorized for the self-generation incentive program
in the 2008 calendar year, through December 31, 2017. The
commission shall require the administration of the program for
distributed energy resources originally established pursuant to
Chapter 329 of the Statutes of 2000 until January 1, 2019. On
January 1, 2019, the commission shall provide repayment of all
unallocated funds collected pursuant to this section to reduce
ratepayer costs.

(3) The commission shall administer solar technologies
separately, pursuant to the California Solar Initiative adopted by
the commission in begin delete Decision 06-01-024. end delete begin insert Decisions 05-12-044 and
06-01-024, as modified by Article 1 (commencing with Section
2851) of Chapter 9 of Part 2 of Division 1 of this code and Chapter
8.8 (commencing with Section 25780) of Division 15 of the Public
Resources Code. end insert

(b)  begin insert (1) end insert begin insert   end insert Eligibility for incentives under the program shall be
limited to distributed energy resources that the commission, in
consultation with the State Air Resources Board, determines will
achieve reductions of greenhouse gas emissions pursuant to the
California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code).

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(2) On or before July 1, 2015, the commission shall update the
factor for avoided greenhouse gas emissions based on the most
recent data available to the State Air Resources Board for
greenhouse gas emissions from electricity sales in the
self-generation incentive program administrators’ service areas
as well as current estimates of greenhouse gas emissions over the
useful life of the distributed energy resource, including
consideration of the effects of the California Renewables Portfolio
Standard.

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(c) Eligibility for the funding of any combustion-operated
distributed generation projects using fossil fuel is subject to all of
the following conditions:

(1)  An oxides of nitrogen (NO_x) emissions rate standard of 0.07
pounds per megawatthour and a minimum efficiency of 60 percent,
or any other NO_x emissions rate and minimum efficiency standard
adopted by the State Air Resources Board. A minimum efficiency
of 60 percent shall be measured as useful energy output divided
by fuel input. The efficiency determination shall be based on 100
percent load.

(2) Combined heat and power units that meet the 60-percent
efficiency standard may take a credit to meet the applicable NO_x
emissions standard of 0.07 pounds per megawatthour. Credit shall
be at the rate of one megawatthour for each 3,400,000 British
thermal units (Btus) of heat recovered.

(3) The customer receiving incentives shall adequately maintain
and service the combined heat and power units so that, during
operation, the system continues to meet or exceed the efficiency
and emissions standards established pursuant to paragraphs (1)
and (2).

(4) Notwithstanding paragraph (1), a project that does not meet
the applicable NO_x emissions standard is eligible if it meets both
of the following requirements:

(A) The project operates solely on waste gas. The commission
shall require a customer that applies for an incentive pursuant to
this paragraph to provide an affidavit or other form of proof that
specifies that the project shall be operated solely on waste gas.
Incentives awarded pursuant to this paragraph shall be subject to
refund and shall be refunded by the recipient to the extent the
project does not operate on waste gas. As used in this paragraph,
“waste gas” means natural gas that is generated as a byproduct of
petroleum production operations and is not eligible for delivery
to the utility pipeline system.

(B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce an onsite net air emissions
benefit, compared to permitted onsite emissions if the project does
not operate. The commission shall require the customer to secure
the permit prior to receiving incentives.

(d) In determining the eligibility for the self-generation incentive
program, minimum system efficiency shall be determined either
by calculating electrical and process heat efficiency as set forth in
Section 216.6, or by calculating overall electrical efficiency.

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(e) Eligibility for incentives under the program shall be limited
to distributed energy resource technologies that the commission
determines meet all of the following requirements:

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(1) The distributed energy resource technology is capable of
reducing demand from the grid by offsetting some or all of the
customer’s onsite energy load, including, but not limited to, peak
electric demand.

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(2) The distributed energy resource technology is commercially
available.

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(3) The distributed energy resource technology safely utilizes
the existing transmission and distribution system.

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(4) The distributed energy resource technology improves air
quality by reducing criteria air pollutants.

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(f) Recipients of the self-generation incentive program funds
shall provide relevant data to the commission and the State Air
Resources Board, upon request, and shall be subject to onsite
inspection to verify equipment operation and performance,
including capacity, thermal output, and usage to verify criteria
air pollutant and greenhouse gas emissions performance.

end insert begin insert

(g) In administering the self-generation incentive program, the
commission shall determine a capacity factor for each distributed
energy resource technology in the program.

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(e)

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begin insert (h) end insert begin insert   end insert begin insert (1) end insert  In administering the self-generation incentive program,
the commission may adjust the amount of rebates and evaluate
other public policy interests, including, but not limited to,
ratepayers, energy efficiency, peak load reduction, load
management, and environmental interests.

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(2) The commission shall consider the relative amount and the
cost of greenhouse gas emission reductions, peak demand
reductions, system reliability benefits, and other measurable factors
when allocating program funds between eligible technologies.

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(f)

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begin insert (i) end insert  The commission shall ensure that distributed generation
resources are made available in the program for all ratepayers.

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(g) (1)

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begin insert (j) end insert  In administering the self-generation incentive program, the
commission shall provide an additional incentive of 20 percent
from existing program funds for the installation of eligible
distributed generation resources begin delete from a California supplier. end delete
begin insert manufactured in California. end insert

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(2) “California supplier” as used in this subdivision means any
sole proprietorship, partnership, joint venture, corporation, or other
business entity that manufactures eligible distributed generation
resources in California and that meets either of the following
criteria:

(A) The owners or policymaking officers are domiciled in
California and the permanent principal office, or place of business
from which the supplier’s trade is directed or managed, is located
in California.

(B) A business or corporation, including those owned by, or
under common control of, a corporation, that meets all of the
following criteria continuously during the five years prior to
providing eligible distributed generation resources to a
self-generation incentive program recipient:

(i) Owns and operates a manufacturing facility located in
California that builds or manufactures eligible distributed
generation resources.

(ii) Is licensed by the state to conduct business within the state.

(iii) Employs California residents for work within the state.

(3) For purposes of qualifying as a California supplier, a
distribution or sales management office or facility does not qualify
as a manufacturing facility.

(h)

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begin insert (k) end insert  The costs of the program adopted and implemented pursuant
to this section shall not be recovered from customers participating
in the California Alternate Rates for Energy (CARE) program.

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(l) (1) The commission shall evaluate the overall success and
impact of the self-generation incentive program based on the
following performance measures:

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(A) The amount of reductions of emissions of greenhouse gases.

end insert begin insert

(B) The amount of reductions of emissions of criteria air
pollutants measured in terms of avoided emissions and reductions
of criteria air pollutants represented by emissions credits secured
for project approval.

end insert begin insert

(C) The amount of energy reductions measured in energy value.

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(D) The amount of reductions of aggregate noncoincident
customer peak demand.

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(E) The ratio of the electricity generated by distributed energy
resource projects receiving incentives from the program to the
electricity capable of being produced by those distributed energy
resource projects, commonly known as a capacity factor.

end insert begin insert

(F) The value to the electrical transmission and distribution
system measured in avoided costs of transmission and distribution
upgrades and replacement.

end insert begin insert

(G) The ability to improve onsite electricity reliability.

end insert begin insert

(2) In addition to evaluating the program based on the
performance measures specified in paragraph (1), the commission
shall also evaluate both of the following:

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(A) The program’s progress toward reducing barriers to the
adoption of distributed energy resources, including, but not limited
to, interconnection costs and the length of time to complete
interconnection.

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(B) The program’s effectiveness in providing frequency
regulation, voltage support, demand reduction, peak shaving, ramp
rate control, and other wholesale ancillary and grid reliability
services.

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SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only 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.