BILL NUMBER: AB 1624 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 11, 2014
AMENDED IN ASSEMBLY MAY 28, 2014
AMENDED IN ASSEMBLY MAY 7, 2014
AMENDED IN ASSEMBLY APRIL 29, 2014
AMENDED IN ASSEMBLY APRIL 24, 2014
AMENDED IN ASSEMBLY APRIL 21, 2014
INTRODUCED BY Assembly Members Gordon and Skinner
FEBRUARY 10, 2014
An act to amend Section 379.6 of the Public Utilities Code,
relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 1624, as amended, Gordon. Self-generation incentive program.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
as defined. Existing law, adopted during the energy crisis of
2000-01, required the Public Utilities Commission, in consultation
with the Independent System Operator and the State Energy Resources
Conservation and Development Commission, to adopt initiatives, on or
before March 7, 2001, to reduce demand for electricity and reduce
load during peak demand periods, including differential incentives
for renewable or super clean distributed generation resources.
Pursuant to this requirement, the commission adopted Decision
01-03-073, dated March 27, 2001, that established program incentives
for demand-responsiveness and self-generation, collectively known as
the self-generation incentive program, that were modified in later
decisions.
Existing law authorizes the Public Utilities Commission, in
consultation with the State Energy Resources Conservation and
Development Commission, to 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, 2014.
Existing law requires the Public Utilities Commission to require
electrical corporations to administer the program for distributed
energy resources originally established pursuant to the
above-described law until January 1, 2016, and to separately
administer solar technologies pursuant to the California Solar
Initiative. Existing law requires the Public Utilities Commission to
provide repayment of all unallocated funds collected for the
self-generation incentive program on January 1, 2016, to reduce
ratepayer costs.
Existing law authorizes the Public Utilities Commission to
allocate up to 15% of revenues received by an electrical corporation
as a result of the direct allocation of greenhouse gas allowances to
electrical distribution utilities for clean energy and energy
efficiency projects that are administered by the electrical
corporation and are not otherwise funded by another funding source.
This bill would require the Public Utilities Commission to require
electrical corporations to continue the collection for the
program for distributed energy resources originally established
pursuant to the above-described law through and including December
31, 2020, and to administer the program for
distributed energy resources originally established pursuant to the
above-described law through and including December 31,
2021. The bill would require the Public Utilities Commission
to allocate $83 million from the above-described greenhouse gas
allowance revenues for the self-generation incentive program. The
bill would require the Public Utilities Commission to authorize the
expenditure of unallocated funds collected from ratepayers before
authorizing the expenditure of funds allocated from the greenhouse
gas allowance revenues. The bill would require the Public
Utilities Commission, beginning January 1, 2018, and each year
thereafter until December 31, 2021, to reduce the total amount
allocated to the program by 10% annually.
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.
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
resource technology in the program. The bill would require the
commission to review the level of incentives and the costs of the
technologies that are receiving incentives to ensure that the program
is more likely to fund those technologies that will meet the
requirements of the program.
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 the
self-generation incentive program's effectiveness in providing
certain capabilities generally related to grid reliability.
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.
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 is 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 commission provide
for an equitable distribution of the costs and benefits of the
program.
(2) (A) 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, 2014.
(B) The commission shall require the administration of the program
for distributed energy resources originally established pursuant to
Chapter 329 of the Statutes of 2000 through and including December
31, 2021.
(C) Beginning January 1, 2015, and each year thereafter until
December 31, 2021, the commission shall allocate up to eighty-three
million dollars ($83,000,000) from the funds allocated for clean
energy programs pursuant to subdivision (c) of Section 748.5 for the
self-generation incentive program.
(D) Beginning January 1, 2015, the commission shall authorize the
expenditure of unallocated funds collected pursuant to subparagraph
(A) before authorizing the expenditure of funds allocated pursuant to
subparagraph (C).
(2) (A) The commission, in consultation with the Energy
Commission, shall authorize the annual collection of not more than
the amount authorized for the self-generation incentive program in
the 2008 calendar year, through and including December 31, 2020. The
commission shall require the administration of the program for
distributed energy sources originally established pursuant to Chapter
329 of the Statutes of 2000 through and including December 31, 2021.
On January 1, 2022, the commission shall provide repayment of all
unallocated funds collected pursuant to this section to reduce
ratepayer costs.
(E)
(B) Beginning January 1, 2018, and each year thereafter
until December 31, 2021, the commission shall reduce the total
amount allocated for the program by 10 percent annually.
(F) On January 1, 2022, all unallocated funds allocated pursuant
to subparagraph (C) shall be subject to expenditure for the purposes
of subdivision (c) of Section 748.5.
(3) The commission shall administer solar technologies separately,
pursuant to the California Solar Initiative adopted by the
commission in 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.
(b) (1) Eligibility for incentives under the self-generation
incentive program shall be limited to distributed energy resources
that the 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
(Division 25.5 (commencing with Section 38500) of the Health and
Safety Code).
(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.
(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 (NOx) emissions rate standard of 0.07
pounds per megawatthour and a minimum efficiency of 60 percent, or
any other NOx 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 NOx
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 NOx 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.
(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:
(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.
(2) The distributed energy resource technology is commercially
available.
(3) The distributed energy resource technology safely utilizes the
existing transmission and distribution system.
(4) The distributed energy resource technology improves air
quality by reducing criteria air pollutants.
(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.
(g) In administering the self-generation incentive program, the
commission shall determine a capacity factor for each distributed
energy resource technology in the program.
(h) (1) 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.
(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.
(i) The commission shall ensure that distributed generation
resources are made available in the program for all ratepayers.
(j) 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 manufactured in California.
(k) 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.
(l) (1) The commission shall evaluate the overall success and
impact of the self-generation incentive program based on the
following performance measures:
(A) The amount of reductions of emissions of greenhouse gases.
(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.
(C) The amount of energy reductions measured in energy value.
(D) The amount of reductions of aggregate noncoincident customer
peak demand.
(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.
(F) The value to the electrical transmission and distribution
system measured in avoided costs of transmission and distribution
upgrades and replacement.
(G) The ability to improve onsite electricity reliability as
compared to onsite electricity reliability before the self-generation
incentive program technology was placed in service.
(2) In addition to evaluating the program based on the performance
measures specified in paragraph (1), the commission shall also
evaluate 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.
(m) To ensure that the self-generation incentive program is more
likely to fund those technologies that meet the requirements of this
section, the commission shall review annually the level of incentives
and the cost of the technologies that are receiving incentives and
(1) allow incentive eligibility for new technologies, (2) remove
incentive eligibility for technologies that have received incentives
but have not met the requirements of this section, or (3) remove
incentive eligibility or reduce incentives for technologies that have
received incentives and have reduced the emissions of greenhouse
gases, but have not otherwise met the requirements of this section.
(m) To ensure that the self-generation incentive program is more
likely to fund those technologies that meet the requirements of this
section, beginning in March 1, 2017, and each year thereafter, for as
long as the self-generation incentive program is providing
incentives, the commission shall review the level of incentives and
the cost of the technologies that are receiving incentives and (1)
allow incentive eligibility for new technologies, or (2) remove
incentive eligibility for technologies that have received incentives
but have not met the requirements of this section.
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.