BILL ANALYSIS Ó
AB 2363
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2363 (Dahle)
As Amended August 18, 2014
Majority vote
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|ASSEMBLY: |76-0 |(May 27, 2014) |SENATE: |33-0 |(August 20, |
| | | | | |2014) |
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Original Committee Reference: NAT. RES.
SUMMARY : Requires the California Public Utilities Commission
(PUC) to adopt by December 31, 2015, a methodology for
determining expenses resulting from integrating and operating
eligible renewable energy resources, i.e., "integration costs,"
and requires the PUC to direct electrical corporations to
include integration costs in their proposed procurement plans.
The Senate amendments:
1)Replace references to "nonzero integration cost adder" with
language related to expenses resulting from integrating and
operating eligible renewable energy resources.
2)Revise the deadline from October 1, 2015, to December 31,
2015, for PUC approval of the methodology to determine
integration costs.
3)Strike the word "ongoing" from the requirement that the PUC
estimate electrical corporation expenses resulting from
integrating and operating eligible renewable energy resources.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, increased costs to the PUC in the $300,000 to
$600,000 range.
COMMENTS :
1)Background. California's Renewable Portfolio Standard (RPS)
mandates that electrical corporations and public utilities
must meet or exceed a target of 33% renewable generation in
their electricity supply portfolios by 2020.
AB 2363
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A wide variety of renewable resources are available, and each
has different operating characteristics and costs. Solar and
wind energy are classified as intermittent renewables and
require additional generation to be available as a backup.
The costs of backup generation are referred to as "integration
costs" and are a necessary element of integrating intermittent
renewable resources into the grid.
Other renewable energy resources, such as geothermal and
biopower facilities, are classified as baseload facilities and
are able to operate 24 hours per day without backup
generation. Baseload facilities may have lower integration
costs than intermittent resources such as solar and wind.
2)PUC requirements. Electricity procurement plans and renewable
energy contracts proposed by investor owned-utilities (IOUs)
are subject to the PUC's least cost best fit (LCBF)
requirements. Currently, the PUC does not include integration
costs in its LCBF analysis. Therefore, all renewables are
considered to have no integration costs even though certain
renewable resources have higher integration costs than others.
In the first year of the RPS program (2004), the PUC
recognized that integration costs for intermittent renewables
needed to be captured in a cost adder so that these costs
could inform and improve renewable procurement decisions.
At the time, with limited renewables and low associated
integration costs, the PUC approved an adder of zero. Today,
estimates of integration costs for intermittent renewables
have suggested that this value is no longer zero, but the PUC
has not approved methodology to determine integration costs.
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083
FN: 0005138