BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 699 - Hill Hearing Date: April 30, 2013
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As Amended: April 4, 2013 FISCAL B
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DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to submit to the Legislature a report on the impacts of
distributed energy generation (DG) on California's transmission
and distribution systems biennially and evaluate several
specific issues including issues related to connecting DG to
local distribution networks and regional grids including any
barriers that affect the interconnection process. (PUC 321.7)
Current orders of the CPUC require electrical corporations
(IOUs) to provide detailed maps of preferred locations on the
distribution grid where the deployment of DG could help address
anticipated peak load growth or help congestion. The decision
required the IOUs to provide this information in map form and to
update this information on a monthly basis and make information
available on preferred distribution substations based on the
available capacity of that substation, updated on a real-time
basis. (CPUC Decision 10-12-048)
This bill requires IOUs to file reports with the CPUC disclosing
the costs incurred during the prior year in sufficient detail so
that stakeholders can determine whether specified DG policy
objectives are achieved.
BACKGROUND
What is DG? - Distributed generation has different meanings in
different regions and by different utilities. What generally
distinguishes DG from other generation are three characteristics
of an electric generating facility - connection, location, and
generation capacity. DG can be on the customer's side of the
meter or on the wholesale, or utility-side of the meter.
In California's renewable procurement world, DG facilities are
most frequently defined as non-centralized electricity power
production facilities less than 20 megawatts interconnected at
the distribution side of the electricity system. DG
technologies include solar, wind and water-powered energy
systems; and renewable and fossil-fueled internal combustion
(IC) engines, small gas turbines, micro-turbines and fuel cells.
The CPUC regulates DG policies and programs on both the customer
and utility (wholesale) side of the electric meter for IOUs.
Customer-side of the meter DG incentive programs include the
California Solar Initiative and the Self-Generation Incentive
Program. These programs are supported by the CPUC's oversight of
net energy metering and interconnection policies. On the utility
side of the meter, utilities procure distributed generation
resources through a variety of procurement programs which
includes the Renewable Portfolio Standard (RPS) program,
including competitive solicitations, the Reverse Auction
Mechanism (RAM), the renewable market adjusting tariff (Re-MAT),
and utility solar programs.
Distribution Grid & Interconnection - The deployment of DG has
placed demands on the distribution grid which were never
intended when designed decades ago as a means to deliver
electricity from the generator to a transmission line to a
substation and end-user or customer. Today, from the
perspective of a renewable developer, the distribution grid is a
relic of the 20th Century but it still achieves its fundamental
purpose of the last century which is to keep the lights on - aka
reliability. As the 21st century energy policy has developed
and placed more demands on the distribution grid in particular
such as pushing power back in the opposite direction for which
is was never designed, it has required considerable attention of
the regulators and utilities. This bill is the result of the
continuing transition of that grid. For some it's not fast
enough and for others they can't keep up.
Interconnection Primer - The process and costs for a renewable
generator to connect to the grid are demanding and start with an
interconnection study done by the utility to determine the
impact a new generator will have on the safety and reliability
of the electrical grid and the costs that generator will have to
incur to interconnect. A generator interconnecting to the
distribution system can trigger three types of upgrades:
interconnection facilities, distribution system upgrades, and
transmission system network upgrades. In general,
interconnection facilities are the least costly while
transmission system network upgrades are the most costly.
Interconnection Facilities: Include all facilities and
equipment between the generating facility and the point of
interconnection, including any modification, additions or
upgrades that are necessary to physically and electrically
interconnect the generating facility to the distribution
provider's distribution system.
Distribution System Upgrades: The additions, modifications,
and upgrades to the distribution provider's distribution
system at or beyond the point of interconnection to
facilitate interconnection of the generating facility and
render the service necessary to affect the interconnection
customer's wholesale sale of electricity.
Transmission System Network Upgrades: Additions,
modifications, and upgrades to the distribution provider's
transmission system required at or beyond the point at
which the distribution system connects to the distribution
provider's transmission system to accommodate the
interconnection of the generating facility.
Interconnection Review by CPUC - To encourage and ease the
development of renewable DG resources, the CPUC has initiated
several forums to consider improvements to distribution level
interconnection rules and regulations. Most significantly was
its September 2012 (D.12-09-018) decision which defined the
appropriate interconnection study process for all types of
generation resources seeking interconnection to the distribution
system, creating distribution-level interconnection procedures
for storage technologies, and evaluating and determining
appropriate processes for establishing distribution-level
interconnection queues. The settlement discussions which led to
the decision included participation by a number of entities and
government agencies. These included the Division of Ratepayer
Advocates (DRA), the California Energy Commission (CEC), the
California Independent System Operator (CAISO), numerous
developers of DG, including renewables, storage, and combined
heat and power, and advocacy groups supporting different
segments of the DG market. A total of 81 entities participated
and among those were most of the parties listed in support of
this bill.
That decision was immediately followed by the opening of a phase
2 proceeding which will give further consideration of objective
criteria to make the interconnection review process more
efficient; mechanisms to improve cost certainty; cost allocation
policy between ratepayers and developers of DG; review of study
deposits against actual study costs; development of the
distribution group study process; consideration of timeline
compliance and remedies; and consideration of additional form
study agreements and interconnection agreements. This
proceeding continues. (R. 11-09-011)
COMMENTS
1. Author's Purpose . The author intends to "require
California IOUs to report specified information about the
distribution grid to better enable the developers of
distributed resources and generation (i.e. distributed
generation, storage, or other grid-supportive technologies)
to determine suitable locations for development before
committing time, energy, and financial resources into
interconnection to any particular location.
Under current law, IOUs are not required to publicly
disclose line characteristics of the electrical
distribution system in sufficient detail to evaluate siting
options in advance of the siting process of a distributed
resource. Since distributed resources and generation are an
important part of California's loading order, the
deployment of such resources should be as time- and
resource-efficient as can be done while maintaining safe
and reliable distribution service. More transparency -
information symmetry between the utilities and distributed
resources and generation developers - will help both
parties achieve timely and grid-supportive citing
solutions.
2. Aligning Author's Intent & Outcome . The broad policy
objectives and structure of the bill as currently drafted
may not result in the cost disclosure intended by the
author. To achieve that goal, the author will make the
following amendments in place of the current bill's
content.
(a) Distributed energy resources, including
distributed generation, can reduce greenhouse gas
emissions, reduce criteria air pollution, reduce water
consumption, increase grid reliability, localize power
generation, and decrease reliance on large, polluting
generation facilities.
(b) The Legislature has established programs and
policies to support the commercialization and growth
of distributed generation technologies, including the
California Solar Initiative, Combined Heat and Power
Feed-in-Tariff, Self-Generation Incentive Program, and
the Renewable Market AdjustingTariff.
(c) A central impediment to increased proliferation of
distributed energy resources is a lack of transparency
in current utility infrastructure investments in the
distribution grid and in the costs and process
associated with interconnection to the utility grid,
costs that are ultimately born by ratepayers.
(e) Transparency on what distribution grid investments
have been made will allow policy makers and
stakeholders to better understand and evaluate what
types of distributed energy resources may be more cost
effective and better serve the grid and ratepayers for
future investments.
Section XXX. For capital expenditures included in the
distribution category of the electrical corporation's
ratebase, the electrical corporation shall annually
report expenditures for each project, to include the
following:
1) The total dollar amount.
2) The type of equipment installed.
3) The purpose of the expenditures.
4) Whether or not the installations
affect the interconnection and
management of distributed energy resources.
For each interconnection agreement executed with
customers that interconnect distributed energy
resources, the utility shall report all
interconnection costs charged to the customer.
3. Ongoing Transition of the Grid . The CPUC has been
aggressive in its review of the interconnection process and
costs and has clearly stated and supported policies to
"achieve the Commission's goal of ensuring a timely,
non-discriminatory, cost-effective, and transparent process
for interconnection to the utility distribution system."
The second phase of a proceeding to guide the comprehensive
redesign of the interconnection process is underway. The
requests of this legislation, as proposed to be amended,
seem more appropriate for that venue. The proponents
report that they have made multiple requests for these
costs to the IOUs but little information has been
forthcoming. It is not clear how the release of cost data
facilitates interconnection.
POSITIONS
Sponsor:
Author
Support:
Bloom Energy
Clean Coalition
EtaGen
Solar Energy Industries Association
Sunrun
Oppose:
None on file.
Kellie Smith
SB 699 Analysis
Hearing Date: April 30, 2013