BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 1414
          Author:   Wolk (D), et al.
          Amended:  5/5/14
          Vote:     21

           
          SENATE ENERGY, UTIL. & COMMUNIC. COMM.  :  10-0, 4/29/14
          AYES:  Padilla, Fuller, Block, Cannella, Corbett, DeSaulnier,  
            Hill, Knight, Pavley, Wolk
          NO VOTE RECORDED:  De León

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Electricity: resources adequacy requirements

           SOURCE  :     Environmental Defense Fund


           DIGEST  :    This bill requires utilities and regulators to  
          include demand response (DR) in resource adequacy plans, as  
          specified.

           ANALYSIS  :    

          Existing law: 

          1.Requires the Public Utilities Commission (PUC), in  
            consultation with the Independent System Operators, to  
            establish resource adequacy requirements for all load-serving  
            entities in accordance with specified objectives. 

          2.Requires each load-serving entity to maintain physical  
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            generating capacity adequate to meet its load requirements to  
            provide reliable electric service and requires the PUC to  
            determine the most efficient and equitable means for achieving  
            prescribed objectives.

          3.Requires each electrical corporation (IOU) to file with the  
            PUC a proposed procurement plan with specified information,  
            including, among other things, a procurement process under  
            which the electric corporation may request bids for  
            procurement-related services, a showing that the procurement  
            plan will achieve, among other objectives, the creation or  
            maintenance of a diversified procurement portfolio, and the  
            IOU's risk management policy, strategy, and practices.

          This bill:

          1.Includes maximizing the cost-effective use of DR as an  
            objective for the resource adequacy requirements, as  
            specified.

          2.Requires each load-serving entity to maintain either  
            electrical demand reductions or physical generating capacity  
            adequate to meet its load requirements. 

          3.Requires the PUC to determine the most efficient and equitable  
            means to ensure the inclusion of DR that is reliable and cost  
            effective in achieving environmental or demand reduction goals  
            or grid reliability.

          4.Requires the proposed procurement plan to include a  
            competitive procurement process that will allow the IOU to  
            request bids for demandside response services.

          5.Requires that the plan's diversified procurement portfolio  
            include DR that is reliable and cost effective in achieving  
            environmental goals and electrical grid reliability.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  5/19/14)

          Environmental Defense Fund (source)
          Alarm.com

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          Breathe California
          Clean Coalition
          Clean Power Campaign
          Comverge
          EnergyHub
          EnerNOC
          Environment California
          Natural Resources Defense Council
          Sierra Club California

           OPPOSITION  :    (Verified  5/19/14)

          Southern California Edison

           ARGUMENTS IN SUPPORT  :    According to the author:

            SB 1414 will help ensure that regulators and utilities utilize  
            cost-effective Demand Response (DR) programs to change their  
            demand for electricity during key times.  With DR, in exchange  
            for changing their electricity use, participating customers  
            receive incentives for providing a clean resource to the  
            system.  Their reductions in demand (consumption) mean there  
            can be less supply (generation), providing clean energy,  
            reducing the need for 'peaker' power plants and helping to  
            integrate renewables.  California currently lags behind other  
            parts of the nation in utilizing DR.

           ARGUMENTS IN OPPOSITION  :    Southern California Edison (SCE)  
          states in part:

            Although the May 5 amendments incorporate language that  
            requires demand response as "cost-effective" and "reliable,"  
            SCE remains concerned that the difference between  
            "cost-effective" and "economic" demand response is still not  
            addressed.  Also, this bill continues to require demand  
            response resources be maximized in a manner that is not  
            necessarily economic, nor is it consistent with the CAISO's  
            [California Independent System Operator] responsibility to  
            maintain reliability.

            Another concern with this bill is that it continues to  
            consider demand "response" only as a "reduction," whereas  
            demand responsiveness may be an increase of demand.  The  
            increased integration of intermittent renewables such as solar  

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            and wind generation has created the possibility of excess  
            generation in the late afternoon peak hours.  However, under  
            this bill we could not use that excess generation for energy  
            storage, for example, since it only allows for 


            reductions in demand.  It is important that as the technology  
            used for demand response improves, that these resources will  
            be able to provide additional ancillary services.


          JG:k  5/20/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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