BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1414| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED SB 1414 Page 2 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 CONTINUED SB 1414 Page 3 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 CONTINUED SB 1414 Page 4 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 **** END **** CONTINUED