BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 33|
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THIRD READING
Bill No: AB 33
Author: Quirk (D), et al.
Amended: 8/2/16 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 6/13/16
AYES: Hueso, Morrell, Cannella, Gaines, Hertzberg, Hill, Lara,
Leyva, McGuire, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Electrical corporations: energy storage systems
SOURCE: Author
DIGEST: This bill makes new pumped hydroelectric storage
facilitates eligible for any increased energy storage system
targets adopted by the California Public Utilities Commission
(CPUC). This bill states that it is declaratory of existing law
and does not limit the CPUC's discretion in developing or
adopting targets for a load-serving entity to procure viable and
cost-effective energy storage systems.
ANALYSIS:
Existing law:
1)Defines "load-serving entity" (LSE) as an electrical
corporation (investor-owned utility, or IOU), energy service
providers or community choice aggregators. (Public Utilities
Code §380(k))
AB 33
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2)Requires the CPUC to determine appropriate targets, if any,
for LSEs to procure energy storage systems. Requires LSEs to
meet any targets adopted by the CPUC by 2015 and 2020.
Requires publicly owned utilities (POUs) to set their own
targets for the procurement of energy storage and then meet
those targets by 2016 and 2021. (Public Utilities Code §2835
et seq.)
3)Directs the California Energy Commission (CEC) and the CPUC,
where feasible, to authorize procurement of resources to
provide grid reliability services that minimize reliance on
system power and fossil fuel resources and, where feasible,
cost effective, and consistent with other state policy
objectives, increase the use of large- and small-scale energy
storage. (Public Utilities Code §400)
This bill declares pumped hydroelectric storage facilities
eligible for any increases in energy storage procurement targets
adopted by the CPUC on or after January 1, 2017. This bill
states that it is declaratory of existing law and does not limit
the CPUC's discretion in developing or adopting targets for an
LSE to procure viable and cost-effective energy storage systems.
Background
Law requires procurement of energy storage systems. AB 2514
(Skinner, 2010) required the CPUC to determine appropriate
targets, if any, for LSEs to procure energy storage systems by
2015 and 2020. The bill also directed POUs to set their own
comparable energy storage system procurement targets.
In October of 2013, the CPUC determined energy storage system
procurement targets applicable to the IOUs. The CPUC set
interim and final targets for the state's largest IOUs - Pacific
Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E) and
Southern California Edison (SCE) - that, in 2020, require the
three IOUs, together, to procure 1,325 megawatts of energy
storage. [See CPUC Decision 13-10-040.] The CPUC decision,
while acknowledging that large pumped hydroelectric facilities
meet the statutory criteria provided AB 2514, explicitly
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excluded pumped hydroelectric storage facilities greater than 50
megawatts. The CPUC justified this exclusion as follows:
The sheer size of pumped storage projects would dwarf other
smaller, emerging technologies; and as such, would inhibit
the fulfillment of market transformation goals. The
majority of pumped storage projects are 500 MW and over,
which means a single project could be used to reach each
target within a utility territory.
The CPUC, not unreasonably, concluded that an IOU could meet its
storage obligation through procurement of a single, large
pumped-storage project, thereby crowding out smaller, emerging
storage technologies. Such an outcome, the CPUC concluded,
would contradict the goal of energy storage market
transformation.
Many purposes of energy storage procurement targets. The CPUC
did not act unreasonably in concluding the energy storage goals
of AB 2514 included market transformation: implicit in the
imposition of procurement targets is the goal of altering market
outcomes from what they would otherwise be. However, whatever
its implicit goals, AB 2514 stated a number of explicit goals to
be achieved by the energy storage procurement program.
Large-scale pumped hydroelectric facilities, like smaller energy
storage systems using varying technologies, have the potential
to meet these statutory goals.
There is no obvious, compelling reason why the energy storage
procurement targets adopted by the CPUC must exclude pumped
hydroelectric storage facilities. In any case, existing statute
already makes large pumped-storage eligible for the CPUC's
storage targets. Therefore, this bill simply restates, with
emphasis, existing law.
The most recent amendments to the bill changed the bill language
as follows:
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Beginning January 1, 2017, if the commission increases the
targets for a load-serving entity to procure viable and
cost-effective energy storage systems, pumped hydroelectric
storage facilities of any size that become operational on
or after January 1, 2017, shall be eligible without limit
to the extent that those facilities meet otherwise
applicable requirements.
It is unclear what effect inclusion of the words "without limit"
had on the requirements of the bill, though some stakeholders
expressed concern with the terms ambiguous meaning. Similarly,
it is unclear what effect, if any, removal those words has on
the requirements of the bill.
Related/Prior Legislation
SB 886 (Pavley, 2015) requires the CPUC to adopt energy storage
system procurement targets applicable to every LSE and the
governing board of each local publicly owned electric utility to
adopt comparable energy storage procurement targets; requires
each LSE and locally owned public electric utility to plan for
the procurement of energy storage systems before
fossil-fuel-based generation; and requires each electrical
corporation to propose measures to encourage customers to
install energy storage systems. The bill passed the Senate
25-14 and is under consideration in the Assembly Committee on
Appropriations.
AB 1258 (Skinner, 2013) would have required the CEC to perform a
technical analysis of the potential uses of existing
hydro-electric and pumped storage facilities to provide
additional operational flexibility to integrate eligible
renewable energy sources into the grid. The bill was held in
Assembly Committee on Appropriations.
AB 2514 (Skinner, Chapter 469, Statutes of 2010) required CPUC
to determine appropriate targets, if any, for LSEs to procure
energy storage systems. The bill required LSEs to meet any
targets adopted by the CPUC by 2015 and 2020. The bill required
POUs to set their own targets for the procurement of energy
storage and then meet those targets by 2016 and 2021.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified7/27/16)
Brookfield Renewable
Clean Power Campaign
EDF Renewable Energy
Eagle Crest Energy, Inc.
San Diego County Water Authority
OPPOSITION: (Verified7/27/16)
None received
ARGUMENTS IN SUPPORT: According to the author:
When CPUC implemented AB 2514 (Skinner, 2010) [D.13-10-040],
the CPUC elected to place an arbitrary restriction on what
types of energy storage would satisfy the procurement mandate.
It determined that any pumped hydroelectric storage project
over 50 megawatts in size would not qualify. Unfortunately,
this means that large-scale pumped hydroelectric storage does
not satisfy any of the numerous requirements placed on IOUs.
Because it does not "check a box" for the utilities, there is
very little for a utility to procure it. This is despite
pumped storage being cost-effective and important in helping
the state integrate additional renewable energy onto the grid.
AB 33 allows IOUs to purchase pumped hydroelectric storage of
all sizes to meet in any future procurement mandate for energy
storage. This is not a storage procurement mandate or an
increase to an existing procurement mandate. AB 33 simply
ensures that pumped hydroelectric storage is not unnecessarily
excluded from future energy storage procurement mandates
AB 33
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Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
8/3/16 18:43:08
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