BILL ANALYSIS                                                                                                                                                                                                    




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          |SENATE RULES COMMITTEE            |                         AB 33|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 33
          Author:   Quirk (D), et al.
          Amended:  8/19/16 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 obligates the CPUC, in consultation with the  
          California Energy Commission (CEC), to evaluate and analyze the  
          potential for all types of long-duration bulk energy storage  
          resources to help integrate renewables into the electric grid.
          
          Senate Floor Amendments of 8/19/16 delete the prior contents of  
          this bill in its entirety and replace it with the provisions  
          described above.

          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  








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            Code 380(k)) 

          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 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:

          1)Obligates the CPUC, in coordination with the CEC, as part of a  
            new or existing proceeding, to evaluate and analyze the  
            potential for all types of long-duration bulk energy storage  
            resources to help integrate renewable generation into the  
            electrical grid.
             
          2)Requires that CPUC, as part of the evaluation, assess the  
            potential costs and benefits of all types of long-duration  
            bulk energy storage resources, including impacts to the  
            transmission and distribution systems of location-specific  
            long-duration bulk energy storage resources.
          
          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  








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          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  
          (one type of long-duration bulk storage) meet the statutory  
          criteria provided AB 2514, explicitly 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.  Those  
          explicit statutory goals include:


           Integration of intermittent generation from eligible renewable  
            energy resources into the reliable operation of the  
            transmission and distribution grid.









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           Allowing intermittent generation from eligible renewable  
            energy resources to operate at or near full capacity.


           Reducing the need for new fossil-fuel powered peaking  
            generation facilities by using stored electricity to meet peak  
            demand.


           Reducing purchases of electricity generation sources with  
            higher emissions of greenhouse gases.


           Eliminating or reducing transmission and distribution losses,  
            including increased losses during periods of congestion on the  
            grid.


           Reducing the demand for electricity during peak periods and  
            achieve permanent load-shifting by using thermal storage to  
            meet air-conditioning needs.


           Avoiding or delaying investments in transmission and  
            distribution system upgrades.


           Using energy storage systems to provide the ancillary services  
            otherwise provided by fossil-fueled generating facilities.


          Long-duration bulk storage, such as large-scale pumped  
          hydroelectric facilities, has the potential to meet these  
          statutory goals.  For this reason, the California Independent  
          System Operator (CAISO) - always preoccupied with the management  
          of intermittent renewable energy resources - recently urged the  
          CPUC to consider (1) increasing current energy storage system  
          procurement targets to allow for large storage resources while  
          not undermining support for smaller and newer technologies, and  
          (2) earmarking capacity within those procurement targets  
          specifically for pumped storage.  [Comments of the California  








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          Independent System Operator Corporation on track 2 issues, filed  
          February 2, 2016.]  


          CPUC/CEC staff paper recommends investigations of the value of  
          pumped storage.  In November 2015, Chair Weisenmiller of the CEC  
          and President Picker of the CPUC conducted a workshop to discuss  
          bulk energy storage in California.  The staff of the two  
          agencies released a paper that summarized the presentations and  
          public comments from the bulk energy storage workshop, as well  
          as the written comments submitted after the workshop.  The staff  
          paper also recommended that the CEC, CPUC, and CAISO undertake  
          investigations to better understand and quantify the value of  
          pumped storage.  This bill forces the hand of the agencies by  
          obligating the CPUC, in coordination with the CEC, to evaluate  
          and analyze the potential for bulk energy storage to help  
          integrate renewable generation into the electric system, such an  
          evaluation and analysis would be consistent with the  
          recommendations of the CEC/CPUC staff paper.  

          Despite this consistency, the staff of the CPUC expressed  
          concern with the requirements of this bill.  While the CPUC as  
          yet has no formal position on this bill, CPUC staff indicates  
          they view this bill as of a kind with several other bills to  
          which the CPUC is formally opposed.  In the view of the CPUC,  
          those bills - AB 33 included - try to inappropriately influence  
          the CPUC resources planning process in favor of one technology  
          or resource type or another.
          
          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 was held in the Assembly Committee on Appropriations.









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          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  
          the 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. 


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified8/19/16)


          Brookfield Renewable
          Clean Power Campaign
          EDF Renewable Energy
          Eagle Crest Energy, Inc.
          San Diego County Water Authority


          OPPOSITION:   (Verified8/19/16)


          None received


          Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
          8/22/16 22:32:16
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