BILL ANALYSIS                                                                                                                                                                                                    



                                                                      AB 33


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          CONCURRENCE IN SENATE AMENDMENTS
          AB  
          33 (Quirk)


          As Amended  August 19, 2016


          Majority vote


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          |COMMITTEE VOTE: |14-0 |(August 30,     |RECOMMENDATION:   |concur     |
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          (U. & C.)




          Original Committee Reference:  NAT. RES.


          SUMMARY:  Requires the California Public Utilities Commission  
          (CPUC), in coordination with the California Energy Commission  








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          (CEC), to evaluate and analyze the potential for all types of  
          long duration bulk energy storage resources. 


          The Senate amendments delete the previous content of the bill  
          and replace it with the following:


          1)Require 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)Require, as part of the evaluation, the CPUC to 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.


          EXISTING LAW:  


          1)Defines "load-serving entity" as an electrical corporation,  
            electric service provider, or community choice aggregator.   
            (Public Utilities Code Section 380)
          2)Requires the CPUC, on or before March 1, 2012, to open a  
            proceeding to determine appropriate targets, if any, for each  
            load-serving entity to procure viable and cost-effective  
            energy storage systems to be achieved by December 31, 2015,  
            and December 31, 2020.  Requires the governing board of each  
            local publicly owned electric utility, on or before March 1,  
            2012, to initiate a process to determine appropriate targets,  
            if any, for the utility to procure viable and cost-effective  
            energy storage systems to be achieved by December 31, 2016,  
            and December 31, 2020.  As part of the proceeding, the CPUC or  
            local publicly owned electric utility governing board may  
            consider a variety of possible policies to encourage the  
            cost-effective deployment of energy storage systems, including  
            refinement of existing procurement methods to properly value  
            energy storage systems.  (Public Utilities Code Section 2836)









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          3)Requires the CPUC and the CEC in furtherance of meeting the  
            state's clean energy and pollution reduction objectives to,  
            among others, where feasible, 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 with a variety of technologies, targeted energy  
            efficiency, demand response, including, but not limited to,  
            automated demand response, eligible renewable energy  
            resources, or other renewable and nonrenewable technologies  
            with zero or lowest feasible emissions of greenhouse gases,  
            criteria pollutants, and toxic air contaminants onsite to  
            protect system reliability.  (Public Utilities Code Section  
            400)


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  


          1)Background:  A distinctive characteristic of electric power is  
            that the supply of electricity that can be generated  
            throughout a day is relatively fixed over short periods of  
            time, whereas, demand for electricity fluctuates throughout  
            the day.  Developing electricity storage devices and other  
            technology, such as pump storage systems or battery storage,  
            to store excess generation can help in addressing demand  
            during peak load. 
          2)AB 2514 (Skinner):  In 2010, the Legislature passed AB 2514  
            (Skinner), Chapter 469, Statutes of 2010, which required the  
            CPUC to determine appropriate targets, if any, for load  
            serving entities to procure energy storage systems and  
            required those load serving entities to meet any targets  
            adopted by the CPUC by 2015 and 2020.  AB 2514 also required  
            publicly owned utilities to set their own targets for the  
            procurement of energy storage and meet those targets by 2016  
            and 2021.  In December 2010, the CPUC opened Rulemaking (R.)  








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            10-12-007 to implement the provision of AB 2514.  R.10-12-007  
            established an energy storage procurement target of 1,325  
            megawatts (MW) to be procured by the Pacific Gas and Electric  
            Company, the Southern California Edison Company, and the San  
            Diego Gas and Electric Company by 2020.


          3)Large-Scale Pumped Storage Projects:  As part of R.10-12-007,  
            the CPUC excluded large-scale pumped storage projects from the  
            energy storage system procurement mechanisms established as  
            directed by AB 2514.  According to the CPUC, because the  
            majority of pumped storage projects are 500 MW and over, a  
            single project in a utility service territory could be used to  
            reach the energy storage procurement targets.  Hence, the CPUC  
            felt that the sheer size of pumped storage projects would  
            dwarf other smaller, emerging technologies and would inhibit  
            the fulfillment of market transformation goals, contrary to  
            the intent of AB 2514. 


            Opponents argued that large-scale pumped storage met the  
            definition of eligible energy storage system under statute and  
            because AB 2514 did not specify any size limitations, the CPUC  
            was improperly favoring certain energy storage technologies  
            over others.  The CPUC argued that AB 2514 allows the CPUC to  
            consider a variety of possible policies to encourage the  
            cost-effective deployment of energy storage systems; hence,  
            the CPUC must adopt policies and procedures that would provide  
            opportunities for the cost-effective deployment of all types  
            of energy storage technologies.


            Although statute does not exclude large pumped facilities from  
            being eligible to meet the energy storage procurement targets  
            adopted by the CPUC, the concern is that utilities could  
            simply rely on a few very large pumped hydroelectric storage  
            facilities to reach its targets, which could harm smaller,  
            still developing storage technologies.  This is not to say  
            that pump storage serves as a complete counter to other  
            storage technologies such as batteries, for example, pumped  
            storage may not be effective during local power outages  
            resulting from infrastructure or network failures, whereas  








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            battery storage could provide customers with power until  
            repairs are made to the system. 


            This bill requires the CPUC, in coordination with the CEC, to  
            evaluate and analyze the potential for all types of long  
            duration bulk energy storage resources, as specified.


          Analysis Prepared by:                                             
                          Edmond Cheung / U. & C. / (916) 319-2083  FN:  
          0004996