BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                     AB 674


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          Date of Hearing:  April 13, 2015


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                Anthony Rendon, Chair


          AB 674  
          Mullin - As Amended April 6, 2015


          SUBJECT:  Electricity:  distributed generation


          SUMMARY:  AB 674 establishes a definition of a "clean  
          distributed energy resource," and exempts those customers who  
          use a clean distributed energy resource from nonbypassable  
          charges for electricity generated on site.  Specifically, this  
          bill:  


          a)Creates a definition for a "clean distributed energy resource"  
            that: 


               1)     Produces carbon dioxide (CO2) emissions less than  
                 the emissions of CO2 from a marginal generating unit  
                 dispatched to meet the demand on the electric grid that  
                 is avoided by the electricity generated by the clean  
                 distributed energy resource, including accounting for  
                 waste heat recovery where applicable and savings on  
                 transmission and distribution losses.


               2)     Is sized to meet the electrical demand of, or use  
                 the available waste heat of  the customer that will be  
                 served by the generating facility.











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               3)     Has an oxide of nitrogen (NOx) emissions rate,  
                 including credit for waste heat recovery, when  
                 applicable, that is less than or equal to 0.07 pounds per  
                 megawatthour, or a lower NOx emissions rate that the  
                 State Air Resources Board determines reflects the best  
                 performance achieved in practice by existing electrical  
                 generation technologies.


               4)     Uses an eligible renewable energy resource as  
                 defined by the Renewable Portfolio Standard.


               5)     Is sized no larger than 20 megawatts (MW).


          b)Requires the California Energy Commission (CEC) is to make the  
            determination of CO2 emissions for clean distributed energy  
            resources by January 1, 2016.


          c) Requires the California Public Utilities Commission (CPUC) to  
            order electrical corporations to modify rate plans for those  
            customers who use clean distributed energy resources so that:


               1)     Nonbypassable charges are based on actual metered  
                 consumption of electricity delivered to the customer  
                 through the electrical corporation's transmission or  
                 distribution system.  All other charges are to be  
                 assessed at the same rate as other customers who do not  
                 use clean distributed energy resources.


               2)     Initial reservation capacity based on a minimum of  
                 12 months of the clean distributed energy resource  
                 generation technology's historical operation, the number,  











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                 size, and outage diversity of the clean distributed  
                 energy resource, and the annual average reduction of  
                 customer load that could occur during an outage.


               3)     Electrical corporations are allowed to:


                     i.          Adjust customer standby demand charges  
                      after an initial 12-month period to reflect the  
                      customer's actual standby demand, averaged over the  
                      previous 12 months.


                     ii.         Modify the reservation capacity once  
                      every 12 months to reflect the customer's actual  
                      average annual reservation capacity based on the  
                      same criteria used to establish the initial  
                      reservation capacity. 


               4)     Calculation of actual average annual reservation  
                 capacity excludes the customer's electrical demand served  
                 by the electrical corporation within 24 hours following  
                 an outage of the clean distributed energy resource  
                 resulting from any event on the electrical corporation's  
                 transmission or distribution grid that is outside of the  
                 customer's control that requires the customer to reduce  
                 onsite generation.


          d)Requires the CEC to provide a report to the Legislature on the  
            impacts of these provisions, including the impacts on avoided  
            transmission and distribution costs, avoided energy losses,  
            wholesale electricity market prices, electricity costs to  
            ratepayers, air quality, emissions of greenhouse gases, job  
            creation, energy reliability, and the extent to which the  
            incentives contribute to achieving the state's distributed  
            generation and combined heat and power goals.











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          EXISTING LAW:  




          1)Defines cogeneration as the sequential use of energy for the  
            production of electrical and useful thermal energy, and  
            specifies that at least 5 percent of the facility's total  
            annual energy output shall be in the form of useful thermal  
            energy and where useful thermal energy follows power  
            production, the useful annual power output plus one-half the  
            useful annual thermal energy output equals not less than 42.5  
            percent of any natural gas and oil energy input. (Public  
            Utilities Code 216.6)





          2)Provides that the cost of the competition transition charge  
            exemptions granted to members of the combined class of  
            customers, other than residential and small commercial  
            customers, shall be recovered only from those customers.   
            (Public Utilities Code 330)

          5)Requires the CPUC to separate distribution cost recovery,  
            taking into account actual costs and benefits of distributed  
            energy resources, proportional to each class resulting in  
            tariff modifications granted to members of each customer class  
            may be recovered only from that class. (Public Utilities Code  
            353.13)

          6)Authorizes allocation of costs for procurement contracts  
            entered into to meet local capacity needs and resource  
            adequacy.  (Public Utilities Code 365.1)

          7)Provides that each retail end-use customer should bear a fair  
            share of power purchase costs by the Department of Water  
            Resources, as well as power purchase contract obligations  











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            incurred as of January 1, 2003, and to prevent any shifting of  
            recoverable costs between customers.  (Public Utilities Code  
            366.1(d)(1)

          8)Established nonbypassable costs to be paid by all ratepayers:   
            Requires that the cost of divesting generation related assets,  
            nuclear settlements, and power purchase contracts that were  
            part of rates approved by the Public Utilities Commission as  
            of December 20, 1995, are to be recovered from all customers  
            on a nonbypassable basis, amortized over a reasonable period  
            of time.  (Public Utilities Code 367)

          9)Provides authorization for cost recovery through rates for  
            specified expenditures by electrical corporations prior to  
            1998.  (Public Utilities Code 368)

          10)Provides that nonbypassable charges will be applied to each  
            customer based on the amount of electricity purchased by the  
            customer from an electrical corporation or alternate supplier  
            of electricity, subject to changes in usage.  (Public  
            Utilities Code 371(a)

          11)Defines "change in usage" to generally mean changes occurring  
            in the normal course of business resulting from changes in  
            business cycles, termination of operations, departure from the  
            utility service territory, weather, reduced production,  
            modifications to production equipment or operations, changes  
            in production or manufacturing processes.  (Public Utilities  
            Code 371(b)

          12)Exempts fuel cell facilities and replacement of existing  
            cogeneration facilities from nonbypassable charges by  
            including them within the definition of change in usage.   
            (Public Utilities Code 371(b)

          13)Exempts specified cogeneration facilities placed in service  
            or committed to construction prior to December 20, 1995, from  
            specified nonbypassable charges.  (Public Utilities Code 374)












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          14)Provides the following exemptions from nonbypassable charges  
            and provides that the costs of these exemptions be borne by  
            all ratepayers in the affected service area:

             a)   110 megawatts of cogeneration serving irrigation  
               districts served by electrical corporations with specific  
               allocations to Merced Irrigation District and Castle Air  
               Force Base.
             b)   Irrigation districts, joint power authorities, and  
               publicly owned utility districts that were owned prior to  
               December 20, 1995.
             c)   A federal power marketing agency that existed as of  
               January 1, 1996, or its successor, from nonbypassable  
               charges.
             d)   A portion of the load at the University of California  
               campus in Yolo County not served by power from a federal  
               marketing agency, provided that the power is used for the  
               facility load and not directly or indirectly for sale.
               (Public Utilities Code 374)

          1)Requires the PUC to approve distributed generation resource  
            plans filed by electrical corporations no later than July 1,  
            2015.  (Public Utilities Code 769)

          2)Provides authorization for cost recovery to accommodate  
            implementation of direct access (Public Utilities Code 376)

          3)Provides incentives for self-generation, including,  
            cogeneration technologies that meet specified performance and  
            emission requirements.  (Public Utilities Code 379.6)

          4)Specifies that "advanced electrical distribution generation  
            technologies" meet emission standards adopted by the State Air  
            Resources Control Board (ARB), produce de minimis emissions of  
            sulfur oxides and nitrogen oxides, meet greenhouse gas  
            emission performance standards, have a minimum efficiency of  
            45%, and is sized to meet onsite demand, uses renewable or  
            nonrenewable fuel.  (Public Utilities Code 379.8(a)












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          5)Provides that advanced electrical distribution technologies  
            qualify to pay the same rate for gas as that is no higher than  
            the rate paid for gas used in an electric plant located in the  
            same service area of an electric corporation and allows for  
            treatment of these technologies as cogeneration.   (Public  
            Utilities Code 379.8 (b))

          6)Provides that the CPUC must establish rates using cost  
            allocation principles that fairly and reasonably assign to  
            different customer classes the costs of providing service to  
            those customer classes, consistent with the policies of  
            affordability and conservation. (Public Utilities Code 739.6)



          7)Provides that the surcharge assessed for natural gas used to  
            generate electricity by a nonutility facility must be the same  
            as the surcharge assessed for gas used to generate electricity  
            by the electric utility for that quantity of gas used to  
            generate electricity.  Prohibits surcharges for electricity  
            for the sale of electricity from a cogeneration or nonutility  
            facility to an entity for resale to a retail customer.   
            (Public Utilities Code 6352) 



          FISCAL EFFECT:  Unknown.


          COMMENTS:  


           1)Author's Statement.   "California is a leader in clean energy  
            policy, with ambitious goals to improve air quality,  
            efficiency, reliability, and the economy.  Clean onsite  
            distributed generation of electricity ("DG") is valuable as an  
            alternative to traditional centralized power plants.  With  
            California's energy demand expected to double by 2050,  
            deployment of distributed generation technologies is an  











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            important piece of meeting the State's energy, climate, and  
            public health goals."



            "Unfortunately, customers who choose to invest their own  
            capital to install clean DG technologies must pay a number of  
            utility-imposed fees on the electricity they generate and  
            consume onsite.  These charges are equivalent to accessing an  
            additional 75 to 100% sales tax on clean DG equipment.  The  
            fees make the installation of clean DG prohibitively expensive  
            and economically infeasible for residential, commercial, and  
            industrial customers in California."





            "This bill would require customers with clean onsite  
            generation technologies to pay all applicable utility imposed  
            fees based  only on  electricity purchased from the grid.  They  
            will continue to pay standby charges for transmission,  
            distribution, and grid maintenance, and they will continue to  
            pay commodity costs for the electricity they use.  This policy  
            will enable more customers to invest their own capital to  
            purchase clean, onsite electricity generation technologies  
            that improve air quality, reduce energy costs for all  
            ratepayers, improve energy reliability, and reduce  
            California's reliance on centralized, fossil-fueled power  
            plants."





           2)Legislative ratemaking.   AB 674 would require the CPUC to  
            order electric corporations to modify rate plans so that users  
            of these technologies would be exempted from contributing,  
            through rates, for costs that the Legislature has previously  











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            required all ratepayers to pay.  These charges are used to  
            support low income electric customers and to support energy  
            efficiency; renewable energy; self-generation; as well as  
            research, development and demonstration programs.  In  
            addition, these charges are used to pay for costs associated  
            with the electricity crisis in the early 2000s.  



             Providing exemptions for a variety of good purposes has led to  
            many debates in the Legislature about cost-shifting and  
            whether one group of customer is or is not paying their fair  
            share of the cost of maintaining a safe, reliable, and  
            affordable electricity system.


             


             Similarly, it is unclear the extent to which the exemptions  
            proposed in AB 674 will increase bills for other customers.   
            Current law limits cost recovery within a class of customers,  
            in this case, most likely commercial customers. Within  
            commercial customers are small and large business, schools,  
            and municipal government. It is unclear whether those  
            increases will create financial hardships for those customers.  






             The author may wish to amend the bill to require that, before  
            authorizing changes to rate plans for customers who use clean  
            distributed energy resources, the PUC shall make a finding  
            that the impact will not create a shift in costs to other  
            customers of an electrical corporation that are not offset by  
            a commensurate benefit to those other customers.












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          3)Isn't the CPUC already doing this?   AB 327, enacted in 2013,  
            requires electrical corporations by July 1, 2015, to submit to  
            the CPUC a distribution resources plan proposal to identify  
            optimal locations for the deployment of distributed resources.  
             The statute requires the CPUC to review each distribution  
            resources plan proposal submitted by an electrical corporation  
            and approve, or modify and approve, a distribution resources  
            plan for the corporation.  The bill requires that any  
            electrical corporation spending on distribution infrastructure  
            necessary to accomplish the distribution resources plan be  
            proposed and considered as part of the next general rate case  
            for the corporation.  
             It is unclear why this new distributed generation program is  
            needed or how it would work with the distributed generation  
            plans that the CPUC will ultimately approve.


            In addition, the CPUC authorized a pilot program exempting  
            bottoming-cycle combined heat and power (CHP) from  
            nonbypassable charges in October 14.<1>  The CPUC's decision  
            granting this program did not make a determination on whether  
            or not CHP can be characterized as energy efficiency.  The  
            pilot program could be expanded by the CPUC pending the  
            outcome of the pilot.


           4)Reliability of Clean Distributed Energy Resources.   The author  
            opines that existing and new technologies could become more  
            prevalent should AB 674 become law.  According to the findings  
            and declarations, "clean onsite generation of electricity  
            yields multiple benefits, including increased electrical  
          ---------------------------
          <1>  
           http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M129/K228/12 
          9228024.pdf  











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            reliability and efficiency, reduced emissions of greenhouse  
            gases and oxides of nitrogen (NOx), and electrical grid  
            resiliency."  
             California currently provides incentives for these and similar  
            technologies, primarily through the Self-Generation Incentive  
            Program (SGIP).  SGIP was established in 2000 and continues to  
            provide incentives as a result of statutory extensions.  SGIP  
            was recently extended by the Legislature with some  
            modifications to address concerns over performance, emissions,  
            and achieving ratepayer benefits.


            As a result of recent evaluations of the SGIP program, a  
            number of deficiencies in the reliability of self-generation  
            have been revealed.  For example, a CPUC investigation<2> on  
            combined heat and power (CHP) performance in 2010 found that  
            CHP projects experienced increased time spent not operating,  
            reductions in output when operating, and decreases in  
            electrical efficiency and thermal heat recovery over time.   
            The investigation further found that unexpected levels of  
            maintenance and economic complexity have dampened participant  
            satisfaction.  It is unclear whether the current reliability  
            of SGIP projects are the same, better, or worse than what was  
            reported in 2010.  The 2012 SGIP evaluation report could not  
            find operational information on 26% of the projects and  
            another 22% of the projects either were decommissioned or  
            offline.


            --------------------------
          <2>



           SGIP Incentive Program, Combined Heat and Power Performance  
          Investigati"  
           http://www.cpuc.ca.gov/NR/rdonlyres/594FEE2F-B37A-4F9D-B04A-B38A4 
          DFBF689/0/SGIP_CHP_Performance_Investigation_FINAL_2010_04_01.pdf 
           , April 2010











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            In addition, it is important to understand that the economics  
            of operating a self-generation facility using natural gas.   
            The difference between the cost of a purchased kilowatt-hour  
            (kWh) of electricity and the cost of natural gas to generate a  
            kWh is known as spark spread.  With a high spark spread,  
            system owners may lower their overall costs by buying natural  
            gas to run their systems.  When spark spread is low, owners  
            may decide to curtail operation of the system and instead  
            purchase electricity from the utility to meet electrical  
            demands and natural gas to meet on-site thermal energy needs.   
            While this is understandable and smart from a business  
            perspective, the operator's decision not to operate based on  
            spark spread may cause increased load on the electric grid  
            when gas prices are higher and thereby increase energy costs  
            for ratepayers who are not participating in the program.
             The author may wish to specify a minimum reliability  
            requirement to ensure that the benefits to the electricity  
            system are realized and require performance reporting to the  
            CPUC verify that facilities are providing benefits consistent  
            with the statute.


            5)Location. 
             As written, AB 674 would provide exemptions for projects  
            located where vendors and customers want them, which is not  
            necessarily where they could provide ratepayer benefits, i.e.,  
            where there is high peak demand coincident with the project's  
            ability to reduce the sites need for electricity from the  
            grid, relieve transmission congestion, or other ratepayer  
            benefits.


             The author may wish to specify that the PUC shall establish  
            requirements that the clean distributed energy resources be  
            located in areas where there are benefits to the transmission  
            and distribution system.


            6)Definition of Clean Distributed Energy Resource.   In other  











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            code sections distributed energy resources have similar  
            definitions which may be "cleaner" than the definition of the  
            clean resource proposed in AB 674.  For example, Public  
            Utilities Code 379.8 defines "advanced electrical distribution  
            technology" as one that produces de minimis emissions of  
            sulfur oxides and nitrogen oxides.  AB 674 defines clean  
            distributed energy resources as having "oxide of nitrogen  
            (NOx) emissions rate, including credit for waste heat  
            recovery, when applicable, that is less than or equal to 0.07  
            pounds per megawatthour, or a lower NOx emissions rate that  
            the State Air Resources Board determines reflects the best  
            performance achieved in practice by existing electrical  
            generation technologies."  AB 674 does not specify a limit of   
            sulfur oxide emissions.  
             


            Similarly, the limitation on GHG emissions is different from  
            what is specified in Section 379.6 of the Public Resources  
            Code for the self-generation incentive program (SGIP). SGIP  
            statute limits the GHG emission factor to a level that is  
            determined by the CPUC, in consultation with ARB that will  
            result in GHG emission reductions.  Conversely, AB 674  
            specifies that allowed GHG emissions are less than the  
            emissions of CO2 from a marginal generating unit dispatched to  
                                                                 meet the demand on the electric grid that is avoided by the  
            electricity generated by the clean distributed energy  
            resource.





            It is not clear why there is a need to have inconsistent  
            definitions of distributed energy resources in the statute.















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            It is also not clear what technologies would be considered  
            clean in these definitions.





             The author may wish to consider an amendment which specifies a  
            definition of clean distributed energy resources that is  
            cleaner than other definitions of distributed energy resource  
            that are already in statute with respect to GHG emissions,  
            nitrous oxide emissions, and sulfur oxide emissions.





          7)Additional amendments.



             AB 674 includes new language in proposed 354 (c) (1)(I)  which  
            states, "The extent to which the incentives provided pursuant  
            to this section contribute to achieving the state's  
            distributed generation and combined heat and power goals."





            Currently, there is no statutory requirement for the state to  
            meet distributed generation and combined heat and power goals.  
             Measures have been introduced to implement goals made in the  
            Governor's 2015 Inaugural address, which included goals for  
            increased use of distributed energy resources to meet  
            California climate goals.













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             The author may wish to consider striking this paragraph.





             AB 674 uses the phrase "reservation capacity" in Sections  
            354(b) (2)(A), (B), (C).  





            The author may wish to consider changing this to "reserve  
            capacity" to reflect typical nomenclature in rate plans.





          8)Prior Legislation.
             2013:  AB 327 (Perea) requires electrical corporations to  
            submit plans for deploying distributed energy resources and  
            for the PUC to approve those plans. Chaptered.





            2013:  AB 427 (Mullin) would exempt bottoming cycle combined  
            heat and power from DLCs.  Failed in Assembly Utilities and  
            Commerce Committee.















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            2014:  AB 365 (Mullin) proposed finding and declarations  
            related to clean onsite generation and nonbypassable charges.  
            Failed in the Senate.





            2014: AB 2441 (Mullin) would create a pilot program to exempt  
            up to 500 MW of "clean on-site generation" (as defined) from  
            departing load charges.  Failed in the Senate.





            2014:  AB 2649 (Mullin) would specify that departing load  
            charges applied to military facilities would be calculated  
            based on generation delivered through the meter to the  
            military facility.  Failed in the Senate.





           9)Suggested Amendments.


             354.  (a) As used in this section, "clean distributed energy  
            resource" means a facility that is located on the customer's  
            premises and generates electricity, or electricity and useful  
            heat, where the electricity generated is used for a purpose  
            described in paragraph (1) or (2) of subdivision (b) of  
            Section 218, and that meets either of the following  
            requirements:











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            (1) It meets all of the following criteria:

            (A)  Produces emission of carbon dioxide (CO2) at a rate per  
            megawatthour, accounting for waste heat recovery, where  
            applicable, and savings on transmission and distribution  
            losses, that is less than the emissions of CO2 from the  
            marginal generating unit dispatched to meet the demand on the  
            electrical grid that is avoided by the electricity generated  
            by the clean distributed energy resource, as determined by the  
            Energy Commission as of January 30, 2016.    Produces greenhouse  
            gas emission that are less than that which is determined by  
            the commission pursuant to Section 379.6(b)(2). 


            (B)  Has an oxide of nitrogen (NOx) emissions rate, including  
            credit for waste heat recovery, when applicable, that is less  
            than or equal to 0.07 pounds per megawatthour, or a lower NOx  
            emissions rate that the State Air Resources Board determines  
            reflects the best performance achieved in practice by existing  
            electrical generation technologies pursuant to Section 41514.9  
            of the Health and Safety Code.    Produces nitrous oxide and  
            sulfur dioxide emissions that are less than allowed for  
            advanced distributed energy resources as specified in Section  
            379.8.  


            (C) Has a nameplate rated generation capacity of 20 megawatts  
            or less.


            (D) Is sized to meet the electrical demand of, or use the  
            available waste heat of, the customer that will be served by  
            the generating facility.


            (2) It is an "eligible renewable energy resource" pursuant to  
            the California Renewables Portfolio Standard Program (Article  
            16 (commencing with Section 399.11)), has a nameplate rated  











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            generation capacity of 20 megawatts or less, is sized to meet  
            the electrical demand of the customer that will be served by  
            the generating facility, and will not otherwise be addressed  
            in the commission's implementation of Section 769 or 2827.1.


            (b) To the extent authorized by federal law, by July 1, 2016,  
            the commission shall require each electrical corporation to do  
            the following for customers served by clean distributed energy  
            resources installed after January 1, 2016   the commission  
            analyzes rate impacts and make a finding that the impact will  
            not create a shift in costs to other customers of an  
            electrical corporation that are not offset by a commensurate  
            benefit to those other customers, specifies a minimum  
            reliability requirement to ensure that benefits to the  
            electricity system are realized, and specifies optimal  
            location requirements:


             (1) Collect all applicable nonbypassable charges fixed,  
            implemented, administered, or imposed by the commission based  
            only on the actual metered consumption of electricity  
            delivered to the customer through the electrical corporation's  
            transmission or distribution system.  All charges shall be at  
            the same rate per kilowatthour as paid by other customers that  
            do not employ a clean distributed energy resource under the  
            electrical corporation's applicable rate schedule.


            (2) (A) Calculate a  reservation   reserve  capacity for standby  
            service, if applicable, based on the capacity needed by an  
            electrical corporation to serve a customer's electrical demand  
            during an outage of the clean distributed energy resource  
            providing electric service for that customer.


            (B) Initial  reservation   reserve  capacity shall be established  
            by the customer for a minimum of 12 months based on the clean  
            distributed energy resource generation technology's historical  











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            operation, the number, size, and outage diversity of the clean  
            distributed energy resource, and the annual average reduction  
            of customer load that could occur during an outage.


            (C) If after the initial 12-month period, the electrical  
            corporation reasonably determines that the  reservation   reserve   
            capacity does not reflect the customer's actual standby demand  
            averaged over the previous 12 months, the electrical  
            corporation shall modify the  reservation   reserve  capacity once  
            every 12 months to reflect the customer's actual average  
            annual  reservation   reserve  capacity based on the same criteria  
            used to establish the initial  reservation    reserve  capacity.   
            Calculation of actual average annual  reservation   reserve   
            capacity shall exclude the customer's electrical demand served  
            by the electrical corporation within 24 hours following an  
            outage of the clean distributed energy resource resulting from  
            any event on the electrical corporation's transmission or  
            distribution grid that is outside of the customer's control  
            that requires the customer to reduce onsite generation.


            (c)  The commission shall specify a minimum reliability  
            requirement to ensure that the benefits to the electricity  
            system are realized and require performance reporting by  
            customers to verify that facilities are providing benefits  
            consistent with the statute.  


             (d)  (1) By July 1, 2021, the Energy Commission, in  
            consultation with the commission, shall report on the impacts  
            of this section to the Legislature and the relevant policy  
            committees of the Legislature in regard to all of the  
            following:


            (A) Avoided transmission and distribution costs.













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            (B) Avoided energy losses.


            (C) Wholesale electricity market prices.


            (D) Electricity costs to ratepayers.


            (E) Air quality.


            (F) Emissions of greenhouse gases.


            (G) Job creation.


            (H) Energy reliability.


             (I) The extent to which the incentives provided pursuant to  
            this section contribute to achieving the state's distributed  
            generation and combined heat and power goals.


             (2) The report to be submitted to the Legislature pursuant to  
            this subdivision shall be submitted in compliance with Section  
            9795 of the Government Code.


            (3) The requirement for submitting a report pursuant to this  
            subdivision is inoperative on July 1, 2025, pursuant to  
            Section 10231.5 of the Government Code.

           10)Support and Opposition.
             According to supporters, AB 674 "removes utility-imposed fees  
            charged to customers of clean distributed generation for  
            energy generated and consumed on-site, and instead requires  











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            them to pay all applicable fees based  only  on electricity  
            purchased from a utility through the grid."


            The California Manufacturers and Technology Association  
            supports AB 674 if amended to provide include customers who  
            installed clean distributed energy resources prior to January  
            1, 2016. 


            According to the Office of Ratepayer advocates, AB 674,  
            "?would unfairly burden other utility customers with paying  
            for the resulting revenue shortfall. It would also set a  
            precedent for other customers groups to seek similar  
            exemptions to nonbypassable charges."


            PG&E opposes AB 674 because it increases rates for some  
            customers for the benefit of others and raise concerns about  
            the definition of clean generation.


            SDG&E opposes AB 674 on the basis that this is legislative  
            mandates on rate design and restrict the CPUC from setting  
            rates and would allow power that is not as clean as  
            utility-provided electricity to qualify for the exemption. SCE  
            raises a similar concern that the type of generation that  
            would receive an exemption from charges would not be as clean  
            as utility-provided electricity.


          REGISTERED SUPPORT / OPPOSITION:




          Support













                                                                     AB 674


                                                                     Page V


          Bloom Energy


          California Large Energy Consumers Association


          California Manufacturers & Technology Association (if amended)


          Capstone Turbine Corporation


          Caterpillar Inc.


          Doosan Corporation


          DE Solutions, Inc.


          EtaGen Inc.


          Peterson CAT


          Qualcomm 


          TechNet


          Western Energy Systems




          Opposition











                                                                     AB 674


                                                                     Page W




          California Coalition of Utility Employees (CCUE) 


          California State Association of Electrical Workers Office of  
          Ratepayer Advocates


          Pacific Gas & Electric


          San Diego Gas & Electric


          Southern California Edison




          Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083