BILL ANALYSIS Ó
AB 1005
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1005
(Gordon) - As Amended March 26, 2015
SUBJECT: Electric vehicles: infrastructure: charging systems
SUMMARY: This bill makes findings and declarations with respect
to electric vehicle charging equipment, and specifies criteria
for the California Public Utilities Commission (CPUC) to
authorize ratepayer funding for electric vehicle charging
infrastructure and equipment. Specifically, this bill:
a)Requires the CPUC to consider (1) authorizing electrical
corporations to rate-base "make-ready" infrastructure needed
to support and encourage investment in electric vehicle
charging equipment by customers and other providers of
electric vehicle charging services if specified requirements
are met.
b)Specifies that "make ready" infrastructure does not include
electric vehicle service equipment or network charging
services.
c)Requires the CPUC's policies to ensure that utilities do not
unfairly compete with nonutility enterprises.
EXISTING LAW:
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1)Requires that all charges demanded or received by any public
utility for any product or commodity furnished or to be
furnished or any service rendered or to be rendered shall be
just and reasonable. Specifies that every unjust or
unreasonable charge demanded or received for such product or
commodity or service is unlawful. (Public Utilities Code
Section 451)
2)Requires the CPUC to evaluate policies to develop
infrastructure sufficient to overcome any barriers to the
widespread deployment and use of plug-in hybrid and electric
vehicles. (Public Utilities Code Section 740.2)
3)Requires the CPUC to evaluate and implement policies to
promote the development of equipment and infrastructure needed
to facilitate the use of electric power and natural gas to
fuel low-emission vehicles. (Public Utilities Code Section
740.3)
4)Requires CPUC policiesto ensure that utilities do not
unfairly compete with nonutility enterprises. (Public
Utilities Code Section 740.3(c))
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "With over 125,000 electric vehicles
(EVs) on the road in California, the state now accounts for an
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estimated 40+% of the total national market for EVs.
California is leading the way for a robust network of EV
charging, which is both critical to support the industry's
tremendous growth and to reach Governor Brown's stated goal of
1.5 million EVs on California roads by 2025. AB 1005 will
protect competitive markets for EV charging equipment which
will help to put downward pressure on pricing, all while
simultaneously stimulating innovation, maximizing consumer
choice, and encouraging private-sector investments in EV
equipment and services."
2)Background: The California Global Warming Solutions Act of
2006, enacted by Assembly AB 32, tasked the Air Resources
Board (ARB) to adopt rules and regulations that would reduce
greenhouse gas emission in the state to 1990 levels by 2020.
With it, the Legislature acknowledged the adverse impacts and
threat global warming poses to the economic wellbeing, public
health, natural resources, and environment of California, and
took an active step towards mitigating its effect.
Increasing the use of zero emission vehicles (ZEV), such as
hydrogen fuel cell vehicles, will play a significant role in
reducing California's greenhouse gas and smog emissions to
standards set forth by AB 32. In 2012, the ARB implemented
the Advanced Clean Cars program which seeks to rapidly
increase the number of ZEV technologies, such as hydrogen fuel
cells and battery electric vehicles. The ARB estimates that
by mid-century, 87% of cars on the road will need to be full
ZEVs which would put California on the path to reducing
greenhouse gas emissions by 80% by 2050.
In March 2012, Governor Brown issued Executive Order B-16-2012
to facilitate the rapid commercialization of ZEVs and in
February 2013, he issued a ZEV Action Plan which created a
roadmap towards achieving 1.5 million zero-emission vehicles
on California roadways by 2025.
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In January 2015, the Governor declared a goal to reduce
petroleum use in cars and trucks by 50 percent.
3)CPUC EV Infrastructure Decision (D. 14-12-079): In December
2014, the CPUC issued Decision 14-12-079, which replaced the
CPUC's prior prohibition against investor owned utilities
(IOUs) from owning electric vehicle charging equipment with a
case specific approach. The decision seeks to encourage the
expansion of electric vehicle infrastructure and the
widespread deployment and use of plug-in electric vehicles
(PEVs). The CPUC decision recognizes that the IOUs "will take
on a critical role in the transportation sector as procurers,
deliverers and suppliers of transportation fuel-in this case
electricity." The CPUC further stated that its decision "sets
aside the requirement that the utilities demonstrate a "market
failure" or "underserved market" as part of any request for
authority to own PEV charging infrastructure. This change is
designed to allow for consideration of utility requests on a
case-specific basis, and states it will examine whether
utility entrance into a competitive market with non-utility
participants should be allowed.
Stakeholder comments in that CPUC proceeding nearly
unanimously supported an expanded role for IOUs in EV
infrastructure support and development in order to realize the
potential benefits of widespread EV adoption. There was
disagreement in the appropriate degree of increased utility
participation, with some parties advocating for limited
utility activity, with stringent criteria applied to approval
of utility program proposals.
The CPUC declined to prescriptively determine the appropriate
level of utility activity in that decision. Instead, it
stated it would evaluate utility proposals on a case-specific
basis.
4)Utility Applications to support EV Infrastructure: Three
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electric utilities, Pacific Gas and Electric Company (PG&E),
Southern California Edison Company (SCE), and San Diego Gas &
Electric Company (SDG&E) have submitted applications varying
in length of projects and the number of charging stations
proposed to develop. PG&E's proposal, filed with the CPUC in
February 2015, seeks a total pilot program cost of $654
million to develop approximately 25,000 charging stations.
SCE's proposal seeks a total pilot cost of $355 million to
develop approximately 30,000 charging stations, and SDG&E's
proposal seeks a total pilot cost of $103 million to develop
5,500 charging stations. The CPUC is currently taking
comments from stakeholders and evaluating these applications.
Some parties to the proceeding have protested PG&E's and
SDG&E's proposals, arguing that these proposals would create
service area monopolies and potentially stifle growth and
innovation in the market in those service areas. According to
ChargePoint's protest to PG&E's application, "ChargePoint is
concerned that the Application has presented very complicated
operational and market issues that will be litigated in this
proceeding without the necessary degree of direction from the
Commission on threshold policy concerns such as the overall
risk and ratepayer impacts of authorizing large-scale (as
opposed to pilot scale) utility ownership of EVSE equipment
and network services."
PG&E points out that its application pending at the CPUC
limits ownership and participation in the electric vehicle
charging market to no more than 25 percent of the needed
charging infrastructure and includes partnerships with
third-party electric vehicle service providers.
Although the CPUC has not made a decision on the pending
applications by PG&E, SCE, and SDG&E, this bill requires the
CPUC to consider certain factors when evaluating and
implementing its policies to authorize utilities to develop
equipment and infrastructure needed for electric powered and
natural gas fueled low emissions vehicles. These
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considerations include: (1) authorizing electrical
corporations to rate-base make-ready infrastructure needed to
support and encourage investment in electric vehicle charging
equipment by customers and other providers of electric vehicle
charging services, and (2) authorizing electric corporations
to rate-base electric vehicle charging equipment if specified
requirements are met.
5)What does it mean to be authorized to ratebase? The ratebase
is the book value, after depreciation, of the generation,
distribution, and transmission infrastructure owned and
operated by the utility. Utilities earn a regulated rate of
return (ROR) on ratebase. The ROR is set by the CPUC. The
ROR is the weighted average cost of debt and shareholder
equity, and the CPUC allows a fair and reasonable return
sufficient to allow the utilities to obtain financing.
Formerly determined in each utility's General Rate Case, the
ROR is currently determined in a separate cost of capital
proceeding. The utilities' actual ROR may be more or less
than what is authorized by the CPUC, depending on how well the
utilities manage their operations and costs.
6)Support and Opposition.
ChargePoint and other organizations support this bill as a way
to "protect consumer choice and innovation and attract private
capital and jobs to the state."
TURN opposes this bill as it does not believe ratepayers
should shoulder the entire cost of large-scale investment in a
nascent market that will ultimately benefit the private sector
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and allow utilities to reap profits from added rate base, and
place the cost of transportation electrification on the
utility ratepayer who will not receive a benefit from this
cost.
PG&E opposes limiting the ability of IOUs to invest in
equipment and services for electric vehicles and undermines
the Governor's vision for widespread deployment of EVs.
7)Suggested amendments. The author may wish to consider
amendments to clarify provisions related to utility
competition with private companies to ensure utilities cannot
unfairly compete against private sellers of electric vehicle
charging equipment.
Other technical amendments are clarifying in nature.
SECTION 1. (a) The Legislature finds and declares all of the
following:
(1) California should encourage the expansion of investment
and usage of electric vehicles to protect the environment,
stimulate economic growth, and improve the quality of life in
this state. All Californians benefit from programs that
support more widespread adoption and usage of electric
vehicles.
(2) The availability of electric vehicle charging correlates
directly with the rate of electric vehicle adoption. In order
to reach the goal 1.5 million electric vehicles in California
by 2025, electric vehicle consumers need confidence that they
can readily access electric vehicle charging services at home,
at the workplace, and at public locations.
(3) "Smart" electric vehicle charging equipment and network
electric vehicle charging services are available on the market
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and enable the management of electric vehicle charging to
avoid negative impacts on the distribution system, coordinate
electric vehicle charging with the operation of the electrical
grid, and minimize costs and maximize benefits to electric
vehicle users and utility ratepayers.
(4) Encouraging private investment in "smart" electric vehicle
charging equipment and network electric vehicle charging
services will facilitate customer choice, stimulate innovation
and development of new business models, attract private
capital investment, and create jobs for Californians.
(b) It is the intent of the Legislature to do all the
following:
(1) Encourage and support the widespread deployment of
electric vehicles.
(2) Protect competitive markets for electric vehicle charging
equipment and network charging services from unfair
competition by clarifying that electrical corporations may
only own electric vehicle service equipment used to charge
electric vehicles owned by the electrical corporation and its
employees, and that electrical corporations may not provide
electric vehicle charging services.
(3) Support consumer choice in electric vehicle charging
equipment and network charging services.
(4) Encourage and support private investment in electric
vehicle charging equipment and network charging services.
SEC. 2. Section 740.2 of the Public Utilities Code is amended
to read:
740.2. The commission, in consultation with the Energy
Commission, State Air Resources Board, electrical
corporations, and the motor vehicle industry, shall evaluate
policies to develop infrastructure sufficient to overcome any
barriers to the widespread deployment and use of plug-in
hybrid and electric vehicles. The commission shall adopt
rules, as necessary, to address all of the following:
(a) The electrical infrastructure, including infrastructure
upgrades, necessary for widespread use of plug-in hybrid and
electric vehicles and the role and development of public
charging infrastructure.
(b) The impact of plug-in hybrid and electric vehicles on grid
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stability and the integration of renewable energy resources.
(c) The technological advances that are needed to ensure the
widespread use of plug-in hybrid and electric vehicles, and
what role the state should take to support the development of
this technology.
(d) The existing code and permit requirements that will impact
the widespread use of plug-in hybrid and electric vehicles and
any recommended changes to existing legal impediments to the
widespread use of plug-in hybrid and electric vehicles.
(e) The role the state should take to ensure that technologies
employed in plug-in hybrid and electric vehicles work in a
harmonious manner and across service territories.
(f) The impact of widespread use of plug-in hybrid and
electric vehicles on achieving the state's goals pursuant to
the California Global Warming Solutions Act of 2006 (Division
25.5 (commencing with Section 38500) of the Health and Safety
Code) and the California Renewables Portfolio Standard Program
(Article 16 (commencing with Section 399.11) of Chapter 2.3)
and what steps should be taken to address possibly shifting
emissions reductions responsibilities from the transportation
sector to the electrical industry.
SEC. 3 . 2. Section 740.3 of the Public Utilities Code is
amended to read:
740.3. (a) For purposes of this section, " smart electric
vehicle charging equipment" means electric vehicle service
equipment and network charging services. charging systems
that enable the management of electric vehicle charging to
avoid negative impacts on the distribution system, coordinate
electric vehicle charging with the operation of the electrical
grid, and minimize costs and maximize benefits to electric
vehicle users and utility ratepayers.
(b) The commission, in cooperation with the Energy
Commission, the State Air Resources Board, air quality
management districts and air pollution control districts,
electrical corporations, gas corporations, and the motor
vehicle industry, shall evaluate and implement policies to
promote the development of equipment and infrastructure needed
to facilitate the use of electricity to power and natural gas
to fuel low-emission vehicles. Policies to be considered
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shall The commission shall adopt policies that include all of
the following:
(1) The sale-for-resale and the rate-basing of low-emission
vehicles and supporting equipment such as batteries for
electric vehicles and compressor stations for natural gas
fueled vehicles.
(2) The development of statewide safety standards for electric
vehicle charger connections and compressed natural gas vehicle
fueling connections, including installation procedures and
technical assistance to installers.
(3) Authorizing electrical corporations to rate-base
make-ready infrastructure, up to but not including the
electric vehicle charging equipment, needed to support and
encourage investment in electric vehicle charging equipment by
customers and other providers of electric vehicle charging
services. For these purposes, "make-ready infrastructure"
means widespread deployment of electric vehicles including
electrical infrastructure installed and owned by an electrical
corporation that is required in order to interconnect and
provide electric service to electric vehicle service
equipment, including transformers, utility services and
meters, panels, interconnection equipment, including conduits
and wiring, and associated infrastructure . "Make-ready
infrastructure" does not include electric vehicle service
equipment or network charging services.
(4) Authorizing electrical corporations to rate-base electric
vehicle charging equipment if all of the following
requirements are met:
(A) The equipment is networked. The equipment is smart
electric vehicle charging equipment.
(B) The site hosts for the equipment are unconstrained with
respect to choice of technology and services, beyond the
requirement that the equipment be networked smart electric
vehicle charging equipment.
(C) The equipment provides the electrical corporation
electrical grid benefits, such as demand response.
(D) The electricity supplied by the equipment is not limited
to utility-owned generation .
(b) (c) The commission shall hold public hearings as part of
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its effort to evaluate and implement the new policies and
proposals considered in subdivision (b), and shall provide a
progress report to the Legislature by January 30, 1993, and
every two years thereafter, concerning policies on rates,
equipment, and infrastructure implemented by the commission
and other state agencies, federal and local governmental
agencies, and private industry to facilitate the use of
electricity to power and natural gas to fuel low-emission
vehicles.
(d) The commission's policies authorizing utilities to develop
equipment or infrastructure needed for electric-powered and
natural gas-fueled low-emission vehicles shall do both of the
following:
(1) Ensure that the costs and expenses of those programs
are not passed through to electric or gas ratepayers unless
the commission finds and determines that those programs are in
the ratepayers' interest.
(2) Ensure that utilities do not unfairly compete with
nonutility enterprises. Prohibit electrical corporations from
unfairly competing against private electric vehicle charging
equipment sellers.
SEC. 4. 3 .Section 740.8 of the Public Utilities Code is
amended to read:
740.8. (a) As used in Section 740.3, "interests" of
ratepayers, short- or long-term, mean direct benefits that are
specific to ratepayers in the form of safer, more reliable, or
less costly gas or electrical service, consistent with Section
451, and activities that benefit ratepayers and that promote
energy efficiency, reduction of health and environmental
impacts from air pollution, and emissions of greenhouse gases
related to electricity and natural gas production and use, and
increased use of alternative fuels.
(b) The commission's policies to ensure that utilities do not
unfairly compete with nonutility enterprises pursuant to
paragraph (2) of subdivision (d) of Section 740.3 shall
include the policy that an electrical corporation shall not
constrain customer choice for electric vehicle service
equipment, as defined in Section 44268 of the Health and
Safety Code, except when providing charging services at sites
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owned or operated by the electrical corporation for electric
vehicles that are owned by the electrical corporation or by
employees of the electrical corporation.
8)Support and opposition.
Supporters state that AB 1005 protects competitive markets for
EV charging equipment in a way that encourages consumers to
adopt EVs and support California's environmental goals.
SDG&E and PG&E state that AB 1005 limits the ability of the
state to meet its clean transportation goals and limits
investments in equipment and services needed to support
widespread deployment of electric vehicles.
TURN opposes AB 1005 because, while TURN supports greater
adoption of electric vehicles, the bill needs to provide
ratepayer protections. The bill as written, according to
TURN, puts the cost of transportation electrification on the
only group that does not directly benefit: utility
ratepayers.
The Coalition of Utility Employees and the International
Brotherhood of Electrical Workers oppose AB 1005 because it
would preempt three ongoing proceedings currently in
litigation at the CPUC, and the proposed amendments override
the CPUC's in-depth analysis on the very same issues it is
considering in the three electrical vehicle charging
infrastructure applications filed by the Investor Owned
Utilities. Last, they state that this bill seeks to ensure
competition for third party electric vehicle charging service
providers at the possible expense of ratepayers and
reliability.
9)Prior Legislation:
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AB 2565 (Muratsuchi) 2014: Requires an owner of a commercial
or residential property to approve the installation of an
electric vehicle charging station if it meets specified
requirements and complies with the owner's process for
approving a modification to the property and makes a term in a
lease of a commercial property, executed, renewed, or extended
on or after January 1, 2015, void and unenforceable if it
prohibits or unreasonably restricts the installation of an EV
charging station in a parking space. Chaptered by Secretary
of State - Chapter 529, Statutes of 201.
SB 1275 (De Leon) 2014: Establishes the Charge Ahead
California Initiative to provide incentives that increase the
availability of zero-emission vehicles and near-zero-emission
vehicles, particularly in disadvantaged and
low-and-moderate-income communities. Chaptered by Secretary
of State - Chapter 530, Statutes of 2014.
SB 454 (Corbett) 2013: Establishes requirements for the
operation of electric vehicle charging stations to better
serve consumers. Chaptered by Secretary of State - Chapter
418, Statutes of 2013.
AB 631 (Ma) 2011: States that a facility that supplies
electricity to charge electric vehicles is not a California
Public Utilities Commission regulated "public utility."
Chaptered by Secretary of State - Chapter 480, Statutes of
2013.
SB 626 (Kehoe) 2009: Requires the California Public Utilities
Commission, in consultation with specified parties, to
evaluate policies to provide fueling infrastructure for
plug-in hybrid and electric vehicles. Chaptered by Secretary
of State - Chapter 355, Statutes of 2009.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Building Industry Association
California Business Properties Association
California Greenworks, Inc.
CALSTART (in concept)
ChargePoint
Individual Letters (1)
Office of Ratepayers Advocates
Pleasant Hill Chamber of Commerce
Powertree Services Inc.
SeaWave Battery, Inc.
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National Federation of Independent Business (NFIB)
TechNet
The Grant Farm
Vamous Unidos USA
Opposition
Coalition of California Utility Employees
International Brotherhood of Electrical Workers
PG&E
San Diego Gas & Electric Company (SDG&E)
TURN (unless amended)
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083
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