BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1008           Hearing Date:    6/16/2015
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          |Author:    |Quirk                                                |
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          |Version:   |2/26/2015    As Introduced                           |
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          |Urgency:   |No                     |Fiscal:      |No              |
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          |Consultant:|Nidia Bautista                                       |
          |           |                                                     |
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          SUBJECT: Public utilities: sale of hydrogen to public as a motor  
          vehicle fuel.

            DIGEST:    This bill would provide that the ownership or  
          operation of a facility that sells hydrogen at retail to the  
          public for use only as a motor vehicle fuel does not make the  
          corporation or person a public utility solely because of that  
          ownership, operation, or sale. 

          ANALYSIS:
          
          Existing law:

          1)Establishes the California Public Utilities Commission (CPUC)  
            with five members appointed by the Governor and confirmed by  
            the Senate and empowers the CPUC to regulate privately owned  
            public utilities. Provides that the CPUC may fix rates,  
            establish rules, examine records, issue subpoenas, and other  
            powers over the utilities it regulates. Specifies that the  
            Legislature may prescribe that additional classes of private  
            corporations or other persons are public utilities.  (Article  
            XII California Constitution)

          2)Defines a public utility as every common carrier, gas  
            corporation, electrical corporation, water corporation, toll  
            bridge corporation, pipeline corporation, telegraph  
            corporation, sewer system corporation and heat corporation,  
            where the service is performed for, of the commodity is  
            delivered to, the public or any portion thereof. Provides that  
            when any public utility performs a service or delivers a  
            commodity to the public or any portion thereof for which any  







          AB 1008 (Quirk)                                    Page 2 of ?
          
          
            compensation or payment shall be subject to the jurisdiction,  
            control, and regulation of the CPUC. (Public Utilities Code  
            §216)

          3)Establishes that the ownership or operation of a facility that  
            sells compressed natural gas at retail to the public for use  
            only as a motor vehicle fuel, and the selling of compressed  
            natural gas at retail from the facility to the public for use  
            only as a motor vehicle fuel, does not make the corporation or  
            person a public utility solely because of that ownership,  
            operation, or sale. (Public Utilities Code §216)

          4)Establishes that ownership, control, operation or management  
            of a facility that supplies electricity to the public only for  
            the use to charge light duty plug-in vehicles does not make  
            the corporation or person a public utility within the meaning  
            of this section solely because of that ownership, control,  
            operation, or management. (Public Utilities Code §216)

          This bill would provide that the ownership or operation of a  
          facility that sells hydrogen at retail to the public for use  
          only as a motor vehicle fuel does not make the corporation or  
          person a public utility solely because of that ownership,  
          operation, or sale.
          
          Background

          The California Global Warming Solutions Act of 2006, enacted by  
          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.

          With the transportation sector representing roughly 40% of the  
          state's greenhouse gas emissions, increasing the use of zero  
          emission vehicles (ZEV), such as hydrogen fuel cell vehicles  
          (FCEVs), is expected to play a significant role in reducing  
          California's greenhouse gas emissions and provide improved local  
          air quality. In 2012, the ARB began implementing 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  








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          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. 

          Hydrogen fuel cell electric vehicles. FCEVs are fueled with  
          hydrogen gas stored on the vehicle. Hydrogen gas passes through  
          a fuel cell that mixes the gas with oxygen to generate electric  
          currents that run the vehicle. Since the vehicle is primarily  
          fueled with pure hydrogen, there are no pollutants emitted into  
          the atmosphere, only water and heat.  

          Hydrogen stations. In April 2004, Governor Schwarzenegger issued  
          Executive Order S-07-04, which created the California Hydrogen  
          Highway Network (CaH2Net). The mission of CaH2Net was to assure  
          that the state had hydrogen fueling stations in place to meet  
          the demand of fuel cells and other hydrogen vehicle technologies  
          being placed on California roads. CaH2Net convened stakeholders  
          and developed a blueprint plan that described the actions needed  
          to create hydrogen highways. 

          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 ZEVs on California  
          roadways by 2025. 

          In 2014, the Legislature passed and the Governor signed SB 1275  
          (De León, Chapter 530, Statutes of 2014) which codified a goal  
          of one million zero and near-zero emission vehicles on  
          California's roads by 2023. 

          California currently has 13 research hydrogen fueling stations,  
          nine public stations and an additional 18 that have been funded  
          and are expected to become operational in the next few years.  
          Funding for hydrogen infrastructure is provided by the  
          California Energy Commission (CEC) through funding authorized by  
          AB 118 (Núñez, Chapter 750, Statutes of 2007).

          Is a bill needed? AB 1008 would include hydrogen fueling  
          stations among the list of types of facilities exempted from the  
          definition of a public utility. In the case of electricity and  
          natural gas fueling facilities which are currently exempted,  
          they represent a commodity that is also supplied by a privately  
          owned public utility regulated by the CPUC. A similar exemption  
          may not be needed for hydrogen since there is no existing  








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          privately owned public utility that provides hydrogen as a  
          commodity to the public. However, the author and supporters  
          argue that such an exemption is needed to give investors greater  
          certainty and increase private investment in hydrogen fueling  
          stations. 

          Prior/Related Legislation
          
          AB 118 (Núñez, Chapter 750, Statutes of 2007), created the  
          Alternative and Renewable Fuel and Vehicle Technology Program  
          (ARFVTP) and authorized CEC to spend up to $120 million per year  
          for over seven years (from 2008-2015) to develop, demonstrate,  
          and deploy innovative technologies to transform California's  
          fuel and vehicle types.

          AB 631 (Ma, Chapter 480, Statutes of 2011), exempted from the  
          definition of a public utility a facility that supplies  
          electricity to the public only for use to charge light-duty  
          plug-in electric vehicles. 

          AB 8 (Perea, Chapter 401, Statutes of 2013), extended the sunset  
          imposed to 2024 for several fee programs, including the ARFVTP.  
          Required CEC to allocate $20 million annually until 2024 to fund  
          hydrogen-fueling charging stations, not to exceed 20% of the  
          monies appropriated by the Legislature from the ARFVTP Fund,  
          until there are at least 100 publicly available hydrogen-fueling  
          stations in California.

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


            ASSEMBLY VOTES:

          Assembly Floor                          (80-0)
          Assembly Utilities and Commerce Committee(14-0)
            
          SUPPORT:  

          California Hydrogen Business Council
          Center for Transportation and the Environment
          First Element Fuel Inc.
          Natural Resources Defense Council

          OPPOSITION:








          AB 1008 (Quirk)                                    Page 5 of ?
          
          

          None received 

          ARGUMENTS IN SUPPORT:   The author's office states that the  
          ambiguity in how hydrogen will be regulated is a concern for  
          investors interested in developing hydrogen fueling  
          infrastructure. The author argues that the certainty provided by  
          this bill when adopted will enable investors to prepare and  
          establish a credible, privately funded business case to scale  
          the market. 


          

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