BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1330|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1330
Author: Bloom (D)
Amended: 9/4/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 7-3, 7/13/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, Pavley, Wolk
NOES: Fuller, Cannella, Morrell
NO VOTE RECORDED: McGuire
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 46-29, 6/4/15 - See last page for vote
SUBJECT: Demand response
SOURCE: California Energy Efficiency Industry Council
DIGEST: This bill requires the California Public Utilities
Commission (CPUC), by June 30, 2018, in consultation with the
California Energy Commission (CEC), electrical corporations,
local publicly owned electric utilities and community choice
aggregators, to establish an annual goal for demand response.
Senate Floor Amendments of 9/4/15 provide the CPUC an additional
eight months to develop the required demand response goals for
electrical utilities. Additional amendments clarify the demand
response goal including removing specific references to an
annual procurement goal and to demand response designed to lower
peak demand.
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ANALYSIS:
Existing law:
1)Establishes a charge on electricity and natural gas
consumption to fund cost-effective energy efficiency and
conservation activities. (Public Utilities Code §§381 and
890)
2)Requires the CPUC to establish policies and procedures by
which an entity, including a community choice aggregator
(CCA), may apply to become administrators for cost-effective
energy efficiency and conservation programs pursuant to §381.
(Public Utilities Code §381.1)
3)Requires electric corporation procurement plans to first meet
unmet resource needs through all available energy efficiency,
and demand reduction resources that are cost effective,
reliable, and feasible. (Public Utilities Code §454.5)
4)Requires each local publicly owned electric utility, in
procuring energy to serve the load of its retail end-use
customers, to first acquire all available energy efficiency
and demand reduction resources that are cost effective,
reliable, and feasible. (Public Utilities Code §961.5)
5)Requires the CEC to, every two years, adopt an integrated
energy policy report containing an overview of major energy
trends and issues facing the state, including, but not limited
to, supply, demand, pricing, reliability, efficiency, and
impacts on public health and safety, the economy, resources
and the environment. (Public Resources Code §25302)
6)Requires the CEC to develop a statewide estimate of all
potentially achievable cost-effective electricity and natural
gas savings, and establish targets for statewide annual energy
efficiency savings and demand reduction for the next 10-year
period. (Public Resources Code §25310)
This bill:
1)Requires the CPUC, by June 30, 2018, in consultation with the
CEC, electrical corporations, local publicly owned electric
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utilities, and CCAs, to establish in a public process an
annual goal for demand response with a timetable for achieving
that goal.
2)Requires that the demand response goal advances renewable
energy resources integration, greenhouse gas reductions, and
grid reliability and that shall be achieved by each electrical
utility through supply-side demand response and types of
load-modifying demand response.
3)Requires the CPUC in establishing the demand response goal to
consider the role of clean technologies, such as
consumer-sited energy storage, electric vehicle charging, and
distributed generation resources.
4)Requires the CPUC to require electrical corporations to
achieve the annual demand response goal.
5)Specifies that the governing boards of local publicly owned
electric utilities and CCAs who elect to administer energy
efficiency programs for its customers are responsible for
achieving the annual demand response goal.
Background
Energy loading order. Following the 2001 energy crisis, the
Legislature codified a "loading order" of preferred energy
resources, requiring the IOUs' electricity procurement plans to
first meet unmet resources needs through all cost-effective,
reliable, and feasible energy efficiency and demand response.
The energy loading order was subsequently adopted by the state's
energy agencies and guides the state's energy policies and
decisions according to the following order of priority: (1)
decreasing electricity demand by increasing energy efficiency;
(2) responding to energy demand by reducing energy usage during
peak hours; (3) meeting new energy generation needs with
renewable resources; and (4) meeting new energy generation needs
with clean fossil-fueled generation.
Demand response. Demand response is end-use electric customers
reducing their electricity usage in a given time period, or
shifting that usage to another time period. The need for demand
response as flexible and available resources continues to grow
as an important piece of the electric grid integration puzzle.
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However, demand response need not be limited to peak demand
incidents. Ultimately, a flexible and dynamic grid will require
demand response to be available even during non-peak times,
particularly with the need to better integrate renewable energy
resources and provide greater grid reliability. In fact, the
CPUC has opened a proceeding to examine integrated demand side
management to more effectively coordinate certain activities,
including the timing and use of electric vehicle charging,
distributed generation, energy storage, and others.
Underutilized resource? While demand response programs are
varied and available as a resource, a 2013 CPUC staff study
found they are underutilized. The study looked at demand
response programs in 2012 when the San Onofre Nuclear Generating
Station was out. According to the study, "even with the SONGS
outage, the Utilities did not trigger their DR programs in 2012
summer more frequently as anticipated. Almost all of the
Utilities' 2012 DR program events and hours fall within the
historical averages or below the historical maximum. However,
staff was surprised to find that the Utilities dispatched their
peaker power plants (peaker plants) three to four times more
frequently in 2012 than the historical averages."
Is this bill workable? The recent floor amendments make this
bill unworkable as it relates to publicly-owned utilities since
the CPUC does not regulate publicly-owned utilities and should
therefore not be the agency tasked with establishing demand
response goals for these utilities. On the other hand, it may
make more sense for the CEC to be tasked with working with
publicly-owned utilities to establish demand response goals.
Furthermore, the absence of a procurement requirement raises
questions about the ability of the demand response goal to be
measured or enforced.
Prior Legislation
SB 1414 (Wolk, Chapter 627, Statutes of 2014) required utilities
and regulators to include demand response in resource adequacy
plans.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
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Ongoing costs of $700,000 annually to the Energy Resources
Program Account (General Fund) for the CEC to adopt cost
limitations for each utility.
Ongoing cost pressures of $850,000 to the Energy Resources
Program Account (General Fund) for the CEC to collect, review,
and verify utility reports.
Annual costs of $700,000 for two years to the Energy Resources
Program Account (General Fund) for the CEC to establish peak
demand reduction procurement goals.
Ongoing costs of approximately $420,000 annually to the Public
Utilities Reimbursement Account (special) for overseeing IOU
and CCA compliance with energy efficiency standard
requirements.
SUPPORT: (Verified9/8/15)
California Energy Efficiency Industry Council (source)
California Energy Storage Alliance
Energy Solutions
EnerNOC, Inc.
Environmental Defense Fund
Proteus, Inc.
Small Business California
TELACU
The Utility Reform Network
OPPOSITION: (Verified9/8/15)
California Municipal Utilities Association
City of Burbank Water and Power
City of Pasadena Water and Power
City of Riverside Public Utilities Department
Imperial Irrigation District
Northern California Power Agency
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Pacific Gas and Electric Company
Sacramento Municipal Utility District
San Diego Gas and Electric
Sempra Energy Utilities
Southern California Gas
Southern California Edison
Southern California Public Power Authority
ARGUMENTS IN SUPPORT: The author argues that though broad
targets have been set via the state's current efforts there
currently are no specific requirements that would drive and
ensure the adoption of demand side energy resources, such as
energy efficiency and demand response, at a level that would
provide certainty for energy resource planning and achievement
of AB 32 (Nunez/Pavley, Chapter 488, Statutes of 2006) and
potential future greenhouse gas reduction goals.
ARGUMENTS IN OPPOSITION: Opposition based on pre-Senate
Appropriations Committee language regarding energy efficiency
goals which is no longer included in this bill.
ASSEMBLY FLOOR: 46-29, 6/4/15
AYES: Alejo, Bloom, Bonilla, Bonta, Burke, Calderon, Campos,
Chau, Chiu, Chu, Cooley, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gipson, Gomez,
Gonzalez, Gordon, Holden, Irwin, Jones-Sawyer, Levine, Lopez,
Low, McCarty, Mullin, Nazarian, O'Donnell, Perea, Quirk,
Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Beth Gaines, Gallagher, Gatto, Gray, Grove, Hadley,
Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis,
Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth,
Wagner, Waldron, Wilk
NO VOTE RECORDED: Brown, Cooper, Dahle, Roger Hernández, Medina
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
9/8/15 21:55:21
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