BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1330|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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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:   (Verified                           6/13/16)


          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:   (Verified6/15/16)


          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
          Pacific Gas and Electric Company
          Sacramento Municipal Utility District
          San Diego Gas and Electric







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          Sempra Energy Utilities
          Southern California Gas
          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
          6/15/16 12:42:09


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