Amended in Senate April 26, 2016

Amended in Senate September 4, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1530

Introduced by Assembly Members Levine and Gordon

(Principal coauthors: Assembly Members Gatto, Irwin, and Low)

(Principal coauthor: Senator Hill)

(Coauthors: Assembly Members Bonilla, Obernolte, and Mullin)

March 18, 2015

An act to add Section 354 to the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

AB 1530, as amended, Levine. Electricity: distributed generation.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. Existing law authorizes the Public Utilities Commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law requires the Public Utilities Commission to require each electrical corporation under the operational control of the Independent System Operator as of January 1, 2001, to modify tariffs so that all customers that install new distributed energy resources, as defined, in accordance with specified criteria are served under rates, rules, and requirements identical to those of a customer within the same rate schedule that does not use distributed energy resources, and to withdraw any provisions in otherwise applicable tariffs that activate other tariffs, rates, or rules if a customer uses distributed energy resources. Existing law provides, notwithstanding these requirements, that a customer that installs new distributed energy resources not be exempted from (1) reasonable interconnection charges, (2) charges imposed pursuant to the Reliable Electric Service Investment Act, and (3) charges imposed to repay the Department of Water Resources for electricity procurement expenses incurred in response to the electricity crisis of 2000-01. Existing law requires the Public Utilities Commission, in establishing the rates applicable to customers that install new distributed energy resources, to create a firewall that segregates distribution cost recovery so that any net costs, taking into account the actual costs and benefits of distributed energy resources, proportional to each customer class, as determined by the Public Utilities Commission, resulting from the tariff modifications granted to members of each customer class may be recovered only from that class.

This bill begin delete would require the Public Utilities Commission, in consultation with the State Energy Resources Conservation and Development Commission and the State Air Resources Board, to promote the deployment of clean distributed energy resources, as defined, in order to provide a stable and reliable supply of electricity. The bill would require the Public Utilities Commission to prioritize deployment of smart grids, microgrids, and reliable energy resources that reduce emissions of greenhouse gases to promote specified benefits. The bill end delete would, to the extent authorized by federal law, require the Public Utilities Commission, by July 1, begin delete 2016, end delete begin insert 2017, end insert to do both of the following for those begin delete electrical corporation end delete customers begin insert of the state’s 3 largest electrical corporations end insert that install clean distributed energy begin delete resources end delete begin insert resources, as defined, end insert after January 1, 2016: (1) require begin delete each electrical corporation end delete begin insert those electrical corporations end insert to collect all applicable nonbypassable charges fixed, implemented, administered, or imposed by the Public Utilities Commission based only on the actual metered consumption of electricity delivered to the customer through the electrical corporation’s transmission or distribution system, which charges are to be at the same rate per kilowatthour as paid by other customers that do not employ a clean distributed energy resource, and (2) calculate a reserve capacity for standby service, if applicable, based on the capacity needed by begin delete an end delete begin insert the end insert electrical corporation to serve a customer’s electrical demand during an outage of the clean distributed energy resource providing electric service for that customer. The bill would require begin delete each electrical corporation end delete begin insert the state’s 3 largest electrical corporations end insert to identify the total amount of nonbypassable charges that would be collected each year from customers served by clean distributed energy resources installed after January 1, 2016, based on gross consumption without any adjustment for the generation of the clean distributed energy resources. The bill would require that this total amount be fully recovered from customers in the same customer class as those customers served by clean distributed energy resources installed after January 1, 2016, and would prohibit any amount from being shifted to any other customer class. The bill would require a customer served by a clean distributed energy resource to provide relevant data to the Public Utilities Commission and the State Air Resources Board annually. The bill would provide that the facility is subject to onsite inspection to verify equipment operation and performance, including capacity, thermal output, and usage, to verify applicable criteria air pollutant and greenhouse gases emissions performance. The bill would require the Public Utilities Commission to suspend the eligibility of new customers to receive service pursuant to the rate program established pursuant to the bill on December 31, 2020.

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Existing law requires the State Air Resources Board to adopt greenhouse gas emissions limits and emissions reduction measures by regulation to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions in furtherance of achieving the statewide greenhouse gas emissions limit.

end delete begin delete

The bill would require the State Air Resources Board, in consultation with the State Energy Resources Conservation and Development Commission, to establish a schedule of annual greenhouse gas emissions reduction standards that certain facilities must meet, in addition to other criteria, to be included as a clean distributed energy resource for the purposes of the bill, not later than March 31, 2016. The bill would require the schedule to be updated every three years, with applicable standards for each intervening year.

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Existing law requires the State Energy Resources Conservation and Development Commission, beginning November 1, 2003, and every 2 years thereafter, to adopt an integrated energy policy report which includes an overview of major energy trends and issues facing the state, including supply, demand, pricing, reliability, efficiency, and impacts on public health and safety, the economy, resources, and the environment.

The bill would require the State Energy Resources Conservation and Development Commission, in consultation with the Public Utilities Commission, to report on the impacts of the rate program established pursuant to the bill in the integrated energy policy report to be filed on or before November 1, 2017, and November 1, 2019.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 354 is added to the Public Utilities Code,
to read:

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, as determined for each year of eligibility based on the then
current criteria, either of the following requirements:

(1) It meets all of the following criteria:

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(A) Meets or exceeds the greenhouse gas emissions reduction
standards established pursuant to subdivision (b).

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(A) Has emissions of greenhouse gases that do not exceed 379
kilograms of carbon dioxide, or its equivalent, per megawatthour,
which is equal to the emissions rate eligibility threshold for the
self-generation incentive program in effect on January 1, 2016.

end insert

(B) Complies with the begin delete oxides of nitrogen (NOx) end delete emissions
standards adopted by the State Air Resources Board pursuant to
the distributed generation certification program requirements (17
Cal. Code Regs. 94203).

(C) Has a nameplate rated generation capacity of 15 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 facility.

(2) It meets all of the following criteria:

(A) Is an eligible renewable energy resource, pursuant to the
California Renewables Portfolio Standard Program (Article 16
(commencing with Section 399.11)).

(B) Has a nameplate rated generation capacity of 15 megawatts
or less.

(C) Is sized to meet the electrical demand of the customer that
will be served by the facility.

(D) Will not otherwise be addressed in the commission’s
implementation of Section 769 or 2827.1.

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(b) (1) The State Air Resources Board, in consultation with the
Energy Commission, shall establish a schedule of annual
greenhouse gas emissions reduction standards for a clean
distributed energy resource, for the purpose of paragraph (1) of
subdivision (a), not later than March 31, 2016, and shall update
the schedule every three years, with applicable standards for each
intervening year.

(2) The greenhouse gas emissions reduction standards shall
ensure that each eligible clean distributed energy resource, for the
purpose of paragraph (1) of subdivision (a), reduces greenhouse
gas emissions compared to the electrical grid resources, including
renewable resources, that the clean distributed energy resource
displaces, accounting for both procurement and operation of the
electrical grid.

(c) (1) In order to promote a modern electrical grid that provides
a stable and reliable supply of electricity, the commission, in
consultation with the Energy Commission and State Air Resources
Board, shall promote the deployment of clean distributed energy
resources.

(2) The commission shall prioritize deployment of smart grids,
microgrids, and reliable energy resources that reduce emissions
of greenhouse gases to promote the following cobenefits:

(A) Deployment of innovative technologies in California
communities, especially disadvantaged communities.

(B) Reduction of the use of water to generate electricity to assist
with the drought.

(C) Assistance to the state in reaching its State Implementation
Plan goals for clean air.

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(d)

end delete

begin insert (b) end insert  To the extent authorized by federal law, by July 1, begin delete 2016, end delete
begin insert 2017, end insert the commission shall require begin delete each electrical corporation end delete begin insert the
state’s three largest electrical corporations end insert to do the following
for customers served by clean distributed energy resources installed
after January 1, 2016:

(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) Identify the total amount of nonbypassable charges that
would be collected each year from customers served by clean
distributed energy resources installed after January 1, 2016, based
on gross consumption without any adjustment for the generation
of the clean distributed energy resources. This total amount shall
be fully recovered from customers in the same customer class as
those customers served by clean distributed energy resources
installed after January 1, 2016, and no amount may be shifted to
any other customer class.

(3) (A) Calculate a 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 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 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 reserve capacity does not reflect
the customer’s actual standby demand, averaged over the previous
12 months, the electrical corporation shall modify the reserve
capacity once every 12 months to reflect the customer’s actual
average annual reserve capacity based on the same criteria used
to establish the initial reserve capacity. Calculation of actual
average annual 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.

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(e)

end delete

begin insert (c) end insert  A customer served by a clean distributed energy resource
shall provide relevant data to the commission and the State Air
Resources Board annually. The facility shall be subject to onsite
inspection to verify equipment operation and performance,
including capacity, thermal output, and usage, to verify applicable
criteria for air pollutant and greenhouse gases emissions
performance. Requests for relevant data shall occur no more than
once per year.

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(f)

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begin insert (d) end insert  (1) The Energy Commission, in consultation with the
commission, shall report on the impacts of this section in the
integrated energy policy report to be filed on or before November
1, 2017, and November 1, 2019.

(2) The report to be submitted 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 November 1, 2021, pursuant to
Section 10231.5 of the Government Code.

begin delete

(g)

end delete

begin insert (e) end insert  The commission shall suspend the eligibility of new
customers to receive service pursuant to the rate program
established pursuant to subdivision begin delete (d) end delete begin insert (b) end insert on December 31, 2020.
Customers that installed clean distributed energy resources after
January 1, 2016, that became operational prior to suspension of
eligibility pursuant to this subdivision and continue to generate
electricity from their clean distributed energy resources after
suspension shall continue to participate in the rate program
established pursuant to subdivision begin delete (d) end delete begin insert (b) end insert for the entire useful life
of their clean distributed energy resource.

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.