BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2323


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          Date of Hearing:  April 13, 2016


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                  Mike Gatto, Chair


          AB 2323  
          (Ridley-Thomas) - As Amended March 29, 2016


          SUBJECT:  Electricity:  rates:  low-carbon fuel production  
          facilities


          SUMMARY:  Requires electrical corporations to offer rate plans  
          to certain transportation fuel production facilities.  
          Specifically, this bill requires an electrical corporation that  
          offers time-of-use rates, critical peak pricing, real-time  
          pricing, or peak time rebates for the charging of electric  
          vehicles, as part of a program to encourage transportation  
          electrification, to offer similar rates to low-carbon  
          transportation fuel production facilities and public and private  
          fueling stations dedicated to providing low-carbon fuels for  
          transportation purposes.


          EXISTING LAW:  


          1)Requires the California Public Utilities Commission (CPUC) to  
            establish rates for electricity and gas using cost allocation  
            principles that fairly and reasonably assign to different  
            customer classes the costs of providing service to those  
            customer classes, consistent with the policies of  
            affordability and conservation. (Public Utilities Code Section  
            739.6)








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          2)Defines "interests" of ratepayers to mean direct benefits that  
            are specific to ratepayers and consistent with safer, more  
            reliable, or less costly gas or electrical service,  
            improvement in energy efficiency of travel, reduction of  
            health and environmental impacts from air pollution, reduction  
            of greenhouse gas emissions related to electricity and natural  
            gas production and use, increased use of alternative fuels,  
            and creating high-quality jobs or other economic benefits,  
            including in disadvantaged communities identified. (Public  
            Utilities Code Section 740.8)


          3)Directs the CPUC to require electrical corporations to file  
            applications for programs and investments to accelerate  
            widespread transportation electrification to reduce dependence  
            on petroleum, meet air quality standards, and achieve the  
            goals set forth in the Charge Ahead California Initiative and  
            requires that these programs be in the interests of  
            ratepayers. (Public Utilities Code Section 740.12)



          1)Authorizes the Charge Ahead California Initiative program to  
            increase the availability of zero-emission vehicles and  
            near-zero-emission vehicles. (Health and Safety Code Section  
            44258.4).


          FISCAL EFFECT:  Unknown.


          COMMENTS:  


          1)Author's Statement: "In 2015 Governor Brown set a goal to  
            reduce petroleum consumption in California by 50%, by 2030. As  
            such, the state is attempting to encourage a 10% reduction of  
            the carbon intensity (CI) in all transportation fuels by 2020,  








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            with plans to further reduce CI values by 2030, 2040, and  
            2050.


            "Some investor-owned electric utility companies are currently  
            offering or plan to offer discount rate programs to electric  
            vehicle users to encourage the adoption of electric vehicles  
            and the reduction of the state's carbon footprint. Like  
            electric vehicles, the use of biofuels, hydrogen, and natural  
            gas can play a significant role in advancing the state's air  
            quality and climate change goals."


          2)Background: According to the author, some investor-owned  
            electric utility companies (IOUs) are currently offering or  
            plan to offer discount rate programs to electric vehicle users  
            to encourage the adoption of electric vehicles and the  
            reduction of the state's carbon footprint. Like electric  
            vehicles, the use of biofuels, hydrogen, and natural gas can  
            play a significant role in advancing the state's air quality  
            and climate change goals. In order to achieve the state's air  
            quality and climate change goals, the state needs to encourage  
            the use of low-carbon alternative transportation fuels that  
            can be used in the medium- and heavy-duty transportation  
            sectors where electrification may not be commercially  
            available. The Air Resources Board estimates sufficient fuel  
            cell and battery electric technology for these sectors will  
            not be available for 15-35 years.  Encouraging the use of  
            low-carbon alternative transportation fuels in the medium- and  
            heavy-duty transportation sectors will provide prompt air  
            quality benefits to disadvantaged communities while the  
            infrastructure for zero-emission heavy duty vehicles is  
            developed.
            Electrical corporations provide various rate plans for  
            customers, including time-of-use rates, critical peak pricing,  
            retail-time pricing, and peak time rebates to many customers,  
            irrespective of whether the customer is using that electricity  
            for charging a vehicle. These rate plans, known as tariffs,  
            are designed in a manner that does not require one class of  








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            customer to subsidize another, with the exception of programs  
            designed to support low income customers.


          3)Already eligible? Fuel production facilities are either  
            commercial or industrial customers (i.e., not residential,  
            street lighting, or agriculture). As such, they are already  
            required to take utility service under time-of-use rate plans  
            and are eligible for a variety of utility rate plans which  
            include critical peak pricing.
          4)Alternative fuels - gas and electric - are they equivalent?  
            This bill proposes a unique offer to production facilities of  
            unspecified alternative fuels to be subsidized by electrical  
            customers. It is unclear whether electrical customers would  
            receive any benefit from this offer. Electric vehicles can be  
            operated in a manner that can assist in management of the  
            electrical grid and integrating generation from eligible  
            renewable energy resources. It is unclear how or if gaseous  
            fuels could provide these services. It is also unclear why the  
            electrical rate would be provided to a production facility  
            without also including a minimum requirement of fuel  
            dispensing. 


             The author may wish to consider an amendment that includes  
            performance accountability measures and that the rates offered  
            are in the interest of ratepayers.


           1)Suggested amendments:

            740.13.  (a)  An electrical corporation that offers time-of-use  
            rates, critical peak pricing, real-time pricing, or peak time  
            rebates for the charging of electric vehicles, as part of a  
            program to encourage transportation electrification, shall  
            offer similar rates to low-carbon transportation fuel  
            production facilities and public and private fueling stations  
            dedicated to providing low-carbon fuels for transportation  
            purposes. Nothing in this section requires an electrical  








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            corporation to offer time-of-use rates, critical peak pricing,  
            real-time pricing, or peak time rebates to low-carbon  
            transportation fuel production facilities or low-carbon  
            transportation fueling stations that do not offer special  
            electric service rates designed to encourage the use of  
            electric vehicles. For purposes of this section, "low-carbon  
            transportation fuel" means a liquid or gaseous transportation  
            fuel that meets the low-carbon fuel standard regulation  
            (Subarticle 7 (commencing with Section 95480) of Article 4 of  
            Subchapter 10 of Chapter 1 of Division 3 of Title 17 of the  
            California Code of Regulations) requirements for reduced  
            carbon intensity compared to the closest comparable petroleum  
            fuel.
             (b) The commission, in consultation with the Air Resources  
            Board and the California Energy Commission, shall establish  
            performance accountability measures for production facilities  
            that elect to use the rates established pursuant to this  
            section.
            (c)The commission shall ensure that the rates established  
            pursuant to this section in the interests of ratepayers as  
            defined in Section 740.8


           1)Arguments in Support:  Supporters argue that this bill will  
            help reduce costs and assist with expanding the use of  
            low-carbon fuels and provide parity with electric vehicle  
            fueling costs.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Advanced Ethanol Producers









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          California Biodiesel Alliance


          Clean Energy


          Coalition for Renewable Natural Gas




          Opposition


          None on file




          Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083