BILL ANALYSIS Ó
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