California Legislature—2015–16 Regular Session

Assembly Bill No. 2395

Introduced by Assembly Member Low

February 18, 2016

An act to amend Section 372 of the Public Utilities Code, relating to electrical restructuring.

LEGISLATIVE COUNSEL’S DIGEST

AB 2395, as introduced, Low. Electrical restructuring: cogeneration.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Provisions of the Public Utilities Act restructuring the electrical services industry state the policy of the state to encourage and support the development of cogeneration as an efficient, environmentally beneficial, competitive energy resource that will enhance the reliability of local generation supply, and promote local business growth.

This bill would make nonsubstantive changes to the policy of the state relative to cogeneration.

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

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

SECTION 1.  

Section 372 of the Public Utilities Code is
amended to read:

372.  

(a) It is the policy of the state to encourage and support
the development of cogeneration as an efficient, environmentally
beneficial, competitive energy resource that will enhance the
reliability of local generation supply, and promote local business
growth. Subject to the specific conditions provided in this section,
the commission shall determine the applicability to customers of
uneconomic costs as specified in Sections 367, 368, 375, and 376.
Consistent with this state policy, the commission shall provide
that these costs shall not apply to any of the following:

(1) To load served onsite or under an begin delete over the fence end delete
begin insert over-the-fence end insert arrangement by a nonmobile self-cogeneration or
cogeneration facility that was operational on or before December
20, 1995, or by increases in the capacity of a facility to the extent
that the increased capacity was constructed by an entity holding
an ownership interest in or operating the facility and does not
exceed 120 percent of the installed capacity as of December 20,
1995, provided that begin delete prior to end delete begin insert before end insert June 30, 2000, the costs shall
apply to begin delete over the fence end delete begin insert over-the-fence end insert arrangements entered into
after December 20, 1995, between unaffiliated parties. For the
purposes of this subdivision, “affiliated” means begin delete any end delete begin insert a end insert person or
entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with another specified entity. “Control” means either of
the following:

(A) The possession, directly or indirectly, of the power to direct
or to cause the direction of the management or policies of a person
or entity, whether through an ownership, beneficial, contractual,
or equitable interest.

(B) Direct or indirect ownership of at least 25 percent of an
entity, whether through an ownership, beneficial, or equitable
interest.

(2) To load served by onsite or under an begin delete over the fence end delete
begin insert over-the-fence end insert arrangement by a nonmobile self-cogeneration or
cogeneration facility for which the customer was committed to
construction as of December 20, 1995, provided that the facility
was substantially operational on or before January 1, 1998, or by
increases in the capacity of a facility to the extent that the increased
capacity was constructed by an entity holding an ownership interest
in or operating the facility and does not exceed 120 percent of the
installed capacity as of January 1, 1998, provided that begin delete prior to end delete
begin insert before end insert June 30, 2000, the costs shall apply to begin delete over the fence end delete
begin insert over-the-fence end insert arrangements entered into after December 20, 1995,
between unaffiliated parties.

(3) To load served by existing, new, or portable emergency
generation equipment used to serve the customer’s load
requirements during periods when utility service is unavailable,
provided the emergency generation is not operated in parallel with
the integrated electric grid, except on a momentary parallel basis.

(4) After June 30, 2000, to begin delete any end delete begin insert a end insert load served onsite or under an
begin delete over the fence end delete begin insert over-the-fence end insert arrangement by begin delete any end delete begin insert a end insert nonmobile
self-cogeneration or cogeneration facility.

(b) Further, consistent with state policy, with respect to
self-cogeneration or cogeneration deferral agreements, the
commission shall do the following:

(1) Provide that a utility shall execute a final self-cogeneration
or cogeneration deferral agreement with begin delete any end delete begin insert a end insert customer that, on
or before December 20, 1995, had executed a letter of intent (or
similar documentation) to enter into the agreement with the utility,
provided that the final agreement shall be consistent with the terms
and conditions set forth in the letter of intent and the commission
shall review and approve the final agreement.

(2) Provide that a customer that holds a self-cogeneration or
cogeneration deferral agreement that was in place on or before
December 20, 1995, or that was executed pursuant to paragraph
(1) in the event the agreement expires, or is terminated, may do
any of the following:

(A) Continue through December 31, 2001, to receive utility
service at the rate and under terms and conditions applicable to
the customer under the deferral agreement that, as executed,
includes an allocation of uneconomic costs consistent with
subdivision (e) of Section 367.

(B) Engage in a direct transaction for the purchase of electricity
and pay uneconomic costs consistent with Sections 367, 368, 375,
and 376.

(C) Construct a self-cogeneration or cogeneration facility of
approximately the same capacity as the facility previously deferred,
provided that the costs provided in Sections 367, 368, 375, and
376 shall apply consistent with subdivision (e) of Section 367,
unless otherwise authorized by the commission pursuant to
subdivision (c).

(3) Subject to the firewall described in subdivision (e) of Section
367, provide that the ratemaking treatment for self-cogeneration
or cogeneration deferral agreements executed begin delete prior to end delete begin insert before end insert
December 20, 1995, or executed pursuant to paragraph (1) shall
be consistent with the ratemaking treatment for the contracts
approved before January 1995.

(c) The commission shall authorize, within 60 days of the receipt
of a joint application from the serving utility and one or more
interested parties, applicability conditions as follows:

(1) The costs identified in Sections 367, 368, 375, and 376 shall
not, begin delete prior to end delete begin insert before end insert June 30, 2000, apply to load served onsite by
a nonmobile self-cogeneration or cogeneration facility that became
operational on or after December 20, 1995.

(2) The costs identified in Sections 367, 368, 375, and 376 shall
not, begin delete prior to end delete begin insert before end insert June 30, 2000, apply to begin delete any end delete begin insert a end insert load served under
begin delete over the fence end delete begin insert over-the-fence end insert arrangements entered into after
December 20, 1995, between unaffiliated entities.

(d) For the purposes of this subdivision, all onsite or begin delete over the
fence end delete begin insert over-the-fence end insert arrangements shall be consistent with Section
218 as it existed on December 20, 1995.

(e) To facilitate the development of new microcogeneration
applications, electrical corporations may apply to the commission
for a financing order to finance the transition costs to be recovered
from customers employing the applications.

(f) To encourage the continued development, installation, and
interconnection of clean and efficient self-generation and
cogeneration resources, to improve system reliability for consumers
by retaining existing generation and encouraging new generation
to connect to the electric grid, and to increase self-sufficiency of
consumers of electricity through the deployment of self-generation
and cogeneration, both of the following shall occur:

(1) The commission and the Electricity Oversight Board shall
determine if begin delete any end delete begin insert a end insert policy or action undertaken by the Independent
System Operator, directly or indirectly, unreasonably discourages
the connection of existing self-generation or cogeneration or new
self-generation or cogeneration to the grid.

(2) If the commission and the Electricity Oversight Board find
that begin delete any end delete begin insert a end insert policy or action of the Independent System Operator
unreasonably discourages the connection of existing self-generation
or cogeneration or new self-generation or cogeneration to the grid,
the commission and the Electricity Oversight Board shall undertake
all necessary efforts to revise, mitigate, or eliminate that policy or
action of the Independent System Operator.