BILL ANALYSIS Ó
AB 2454
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2454 (Williams) - As Amended May 4, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill modifies the procurement requirements an electrical
corporations regulated by the California Public Utilities
Commission (PUC) must propose and the PUC must approve.
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Specifically this bill:
1)Requires electrical corporations to consider the findings in
the Demand Response Potential Study, ordered by the PUC, when
determining the availability of cost-effective, reliable, and
feasible demand response resources.
2)Requires the electrical corporation to meet any identified
resource need through available renewable energy, energy
storage, energy efficiency, and demand reductions that are
cost effective, reliable, and feasible. This bill requires
the PUC to require the electrical corporation to demonstrate
fulfillment of this provision prior to approving a contract
for any new or repowered gas-fired generation facility.
3)Requires the PUC to report to the Legislature, 60 days after
issuing a final decision approving capacity additions in
excess of 100 MW that required prioritized procurement of
energy efficiency and demand resources is achieved.
FISCAL EFFECT:
Increased annual costs to the PUC of approximately $320,000 to
comply with the reporting requirements (Public Utilities
Commission Utilities Fund.)
The PUC anticipates this bill will require an additional staff
analyst to track procurement decisions across numerous sections,
including storage, self-generation incentive program, combined
heat and power, and others to demonstrate the procurement
prioritized demand reduction and energy efficiency resources.
This bill will also require an administrative law judge to
ensure the decisions contain the analysis necessary to satisfy
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the requirements.
COMMENTS:
1)Purpose. According to the author, demand response is a
valuable tool that can enhance system reliability by reducing
peak demand on the grid when it is most expensive to generate
electricity, provide economic alternatives to generation,
reduce greenhouse gas emissions, help with renewable resource
integration, and provide customers options for managing their
energy needs. This bill will ensure demand response resources
are integrated into the wholesale market as supply-side
resources to address transmission level reliability issues and
used on the distribution system to address local reliability
needs.
2)Background. Under existing law, each electrical corporation
is required to file a proposed procurement plan with the PUC
and the PUC is required to review and accept, modify or reject
the proposed plan based on specific requirements.
In 2014, the PUC issued a decision indicating its intention to
adopt a firm demand response (DR) goal specific to each
utility to increase participation in DR. To that end, the PUC
authorized the undertaking of a DR Potential Study to
determine the amount of the DR capacity in California. This
report is due to be completed in 2016.
Demand response refers to altering energy usage in response to
an event or a schedule. By altering demand for energy at a
given time in a specified amount, DR can help maintain
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reliable operation of the electricity grid. Used correctly, it
can also reduce overall cost of energy procurement because it
has been generally true that the electricity demanded when
load is highest is always the most expensive electricity. A
reduction in demand can avoid the need for that most expensive
electricity.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081