BILL ANALYSIS Ó
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CONCURRENCE IN SENATE AMENDMENTS
AB
2454 (Williams)
As Amended August 16, 2016
Majority vote
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|ASSEMBLY: |58-20 |(June 2, 2016) |SENATE: |26-13 |(August 22, |
| | | | | |2016) |
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Original Committee Reference: U. & C.
SUMMARY: Modifies the procurement requirements an electrical
corporation regulated by the California Public Utilities
Commission (CPUC) must propose and the CPUC must approve.
Specifically, this bill:
1)Requires electrical corporations to consider the findings in
the Demand Response Potential Study, ordered by the CPUC, 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. Requires the CPUC to
require the electrical corporation to demonstrate fulfillment
of this provision prior to approving a contract for any new or
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repowered gas-fired generation facility.
3)Requires the CPUC to report to the Legislature, 60 days after
issuing a final decision approving capacity additions in
excess of 100 megawatts (MW) that required prioritized
procurement of energy efficiency and demand resources is
achieved.
4)Establishes chaptering out language for changes proposed by
both this bill and AB 1937 (Williams) of the current
legislative session to the same section in the Public
Utilities Code.
The Senate amendments:
1)Remove a requirement that electrical corporations undertake
all feasible efforts to meet any identified resource need
through available renewable energy, energy storage, energy
efficiency, and demand reduction resources that are cost
effective, reliable, and feasible.
2)Establish chaptering out language and also change reference
from "gas-fired generation resources from new facilities" to
"new generating units."
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
1)Purpose: According to the author, demand response (DR) is a
valuable tool that can enhance system reliability by reducing
peak demand on the grid when it is most expensive to generate
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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 CPUC
and the CPUC is required to review and accept, modify or
reject the proposed plan based on specific requirements.
In 2014, the CPUC issued a decision indicating its intention
to adopt a firm DR goal specific to each utility to increase
participation in DR. To that end, the CPUC 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.
DR 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 reliable operation of
the electricity grid. Used correctly, it can also reduce the
overall cost of energy procurement because generally it has
been 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:
Sue Kateley / U. & C. / (916) 319-2083 FN:
0004527
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