BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2454


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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,      |
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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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