BILL ANALYSIS Ó
AB 2861
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2861
(Ting) - As Introduced February 19, 2016
SUBJECT: Electricity: distribution grid interconnection
dispute resolution process
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to establish an electric distribution system
interconnection dispute process. Specifically, this bill:
1)Requires the CPUC to establish an expedited distribution
system interconnection process by July 1, 2017, with a goal of
resolving interconnection disputes within 60 days.
2)Establishes a distribution grid interconnection technical
advisory panel consisting of at least eight individuals
selected by the CPUC: Four from electrical corporations and
four not from electrical corporations.
3)Authorizes the CPUC to determine the length of the term of
each member.
4)Requires any member of the panel to not participate in any
discussion if that member is an employee of, or contractor to,
an electrical corporation, an employee of a vendor with an
open application, or has a financial interest or financial
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relationship to a person or corporation with a financial
interest in the outcome of the decision.
5)Requires the advisory panel to select a review plan of four
members for each dispute.
6)Allows an interconnection applicant to seek resolution through
the expedited process after working with the electric
corporation operating the distribution grid.
7)Allows parties to withdraw from the dispute resolution process
upon agreeing to a final settlement of the dispute.
8)Requires, if a dispute is filed with the CPUC, the CPUC to
ensure that a technical advisory panel shall review the
dispute and make a recommendation to the executive director
CPUC within 30 days of receiving the dispute.
9)Requires the CPUC to establish a public process to allow the
electrical corporation, the applicant, and other interested
parties to file written comments on the recommendation of the
technical advisory panel.
10)Authorizes the advisory panel to request appropriate
documents from the electrical corporation involved in the
dispute.
11)Limits the scope of the technical advisory panel's review to
issues regarding compliance with the established
interconnection rules and making recommendations to resolve
specific customer disputes and recommending associated
corrective actions.
12)Specifies the panel has no authority to assess penalties.
13)Requires the CPUC executive director to review
recommendations form the technical advisory panel within 30
days and prepare an order to the electrical corporation to
resolve the dispute.
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14)Authorizes, if the technical advisory panel recommendation is
not a consensus of all panel members, the CPUC executive
director to make the final decision to resolve the dispute.
15)Provides any interested person seeking CPUC review of the
executive director's determination within 10 days of the
determination. Upon receipt of the request for review, the
executive director or the energy division director shall
prepare a proposed resolution of the matter for approval by
the CPUC.
16)Directs the CPUC to provide the members of the technical
advisory panel that are not from electrical corporations with
an appropriate per diem compensation consistent with
Government Code Section 19822.5.
EXISTING LAW:
1)Defines "distributed resources" to means distributed renewable
generation resources, energy efficiency, energy storage,
electric vehicles, and demand response technologies. (Public
Utilities Code 769)
2)Requires each electrical corporation, as a part of its
distribution planning process, to consider specified
nonutility owned distributed energy resources as an
alternative to investments in its distribution system to
ensure reliable electric services at the lowest possible
costs. (Public Utilities Code 769)
FISCAL EFFECT: Unknown.
COMMENTS:
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1)Author's statement: "This bill expedites the process of
getting more energy storage connected to a utility's electric
grid, which in turn means more renewable energy can be
obtained. This benefits all Californians by getting more clean
renewable power on-line and further advances energy storage
technologies."
2)Background: The CPUC currently has an Alternative Dispute
Resolution (ADR) Process in its interconnection rules (Rule 21
Section K). The process first provides a structure for
bilateral negotiations, and then directs unresolved disputes
to the CPUC's ADR process. ADR is administered by the CPUC's
Administrative Law Judge (ALJ) Division, and provides a
dispute resolution forum for all utility service provision
under the CPUC's jurisdiction. Data has not been collected on
the number of disputes related to Rule 21 interconnection that
have gone through the ADR process. Anecdotally, as described
above, the process has rarely, if ever, been used by
interconnection applicants. Instead, developers complain to
Energy Division staff, who, according to the CPUC, lack the
engineering expertise and decision-making authority to
effectively intervene in interconnection disputes beyond
informally mediating between developers and utilities.
3)How Many Interconnection Disputes? In addition, the CPUC
states that the current ADR process has rarely, if ever, been
used by interconnection applicants. Instead, developers often
raise complaints with Energy Division staff. CPUC staff
typically attempt to informally mediate between developers and
utilities. In the last year, CPUC staff has received 20-30
informal requests for assistance with interconnection
disputes. Of these, the CPUC states that three to five
involved an engineering dispute.
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4)Technical Advisory Panel Process and CPUC Technical Issues:
According to the CPUC, the technical advisory panel and 60-day
dispute resolution process proposed in this bill would
largely, if not entirely, supplant the existing process. For
instance, if the bill becomes law, Rule 21 Section K will
likely continue to provide a structure for bilateral
negotiations before directing applicants to file disputes with
the technical advisory panel, instead of directing disputes
into ADR.
Also according to the CPUC, The technical advisory panel would
likely be administered by Energy Division, which would entail
the following administrative work:
a) Determining panel selection criteria, term length, panel
charter, guidelines for reviews and recommendations, and
other programmatic elements;
b) Facilitating a stakeholder process to determine
necessary revisions to Rule 21 in order to integrate the
expedited dispute resolution process into the Rule 21
process workflow;
c) Launching a competitive solicitation process to solicit
and contract with panel members;
d) Administration of panel members' contracts and
compensation;
e) Creating standardized process workflows for:
i) Receiving applicant disputes;
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ii) Assigning panel members to each dispute;
iii) Managing the panel's review and recommendation
process;
iv) Tracking panel members' time;
v) Submitting panel recommendations to the Executive
Director;
vi) Establishing a public process for parties to file
written comments on the panel's recommendations; and
vii) Establishing a public process for parties to request
CPUC review, via CPUC resolution, of the Executive
Director's final order on dispute resolution.
f) Working in conjunction with Legal Division on
potentially substantial legal analysis due to the
conflicted positions of at least half of the technical
advisory panel.
The CPUC also states that the bill could create significant
additional functions for Energy Division staff and the CPUC's
Executive Director, as well as ongoing tasks for Legal
Division and rulemaking start-up tasks for Administrative Law
Judge (ALJ) Division staff, including:
a) The Executive Director would review both unanimous and
split recommendations of the technical advisory panel and
issue orders with binding force;
b) The Executive Director or the Energy Division Director
would be required to issue a proposed resolution when a
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request for review of an order is received;
c) Energy Division staff would likely play a significant
role supporting the technical advisory panel, Executive
Director, and Energy Division Director;
d) Energy Division staff would have ongoing administration
and contract management tasks related to the utility and
non-utility members of the technical advisory panel;
e) Legal Division would likely be asked to review and
advise the technical advisory panel, Executive Director,
and Energy Division Director; and
f) CPUC staff would be required to make sure the panel
meets all applicable laws, including the Bagley-Keene Open
Meeting Act and conflict of interest laws.
Also according to the CPUC, even though they are sponsoring
this bill they have identified a number of technical issues
with the proposal in this bill. They state that the
legislation may be considered duplicative of the CPUC's
existing formal complaint and ADR processes, in that this bill
creates a confusing and legally-challenging parallel
decision-making process for the CPUC. According to the CPUC,
it has only recently received its first
interconnection-related complaint, no developer has entered
the ADR process to staff's knowledge.
The proposed makeup of the panel in this bill might be
difficult to manage and could be unnecessarily complex. The
goal of the panel is to provide CPUC staff and the Executive
Director an independent analysis of engineering or contractual
factual disputes between the utility and developers. These
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disputes can involve technical details that are beyond the
training of CPUC staff. A multiple member panel is not the
only way to provide this independent analysis and the same
goal could be meet by contracting with a single independent
expert (IE) to review the dispute along with CPUC staff. IEs
are already used successfully to advise the CPUC on power
purchase agreements.
The CPUC recommends the following amendments to this bill:
a) To emphasize efficiency in the interconnection process
under this bill.
b) This bill should provide the CPUC the discretion to
implement an Expedited Interconnection Dispute Resolution
Process consistent with the goals of a streamlined,
low-cost interconnection dispute resolution process that
issues binding decisions in 60 days or less, in a manner
that most efficiently fits within existing CPUC processes.
c) This bill should delay the program implementation
deadline from April 1, 2017, to December 1, 2017, to give
the CPUC adequate time to implement and staff the expedited
interconnection dispute resolution process, assuming it
would be effective on January 1, 2017.
d) This bill should be amended to replace the technical
advisory panel with an independent expert/special master
(in the vein of the Independent Evaluator monitoring of
Power Purchase Agreements).
5)Clarifications Needed: As written there are several unanswered
questions, such as:
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a) If there are so few disputes, is this Advisory panel
needed?
b) Why isn't the current ADR used in disputes?
c) Does this new process replace the current ADR? If it
does not, would a dispute first be addressed by the
existing ADR and then referred to the new ADR? How does
that help resolve disputes in a timely manner?
d) What is the scope of the Advisory Panel's work? Is it
limited to interconnection or can it also take on disputes
related to costs to meet Rule 21 requirements? Can it take
on disputes that are outside of Rule 21, such as legal
matters between the utility and the project
owner/developer?
e) Can the Advisory Panel propose new rules or interpret
existing rules?
f) Who pays for the cost of the Advisory Panel? Should
ratepayers pay these costs or should the loser pay? If a
utility loses on the dispute should ratepayers pay or
shareholders pay? What if there is more than one dispute
and some are won and some are lost? Should it be
proportional cost allocation in this case?
g) Should developers who have a direct financial interest
in the outcome of a dispute be able to serve on the
advisory panel?
h) Should deliberations be extended if the CPUC needs more
time to safely address a dispute?
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The author may wish to consider an amendment that will make
the requirement to establish an advisory panel permissive,
specify that persons with direct financial interest in the
outcome of a dispute may not serve on the advisory panel, and
provide a means to extend deliberations if the CPUC needs more
time to address a dispute.
1)Related Legislation.
SB 106 (Budget and Fiscal Review Committee) of 2015: Includes,
among other things, a proposal to create a similar dispute
resolution process. Pending on the Senate Inactive File.
2)Suggested amendments:
SECTION 1.
Section 769.5 is added to the Public Utilities Code, to read:
769.5. (a) By April 1, 2017, December 17, 2017, the
commission shall may establish an expedited distribution grid
interconnection dispute resolution process with the goal of
resolving disputes over interconnection applications that are
within the jurisdiction of the commission in no more than 60
days from the time the dispute is formally brought to the
commission. If the commission needs more than 60 days to
fairly and safely address the dispute, the commission shall
take such needed time.
(b) The expedited distribution grid interconnection dispute
resolution process shall include the following elements:
(1) A distribution grid interconnection technical advisory
panel consisting of at least eight individuals selected by the
commission. Four of the technical advisory panel members shall
be from electrical corporations and four shall not be from
electrical corporations. The commission shall determine the
length of the term of each member. If any member of the panel
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is an employee of, or contractor to, an electrical corporation
to which the contested interconnection application has been
submitted; or is the applicant, or an employee of the
installer for the applicant, or a third party solar Power
Purchase Agreement provider for the applicant who has a direct
financial interest in the contested interconnection
application , an employee of a vendor with an open
application, or has a financial interest or financial
relationship to a person or corporation with a financial
interest in the outcome of the decision, that member shall not
participate as a technical advisory panel member for the
dispute resolution process for that contested interconnection
application. in any discussion involving that electrical
corporation, vendor, or financially interested person or
corporation .
(2) A review panel of four members shall be selected from the
technical advisory panel for each dispute.
(3) If an applicant is unable to resolve an
interconnection-related dispute after working with the
electrical corporation operating the distribution grid, the
applicant may seek resolution of the dispute using the
commission's expedited distribution grid interconnection
dispute resolution process.
(4) Upon agreeing to a final settlement of the dispute,
parties shall be free to withdraw from the dispute resolution
process.
(5) If the dispute is filed with the commission, the
commission shall ensure that a technical advisory panel shall
review the dispute and make a recommendation to the executive
director of the commission within 30 days of receiving the
dispute.
(6) The commission shall establish a public process to allow
the electrical corporation, the applicant, and other
interested parties to file written comments on the
recommendation of the technical advisory panel.
(7) The panel shall request appropriate documents from the
electrical corporation involved in the dispute, including, but
not limited to, interconnection application studies.
(8) The scope of the technical advisory panel's review shall
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be limited to issues regarding compliance with the established
interconnection rules. Any recommendations shall ensure safe
and reliable interconnection.
(9) The scope of the technical advisory panel's review is
limited to making recommendations to resolve specific customer
disputes and recommending associated corrective actions, and
the panel shall have no authority to assess penalties.
(10) Upon receipt of the recommendation from the technical
advisory panel, the executive director shall have 30 days to
review the recommendation and to prepare an order to the
electrical corporation resolving the dispute. If the review
panel from the technical advisory panel cannot agree on
recommendations, then each recommendation of a review panel
member shall be submitted to the executive director, who shall
make the decision resolving the dispute.
(11) Any interested person seeking commission review of the
executive director's determination shall file the request for
review within 10 days of the determination. Upon receipt of
the request for review, the executive director or the energy
division director shall prepare a proposed resolution of the
matter for approval by the commission.
(c) The commission shall provide the members of the technical
advisory panel that are not from electrical corporations with
an appropriate per diem compensation consistent with Section
19822.5 of the Government Code.
REGISTERED SUPPORT / OPPOSITION:
Support
CPUC (Sponsor)
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California Energy Storage Alliance
Opposition
None on file
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083