BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       AB 2861|
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                                   THIRD READING 


          Bill No:  AB 2861
          Author:   Ting (D) 
          Amended:  8/1/16 in Senate
          Vote:     21 

           SENATE ENERGY, U. & C. COMMITTEE:  9-0, 6/27/16
           AYES:  Hueso, Morrell, Cannella, Gaines, Hertzberg, Hill, Lara,  
            Leyva, McGuire
           NO VOTE RECORDED:  Pavley, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/11/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  80-0, 5/31/16 - See last page for vote

           SUBJECT:   Electricity:  distribution grid interconnection  
                     dispute resolution process


          SOURCE:    California Public Utilities Commission

          DIGEST:   This bill authorizes the creation of an expedited  
          dispute resolution process for distributed generation energy  
          resources attempting to establish a connection to an  
          investor-owned utility's (IOU's) electricity transmission and  
          distribution network.

          ANALYSIS:  
          
          Existing law:
          
          1)Defines "distributed resources" to means distributed renewable  
            generation resources, energy efficiency, energy storage,  
            electric vehicles, and demand response technologies.  









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          2)Requires each IOU to submit to the California Public Utilities  
            Commission (CPUC) for its approval or modification a  
            distribution resources plan proposal to identify optimal  
            locations for the deployment of distributed resources. (Public  
            Utilities Code §769)


          This bill:

          1)Authorizes the CPUC to establish an expedited dispute  
            resolution process with the goal of resolving disputes over  
            interconnection applications in no more than 60 days from the  
            time the dispute is formally brought to the CPUC.

          2)Requires the dispute resolution process to have the certain  
            elements, including a distribution grid interconnection  
            technical panel (DGITP) of at least eight members selected by  
            the CPUC, four of whom are from IOUs and four of whom are not,  
            and are restricted from participating in the dispute  
            resolution process for an interconnection application for  
            which the member has certain defined conflicts.

          3)Specifies that a review panel of four members shall be  
            selected from the DGITP for each dispute.

          4)Directs CPUC to establish a public process in which interested  
            parties to the dispute may file comments with the CPUC.

          5)Directs each review panel to a dispute to make recommendations  
            to the Executive Director of the CPUC, who has 30 days to  
            review the recommendation and issue an order to the IOU.

          6)Establishes a process for an interested person to appeal a  
            decision by the dispute resolution panel to the commission of  
            the CPUC for resolution.

          7)Directs the CPUC to provide DGITP members that are not from  
            IOUs with an appropriate per diem compensation.

          8)Requires the CPUC to appoint a qualified electrical systems  
            engineer with substantial interconnection expertise to advise  








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            the director of the energy division and to provide adequate  
            commission staff to assist in resolving interconnection  
            disputes.

          Background

          CPUC's Rule 21 and the Alternative Dispute Resolution Process.   
          Electric Rule 21 is a tariff that describes the interconnection,  
          operating and metering requirements for generation facilities to  
          be connected to an IOU's distribution system, over which the  
          CPUC has jurisdiction.  Section K of Rule 21 establishes a  
          dispute resolution process that first provides a structure for  
          bilateral negotiations between representatives of a generation  
          facility and the IOU, and then directs unresolved disputes to  
          the CPUC's Alternative Dispute Resolution (ADR) process. 

          According to the CPUC, the ADR process is administered by the  
          CPUC's Administrative Law Judge (ALJ) Division.  The CPUC does  
          not have data on how many interconnection disputes have gone  
          through the ADR process.  However, the CPUC describes the  
          process as rarely, if ever, having been used by interconnection  
          applicants.  The CPUC attribute this lack to the time and cost  
          of the ADR process.  The CPUC reports that, instead of the ADR  
          process, developers often raise complaints with CPUC's Energy  
          Division staff, who lack the engineering expertise and  
          decision-making authority to effectively intervene in  
          interconnection disputes.  

          This bill would create an expedited distribution grid  
          interconnection dispute resolution process.  This bill seeks to  
          create a forum by which interconnection disputes between a  
          generator and an IOU can be resolved quickly and fairly.  To  
          that end, this bill authorizes the CPUC to 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 CPUC in no  
          more than 60 days from the time the dispute is formally brought  
          to the commission.  The idea was proposed as part of last year's  
          Budget Act but did not appear in the final version of the act.

          If the CPUC chooses to adopt the process, this bill prescribes  
          certain features and procedures that must be part of the  








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          process.  Generally, the process would function as follows:

           The CPUC would establish a DGITP of at least eight members,  
            four of whom work for and IOU and four of whom do not.

           An applicant for interconnection who is unable to resolve a  
            dispute with an IOU may file with the CPUC for expedited  
            dispute resolution.

           The CPUC would ensure that a review panel - a four-member body  
            chosen from the DGITP, reviews the dispute via a public  
            process and makes a recommendation to the executive director  
            of the CPUC within 30 days of receiving the dispute.

           The CPUC executive director would have 30 days to review the  
            recommendation and to prepare an order to the IOU resolving  
            the dispute.

          The process would provide for alternate decisions by each member  
          of a review panel, appeal to the full commission of decisions by  
          the executive director, and per diem for the member of a panel  
          who do not work for an IOU.

          The CPUC reports that, if this bill becomes law, the expedited  
          interconnection dispute resolution process would likely replace  
          the dormant ADR Process.

          It is unknown whether the process this bill would allow to be  
          established would allow disputes between generators and IOUs to  
          be resolved more quickly or to a greater degree of general  
          satisfaction. Many details of implementation are left to the  
          CPUC.  However, stakeholders seem to believe it might help:   
          this bill is supported by many generators and the CPUC and is  
          not opposed by any party, including any IOU.  

          Prior/Related Legislation
          
          SB 106 (Budget and Fiscal Review Committee, 2015) included a  
          proposal to create a similar dispute resolution process. The  
          bill is pending on the Senate Inactive File.










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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No            

          According to the Senate Appropriations Committee, approximately  
          $731,000 (Utilities Reimbursement Account) to the CPUC for staff  
          necessary to develop and implement the expedited distribution  
          grid interconnection dispute resolution process.  


          SUPPORT:   (Verified8/12/16)


          California Public Utilities Commission (source)
          California Energy Storage Alliance
          California Solar Energy Industries Association
          OutBack Power Technologies
          Powertree Services Inc.
          Solar Energy Industries Association
          SolarCity


          OPPOSITION:   (Verified8/12/16)


          None received

          ARGUMENTS IN SUPPORT:  According to the author:

            Interconnection requests have grown dramatically in  
            California.  Electrical corporations and the CPUC have worked  
            to ensure timely processing of interconnection applications.   
            However, when a dispute arises between an existing electricity  
            provider (which owns the distribution grid) and a renewable  
            energy or energy storage developer attempting to connect to  
            the grid, projects are unnecessarily delayed or come to a  
            halt. 

            Examples of disputes include wildly differing fee estimates  
            for interconnection upgrades, unreasonable response timeframes  
            from utilities, excessive needs for meetings and re-submittals  
            of materials. 









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            Just as the electrical corporation oversees the  
            interconnection processes, the same corporation handles the  
            disputes.  This structure has unduly limited the ability to  
            get an independent review of disputes. 

            The technical nature of interconnections - dealing with  
            electrical engineering, circuitry protection 'schemes',  
            metering configurations, and system upgrades (such as new  
            electrical equipment costs) - render the decision-making of  
            the electrical corporation incoherent to most interconnection  
            applicants.  Additionally, the lack of independence in the  
            current process, where disputes are escalated within the  
            electrical corporation, may not provide sufficient  
            independence in the review of disputes.

            AB 2861 establishes a technical advisory panel to review  
            disputes and to provide recommendations to the CPUC on dispute  
            resolution.  Ultimately, the CPUC has the final  
            decision-making authority to determine the appropriate  
            resolution.


          ASSEMBLY FLOOR:  80-0, 5/31/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth  
            Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,  
            Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,  
            Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,  
            Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,  
            Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

          Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
          8/15/16 20:30:07


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