Amended in Senate August 31, 2016

Amended in Senate August 19, 2016

Amended in Senate August 2, 2016

Amended in Senate June 15, 2016

Amended in Senate June 13, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2868

Introduced by Assembly Member Gatto

(Coauthor: Assembly Member Cristina Garcia)

February 19, 2016

An act to add begin delete and repeal Section 2838.2 of end delete begin insert Sections 2838.2 and 2838.3 to end insert the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2868, as amended, Gatto. Energy storage.

Existing law requires the Public Utilities Commission (PUC) to determine appropriate targets, if any, for each load-serving entity to procure viable and cost-effective energy storage systems to be achieved by December 31, 2020.

This bill would require the PUC, in consultation with the State Air Resources Board and the State Energy Resources Conservation and Development Commission, to direct begin insert the state’s 3 largest end insert electrical corporations to file applications for programs and investments to accelerate widespread deployment of distributed energy storage systems, as defined. The bill would authorize the PUC to approve, or modify and approve, programs and investments in distributed energy storage systems, as provided, and would require the PUC to begin delete first approve end delete begin insert prioritize end insert those programs and investments that provide distributed energy storage systems to begin delete industrial, commercial, school, military, end delete begin insert public sector end insert and low-income customers. begin delete The bill would authorize the PUC, beginning January 1, 2019, to approve programs and investments for residential customers who enroll in time-variant pricing. The bill would require that a minimum of 20% of the storage capacity in an electrical corporation’s approved programs and investments be dedicated to the benefit of public schools and military installations and would limit an electrical corporation’s total programs and investments to 5% of annual peak load, up to 250 megawatts. end delete Because a violation of any order, decision, rule, direction, demand, or requirement of the commission implementing these requirements would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) The state, through the Public Utilities Commission, has taken
action to promote energy storage, including setting energy storage
procurement targets applicable for certain load-serving entities,
totaling 1,325 megawatts, and for all other load-serving entities,
to be met by 2020, with installations of the energy storage systems
meeting the procurement targets by no later than the end of 2024.

(2) Ratepayer funding is currently allowed to provide incentives
to customers who purchase energy storage for permanent load
shifting.

(3) The Legislature reauthorized the self-generation incentive
program to provide incentives to customers who achieve reductions
in the emissions of greenhouse gases using technologies like energy
storage.

(4) The State Energy Resources Conservation and Development
Commission funds research and demonstration programs to further
the effectiveness of energy storage as an important resource to the
electric grid through the Electric Program Investment Charge.

(5) Federal Energy Regulatory Commission Order No. 792
directs transmission providers to define energy storage devices as
generating facilities, thereby enabling these resources to take
advantage of generator interconnection procedures.

(6) Industrial and commercial customers are subject to the
time-of-use tariffs of the load-serving entity providing electric
services, some of which also include demand charges. Industrial
and commercial customers have challenges modifying their
businesses to manage their electricity consumption and costs.

(7) Section 745 of the Public Utilities Code authorizes the
commission to require or authorize an electrical corporation to
employ default time-of-use pricing for residential customers.

(8) Changes in customer electricity usage will modify the peak
time for electricity demand and effect demand charges in rate
design.

(9) Properly designed and dispatched energy storage systems
will help customers manage energy costs, help reduce overall
system peak energy demands, improve public health, and assist in
achieving greenhouse gas emissions goals.

(10) Increased demand for energy storage technologies will
drive new business opportunities and create jobs.

(11) Easing energy costs for large energy users will help keep
manufacturing and industrial jobs in California.

(b) It is the policy of the state and the intent of the Legislature
to encourage energy storage as a means to achieve ratepayer
benefits, ambient air quality standards, and the state’s climate
change goals.

SEC. 2.  

Section 2838.2 is added to the Public Utilities Code,
to read:

2838.2.  

(a) The following definitions apply to this section:

(1) “Distributed energy storage system” means an energy storage
system with a useful life of at least 10 years that is begin insert connected to
the distribution system or is end insert located on the customer side of the
meter.

(2) “Energy storage management system” means a system by
which an electrical corporation can manage the charging and
discharging of the distributed energy storage system in a manner
that provides benefits to ratepayers.

(b) The commission, in consultation with the State Air Resources
Board and the Energy Commission, shall direct begin insert the state’s three
largest end insert electrical corporations to file applications for programs
and investments to accelerate widespread deployment of distributed
energy storage systems to achieve ratepayer benefits, reduce
dependence on petroleum, meet air quality standards, and reduce
emissions of greenhouse gases. Programs and investments proposed
by begin insert the state’s three largest end insert electrical corporations shall seek to
minimize overall costs and maximize overall benefits.

(c) (1) The commission may approve, or modify and approve,
programs and investments of an electrical corporation in distributed
energy storage systems with appropriate energy storage
management systems and reasonable mechanisms for cost begin delete recovery
from all distribution customers for distribution level distributed
energy storage systems, and from transmission customers for
transmission level distributed energy storage systems. An electrical
corporation’s programs and investments in distributed energy
storage systems shall not exceed 5 percent of the electrical
corporation’s annual peak load, up to 250 megawatts. end delete begin insert recovery, if
they are consistent with the requirements of this section and do
not unreasonably limit or impair the ability of nonutility enterprises
to market and deploy energy storage systems. The total capacity
of the programs and investments in distributed energy storage
systems approved by the commission pursuant to this section shall
not exceed 500 megawatts, divided equally among the state’s three
largest electrical corporations. end insert

begin delete

(2) A minimum of 20 percent of the storage capacity in an
electrical corporation’s approved programs and investments in
distributed energy storage systems shall be dedicated to the benefit
of public schools and military installations. The electrical
corporation shall allocate the benefits of this dedicated storage
capacity to benefitting schools and military installations by
reducing the customer’s metered demand in an amount equivalent
to the demand served by the storage that has been dedicated to
these customers pursuant to this section.

(d) The commission shall approve an electrical corporation’s
application for a program or investment in distributed energy
storage systems if it is consistent with the requirements of this
section, does not unreasonably limit or impair the ability of
nonutility enterprises to market and deploy energy storage systems
to other customers, and is in the interest of ratepayers.

end delete begin insert

(2) No more than 25 percent of the capacity of distributed energy
storage systems approved for programs and investments pursuant
to this section shall be provided by behind-the-meter systems.

end insert begin insert

(3) The capacity authorized pursuant to paragraph (1) is in
addition to any investments authorized pursuant to Section 2836.

end insert begin delete

(e)

end delete

begin insert (d) end insert  (1) The commission shall begin delete approve, or modify and approve, end delete
begin insert resolve end insert each application filed by an electrical corporation pursuant
to this section within 12 months of the date of filing of the
completed application. begin delete The costs associated with storage
investments authorized by the commission shall be recoverable
from all electricity customers on a nonbypassable basis. end delete

(2) The commission shall begin delete first approve end delete begin insert prioritize end insert those programs
and investments that provide distributed energy storage systems
to begin delete industrial, commercial, school, military, end delete begin insert public sector end insert and
low-income customers. begin delete Beginning January 1, 2019, the commission
may approve programs and investments offered to residential
customers who enroll in time-variant pricing pursuant to Section
745. end delete

begin delete

(3) The commission shall ensure that the costs for the programs
and investments are recovered through transmission, distribution,
and generation rate components in proportion to the benefits
received.

end delete begin delete

(f) The commission shall not establish a separate fund for this
program but shall allow standard cost recovery by an electrical
corporation.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 2838.3 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 2838.3. end insert   

It is the intent of the Legislature that the commission,
in authorizing an electrical corporation to recover the costs of
approved energy storage programs and investments from all
customers pursuant to Section 2838.2, shall ensure that the costs
for the programs and investments are recovered in proportion to
the benefits received, consistent with Section 451.

end insert

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.