BILL ANALYSIS Ó
AB 2868
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2868
(Gatto) - As Amended March 17, 2016
SUBJECT: Energy storage
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to direct electrical corporations to file applications
for programs and investments to accelerate widespread deployment
of distributed energy storage systems. Specifically, this bill:
1)Requires the CPUC, in consultation with the State Air
Resources Board and the State Energy Resources Conservation
and Development Commission, to direct electrical corporations
to file applications for programs and investments to
accelerate widespread deployment of distributed energy storage
systems.
2)Requires the CPUC to first approve programs and investments
that provide distributed energy storage systems to industrial,
commercial, and low-income customers and, beginning January 1,
2019, authorizes the CPUC to approve programs and investments
for residential customers who enroll in time-variant pricing.
EXISTING LAW:
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1)Authorizes, beginning January 1, 2018, the CPUC to require or
authorize an electrical corporation to employ default
time-of-use pricing for residential customers. (Public
Utilities Code Section 745)
1)Requires the CPUC 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, 2015, and December 31, 2020. (Public Utilities
Code Section 2836)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "Energy storage, the act of disconnecting
energy from when it is created and when it is used, is
critical to creating a reliable and efficient electrical grid.
Traditionally, storage has been accomplished via large water
pumping projects that pump water into a reservoir during the
hours when demand for electricity is low and then release
water to generate electricity during hours of peak electricity
demand. As renewable energy technologies (such as solar and
wind) become more prevalent, local, customer-side storage
solutions provide an opportunity to capture excess energy and
store it for use until it is called on by the customer.
Similarly, storage technologies provide an opportunity to
shift a portion or a building's energy demand from on-peak to
off-peak times (load shifting). Use of energy storage
technology not only increases the reliability of California's
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grid, but it increases the utility of renewable energy and can
reduce electricity bills. Increased demand for energy storage
technologies will ease energy costs for large energy users,
will drive new business opportunities, and will help keep and
create manufacturing and industrial jobs in California."
2)Background: On October 17, 2013, the CPUC approved D.
13-10-040 to establish storage procurement targets and
policies for load-serving entities (investor-owned utility
(IOU) and non-utility): For the IOUs, the CPUC set the
following targets for the IOUs: 1,325 megawatts (MW) of
storage by 2020 in four biennial solicitations (starting
December 2014), as follows: Pacific Gas and Electric (PG&E),
580 MW; Southern California Edison (SCE), 580 MW; San Diego
Gas and Electric (SDG&E), 165 MW. The CPUC divided the targets
into three "storage grid domains": Transmission-connected,
Distribution-level and Customer-Side of the Meter
applications.
For customer-side of the meter applications, the CPUC included
bill management/permanent load shifting, power quality, and
electric vehicle charging within energy storage. The CPUC set
total procurement targets on the customer-side of the meter at
85 MW for SCE, 85 MW for PG&E, and 30 MW for SDG&E.
a) According to SCE, it has procured approximately 171 MW
of customer-side storage through 2014 and has plans an
additional 50 MW.
b) According to PG&E, it has procured approximately 91 MW
of customer-side storage through 2014 and has a target of
120 MW in 2016.
c) According to SDG&E it has procured 4.66 MW of
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customer-side storage in 2014 and has 20.29 MW pending
approval for 2016 with a target of 30 MW.
3)Neither an Incentive Program or a Procurement Program: Current
programs to develop energy storage are limited to the
ratepayer-funded incentives provided by the Self-Generation
Incentive Program and utility procurement solicitations.
This bill does not require either an incentive or a
procurement solicitation. It allows a utility to design a
program that benefits ratepayers and provides utility
customers a way to better manage their energy bills. Initially
this bill is limited to industrial, commercial, and low income
programs.
This bill does not specify the structure of the program or the
size of the program, which would allow the utilities to
develop a program that tailored to meet customer needs and
ratepayer benefits. Further, this bill is silent on the extent
a utility may partner with third-party energy storage
providers. To that extent, it allows the utilities to design
the program.
This bill requires that the costs be in the interest of
ratepayers in order for a utility to qualify for cost
recovery.
4)Time of Use Rates: In an attempt to reduce peak loads and/or
shift loads from peak to off-peak periods, utilities have
implemented "time-of-use" (TOU) rate structures that charge
for energy depending on the dime of day and season of the year
in which the energy is used. Industrial and commercial
customers are subject to the TOU tariffs of the load-serving
entity providing electric services, some of which also include
demand charges. Similarly, Public Utilities Code Section 745
authorizes the CPUC to require or authorize an electrical
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corporation to employ default time-of-use pricing for
residential customers.
Although TOU structures are effective, because of the nature
of their operations, industrial and commercial customers often
have challenges modifying their businesses to manage their
electricity consumption and costs. More common, however, are
responsive changes in customer electricity usage, which modify
the peak time for electricity demand and effect demand charges
in rate design.
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.
The CPUC is not required to implement residential customer
time of use rates until 2018.
5)Sunset Date: This bill requires the CPUC to first approve
those programs and investments that provide distributed energy
storage systems to industrial, commercial, and low-income
customers. After January 1, 2019, the CPUC may approve
programs and investments offered to residential customers who
enroll in time-variant pricing pursuant to Public Utilities
Code Section 745.
This bill sunsets January 1, 2020.
6)Arguments in Support: Supporters state that this bill will
significantly accelerate the deployment of energy storage
resources in California, where energy storage resources still
require further support to become mainstream resources
available for use in grid's and by electricity customers.
REGISTERED SUPPORT / OPPOSITION:
AB 2868
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Support
California Energy Storage Alliance
SolarCity
Opposition
None on file.
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083