BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2868


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2868 (Gatto) - As Amended March 17, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill requires the California Public Utilities Commission  
          (PUC) to direct electrical corporations to file applications for  
          programs and investments to accelerate widespread deployment of  








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          distributed energy storage systems.  Specifically, this bill:  


          1)Requires the PUC, in consultation with the State Air Resources  
            Board (ARB) and the California Energy Commission (CEC), to  
            direct electrical corporations to file applications for  
            programs and investments to accelerate widespread deployment  
            of distributed energy storage systems.


          2)Requires the PUC to initially approve programs and investments  
            to provide distributed energy storage systems to industrial,  
            commercial, and low-income customers, and beginning January 1,  
            2019, authorizes the PUC to approve programs and investments  
            for residential customers who enroll in time-variant pricing.


          3)Sunsets January 1, 2020.


          FISCAL EFFECT:


             1)   This bill requires one consolidated or three separate  
               application approval proceedings estimated to take up to  
               two years plus an implementation phase.  


             2)   Minor and absorbable ARB and CEC costs.


           COMMENTS:


          1)Purpose.  According to the author, this bill will encourage  
            energy storage as a means to achieve ratepayer benefits, air  
            quality standards, and the state's climate change goals.










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          2)Background.  On October 17, 2013, the PUC approved D.  
            13-10-040 to establish storage procurement targets and  
            policies for load-serving entities (investor-owned utility  
            (IOU) and non-utility.  The PUC 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 PUC included  
            bill management/permanent load shifting, power quality, and  
            electric vehicle charging within energy storage.


          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.   

            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. This bill allows the utilities to design  
            the program and requires costs to 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 time 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  








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            demand charges.  Similarly, the PUC is authorized to require,  
            or authorize, an electrical 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 PUC is not required to implement residential customer time  
            of use rates until 2018.




          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081