BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2868 (Gatto) - Energy storage
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|Version: June 15, 2016 |Policy Vote: E., U., & C. 7 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 8, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2868 requires investor-owned utilities (IOUs) to
file applications with the California Public Utilities
Commission (CPUC) for programs and investments to accelerate the
widespread deployment of distributed energy storage systems.
Fiscal
Impact:
One-time costs of approximately $500,000 (Utilities
Reimbursement Account) to the CPUC for a consulting budget.
Approximately $419,000 (Utilities Reimbursement Account)
annually to the CPUC for staffing costs. (See staff comments)
Minor costs to the Air Resources Board (ARB) for consultation.
Background: Existing state programs seek to foster development
and deployment of energy storage systems. AB 2514 (Skinner,
Chapter 469, Statutes of 2010) statute requires the CPUC to
determine appropriate targets, if any, for Load Serving Entities
(LSE) to procure energy storage systems by 2015 and 2020, and
directed publicly owned utilities (POU) to set their own
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comparable energy storage system procurement targets. The CPUC,
in implementing AB 2514, established energy storage system
procurement targets for the state's three largest electric IOUs.
The CPUC reports the IOUs have each progressed in meeting their
energy storage procurement goals. However, none has yet met its
final procurement goal in any category, other than SCE, which
has already exceeded the procurement goal for customer-side
storage.
The state has also provided financial incentives to energy
storage systems. Over the last several years, the CPUC reports
that the Self-Generation Incentive Program (SGIP), which the
CPUC administers, has awarded $42 million to nearly 1,200 energy
storage projects.
The CPUC is currently considering revisions to SGIP program
eligibility. While the CPUC has yet to make a decision about
program revisions, a staff proposal recommends reserving at
least 75 percent of future program awards for energy storage
systems. A primary rationale for this storage-focus is the CPUC
staff's belief that the energy storage industry is ripe for
market transformation, so that system subsidies have the
potential or even the likelihood to lead to decreases in energy
storage system costs.
Time-of-use rates. TOU rates are a mechanism to shape demand
for energy. TOU rates rely on price signals to encourage
customers to reduce their use of electricity when the relative
availability of electricity is low or, in some cases, to
increase their electricity use when relative supply is abundant.
Currently, the CPUC requires all commercial and industrial
customers of the IOUs to participate in TOU rates. Statute
authorizes the CPUC to allow or require IOUs to offer TOU rates
to residential customers beginning in 2018. The CPUC has
recently required the IOUs to offer mandatory TOU rates to
residential customers beginning in 2019, with the option for the
customer to opt out of such rates at his or her request.
Proposed Law:
This bill:
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1)Directs the CPUC, in consultation with the ARB and the CEC, to
direct IOUs 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.
2)Requires the CPUC to approve, or modify and approve, programs
and investments in distributed energy storage systems with
appropriate energy storage management systems and reasonable
mechanisms for cost recovery from all distribution customers
for distribution level distributed energy storage systems, and
from transmission customers for transmission level distributed
energy storage systems, if they are consistent with the
section and are in the interest of the ratepayers.
3)Requires the CPUC to first approve programs and investments
that provide distributed energy storage systems to industrial,
commercial, and low-income customers.
4)Authorizes the CPUC, beginning January 1, 2019, to approve
programs and investments offered to residential customers who
enroll in TOU pricing.
5)Defines "distributed energy storage system" as an energy
storage system with a useful life of at least 10 years that is
located on the customer side of the meter.
6)Defines "energy storage management system" as a system by
which an IOU can manage the charging and discharging of the
distributed energy storage system in a manner that provides
benefits to ratepayers.
7)Defines "compete fairly with nonutility enterprises" as the
elimination of the ability of a nonutility enterprise to
install distributed energy storage systems for the benefit of
utility customers.
8)Sunsets all of the above provisions as of January 1, 2020.
Related
Legislation: AB 33 (Quirk, 2015) reiterates existing law, which
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states that new pumped hydroelectric storage facilitates
eligible for any increased energy storage system targets adopted
by the CPUC. AB 33 is the Senate Floor.
SB 886 (Pavley, 2015) would require appropriate energy storage
system procurement targets; requires each load-serving entity
and locally owned public electric utility to plan for the
procurement of energy storage systems before fossil-fuel-based
generation; and requires each electrical corporation to propose
measures to encourage customers to install energy storage
systems. SB 886 is pending hearing in the Assembly
Appropriations Committee.
Staff
Comments: According to the CPUC:
AB 2868 would require the CPUC to establish new IOU programs and
investments to accelerate deployment of energy storage systems
that achieve ratepayer benefits such as grid benefits and
customer bill savings, but without ratepayer subsidy. This
would require one consolidated or three separate 18-24 month
application approval proceedings and an implementation roll-out
phase. Significant analytic tools and procedural effort will be
required to determine the appropriate rate design, cost
recovery, program design, and storage and energy management
systems that will achieve the goals while keeping ratepayers
whole. This is potentially equivalent to establishing a "NEM"
like tariff structure for energy storage.
Implementation will require:
1 permanent Public Utilities Regulatory Analyst V to
support the proceeding
1 Permanent Administrative Law Judge II to preside over
the proceeding
0.5 Public Utilities Counsel to advise on legal issues
in the first two years of the proceeding
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Additionally, a $500,000 consultant budget would be needed over
the course of two years to build an analytic "public tool" to
support optimal rate design that achieves net rate payer
benefits without cross subsidy. The Base Year cost for all the
positions is $418,509 plus an additional total of $500,000 in
consulting fees in Year 1 and Year 2.
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