BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2868|
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THIRD READING
Bill No: AB 2868
Author: Gatto (D), et al.
Amended: 8/2/16 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 7-2, 6/27/16
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire
NOES: Morrell, Gaines
NO VOTE RECORDED: Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 51-27, 6/1/16 - See last page for vote
SUBJECT: Energy storage
SOURCE: Author
DIGEST: This bill requires investor-owned utilities (IOUs) to
file applications with the California Public Utilities
Commission (CPUC) for programs and investments to accelerate
widespread deployment of distributed energy storage systems.
ANALYSIS:
Existing law:
1)Requires the CPUC to determine appropriate targets, if any,
for load-serving entities (LSEs) to procure energy storage
systems. Requires LSEs to meet any targets adopted by the
CPUC by 2015 and 2020. Requires publicly owned utilities
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(POUs) to set their own targets for the procurement of energy
storage and then meet those targets by 2016 and 2021. (Public
Utilities Code §2835 et seq.)
2)Directs the California Energy Commission (CEC) and the CPUC,
where feasible, to authorize procurement of resources to
provide grid reliability services that minimize reliance on
system power and fossil fuel resources and, where feasible,
cost effective, and consistent with other state policy
objectives, increase the use of large- and small-scale energy
storage. (Public Utilities Code §400)
3)Authorizes, beginning January 1, 2018, the CPUC to require or
authorize an IOU to employ default time-of-use (TOU) pricing
for residential customers. (Public Utilities Code §745)
This bill:
1)Directs the CPUC, in consultation with the California Air
Resources Board (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)Authorizes 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, do not compete unfairly with
nonutility enterprises, and are in the interest of the
ratepayers.
3)Defines "compete unfairly with nonutility enterprises" to mean
to eliminate the ability of nonutility enterprises to install
distributed energy storage systems for the benefit of utility
customers.
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4)Requires the CPUC to first approve programs and investments
that provide distributed energy storage systems to industrial,
commercial, and low-income customers.
5)Authorizes the CPUC, beginning January 1, 2019, to approve
programs and investments offered to residential customers who
enroll in TOU pricing.
6)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.
7)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.
8)Sunsets all of the above provisions as of January 1, 2020.
Background
State encourages procurement of energy storage. As the state
becomes increasingly reliant on intermittent renewable energy
resources, it will need options to allow it to flexibly manage
electric supply and demand. Energy storage is one technology
that allows for such flexible management.
Existing state programs seek to foster development and
deployment of energy storage systems. Statute requires the CPUC
to determine appropriate targets, if any, for LSEs to procure
energy storage systems by 2015 and 2020, and directed POUs to
set their own comparable energy storage system procurement
targets. [AB 2514, Skinner, Chapter 469, Statutes of 2010)]
The CPUC, in implementing AB 2514, established the following
energy storage system procurement targets applicable to the
state's three largest electric IOUs [See CPUC Decision
13-10-040.]:
--------------------------------------------------------------
| |
--------------------------------------------------------------
|-----------------------------------+----+----+----+----+-----|
|Energy Storage Procurement Targets |2014|2016|2018|2020|Total|
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| | | | | | |
|-----------------------------------+----+----+----+----+-----|
|Southern California Edison (SCE) | | | | | |
|-----------------------------------+----+----+----+----+-----|
|Transmission | 50| 65| 85| 110| 310|
|-----------------------------------+----+----+----+----+-----|
|Distribution | 30| 40| 50| 65| 185|
|-----------------------------------+----+----+----+----+-----|
|Customer | 10| 15| 25| 35| 85|
|-----------------------------------+----+----+----+----+-----|
|Subtotal SCE | 90| 120| 160| 210| 580|
|-----------------------------------+----+----+----+----+-----|
|Pacific Gas and Electric (PG&E) | | | | | |
|-----------------------------------+----+----+----+----+-----|
|Transmission | 50| 65| 85| 110| 310|
|-----------------------------------+----+----+----+----+-----|
|Distribution | 30| 40| 50| 65| 185|
|-----------------------------------+----+----+----+----+-----|
|Customer | 10| 15| 25| 35| 85|
|-----------------------------------+----+----+----+----+-----|
|Subtotal PG&E | 90| 120| 160| 210| 580|
|-----------------------------------+----+----+----+----+-----|
|San Diego Gas and Electric (SDG&E) | | | | | |
|-----------------------------------+----+----+----+----+-----|
|Transmission | 10| 15| 22| 33| 80|
|-----------------------------------+----+----+----+----+-----|
|Distribution | 7| 10| 15| 23| 55|
|-----------------------------------+----+----+----+----+-----|
|Customer | 3| 5| 8| 14| 30|
|-----------------------------------+----+----+----+----+-----|
|Subtotal SDG&E | 20| 30| 45| 70| 165|
|-----------------------------------+----+----+----+----+-----|
|Total IOU Energy Storage | 200| 270| 365| 490|1325 |
|Procurement Targets | | | | | |
-------------------------------------------------------------
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 several times over.
The state has also provided financial incentives to energy
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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.
-------------------------------------------------------------------
| SGIP Awards to Energy Storage Systems |
-------------------------------------------------------------------
|---------+------+------------+----------+------------+-------------|
| Years |Projec| Installed |Incentive | Reserved | Incentives |
|2009-2015| ts | Capacity | Paid | Capacity |Reserved |
| | | (kW) | | (kW) | |
|---------+------+------------+----------+------------+-------------|
| Totals| 1175| |$41,547,42| | |
| | | | 6 | |$149,215,781 |
| | | | | | |
| | | 23 | | 92 | |
-------------------------------------------------------------------
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
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residential customers beginning in 2019, with the option for the
customer to opt out of such rates at his or her request.
The use of energy storage systems has the potential to
complement TOU rates. This is because the operator of an energy
storage system of a customer on TOU rates could charge the
storage system when electricity rates are low (signaling
abundance) and discharge the storage system when electricity
rates are high (signaling scarcity).
Focus on customer-side energy storage meant to ensure storage
systems benefit customers directly. This bill limits the energy
storage programs and investments the IOUs are to propose to only
systems located on the customer side of the electricity meter.
The limitation prevents the IOUs from proposing programs and
investments in energy storage systems to be installed on
electricity transmission or distribution systems. This is by
design. The author reports that he intends the IOUs' programs
and investments to benefit IOU customers as a whole and
individual customers specifically; the best way to ensure
individual customers benefit from the IOU programs and
investments is to limit them to the customer side of the meter.
Arguably, individual customers can benefit from energy storage
systems located at the transmission level, the distribution
level and behind the customer meter. The author's intent seems
to be to encourage deployment of systems that provide direct
benefits - meaning lower electric utility bills - to the
customer. Energy storage systems on the customer side of the
meter can lower a customer's electric utility bill.
Short timeframe intended to spur fast action on energy storage.
The author intends to encourage rapid deployment of energy
storage technologies. For this reason, this bill sunsets on
January 1, 2020. The author views the short duration of the
program and encouraging quick action. However, action at the
CPUC is rarely quick. Its proceedings to implement bills can
take years. In any case, the Legislature can always extend the
program sunset at a later date if becomes practically necessary.
Related/Prior Legislation
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AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the
CPUC to determine appropriate targets, if any, for LSEs to
procure energy storage systems. The bill required LSEs to meet
any targets adopted by the CPUC by 2015 and 2020. The bill
required POUs to set their own targets for the procurement of
energy storage and then meet those targets by 2016 and 2021.
AB 33 (Quirk, 2015) reiterates existing law, which states that
new pumped hydroelectric storage facilitates eligible for any
increased energy storage system targets adopted by the CPUC.
The bill is pending before the full Senate.
SB 886 (Pavley, 2015) requires 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. The bill passed the Senate 25-14 and is pending in the
Assembly Committee on Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
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.
Minor costs to the ARB for consultation.
SUPPORT: (Verified8/16/16)
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Association of California Water Agencies
California State Association of Electrical Workers
Coalition of California Utility Employees
San Diego County Water Authority
SolarCity
OPPOSITION: (Verified8/16/16)
Advanced Energy Economy
California Energy Storage Alliance
California Solar Industries Association
Marin Clean Energy
San Francisco Public Utilities Commission
Silicon Valley Leadership Group
Solar Energy Industries Association
Sonoma Clean Power
TechNet
The Alliance for Solar Choice
The Utility Reform Network
ARGUMENTS IN SUPPORT: According to the author:
This bill requires the CPUC, in consultation with the ARB and
the State Energy Resources Conservation and Development
Commission, to direct electric corporations to file
applications for programs and investments to accelerate
widespread deployment of distributed energy storage systems.
Energy storage systems will help customers manage energy costs
and improve electrical grid reliability by reducing overall
system peak energy demands. Increased demand for energy
storage technologies will drive new business opportunities and
will help keep and create manufacturing and industrial jobs in
California. Energy storage also offers valuable benefits to
public and environmental health by assisting California
achieve its greenhouse gas emissions goals.
ARGUMENTS IN OPPOSITION:Representatives of community choice
aggregators (CCAs), such as Marin Clean Energy, contend this
bill will require the CPUC to assign costs for the customer-side
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energy storage programs and investments required by this bill to
all transmission and distribution customers, CCA customers
included, though they receive no benefit from the program or
investments.
In addition, the California Energy Storage Alliance contends
this bill could excessively authorize utility-owned
customer-sited energy storage investments and that this bill
goes too far in promoting utility-owned customer-sited energy
storage potentially to the detriment of businesses engaged in
the deployment and operation of third-party customer-sited
energy storage.
ASSEMBLY FLOOR: 51-27, 6/1/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez,
Low, McCarty, Medina, Mullin, O'Donnell, Quirk, Ridley-Thomas,
Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,
Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones,
Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez,
Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Hadley, Nazarian
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
8/16/16 17:34:56
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