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: 8/19/16 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
SENATE ENERGY, U. & C. COMMITTEE: 6-5, 8/24/16 (Pursuant to
Senate Rule 29.10)
AYES: Hueso, Cannella, Gaines, Lara, Leyva, Pavley
NOES: Morrell, Hertzberg, Hill, McGuire, Wolk
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.
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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
(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)Declares it the policy of the state and 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.
2)Requires the CPUC, in consultation with the California Air
Resources Board (ARB) and the CEC, to direct the IOUs to file
applications for programs and investments to accelerate
widespread deployment of distributed energy storage systems.
3)Limits an IOU's storage programs and investments to five
percent of the IOU's annual peak load, up to 250 megawatts
(MW), and dedicates at least 20 percent of the storage
capacity in an IOU's approved storage programs and investments
to the benefit of public schools and military installations.
4)Authorizes the CPUC, within 12 months, to approve, or modify
and approve, an IOU's storage programs and investments with,
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Page 3
among other things, reasonable mechanisms for cost recovery,
on a nonbypasable basis, from all distribution customers for
distribution-level energy storage systems and from
transmission customers for transmission-level distribution
storage systems.
5)States that the CPUC shall approve and IOU's application for
storage programs and investments if it is consistent with the
requirements of this bill and 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.
6)Directs the CPUC to first approve storage programs and
investments that provide distributed energy storage systems to
industrial, commercial, school, military, and low-income
customers, and, as of January 1, 2019, authorizes the CPUC to
approve IOU programs and investments offered to residential
customers enrolled in time-variant pricing.
7)Directs the CPUC to ensure costs for IOU storage programs and
investments are recovered through transmission, distribution
and generation rate components in proportion to the benefits
received.
8)Prohibits the CPUC from establishing a separate fund for this
program.
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 energy storage
system procurement targets applicable to the state's three
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largest electric IOUs totaling 1,325 MW. [See CPUC Decision
13-10-040.]
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 Southern
California Edison (SCE), which has already exceeded the
procurement goal for customer-side storage several times over.
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.
-------------------------------------------------------------------
| SGIP Awards to Energy Storage Systems |
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|---------+------+------------+----------+------------+-------------|
| 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 | |
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Recently, the CPUC modified SGIP to dedicate 75 percent of
funding to energy storage systems, and the Legislature is
considering doubling the program budget, to a total annual
budget of $163 million. 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). Time-variant rates, such as 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
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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.
The use of energy storage systems has the potential to
complement time-variant rates, such as 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 author concludes that 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.
Several changes, seeking several more. When the committee first
heard this bill on June 27 of this year, this bill required IOUs
to file applications with the CPUC for programs and investments
to accelerate widespread deployment of distributed energy
storage systems. It still does. Nonetheless, the author has
amended this bill substantially since this committee heard this
bill. Those amendments resulted from negotiations among diverse
stakeholders. Despite those amendments, it appears a number of
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additional amendments are needed to resolve the concerns of
those stakeholders.
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: (Verified8/24/16)
Association of California Water Agencies
California State Association of Electrical Workers
Coalition of California Utility Employees
San Diego County Water Authority
SolarCity
Stem
OPPOSITION: (Verified8/24/16)
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
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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
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,
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Page 8
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
8/24/16 18:31:47
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