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: 8/31/16 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.
ANALYSIS:
AB 2868
Page 2
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 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)Directs the CPUC, in consultation with the Air Resources Board
and the California Energy Commission, to require the state's
three largest IOUs to file with the CPUC applications for
programs and investments to accelerate widespread deployment
of distributed energy storage (DES) systems to achieve
ratepayer benefits and other benefits.
3)Authorizes the CPUC to approve, or modify and approve, an
IOU's DES systems programs and investments with reasonable
mechanisms for cost recovery if they are consistent with the
requirements of this bill and do not unreasonably limit or
AB 2868
Page 3
impair the ability of nonutility enterprises to market and
deploy energy storage systems.
4)Limits the capacity of the IOUs collective DES system programs
and investments to 500 megawatts (MW), divided equally among
the three largest IOUs.
5)Limits behind-the-meter DES systems to 25 percent of the
capacity of DES systems approved by the CPUC.
6)Requires CPUC to prioritize investments that provide DES
systems to the public sector and low-income customers.
7)States the intent of the Legislature that the CPUC shall
ensure that the costs for the programs and investments are
recovered in proportion to the benefits received, consistent
with existing statute.
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
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.
AB 2868
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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.
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| 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.
The author intends this bill to accelerate the widespread
deployment of DES systems by requiring the IOUS to administer
programs and investments in energy storage.
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
relative supply is abundant.
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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).
Intent versus requirement. The latest amendment to the bill
state the intent of the Legislature that the CPUC "shall" ensure
that the costs for the programs and investments are recovered in
proportion to the benefits received, consistent with existing
statute. A statement that is the intent of the Legislature that
the CPUC do something does not require the CPUC to do that
thing. However, this analysis assumes that the CPUC will
implement this bill consistent with the stated intent of the
Legislature.
Related/Prior Legislation
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 was held in the
Assembly Committee on Appropriations
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.
AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the
AB 2868
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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.
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: (Verified8/31/16)
Association of California Water Agencies
California State Association of Electrical Workers
Coalition of California Utility Employees
San Diego County Water Authority
SolarCity
Stem
Tesla
OPPOSITION: (Verified8/31/16)
California Energy Storage Alliance
California Solar Energy Industries Association
Marin Clean Energy
AB 2868
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San Francisco Public Utilities Commission
San Francisco Water Power Sewer
Silicon Valley Leadership Group
Solar Energy Industries Association
Sonoma Clean Power
TechNet
The Alliance for Solar Choice
The Utility Reform Network
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
8/31/16 15:24:37
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