BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 286 (Hertzberg) - Electricity: direct transactions.
          
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          |Version: April 29, 2015         |Policy Vote: E., U., & C. 11 -  |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 28, 2015      |Consultant: Marie Liu           |
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          SUSPENSE FILE. AS AMENDED.


          Bill  
          Summary:  SB 286 would expand the limit on Direct Access (DA)  
          service for nonresidential customers of electrical  
          investor-owned utilities (IOUs). 


          Fiscal Impact (as approved on May 28,  
          2015): Initial costs of at least $400,000 annually for 1.5  
          years, then $250,000 annually ongoing, from the Public Utilities  
          Reimbursement Account (special) for increased oversight and  
          management of a larger DA service program.


          Background:  In the past, through the passage of AB 1890 (Brulte) Chapter  
          854, Statutes of 1996, the Legislature allowed IOU customers to  
          elect to receive electric service from a provider other than the  
          IOU, a service known as DA, in an effort to provide more  
          competition.  The other providers of electrical service are  
          known as Electric Service Providers (ESPs). In reaction to the  







          SB 286 (Hertzberg)                                     Page 1 of  
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          California electricity crisis in 2000 and 2001, the Legislature  
          suspended DA, though existing DA contracts were allowed to  
          continue. 
          In 2009, the Legislature passed SB 695 (Kehoe, Chapter 337,  
          Statutes of 2009), which reopened DA.  More specifically, SB 695  
          directed the CPUC to allow nonresidential end-use customers to  
          acquire electric service from ESPs in each IOUs service  
          territory, up to a specified limit.  SB 695 set the limit for  
          each IOU equal to the maximum total KWh supplied by all ESPs to  
          DA customers of the IOU during any sequential 12-month period  
          between April 1, 1998, and October 11, 2009. After accounting  
          for existing DA contracts, SB 695 opened up an additional 8,354  
          gigawatt hours (GWh) of DA service. The additional DA service  
          made available by SB 695 was quickly acquired. 


          No new customer may contract with an ESP for DA service unless  
          an existing customer drops out of DA. As of 2014, there was a  
          queue for DA service by 845 customers for 6,131 GWh of load.


          Existing law subjects ESPs to the same requirements that are  
          applicable to the state's three largest IOUs for resource  
          adequacy, the renewables portfolio standard (RPS), and the  
          requirements for the electricity sector adopted by the  
          California Air Resources Board pursuant to the California Global  
          Warming Solutions Act of 2006. (PUC §356.1 et seq.)




          Proposed Law:  
            This bill would open up 8,000 GWh of additional DA load over  
          the SB 695 limits for each IOU. This additional DA service would  
          be phased in over a period adopted by the CPUC, but not to  
          exceed three years, and beginning in January 1, 2016. 
          Of the new DA service, at least 51% of the electricity purchases  
          must be from eligible renewable energy resources as defined in  
          the RPS program.




          Staff  








          SB 286 (Hertzberg)                                     Page 2 of  
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          Comments:  This bill would require the CPUC to conduct a  
          proceeding to implement the phase-in of the additional DA  
          service availability. The CPUC anticipates needing approximately  
          $400,000 for three positions annually for 1.5 years. Once the  
          proceeding is completed, the CPUC would require two of the  
          positions to be ongoing to manage the compliance, monitoring,  
          and ongoing implementation with the phase-in for an ongoing  
          annual cost of $250,000.
          Staff notes that the intent of the author and the policy  
          committee is that the DA program be expanded for a total of  
          8,000 GWh statewide, not 8,000 GWh per IOU.  Staff recommends   
          that the bill be amended to reflect this intent. 


          Author amendments (as adopted on May 28, 2015): Amend to:
           Specify that the 8 GWh is a statewide total to be distributed  
            amongst the IOUs based on their proportionate share of retail  
            sales


           Require that all additional DA service be from renewable  
            sources as defined in the RPS program.




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