BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 286 (Hertzberg) - Electricity: direct transactions. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 29, 2015 |Policy Vote: E., U., & C. 11 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 28, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- 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 ? 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 ? 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. -- END --