BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 286|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 286
Author: Hertzberg (D)
Amended: 6/2/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 4/21/15
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,
McGuire, Morrell, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva
NOES: Nielsen
NO VOTE RECORDED: Mendoza
SUBJECT: Electricity: direct transactions
SOURCE: Author
DIGEST: This bill increases the statewide limit on Direct
Access (DA) service by 8,000 gigawatt hours to allow a greater
number of nonresidential customers of the electrical
investor-owned utilities (IOUs) to receive electric service from
an entity other than an IOU. This bill also requires that all
additional DA service come from renewable resources.
ANALYSIS:
Existing law:
1)Suspends the ability of retail end-use customers of the IOUs
to receive electrical service from an entity other than an
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IOU. This arrangement commonly is referred to as DA, while
"other providers of electrical service" are known as Electric
Service Providers (ESPs).
2)Makes an exception to this general DA suspension by directing
the California Public Utilities Commission (CPUC) to allow
individual retail nonresidential end-use customers of the IOUs
to acquire electric service from ESPs in each electrical
corporation's distribution service territory, up to a maximum
allowable total annual limit. Statute sets the annual limit
at the maximum total kilowatt hours (KWhs) supplied by all
ESPs to distribution customers of each electrical corporation
during any sequential 12-month period between April 1, 1998,
and October 11, 2009.
3)Makes ESPs subject 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. (Public Utilities Code
§356.1 et seq.)
4)State's the intent of the Legislature to prevent any shifting
of recoverable costs between IOU customers. (Public Utilities
Code §366.1(d)(1).)
This bill:
1)Increases the statewide limit on DA by 8,000 gigawatt hours.
This bill directs the CPUC, as of January 1, 2016, to adopt a
schedule that phases in new DA transactions for individual
retail nonresidential end-use customers over a period of not
more than three years. This bill requires that 100 percent of
new DA transactions be for electricity products from renewable
energy resources eligible for RPS credit, pursuant to existing
statutory RPS procurement requirements, enforced by the CPUC.
2)Requires each IOU to continue to provide DA customers with
support functions, including, but not limited to, billing,
customer service, call centers, support services, and line
clearance tree trimming, through its own employees, except
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that construction of distribution system equipment and line
clearance tree trimming may be performed pursuant to contracts
between the electrical corporation and another entity. This
bill prohibits an ESP from offering consolidated billing.
Background
Direct Access. DA allows customers of each IOU to elect to
receive electric service from a provider other than the IOU.
Such providers are knows as ESPs. ESPs rely on the use of IOU
transmission lines to deliver electricity to DA customers. DA
was first offered as part of efforts to restructure the
electricity markets to provide more competition. In 2000 and
2001, the state experienced extraordinary wholesale electricity
prices in what has become known as the California electricity
crisis.
Direct Access Suspended. In response to the electricity crisis,
state government suspended DA. No new customers would be
allowed to sign DA contracts; existing DA contracts, however,
would continue in effect.
Direct Access Reopened. In 2009, the Legislature passed SB 695
(Kehoe, Chapter 337, Statutes of 2009), which reopened DA, up to
a specified limit. Consistent with statute, the CPUC determined
the additional amount of DA service that could occur in each IOU
territory, as shown in the following table.
--------------------------------------------------
| |
| SB 965 Direct Access Limits [CPUC Decision |
| 10-03-22] |
| |
--------------------------------------------------
|-----------------+--------+------+-------+-------|
| | PG&E | SCE | SDG&E | Total |
|-----------------+--------+------+-------+-------|
| SB 695 Limit| 9,520|11,710| 3,562| 24,792|
| | | | | |
| | | | | |
|-----------------+--------+------+-------+-------|
| Existing DA | 5,574| 7,764| 3,100| 16,438|
| Contracts| | | | |
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|-----------------+--------+------+-------+-------|
|New DA Allowance | 3,946| 3,946| 462| 8,354|
| (line 1 less | | | | |
| line 2)| | | | |
-------------------------------------------------
--------------------------------------------------
| | |
|1) Gigawatt hours. | |
--------------------------------------------------
Nonresidential customers quickly enrolled in all available DA
service made newly available by SB 695. Under current law, no
customer may newly contract with an ESP for DA service unless an
existing customer drops out of DA.
Recent Amendments. The Senate Appropriations Committee amended
this bill in two ways. First, the Committee clarified that the
bill's 8,000 gigawatt hour increase in DA applies statewide.
This amendment is consistent with the intent of the Senate
Energy, Utilities and Communications Committee that considered
the bill prior to the Appropriations Committee. The
Appropriations Committee's second amendment to this bill
increases, from 51 percent to 100 percent, the proportion of DA
service made available by this bill that must come from
RPS-eligible renewable energy products.
Prior/Related Legislation
SB 350 (De León, 2015) requires load-serving entities to procure
at least 50 percent of their electricity from renewable
resources by 2030. The bill passed the Senate Appropriations
Committee on a vote of 5-1.
SB 695 (Kehoe, Chapter 337, Statutes of 2009) directed the CPUC
to allow nonresidential end-use customers to acquire electric
service from ESPs in each IOU service territory, up to a
specified limit. SB 695 set the limit for each IOU equal to the
maximum total KWhs supplied by all ESPs to DA customers of the
IOU during any sequential 12-month period between April 1, 1998,
and October 11, 2009 (the date the bill - and urgency measure -
took effect).
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, 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.
SUPPORT: (Verified5/29/15)
3Phases Renewables
AES
Albertsons/Safeway
Alliance for Retail Energy Markets
Alta Dena Dairy, A Dean Foods Company
Aviva Energy Corporation
Bericap
Boral Industries, Incorporated
Building Owners and Managers Association
California Association of Sanitation Agencies
California Biomass Energy Alliance
California Business Properties Association
California Grocers Association
California Manufacturers and Technology Association
California Retailers Association
California State Universities
Calpine Corporation
Cargill, Incorporated
Cinemark USA, Incorporated
Commerce Energy, Incorporated
Community College League of California
COMPETE Coalition
Constellation NewEnergy, Incorporated
Covanta Energy
Direct Access Customer Coalition
Direct Energy Business, LLC
Dynegy, Incorporated
eBay, Incorporated
Ecom-Energy of California, Incorporated
Energy Users Forum
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Fabrica International, Incorporated
Gas and Power Technologies, Incorporated
Guardian Industries Corporation
IBM Corporation
IGS Energy
JDS Uniphase
Just Energy Group, Incorporated
Kings Canyon Unified School District
Large-Scale Solar Association
Lehigh Hanson
Liberty Power Corp., LLC
Lineage Logistics
Macy's, Incorporated
Noble Americas Energy Solutions, LLC
Nordic Energy Services, LLC
Oakley, Incorporated
Owen-Illinois
Owens Corning
Qualcomm
Retail Energy Supply Association
RockTenn Company
School Project for Utility Rate Reduction
Shell Energy North America (US), LP
Solar City
Solar Energy Industries Association
Stanford University
Staples
Steelscape
Swisstex California
TechNet
Tenaska, Incorporated
TES Energy Services, LP
Think Wire Energy Services, Incorporated
Tiger Natural Gas
United States Cold Storage, Incorporated
University of California
Walmart
Western Power Trading Forum
Western States Petroleum Association
Wilmar Oils and Fats Stockton
OPPOSITION: (Verified5/29/15)
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California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Workers
Pacific Gas and Electric Company
San Diego Gas & Electric Company
Southern California Edison
The Utility Reform Network
Western States Council of Sheet Metal Workers
ARGUMENTS IN SUPPORT: The author contends this bill
encourages competition and reduces prices for electricity.
This, in turn, will give California businesses the necessary
tools to make cost-effective energy decisions and make
California more business friendly, while providing new flexible
options for meeting the state's renewable energy and greenhouse
gas reduction goals.
ARGUMENTS IN OPPOSITION:Opponents argue that ESPs rely on a
short-term business model that undercuts the long-term planning
needed to meet California's ambitious energy and environmental
goals, as well as to finance its capital-intensive energy
infrastructure. The IOUs also argue that the migration of
customers to DA service saddles IOU ratepayers with millions in
stranded costs, despite the existence of a CPUC process to
allocate such costs.
Prepared by:Jay Dickenson / E.U. & C. / (916) 651-4107
6/3/15 9:45:39
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