BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 286  


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          Date of Hearing:  August 26, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 286  
          (Hertzberg) - As Amended August 18, 2015


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill requires the Public Utilities Commission (PUC) to  
          allow individual retail nonresidential end-use customers to  
          contract directly for their electricity supplies, also known as  








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          direct access (DA).  Specifically, this bill:  


          1)Expands the existing direct access program to allow 8,000  
            gigawatt-hours (GWh) of new direct access customers over a  
            period of three years.


          2)Allocates the 8,000 GWh proportionally among electrical  
            corporation service areas.


          3)Requires the electricity provided under this program to meet  
            the definition of renewable energy as defined in the  
            California Renewable Portfolio Standard (RPS), including  
            procurement in excess of the RPS requirement.


          4)Requires nonresidential retail end-use DA customers to pay for  
            their proportionate share of specified costs for efficiency,  
            low-income, research and other programs.


          5)Requires electrical corporations to continue to: 1) construct,  
            own, and operate distribution system equipment; and 2) provide  
            distribution system support directly with their own employees.  
             Sunsets this requirement January 1, 2021


          6)Requires electrical corporations to continue to provide  
            services on behalf of direct access customers, including  
            billing, customer service, call centers, support services, and  
            line clearance tree trimming through its own employees.


          7)Allows construction of distribution system equipment and line  
            clearance tree trimming to be performed pursuant to contracts  
            between the electrical corporation and another entity.









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          FISCAL EFFECT:


          Increased one-time PUC costs of $600,000 for the first year and  
          a half and on-going annual costs of $250,000 for increased  
          oversight and management of the expanded DA program (Public  
          Utilities Reimbursement Account).





          





          COMMENTS:


          1)Purpose.   According to the author, this bill will allow  
            commercial and industrial customers to choose alternative  
            electricity service with 100% renewable energy, and sign  
            contracts for delivery of electricity separate from the local  
            utility company.  The author further states that this bill  
            will encourage competition and reduce prices for electricity. 


          2)Background.  In the past, pursuant to AB 1890 (Brulte) Chapter  
            854, Statutes of 1996, Investor - owned utilities (IOU)  
            customers were allowed 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 California electricity crisis in  
            2000 and 2001, the Legislature suspended DA, though existing  
            DA contracts were allowed to continue. 








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            In 2009, the Legislature passed SB 695 (Kehoe, Chapter 337,  
          Statutes of 2009), which             reopened DA.  More  
          specifically, SB 695 directed the PUC 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.              


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


            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  
          (AB 32, Chapter 488,                                      
          Statutes of 2006).





          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081









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