BILL ANALYSIS Ó SB 286 Page 1 Date of Hearing: August 26, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 286 (Hertzberg) - As Amended August 18, 2015 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|10 - 1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 SB 286 Page 2 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. SB 286 Page 3 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. SB 286 Page 4 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 SB 286 Page 5