Amended in Senate March 17, 2016

Senate Bill No. 886

Introduced by Senator Pavley

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(Principal coauthors: Senators De León and Huff)

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(Coauthor: Senator Allen)

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(Coauthor: Assembly Member Wilk)

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January 20, 2016

begin delete An act to add Section 3217 to the Public Resources Code, and to add Section 713 to the Public Utilities Code, relating to natural gas, and declaring the urgency thereof, to take effect immediately. end delete begin insert An act to add Sections 454.53, 455.6, and 9620.5 to the Public Utilities Code, relating to electricity. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 886, as amended, Pavley. begin delete Natural gas storage: moratorium. end delete begin insert Electricity: energy storage systems. end insert

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Existing law requires the Public Utilities Commission to determine appropriate targets for each load-serving entity to procure viable and cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. Existing law requires the governing board of each local publicly owned electric utility to initiate a process to determine appropriate targets for the utility to procure viable cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. Existing law requires the commission to adopt a process for each load-serving entity to file an integrated resource plan and a schedule for periodic updates to the plan to meet certain objectives. Existing law requires each publicly owned electric utility to prudently plan for and procure resources, including energy storage systems adequate to meet the 2015 and 2020 targets, to provide reliable electric service to its customers.

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This bill would require the commission, by March 1, 2017, to require load-serving entities, in developing and updating their integrated resource plans, to consider the benefits of procuring energy storage systems and to give priority to procuring energy storage systems over fossil-fuel-based generation. The bill would require the commission on or before October 1, 2017, to require electrical corporations to develop appropriate tariffs to provide incentives to customers to install grid-connected energy storage systems on the customer side of the electrical meter. Because a violation of an order, decision, rule, direction, demand, or requirements of a commission is a crime, this bill would impose a state-mandated local program. The bill would require the governing board of each local publicly owned electric utility, in planning for future procurement of resources, to consider the benefits of procuring energy storage systems and to give priority to procuring energy storage systems over fossil-fuel-based generation. Because this bill would impose additional requirements on the governing board of a local publicly owned electric utility, this bill would impose a state-mandated local program.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for specified reasons.

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(1) Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisor’s duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with certain requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.

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This bill would require the supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met. The bill would also require the supervisor to prohibit the production of natural gas by any well originally drilled earlier than 1954 at the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, except as specified. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

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(2) Under existing law, the Public Utilities Commission is authorized to supervise and regulate every public utility in the state.

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This bill would require the commission to determine the feasibility of minimizing or eliminating use of the Aliso Canyon natural gas storage facility located in the County of Los Angeles while still maintaining energy reliability for the region, and to consult with specified entities in making its determination.

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(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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(4) This bill would declare that it is to take effect immediately as an urgency statute.

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Vote:  begin delete ²⁄₃ end delete begin insert majority end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 454.53 is added to the end insert begin insert Public Utilities
Code end insert begin insert , to read: end insert

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begin insert 454.53. end insert   

On or before March 1, 2017, the commission shall, in
a new proceeding or in an existing proceeding, require
load-serving entities, in developing and updating their integrated
resource plans as required by Section 454.52, to consider the
benefits of procuring energy storage systems, as defined in Section
2835, and to give priority to procuring energy storage systems
over fossil-fuel-based generation.

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begin insert SEC. 2. end insert   

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begin insert Section 455.6 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

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begin insert 455.6. end insert   

On or before October 1, 2017, the commission shall, in
a new proceeding or in an existing proceeding, require each
electrical corporation to develop appropriate tariffs to provide
incentives to customers of the electrical corporation to install
energy storage systems on the customer side of an electric meter
that is connected to the electric grid.

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begin insert SEC. 3. end insert   

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begin insert Section 9620.5 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

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begin insert 9620.5. end insert   

The governing board of each local publicly owned
electric utility, in planning for future procurement of resources,
shall consider the benefits of procuring energy storage systems,
as defined in Section 2835, and shall give priority to procuring
energy storage systems over fossil-fuel-based generation.

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begin insert SEC. 4. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
a local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act or because costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.

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SECTION 1.  

Section 3217 is added to the Public Resources
Code, to read:

3217.  

(a) The supervisor shall immediately institute a
moratorium on injections of natural gas into any wells located
within and serving the Aliso Canyon storage facility located in the
County of Los Angeles until all of the following conditions are
met:

(1) The integrity of each well has been quantitatively and
objectively evaluated using state-of-art technology and the risks
posed by well failure have been evaluated.

(A) The age, history, and condition of each well shall be
specifically addressed, with particular emphasis on wells drilled
prior to 2006.

(B) The technical methods and equipment used to evaluate well
integrity and the risks posed by well failure shall be determined
by the supervisor with input from independent experts and the
public through a public process.

(2) Any well posing an enhanced risk of failure has been
repaired to mitigate the enhanced risk or plugged and abandoned.

(3) The supervisor determines that the overall risk from well
failure satisfies the supervisor’s duty pursuant to Section 3106 to
prevent damage to life, health, property, and natural resources and
other requirements.

(4) The Public Utilities Commission and the State Energy
Resources Conservation and Development Commission concur
with the supervisor’s determination in paragraph (3).

(b) The supervisor shall prohibit the production of natural gas
by any well originally drilled earlier than 1954 at the Aliso Canyon
storage facility located in the County of Los Angeles until after
the integrity of and the risks associated with any of these wells
have been evaluated and determinations by the supervisor, with
the concurrence of the commissions, have been made pursuant to
the process described in subdivision (a), except when necessary
to do either of the following:

(1) Respond to the uncontrolled leak of natural gas from the
“Standard Sesnon 25” well (American Petroleum Institute
identification number 03700776).

(2) Maintain regional energy reliability, at the written direction
of the commissions.

SEC. 2.  

Section 713 is added to the Public Utilities Code, to
read:

713.  

The commission shall determine the feasibility of
minimizing or eliminating use of the Aliso Canyon natural gas
storage facility located in the County of Los Angeles while still
maintaining energy reliability for the region. The commission shall
consult with the State Energy Resources Conservation and
Development Commission, the Independent System Operator, the
Division of Oil, Gas, and Geothermal Resources in the Department
of Conservation, and other relevant government entities, in making
its determination.

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 4.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to mitigate, at the earliest possible time, ongoing harm
from the gas leak at the Aliso Canyon storage facility, and to
evaluate the integrity of and the risks associated with older wells
at that facility, it is necessary that this act take effect immediately.

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