BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 886|
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THIRD READING
Bill No: SB 886
Author: Pavley (D)
Amended: 5/31/16
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 8-3, 4/19/16
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley,
Wolk
NOES: Morrell, Cannella, Gaines
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SUBJECT: Electricity: energy storage systems
SOURCE: Author
DIGEST: This bill requires appropriate energy storage system
procurement targets; requires each load-serving entity and
locally owned public electric utility to plan for the
procurement of energy storage systems before fossil-fuel-based
generation; and requires each electrical corporation to propose
measures to encourage customers to install energy storage
systems.
ANALYSIS:
Existing law:
1)Defines "load-serving entity" (LSE) as an electrical
corporation (investor-owned utility, or IOU), energy service
providers (ESP) or community choice aggregators (CCA).
(Public Utilities Code §380(k))
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2)Requires each LSE and local publicly owned electric utility
(POU) to increase purchases of renewable energy such that at
least 50 percent of retail sales are procured from renewable
energy resources by December 31, 2030. This is known as the
Renewable Portfolio Standard (RPS). (Public Utilities Code
§399.11 et seq.)
3)Requires the California Public Utilities Commission (CPUC) to
determine appropriate targets, if any, for LSEs to procure
energy storage systems. Requires LSEs to meet any targets
adopted by the CPUC by 2015 and 2020. Requires POUs to set
their own targets for the procurement of energy storage and
then meet those targets by 2016 and 2021. (Public Utilities
Code §2835 et seq.)
4)Requires the CPUC to adopt a process for each load-serving
entity to file an integrated resource plan (IRP), to be
approved by the CPUC, to ensure they meet the greenhouse gas
emissions reduction targets for the electricity sector;
procure at least 50 percent eligible renewable energy
resources by December 31, 2030; and meet other statutory
requirements. Requires the plan of a CCA be submitted to its
governing board for approval and provided to the CPUC for
certification. (Public Resources Code §454.52)
5)Requires each POU to adopt and regularly update an IRP
substantially similar required of the IRPs developed by LSEs,
to be reviewed by the California Energy Commission (CEC).
(Public Utilities Code §9321)
6)Directs the CEC and the CPUC, where feasible, to authorize
procurement of resources to provide grid reliability services
that minimize reliance on system power and fossil fuel
resources and, where feasible, cost effective, and consistent
with other state policy objectives, increase the use of large-
and small-scale energy storage. (Public Utilities Code §400)
This bill:
1)Requires the CPUC to determine, by January 1, 2018, energy
storage system procurement targets, if any, applicable to each
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LSE, to be achieved by December 1, 2030. Requires the
governing board of each CCA to determine appropriate energy
storage procurement targets, if any, applicable to the CCA.
2)Directs the CPUC to require each IOU, by January 1, 2017, to
propose new tariffs or programs to encourage customers to
install energy storage systems on the customer side of the
meter.
3)Requires the CPUC, in approving an LSE's IRP, to require the
IRP to provide for the procurement of comparably priced,
equally effective energy storage systems before
fossil-fuel-based generation.
4)States that the CPUC, in certifying an IRP of a CCA, to act
according to existing law regarding CCAs, IRPs and energy
resources procurement.
5)Requires the governing board of each POU, in planning for
future procurement of resources, to consider the benefits of
procuring energy storage systems and to procure comparably
priced, equally effective energy storage systems before
fossil-fuel-based generation.
Background
California utilities have procured increasing amounts of
electricity from renewable resources, in response to the state's
RPS mandates. Much of this electricity has come from solar and
wind energy resources. Such resources can be described as
intermittent, meaning that they are not available at all times
of the day and can experience difficult-to-predict upward or
downward swings in electricity production. This intermittency
creates challenges for management of the electric grid, one of
which is the need to quickly respond to changes in demand for
energy.
According to the California Independent System Operator (CAISO),
this energy resource intermittency and rapid ramping in demand
create a number of challenging conditions for grid management,
including short, steep ramps, risk of overgeneration, and
decreased ability to automatically adjust electricity production
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to maintain grid reliability.
[https://www.caiso.com/Documents/FlexibleResources
HelpRenewables_FastFacts.pdf.] The CAISO reports that, to
reliably manage the electricity grid under these conditions, it
needs flexible resources with certain characteristics.
One flexible resource that provides many of the characteristics
CAISO says will be needed to reliably manage the electricity
grid is natural-gas-fired powerplants, especially "peaker
plants" that can quickly ramp up and down. Another potential
method to manage the electric grid of the future is through the
use of energy storage systems.
This bill encourages the procurement of energy storage systems
in a number of ways. Most significantly, it requires the CPUC
to determine appropriate energy storage system targets, if any,
for IOUs and ESPs, to be achieved by the end of 2030. This bill
makes parallel requirements of the governing board of each CCA
and POU. This bill also requires the same entities, when
developing their IRPs - comprehensive planning documents all
LSEs must prepare that detail how the LSE will achieve the
state's environmental and energy goals - to consider the
benefits of energy storage systems. Finally, this bill requires
IOUs to propose new tariffs or programs to encourage customers
to install energy storage systems on the customer side of the
meter.
If it becomes law, this bill would not represent the first time
the Legislature has mandated the procurement of energy storage
systems. AB 2514 (Skinner, 2010), similar to this bill,
required CPUC to determine appropriate targets, if any, for LSEs
to procure energy storage systems by 2015 and 2020, and directed
POUs to set their own comparable energy storage system
procurement targets. The state has also provided financial $42
million in incentives to nearly 1,200 to energy storage systems
through the Self-Generation Incentive Program.
Related/Prior Legislation
AB 1258 (Skinner, 2013) would have required the CEC to perform a
technical analysis of the potential uses of existing
hydro-electric and pumped storage facilities to provide
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additional operational flexibility to integrate eligible
renewable energy sources into the grid. The bill was held in
the Assembly Committee on Appropriations.
AB 2514 (Skinner, Chapter 469, Statutes of 2010) required CPUC
to determine appropriate targets, if any, for LSEs to procure
energy storage systems. The bill required LSEs to meet any
targets adopted by the CPUC by 2015 and 2020. The bill required
POUs to set their own targets for the procurement of energy
storage and then meet those targets by 2016 and 2021.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, there is a
one-time cost up to $339,288 (Public Utilities Commission
Utilities Reimbursement Account) for staffing necessary to
determine cost-effective storage targets, review investor owned
utility tariff filings, develop a policy for prioritizing
storage procurement before fossil generation, monitor
procurement filings, and to manage a new track of an existing
proceeding or to manage a new proceeding.
SUPPORT: (Verified5/27/16)
California Energy Storage Alliance
Consumer Attorneys of California
Environmental Defense Fund
SolarCity
South Coast Air Quality Management District
OPPOSITION: (Verified5/27/16)
California Chamber of Commerce
Pacific Gas and Electric Company
San Diego Gas & Electric
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Southern California Edison
ARGUMENTS IN SUPPORT: According to the author, if the state is
going to meet its RPS requirement, and its commitments under the
Clean Power Plan, it will need to move away from fossil storage
and thermal peakers. Cleaner storage, through batteries and
renewable fuels, holds the promise of a smoother load curve and
less reliance on facilities like Aliso Canyon to support
electricity needs in Los Angeles and elsewhere in California.
ARGUMENTS IN OPPOSITION: Writing in opposition, the IOUs
contend this bill makes unnecessary, redundant and premature
requirements, muddies the nascent IRP process and fails to treat
all LSEs equally.
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
5/31/16 21:58:36
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