BILL ANALYSIS Ó
SB 886
Page A
Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
SB
886 (Pavley) - As Amended May 31, 2016
SENATE VOTE: 25-14
SUBJECT: Electricity: energy storage systems
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to adopt energy storage system procurement targets
applicable to electrical corporations, community choice
aggregators, and the governing board of each local
publicly-owned electric utility (POU) to adopt comparable energy
storage 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. Specifically, this bill:
1)Requires the CPUC to adopt, by January 1, 2018, energy storage
system procurement targets applicable to each load-serving
entity (LSE), to be achieved by December 1, 2030.
2)Directs the CPUC to require each investor-owned utility (IOU),
by January 1, 2017, to propose new tariffs or programs to
SB 886
Page B
encourage customers to install energy storage systems on the
customer side of the meter.
3)Requires the CPUC, by March 1, 2017, to require each LSE, in
developing its integrated resource plan (IRP), to consider the
full benefits of procuring energy storage systems; 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)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.
EXISTING LAW:
1)Allows the CPUC to collect up to $83 million annually until
December 31, 2019, and use these funds to provide incentives
for for distributed energy resources, including energy storage
systems, until January 1, 2021. (Public Utilities Code Section
379.6)
2)Defines "LSE" as an electrical corporation (IOU), energy
service providers (ESP) or community choice aggregators (CCA).
(Public Utilities Code Section 380(k))
3)Requires each LSE and local POU to increase purchases of
renewable energy such that at least 50% of retail sales are
procured from renewable energy resources by December 31, 2030.
This is known as the Renewable Portfolio Standard (RPS).
SB 886
Page C
(Public Utilities Code Section 399.11 et seq.)
4)Requires the CPUC to: a) identify a diverse and balanced
portfolio of resources needed to ensure a reliable electricity
supply that provides optimal integration of renewable energy
in a cost-effective manner. The portfolio shall rely upon zero
carbon-emitting resources to the maximum extent reasonable and
be designed to achieve any statewide greenhouse gas emissions
limit established pursuant to the California Global Warming
Solutions Act of 2006; b) direct each electrical corporation
to include, as part of its proposed procurement plan, a
strategy for procuring best-fit and least-cost resources to
satisfy the portfolio needs identified by the CPUC; and c)
ensure that the net costs of any incremental renewable energy
integration resources procured by an electrical corporation to
satisfy the need identified by the CPUC . (Public Utilities
Code Section 454.51)
5)Requires the CPUC to adopt a process for each IOU to file an
IRP to ensure IOUs meet the greenhouse gas (GHG) emissions
reduction targets for the electricity sector; procure at least
50% eligible renewable energy resources by December 31, 2030;
enable each IOU to fulfill its obligation to serve its
customers at just and reasonable rates; minimize impacts on
ratepayers' bills; ensure system and local reliability;
strengthen the diversity, sustainability, and resilience of
the bulk transmission and distribution systems, and local
communities; enhance distribution systems and demand-side
energy management; and minimize localized air pollutants and
other GHG emissions, with early priority on disadvantaged
communities. (Public Resources Code Section 454.52)
6)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 Section 9321)
SB 886
Page D
7)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
Section 400)
8)Requires the 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 Section 2835 et seq.)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement. "The Southern California Gas Company
Aliso Canyon Disaster highlighted the states dangerous
dependence on fossil fuels, and natural gas storage. The
Disaster forced the displacement of thousands of families from
their homes-many of whom remain in temporary housing-resulted
in the largest single emission of methane gas (the equivalent
in climate pollution to burning roughly a billion gallons of
gasoline) in our country's history, and has left 21 million
people in the southland vulnerable this summer and winter to
blackouts. SB 886 seeks a simple solution to prevent this kind
of problem from ever happening again: diversification of our
energy storage resources. The bill asks that utilities
consider energy storage systems ahead of fossil fuels in their
planning process, and that the CPUC consider updating its
SB 886
Page E
energy storage procurement target for the utilities. It also
asks the CPUC to create an energy storage rate, which would
send the right economic signal to consumers-businesses and
homeowners-that will enable them to take control of their
energy future and save money on their energy bills."
2)Integrated Resource Planning: In 2015, SB 350 (De León),
Chapter 547, Statutes of 2015, was enacted to increase the
state's commitment to lowering greenhouse gas emissions, clean
electric generation, energy efficiency, and transportation
electrification. Included in the final version of the bill was
a requirement for the CPUC and local POUs to prepare IRP. The
CPUC is currently working on implementing the provision of
this requirement.
According to the CPUC the integrated planning process
considers the costs and benefits of both demand and supply
side resources when developing the least total cost mix of
utility resource options. Establishing a "carve out" in the
IRPs for energy storage undermines the CPUC and utilities
effort to find the least total cost mix of resource options.
Instead it puts energy storage ahead of what might be one or
more "least cost" solutions to meeting the requirement in
statute with respect to lowering greenhouse gas emissions.
The author may wish to consider striking this provision in the
bill.
3)Energy Storage Incentives: Current law provides funding for
energy storage through the Self-Generation Incentives program.
In addition, certain energy storage facilities are eligible to
receive bill credits through the existing Net Energy Metering
Programs. The CPUC has also directed utilities to procure
energy storage through both direct procurement and through
"all-source" bids (where any energy resource may bid to
SB 886
Page F
provide electricity services). The California Independent
System Operator recently initiated a request for approval from
the Federal Energy Regulatory Commission (FERC) to provide
payments for energy storage that can assist with the
reliability operation of the grid.<1> In addition, the CPUC
recently authorized additional energy procurement to begin
immediately to assist in addressing reliability problems that
may occur as a result of the Aliso Canyon gas storage facility
leak.
The author may wish to consider alternative language to
encourage electrical corporations to offer rate plans, based
on time-of-use or dynamic pricing, to customers using energy
storage.
4)Suggested Amendment: It is unclear whether additional
incentives are needed nor it is clear in the bill what type of
incentive is envisioned, its purpose, or its funding levels.
The author may wish to consider striking this provision in the
bill.
SECTION 1. Section 454.53 is added to the Public Utilities
Code, to read:
454.53. (a) The commission shall require load-serving
entities, in developing and updating their integrated resource
plans pursuant to Section 454.52, to consider the benefits of
procuring energy storage systems, as defined in Section 2835.
(b) Except as provided in subdivision (c), the commission, in
approving an integrated resource plan for a load-serving
--------------------------
<1>
http://www.caiso.com/Documents/May18_2016_TariffAmendment_ImplementEnergyStorageEnhancements_ER16-1735.pdf
SB 886
Page G
entity shall require that, to the extent energy storage
systems can meet resource needs as well as or better than
fossil-fuel-based generation at reasonably equivalent or lower
cost, the plan provide for the procurement of energy storage
systems before fossil-fuel-based generation.
(c) In certifying an integrated resource plan for a community
choice aggregator, the commission shall act in accordance with
paragraph (3) of subdivision (b) of Section 454.52 and
paragraph (5) of subdivision (a) of Section 366.2.
SEC. 2. Section 455.6 is added to the Public Utilities Code,
to read:
455.6. The commission shall, in a new or existing proceeding,
require each electrical corporation, by October 1, 2017, to
propose new tariffs or programs to provide incentives to
customers of the electrical corporation for installing energy
storage systems on the customer side of an electric meter that
is connected to the electrical grid.
SEC. 2. Section [to be determined] is added to the Public
Utilities Code, to read:
The commission shall require electrical corporations to offer
"time of use pricing" or "dynamic pricing" to customers using
energy storage at their premises.
SEC. 3. Section 2836.1 is added to the Public Utilities Code,
to read:
2836.1. (a) (1) Except as provided in subdivision (b), on or
before January 1, 2018, the commission shall determine
appropriate targets, if any, for each load-serving entity to
procure viable and cost-effective energy storage systems to be
achieved by December 31, 2030. Energy storage systems procured
pursuant to the targets shall be limited to those that reduce
the need for fossil-fuel-based generation, provide benefits to
the electrical grid, or support the integration of eligible
renewable energy resources procured pursuant to the California
Renewables Portfolio Standard Program (Article 16 (commencing
with Section 399.11) of Chapter 2.3 of Part 1).
SB 886
Page H
(2) This subdivision does not prohibit the commission's
evaluation and approval of any application for funding or
recovery for costs of any ongoing or new development, trial,
or testing of energy storage projects or technologies outside
the targets required by this chapter.
(b) On or before July 1, 2018, the governing board of each
community choice aggregator shall determine appropriate
targets, if any, for the community choice aggregator to
procure viable and cost-effective energy storage systems to be
achieved by December 31, 2030. The governing board may
consider a variety of policies to encourage cost-effective
deployment of energy storage systems to reach the targets,
including refinement of existing procurement methods to
properly value energy storage systems.
(c) On or before July 1, 2018, or during its next open
integrated resource plan process, the governing board of each
local publicly owned electric utility shall determine
appropriate targets, if any, for the utility to procure viable
and cost-effective energy storage systems to be achieved by
December 31, 2030. The governing board may consider a variety
of policies to encourage the cost-effective deployment of
energy storage systems to reach the targets, including
refinement of existing procurement methods to properly value
energy storage systems.
SEC. 4. Section 9620.5 is added to the Public Utilities Code,
to read:
9620.5. 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, to the
extent energy storage systems can meet resource needs as well
as or better than fossil-fuel-based generation at reasonably
equivalent or lower costs, procure energy storage systems
before fossil-fuel-based generation.
5)Support and Opposition:
SB 886
Page I
Supporters state that this bill will significantly advance
California's ability to both promote and leverage energy
storage resources in managing and supporting the electric grid
and clean energy goals. A CCA provider noted that this bill
was written in a way to increase energy storage while
reflecting the procurement autonomy of a CCA Board.
Opponents raise various concerns about the cost implications
of the provisions of this bill. Others state that this bill
works against the goals enacted in SB 350. Other opponents
state that this bill is unnecessary and contrary to policies
passed in 2015.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Water Agencies
California Energy Storage Alliance
California Solar Energy Industries Association
ElectIQEnvironmental Defense Fund
Green Charge Networks
Marin Clean Energy
SB 886
Page J
Office of Ratepayer Advocates
Qnovo
NGK Insulators
San Diego County Water Authority (if amended)
Solar Energy Industries Association
Solar City
Stem
Opposition
California Chamber of Commerce
California Municipal Utilities Association
Pacific Gas and Electric Company
San Diego Gas and Electric
SB 886
Page K
Southern California Edison
Analysis Prepared by:Sue Kateley / U. & C. / (916)
319-2083