BILL ANALYSIS Ó
SB 886
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Date of Hearing: August 10, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 886
(Pavley) - As Amended August 1, 2016
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|Policy |Utilities and Commerce |Vote:|10 - 4 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires the California Public Utilities Commission
(PUC) to require each electrical corporation to offer
time-of-use pricing or dynamic pricing to customers using energy
storage at their premises. Additionally, this bill requires
electricity providers to adopt energy storage procurement
targets. Specifically, this bill:
1)Requires the PUC, by January 1, 2018, to determine appropriate
energy storage system procurement targets, if any, for each
load-serving entity (LSE), to be achieved by December 31,
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2030.
2)Requires the governing board of each community choice
aggregator (CCA) and each local publicly owned electrical
utility (POU), by July 1, 2018, to determine appropriate
energy storage procurement targets, if any, to be achieved by
December 31, 2030. The respective governing boards 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 storage systems.
3)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.
FISCAL EFFECT:
Increased ongoing annual PUC costs of approximately $420,000
(Public Utilities Reimbursement Fund) to receive and evaluate
TOU tariffs through a new or existing rate-setting proceeding
and determine targets, if any are adopted, through a new or
existing policy setting proceeding.
COMMENTS:
1)Purpose. According to the author, the Aliso Canyon natural
gas leak highlighted the states dependence on fossil fuels,
and natural gas storage. This bill is intended to prevent this
kind of problem from ever happening again through the
diversification of our energy storage resources. The author
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further states, this bill asks utilities to consider energy
storage systems ahead of fossil fuels in their planning
process and asks the PUC to create an energy storage rate,
which would send the right economic signal to businesses and
homeowners that will enable them to take control of their
energy future and save money on their energy bills.
2)Background. Existing law directs the California Energy
Commission (CEC) and the PUC to authorize the procurement of
resources to provide grid reliability services that minimize
reliance on system power and fossil fuel resources and, where
feasible, increase the use of large- and small-scale energy
storage. The PUC is required to determine appropriate
targets, if any, for LSEs to procure energy storage systems
and requires LSEs to meet any targets adopted by the PUC by
2015 and 2020. POUs are required to set their own targets and
meet those targets by 2016 and 2021.
The general category of Time-of-Use (TOU) rates for
electricity customers often refers to prices set in advance
but varying over the day to capture expected impacts of
changing electricity use. Generally, electricity rates are
higher during pre-determined peak usage times and lower during
off usage times.
Dynamic pricing, also referred to as surge pricing or demand
pricing, is a pricing strategy in which businesses set
flexible prices for products or services based on current
market demands. With dynamic electricity pricing, rates vary
by actual demand.
Current law provides funding for energy storage through the
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Self-Generation Incentives program. In addition, certain
energy storage facilities are eligible to receive bill credits
through the existing Net Energy Metering Programs. The PUC has
also directed utilities to procure energy storage through both
direct procurement and through "all-source" bids (where any
energy resource may bid to 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. In
addition, the PUC 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.
3)Other Efforts to Reduce Methane Emissions. The PUC, as part
of the Leak Abatement Order Instituting Rulemaking pursuant to
SB 1371 (Leno, Chapter 525, Statutes of 2014) is aand in a
cost-effective manner
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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