BILL ANALYSIS
AB 44
Page 1
ASSEMBLY THIRD READING
AB 44 (Blakelslee)
As Amended June 1, 2009
Majority vote
UTILITIES AND COMMERCE 14-0
APPROPRIATIONS 17-0
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|Ayes:|Fuentes, Duvall, Tom |Ayes:|De Leon, Nielsen, |
| |Berryhill, Blakeslee, | |Ammiano, |
| |Buchanan, Carter, Fong, | |Charles Calderon, Davis, |
| |Fuller, Furutani, | |Duvall, Fuentes, Hall, |
| |Krekorian, Skinner, | |Harkey, Miller, |
| |Smyth, Swanson, Torrico | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Krekorian |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Creates incentives for investor owned utilities (IOUs)
and non-utility companies to build energy storage devices that
store energy produced from renewable facilities. Specifically,
this bill:
1)Authorizes California Public Utilities Commission (PUC) to
approve an increase of between one-half of 1% and one percent
in the rate-of-return otherwise allowed an IOU for investment
by IOU in energy storage systems that store energy from
eligible renewable resources and dispatch that energy at a
later time.
2)Requires IOUs to incorporate cost-effective, reliable, and
feasible energy storage systems that reduce emissions of
greenhouse gases, or reduce demand for peak electrical
generation, or improve the reliable operation of the electric
grid.
3)Provides that electricity generated from an eligible renewable
resource that is stored by an eligible energy storage system
is deemed "delivered" to California customers.
EXISTING LAW :
AB 44
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1)Authorizes PUC to approve an increase of between one-half of
one percent and one percent in the rate-of-return otherwise
allowed an IOU for investment by IOU in renewable generation
facilities.
2)Requires IOUs to procure at least 20% of their electricity
sales from renewable resources by 2010.
FISCAL EFFECT : Minor absorbable special fund costs to PUC.
COMMENTS : According to the author, the purpose of this bill is
to create incentives and remove barriers for both utility-owned
and merchant-owned energy storage facilities. The author
believes these energy storage facilities will be necessary for
California to meet its renewable energy goals since they can
store energy produced by wind and solar facilities at times that
electricity is not needed to be used at peak periods when
electricity is in high demand.
California law requires all retail sellers of electricity to
meet at least 20% of the retail sales using electricity from
renewable resources by 2010 - a Renewable Portfolio Standard
(RPS). The California Air Resources Board (ARB) has identified
an advancement of RPS to 33% by 2020 as one of the key actions
needed to be taken in order to meet the greenhouse gas (GHG)
reduction goals of AB 32 (Nunez), Chapter 488, Statutes of 2006.
Two bills have been introduced this legislative session to
create the 33% RPS goals [AB 64 (Krekorian) and SB 14
(Simitian)].
While several studies have determined that a 33% RPS is
achievable, it can only be met with a heavy reliance on wind and
solar energy. The problem is that both resources are
intermittent. They only produce electricity when the wind is
blowing or the sun is out. This intermittency could create
reliability problems for the electricity grid since the grid
managers cannot count on the solar and wind energy being
available at the same time there is demand for electricity. One
way to resolve this reliability problem would be to find ways to
store the electrical output of renewable facilities to use hours
later.
Energy storage devices are devices that can take electricity and
AB 44
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covert the electricity into some other form of energy so it can
be stored and converted back to electricity at some later point.
This bill defines storage systems to include any device that
stores energy generated from an eligible renewable resource
during off-peak periods and dispatched the energy during on-peak
periods. The device must also be capable of storing energy for
at least two hours and must be able to respond to orders from
the transmission grid managers to absorb or dispatch energy.
The author envisions the development of storage devises that are
owned and operated by the utilities and storage devices that are
owned by private parties that could buy renewable power from
renewable developers or the utility and then sell that power
back to the utility at a later time.
This bill allows IOUs to earn a higher profit on investments
they make in energy storage devices than they do on investments
in natural gas generation facilities. The higher profit concept
is based on Public Utilities Code Section 454.3 which allows
IOUs to earn higher profits on investments in renewable
facilities. According to PUC, no IOU has applied for higher
rate-of-return under 454.3 since it was approved in 1988.
The bill also requires IOUs to incorporate cost-effective,
reliable, and feasible energy storage systems that reduce
emissions of greenhouse gases, or reduce demand for peak
electrical generation, or improve the reliable operation of the
electric grid.
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083
FN: 0001345