BILL ANALYSIS
AB 2061
Page 1
Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2061 (Carter) - As Amended: April 6, 2010
SUBJECT : Electric distribution: efficiency
SUMMARY : Requires the California Public Utilities Commission
(CPUC) to develop electric transmission and distribution
efficiency measures, and large publicly owned utilities (POUs)
to develop electric distribution efficiency measures.
Specifically, this bill :
1)Requires the CPUC, using existing resources and in
consultation with the California Energy Commission, (CEC), the
California Independent System Operator (CAISO), electric
transmission and distribution owners, users, and consumers, to
develop electric transmission and distribution efficiency
measures, to the extent feasible.
2)Requires a local POU with more than 100,000 customers, to
develop electric distribution efficiency measures, to the
extent feasible.
3)Permits the CPUC to develop and impose a statewide target for
distribution efficiency on an energy (megawatthour) or power
(megawatt) basis.
4)Requires the CPUC, by January 1, 2012, to develop a plan to
improve electric distribution efficiency within the service
territory of an investor-owned utility (IOU) and prescribes
the criteria to be included in the efficiency plans.
5)Requires POU with more than 100,000 customers, by January 1,
2012, to develop a plan to improve electric distribution
efficiency within its service territory, and prescribes the
same criteria used in the IOU plans.
EXISTING LAW :
1)Requires IOUs to operate its electric distribution grid in a
safe, reliable, efficient, and cost-effective manner and
authorizes the PUC to give each IOU a reasonable opportunity
to fully recover from all customers the costs of operating the
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distribution system.
2)Requires CPUC, in consultation with other state agencies and
key stakeholders, to determine the requirements for a smart
grid deployment plan and requires the utilities to submit
smart grid plans to the CPUC.
3) Requires both IOUs and POUs to first acquire all
available energy efficiency and demand reduction resources
that are cost-effective, reliable, and feasible.
4) Requires the CPUC to study and submit a report on the
impacts of distributed energy generation on the state's
distribution and transmission grid, by January 1, 2010.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to encourage investments that improve the efficiency and
reliability of electricity transmission and distribution (T&D)
in California, reducing energy consumption, greenhouse gas
emissions, and costs.
1) Background : California is transitioning from a traditional
large-scale powerplant operations, toward more of a widespread
network of distributed generation (DG). Rapid increases in
technology and the quest for innovation have developed
alternative resources that can be used to self-generate one's
electricity. In addition, some utilities are using DG to
generate electricity for neighborhoods using fuel cell
technology. Due to the proliferation of DG options, some
utilities are concerned that the state's infrastructure may not
be fully prepared to handle inconsistent surges of electricity
being dispatched to the distribution or transmission grid.
Most of the state programs limit the qualified projects to those
that are less than 5 megawatts, in part because net-meter
customer generation cannot be scheduled by the electric utility.
The utility must take the power when it is produced, whether it
needs it at that moment or not. The electric utility can easily
adapt to small amounts of unscheduled electricity coming onto
the grid, but it's difficult to determine at what point the
transmission operator begins to encounter reliability problems
if they ramp down larger generators in anticipation for the
unscheduled power, but cannot ramp back up fast enough when the
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wind stops blowing or clouds appear.
The CPUC has oversight of policies and programs related to DG
resources in California's IOU territories. Since the 1980s, the
use of DG resources has increased dramatically in California due
to policies related to interconnection, net energy metering, and
procurement, as well as programs related to advancing the
integration of clean, DG resources, such as the California Solar
Initative (CSI) and the Self-Generation Incentive Program
(SGIP).
2) Previous state efforts to evaluate transmission and
distribution infrastructure : AB 578 (Blakeslee/Levine) Chapter
627, Statutes of 2008, required the CPUC to submit to the
legislature a report on the impacts of DG on California's
transmission and distribution systems. The report provides an
overview of the current status of California's DG resources and
highlights some of the current challenges and activities around
interconnecting these resources to the utility grid.
The CPUC concluded that, compared with the rest of the Untied
States, California has a significant amount of DG installed on
the grid, particularly solar. The report indicates that as yet
there are no noticeable impacts on the distribution and
transmission infrastructures, based on performed studies.
However, with the continued expected growth of DG, there are
opportunities to develop consistent interconnection policies and
to evaluate the penetration of DG on distribution feeders and
DG's continued contributions to reducing peak demand through
existing technology and technologies in the infancy.
3) Is it "smart" to improve transmission and distribution
infrastructure : The federal Energy Independence and Security
Act of 2007 (2007 Energy Act) requires the National Institute of
Standards and Technology to be the lead agency to develop
standards and protocols for the smart grid. In addition, the
2007 Energy Act creates a research, development, and
demonstration program for smart grid technologies at the
Department of Energy.
Each state regulatory authority and each nonregulated utility is
required to initiate within 1 year (December 2008), and complete
within 2 years (December 2009), consideration of whether to
allow utilities cost recovery for nonadvanced grid technologies,
deployment of a qualified smart grid system, and implementation
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of the provision of price information to customers on a
no-less-than daily basis.
The federal American Reinvestment and Recovery Act of 2009 (2009
Recovery Act) authorizes the Department of Energy to award $4
billion in grants ranging from $500,000 to $20 million for smart
grid technology deployments and grants of $100,000 to $5 million
for the deployment of grid monitoring devices.
4) Federal efforts to improve transmission and distribution
infrastructure : Title 13 of the 2007 Energy Act characterizes a
Smart Grid but doesn't actually define it. The 2007 Energy Act
states that a smart grid would mean modernizing the nation's
electricity grid to meet future demand growth and achieve
certain characteristics. Those characteristics include, among
other things, an increase in the use of digital information; the
development and incorporation of demand response, demand-side
resources, and energy efficiency resources.
The 2007 Energy Act requires the Secretary of the Department of
Energy to report to Congress, no later than one year after
enactment, and every two years thereafter, of the status of
smart grid deployments nationwide and any regulatory or
government barriers to continued deployment. In addition, it
requires the Secretary to establish a Smart Grid Advisory
Committee to advise the Secretary, and a Smart Grid Task Force
to ensure awareness, coordination, and integration of the
activities of the federal government related to smart-grid
technologies and practices.
The 2007 Energy Act establishes a research and demonstration
program and provides up to 50% of the cost of grid technology
investments made as part of a demonstration project. It also
requires the coordination of the smart grid framework that
includes protocols and model standards to achieve
interoperability of smart grid devices and systems. When
utilities invest in smart-grid applications, the 2007 Energy Act
provides reimbursement of 20% of qualifying smart grid
investments.
The 2007 Energy Act requires the CPUC to initiate within one
year, and complete within two years, consideration of whether to
allow utilities cost recovery from "nonadvanced grid
technologies," "deployment of a qualified smart grid system" and
implementation of the provision of price information to
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customers on a no-less-than daily basis. As such, the PUC
commenced the proceeding by December 2008. The CPUC is
currently on schedule to meet the requirement to issue smart
grid deployment plan requirements by July 1, 2010. The IOUs
will file their deployment plans by July 1, 2011.
5) State efforts on transmission and distribution upgrades :
The CPUC has a rulemaking underway to consider policies for
California's IOUs to develop a smarter electric grid in the
state. One of the factors that define a smart grid is increasing
the efficiency of the transmission and distribution system. The
proceeding will consider setting policies, standards and
protocols to guide the development of a smart grid system and
facilitate integration of new technologies such as distributed
generation, storage, demand-side technologies, and electric
vehicles.
The CEC funded a smart grid research project under the Public
Interest Energy Research program. The research identified new
and emerging technologies that would impact a smart grid,
concerns about ensuring incompatible systems and/or large
capital investments with short-term benefits, and the need to
foster open access, competition and commercial growth of
cost-effective, new technologies. Preliminary research shows
the state could play a key role in defining the smart grid of
the future for California and if left alone, many systems most
likely will not be compatible. Future smart grid research
planned by the CEC includes assessing smart grid technologies
and functional areas through micro-grid demonstration projects.
One of the primary goals is to increase efficiencies in the
transmission and distribution infrastructure.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083