BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 17 - Padilla Hearing Date:
April 27, 2009 S
As Amended: April 20, 2009 FISCAL B
1
7
DESCRIPTION
Current federal law requires each state to consider investment
in a qualified smart grid system and directs the National
Institute of Standards and Technology to coordinate the
development of smart grid standards. (Energy Independence and
Security Act of 2007)
Current federal law 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.
(American Reinvestment and Recovery Act of 2009)
Current state law requires investor owned utilities (IOUs) to
operate its electric distribution grid in a safe, reliable,
efficient, and cost-effective manner and authorizes the
California Public Utilities Commission (CPUC) to give each IOU a
reasonable opportunity to fully recover from all customers the
costs of operating the distribution system.
This bill establishes smart grid as the policy of the state and
requires the CPUC to determine the requirements for a smart grid
deployment plan no later than July 1, 2010; subsequently, IOUs
would be required to adopt a plan for implementation of a smart
grid no later than July 1, 2011. Publicly owned utilities with
more than 100,000 service connections would also be required to
develop a smart grid deployment plan consistent with federal law
by July 1, 2011.
BACKGROUND
What is a Smart Grid? - The term smart grid refers to a
distribution system that allows for the flow of information from
a customer's meter in two directions and modernizes the electric
distribution and transmission grid with a goal of using
advanced, information-based technologies to increase power grid
efficiency, reliability, and flexibility, and reduce the rate at
which additional electric utility infrastructure needs to be
built. A smart grid is a key element to the greening of
California's grid due to the intermittent nature of renewable
electricity resources such as wind and solar.
The most vital step in transforming California's distribution
grid into an intelligent, integrated network enabled by modern
information and control system technologies is deployment of an
advanced meter infrastructure (AMI or smart meters).
Smart Meters - California's attempts to educate its grid have
begun with the deployment of smart meters which is one of
hundreds of possible applications that constitute a smart grid.
For the last several years, the CPUC has encouraged the IOUs to
increase demand response and implement dynamic pricing tariffs
as a means of reducing energy demand during peak periods which
cannot be done without a smart meter. The technology also
allows a utility to:
Conduct remote meter reading, pinpoint outages, remote
turn off/turn on capability, provide more accurate billing,
and prevent energy theft;
Monitor electrical load on an hourly basis to enable a
utility to more accurately forecast load and identify load
centers;
Enable two-way communication to each customer's meter;
and
Offer time varying rates to customers.
Each of the three IOUs is in the process of deploying smart
meters as follows:
Pacific Gas & Electric, 5.1 million electric and 4.2
million gas meters at a cost of $2.2 billion to be
completed by 2011;
San Diego Gas & Electric, 1.4 million electric and
900,000 gas meters at a cost of $572 million by 2011; and
Southern California Edison, 5.3 million electric meters
at a cost of $1.7 billion by 2012.
COMMENTS
1. If I Only Had a Brain - The term smart grid is one of
the most overused, undefined terms in the electric industry
today. In the past a number of projects have been labeled
"smart" but turned out not to be. A working definition of
the term is long overdue, especially now that it has found
its way into federal legislation. This bill addresses this
void by requiring the CPUC to clearly define what the smart
grid will be for California, provide clear direction on its
development and when it will be operational. The CPUC has
a rulemaking underway to consider policies for California's
IOUs to develop a smarter electric grid in the state. 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.
2. Cost Recovery - When an IOU procures equipment for the
purpose of providing electric service to its ratepayers,
the CPUC has the authority to determine what expenditures
will be recoverable from ratepayers and the method by which
the expenditures will be recovered. This bill also
addresses cost recovery for smart grid but appears to be
unnecessary and may be inconsistent with the CPUC's current
rate recovery policies. The author may wish to consider
striking these provisions (page 4, lines 29-35 and page 5,
lines 4-12) related to cost recovery for smart grid costs
since authority exists in current law.
3. Ratepayer Impacts - There will be additional ratepayer
costs for the deployment of a smart grid but those costs
cannot be identified since there is not yet a definition,
protocol or plan for the state. As identified in the
background, the cost of deploying meters alone exceeds $4.8
billion.
Depending on its design and deployment a smart grid could
result in mitigating the likely increased costs of
electricity through such programs as demand response.
Customers would also benefit from: enhanced utility service
reliability; more stable, higher-quality electricity
supply; short customer outages, and faster service
restoration.
4. Reporting Requirement - The bill requires (page 5, lines
17-23) the CPUC to evaluate the impact of deployment on
specified initiatives and policies at each step of
deployment. The author may wish to consider striking this
phrase and require that the CPUC report to the Legislature
annually on its smart grid progress.
5. Prior Legislation - In 2008 the author carried a largely
similar bill, SB 1438, which was held in the Assembly
Appropriations Committee.
POSITIONS
Sponsor:
Author
Support:
California Public Utilities Commission (with amendments)
Clean Power Campaign (with amendments)
Coalition of California Utility Employees
Sempra Energy
Oppose:
Utility Services Customer Link
Kellie Smith
SB 17 Analysis
Hearing Date: April 27, 2009