BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 631 - Ma Hearing Date:
July 5, 2011 A
As Amended: June 1, 2011 Non-FISCAL
B
6
3
1
DESCRIPTION
Existing law defines a public utility as a gas corporation,
electrical corporation, telephone corporation, telegraph
corporation, water corporation, sewer system corporation, and
heat corporation, where the service is performed for, or the
commodity is delivered to, the public or any portion thereof.
This bill exempts from the definition of a public utility a
facility that supplies electricity to the public only for use to
charge light duty plug-in electric vehicles (PEVs).
BACKGROUND
PEVs & Charging - Within the next five years automakers are
expected to release 10 to 15 PEV models into California's new
car market. Those PEVs will need a reliable electric charging
infrastructure - at home and in public - which can accommodate
the unique fueling needs of these vehicles.
Although PEVs can actually be plugged in to a standard home
outlet for charging (referred to as Level 1), that mode can take
as long as 20 hours to get a full charge (e.g. Nissan Leaf).
Most PEV owners will want to have a Level 2 charger installed at
home to bring the charging time down to 4 to 8 hours. Level 2
and Level 3 (which can charge in less than 30 minutes) chargers
will be installed in public locations and at many workplaces to
accommodate charging needs away from home when the PEV can't
quite get to its location and back again and to also relieve
"range anxiety" for the PEV owner.
However, unlike traditional vehicle fuel, every time a PEV is
plugged into a Level 2 or Level 3 charger, that charging has a
ripple effect across the distribution and transmission grid and
therefore affects all ratepayers. The charging of that PEV at
Level 2 is equivalent to adding a new house onto the
distribution grid.
Grid Impacts - In 2010 a group of U.S. and Canadian power grid
operators who manage most of the North American bulk electric
grid collectively studied the effect that PEVs would have on the
electric power grid. The study was modest in its assumptions of
1 million PEVs nationwide in the next 10 years. California is
planning on 1 million PEVsin this state alone. However the
study is illustrative of the impacts that can be expected.
Among the study's conclusions:
One million PEVs may be on U.S. roadways in a decade,
with concentrations of the vehicles in the major
metropolitan areas of the West Coast and the Northeast;
Staggered charging of PEVs would reduce the potential
negative impact on electric load; and
Power companies will need new tools to manage growth in
PEV use.
The study also included a very modest estimate of the number of
PEVs for the LA area which "is projected to experience the
largest growth of PEVs, a total 119,069 by 2019. PEVs in the
L.A. region could add electric load of 658 MW if every PEV
charged simultaneously. If PEV charging were staggered over an
eight-hour period, electric load would increase by 147 MW. Over
a 12-hour period, PEV charging would add 98 MW."
Consequently, the deployment of PEVs will place new demands on
the state's electric system but managed properly that demand can
benefit ratepayers and car owners alike. The electric utilities
have not experienced a greater impact on the electric grid since
air conditioners were introduced into residential and commercial
structures. Grid managers are not exactly certain of how the
success of PEVs might impact the grid and not certain of what
tools may be necessary to mitigate the impacts.
If that service is not managed efficiently it will cost all
ratepayers in the form of higher electric rates, and diminish
the environmental benefits of PEVs by increasing greenhouse gas
and other emissions associated with the generation of
electricity at peak demand.
However, a well-planned electric vehicle charging infrastructure
and charging behaviors can ensure that the distribution grid has
the capacity necessary to handle the charging of the vehicles
and can also shift a significant amount of charging to off-peak
times. The result is that the need for additional power plants
is minimized and the utilization of existing plants is
increased.
More critically, if substandard charging units start to
proliferate in public places, EV car owners will not be able to
successfully charge their vehicles and get frustrated. Their
experience could dampen the successful deployment of PEVs into
the marketplace. Additionally, an improperly installed
charging unit can disrupt power (typically caused by a blown
transformer) and literally turn off the lights in the immediate
vicinity of the charging unit.
Benefits of PEVs to Electric Grid - According to the CPUC,
off-peak charging places less strain on the distribution system,
avoiding adverse impacts to the electric grid and reducing the
need for costly infrastructure upgrades. Concentrating PEV
charging in off-peak periods will also dampen increases in
energy procurement costs resulting from the addition of this new
load. Not only is energy more expensive during peak periods,
but significant levels of on-peak charging could actually
increase incremental procurement costs by exerting upward
pressure on peak-time wholesale energy prices. Spreading fixed
capacity costs over a larger volume of energy sales has the
beneficial effect of lowering the average cost of providing
electricity service for all customers. Off-peak charging also
delivers greater environmental benefits since substituting
electricity for petroleum-based transportation fuels yields
greater reductions in carbon emissions and other pollutants
during off-peak periods.
This is because the marginal generating units available during
off-peak hours tend to be cleaner and/or more efficient than
peaker plants. Finally, night-time charging facilitates'
integration of wind energy by using the storage capacity of the
PEV batteries transform California's predominantly nocturnal
wind power resources into transportation fuel for daytime
driving. Currently much of the wind capacity in California
generates electricity off-peak. In addition to being low
emission, wind generation is not designed to ramp down to
accommodate additional wind output. By creating a new use for
off-peak generating resources, off-peak charging could help
address challenges posed by wind generation.
PEV Charging Need & Range Anxiety - From the standpoint of the
electric grid, the hope is that PEV owners primarily utilize
home charging but this is of course not realistic for all
charging needs. In order to ensure the successful deployment of
the vehicles there must be options for PEV owners to charge
their vehicles away from home. According to the strategic plan
of the California Plug-In Electric Vehicle Collaborative:
Availability of charging stations outside of the home
may play an important role in developing PEV markets.
Well-placed nonresidential (public) charging stations
at workplaces, businesses, curbsides, destination or
transit station parking lots, highways, or elsewhere,
would provide added visibility for PEVs, convenience
and value for PEV drivers, and an important solution
for people in multi-dwelling units and without access
to home charging. Public charging can provide a safety
net and comfort for early adopters and extend the range
and utility of PEVs, broadening their market reach. It
may also allow drivers to increase electric driving and
the associated energy security and environmental
benefits of their PEV.
Electric Vehicle Service Providers - a new industry has come to
the state lured by the intention of the PEV automakers to target
the California market and the availability of tens of millions
of dollars (e.g. federal ARRA, AB 118, and local air districts)
to build a public PEV charging infrastructure.
When these entities started to plan and develop their
businesses, there was no natural fit for the business model in
the electricity marketplace. When they launched in California
they walked into uncharted territory since the service of
charging PEVs was not recognized in the law or by the CPUC.
COMMENTS
1. Author's Purpose . Consumer demand and private sector
investment are primary factors for the success of emerging
technology. Encouraging consumer adoption, innovation and
investment is the key to driving future growth of low to
zero emissions vehicle markets. Such innovation and
private sector investment in California's EV industry needs
regulatory certainty and an open market where consumer
choice drives technology adoption. The CPUC has taken the
first step in encouraging solutions for EVs by deciding
that a company which sells electricity for the charging of
light-duty electric vehicles is not a public utility.
AB 631 will codify the CPUC decision, and allow EV
infrastructure and services to be developed in a free
market where consumers and charging providers do not face
uncertainty as to how they will be regulated. AB 631
retains the CPUC ability to regulate EV infrastructure
through every other statutory authority. AB 631
facilitates the EV market development and encourages
economic growth, technological innovation, and job creation
in alternative transportation technologies.
2. CPUC Action . The EVSPs came into California's market
some years ago in uncharted territory. There was no
natural fit for them in the electricity marketplace or the
regulatory scheme. Most EVSPs do charge a fee for plugging
in to charge a PEV. Is that like a gas pump? Is it the
sale of electricity at retail which makes it a regulated
public utility? The CPUC addressed this question in a 2010
decision in which it decided that entities selling
electricity at retail for electric vehicle charging are not
public utilities within the meaning of Public Utilities
Code Section 216. This bill codifies that decision.
There is little opposition to the notion that businesses
providing the service to fuel or charge PEVs should not be
held to the same rigor as a public utility. However, if an
EVSP is not a utility, what is it and can the CPUC touch
the service the EVSPs provide in any way in order to manage
the grid impacts of that service?
If the EVSPs are not a public utility, what can the EVSPs
be required to do by the CPUC to manage the safety,
reliability and efficiency of the grid as a result of the
impacts of the service that they provide? The author and
sponsor provided no response to this question.
3. Regulate the Customer ? In its 2010 decision the CPUC
went on to conclude that a "charging service provider that
is connecting to the transmission or distribution system of
an investor-owned utility will, at the very least, be a
retail transmission and distribution customer of the
utility" and therefore the CPUC could regulate the grid
impacts of the service because the EVSP is a customer of
the utility.
The CPUC then laid out different methods of regulating
service to customers such as interconnection requirements,
demand response program and rate regulation. But what if
the EVSP is not a direct customer of the IOU? The CPUC's
decision left a significant gap which this bill does as
well - in the business model for most EVSPs they are not a
customer of the utility.
For example, if Costco has ten EV charging stations on its
property, the customer is Costco not the party with which
Costco contracted to install and service those charging
units. Although the CPUC could regulate the impacts of
Costco's entire electric load, it is not clear that the
CPUC would have the authority to require anything of the
EVSPs which own and operate the charging unit to address
safety, reliability and efficiency of the grid as a result
of the impacts of the service that they provide.
4. Missing Piece . If EVSPs are not a public utility and
not a customer of a utility, then exactly how can the
safety, reliability and efficiency of the grid impacts of
those units be managed? That is not clear and these are
the questions of which lengthy and expensive litigation is
made. Moreover, the author and sponsors of this bill did
not respond to this question either.
In 2009 the Legislature attempted to address this issue in
SB 1435 (Padilla, 2010) which was held in the Assembly.
That bill exempted EVSPs from the definition of a public
utility as this bill does but added an additional piece -
or part 2 - which specifically authorized the CPUC to adopt
rules to ensure that the charging of PEVs is incorporated
into the electricity delivery system in a way that
minimizes transmission and distribution grid impacts and
maximizes environmental and ratepayer benefits while
facilitating the development of the electric infrastructure
needed to charge PEVs.
The bill was extensively negotiated with the sponsors of AB
631 but no agreement could be reached. Grid managers are
not exactly certain of how the success of PEVs might impact
the grid and not certain of what tools may be necessary to
mitigate those impacts. The intent of part 2 was not to
mandate that the CPUC act but to ensure that litigation is
avoided and if the CPUC begins to see adverse impacts
associated with PEV charging that they have the authority
to work with the EVSPs to effectively address it.
To clarify the CPUC's authority and hopefully avoid
litigation, the author and committee should consider adding
an additional section to this bill to clarify that the CPUC
may regulate the safety, reliability and efficiency of the
grid related to the impacts of service provided by EVSPs.
5. Sunset Clause ? An alternative suggested to the
"missing piece" or part 2 of the Padilla bill is to add a
sunset clause to this bill. The Union of Concerned
Scientists writes in support of a sunset clause noting that
"we can't know now what the electric vehicle charging
industry will look like when the electric vehicle industry
grows larger." This would allow the industry to develop
but also ensure that the CPUC and the Legislature have the
opportunity to revisit the issue as the use of PEVs grows,
and grid impacts and marketplace response can be better
assessed.
ASSEMBLY VOTES
Assembly Floor (74-1)
Assembly Utilities and Commerce Committee
(12-1)
POSITIONS
Sponsor:
Author
Support:
Alliance of Automobile Manufacturers
Better Place
BOMA California
California Apartment Association
California Business Properties Association
California Conference of Carpenters
Support (continued):
California Manufacturers & Technology Association
California Public Utilities Commission
California Retailers Association
Coalition of California Utility Employees
Coulomb Technologies, Inc.
ECOtality, Inc.
Electric Vehicle Service Provider Coalition
Environmental Defense Fund
International Brotherhood of Electrical Workers
Nissan North America
Plug In America
San Diego Association of Governments
SF Environment
Southern California Association of Governments
Silicon Valley Leadership Group
The California Cars Initiative
Western States Petroleum Association
Support (if amended):
Union of Concerned Scientists
Oppose:
California Electric Transportation Coalition
Pacific Gas and Electric
The Utility Reform Network (unless amended)
Kellie Smith
AB 631 Analysis
Hearing Date: July 5, 2011