BILL ANALYSIS �
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1214 (Skinner) - As Amended: April 26, 2011
SUBJECT : Electricity transmission, permitting
SUMMARY : Requires the California Public Utilities Commission
to deem transmission projects necessary if the California
Integrated System Operator has determined a transmission
facility is needed. Specifically, this bill :
Requires the California Integrated System Operator (CAISO) and
the California Public Utilities Commission (PUC) to jointly
evaluate transmission facilities that serve solar development
areas.
Requires the PUC and CAISO to publish a report, no later than
March 31, 2012 to identify new and upgraded transmission
facilities that can be placed in service by December 31, 2016,
including identifying barriers to placing the facilities in
service by December 31, 2016 and the means to overcome those
barriers.
Requires the PUC and the CAISO to coordinate the CAISO's
transmission planning process and identification of needed
transmission facilities with the PUC's issuance of certificates
of public convenience and necessity for transmission facilities.
Requires the PUC to find construction of new transmission
necessary if the CAISO determines that the building or upgrading
of electrical transmission facilities is necessary, and the
commission determines that those transmission facilities will
serve at least 200 megawatts of eligible renewable energy
resources for which the commission has approved a purchase
agreement for RPS compliance and additionally determines that
those facilities assist in achievement of resource adequacy
requirements unless new information is provided showing good
cause for denial.
EXISTING LAW :
1)Requires the California Public Utilities Commission (PUC) to
grant a Certificate of Public Convenience (CPCN) for 200
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kilovolt and above before beginning construction of a
transmission line or extension or a Permit to Construct (PTC)
for projects between 50kV and 200kV.
2)Requires the PUC to take into consideration community values,
recreational and park areas, historic and aesthetic values,
influence on the environment, cost-effective alternatives
(including but not limited to demand-side alternatives,
targeted energy efficiency, ultraclean distributed generation,
and other demand reduction resources when considering
approving new transmission lines and expansions.
3)Requires the CAISO to adopt inspection, maintenance, repair,
and replacement standards for transmission facilities in order
to provide high quality, safe, and reliable service and take
into account cost, local geography and weather, applicable
codes, and industry practice.
FISCAL EFFECT : Unknown
COMMENTS :
According to the author, this bill will eliminate redundancy
where the CAISO has determined a transmission facility is
necessary via a Federal Energy Regulatory Commission (FERC)
approved interconnection agreement. This would then relieve the
PUC from considering alternatives to the facility.
1)Background . The PUC has constitutional authority to fix
rates, establish rules, examine records, issue subpoenas,
administer oaths, take testimony, punish for contempt, and
prescribe a uniform system of accounts for California investor
owned utilities. In addition, the PUC provides a program to
provide reasonable compensation to interveners to assist
public participation in PUC proceedings. The PUC is funded by
ratepayers.
The CAISO is a non-profit public benefit corporation that has
statutory requirements to manage the State's electricity grid
and consult and coordinate with state and local agencies.
CAISO must meet the State's open meeting requirements and
comply with the California Public Records Act. The CAISO is
funded generally through grid and transmission management
charges.
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2)In April 2011 the PUC and CAISO executed a Memorandum of
Understand that seeks to coordinate CAISO transmission
planning with the PUC transmission permitting processes.
3)The State's electricity grid is generally comprised of
transmission lines, distributions lines, and transfer stations
(commonly known as substations). Transmission lines carry
bulk high-voltage electricity over long distances, while
distribution lines are short and carry smaller quantities of
electricity (typically 20 megawatt maximum per distribution
line). Distribution lines carry electricity at a lower
voltage rating for residential, commercial, and industrial
uses.
An interconnection agreement is a contract between an
electricity seller and either a transmission line owner or a
distribution line owner. In California, transmission level
interconnection agreements must be reviewed and approved by
CAISO.
Separately, the electricity seller will enter into an
agreement to sell electricity to a utility, load serving
entity, community choice aggregator, or direct access
customer.
4)Ratepayers pay 100% of the cost of construction for new
transmission lines, facilities, and expansions.
5)CAISO relies on the Energy Commission's annual demand forecast
and the PUC Long Term Planning Procurement process to develop
an annual transmission plan. The Energy Commission will be
updating its annual demand forecast through the 2011
proceeding on the Integrated Energy Policy Report. At that
time, the Energy Commission is likely to begin incorporating
larger allocations of distributed generation (in particular
the 12,000 MW localized renewable goal advocated by Governor
Brown) and perhaps additional energy efficiency reductions.
This could reduce or delay the need to build new transmission
lines and facilities.
6)In California, the CAISO has authority to execute
interconnection agreements over California's transmission
lines. However, it is important to point out that CAISO does
not control all of the electricity system in California. The
owner of distribution level lines has review authority over
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connections to their distribution lines. In California,
distribution lines are owned by utilities.
Both CAISO and distribution line owners offer interconnection
agreements, which are regulated in form and content by the
FERC. In addition, the PUC holds regulatory authority over
self-generation interconnections within the areas served by
investor owned utilities where the power that is produced is
also consumed on the same site (this is known at Rule 21).
Publicly owned utilities develop and implement their own
interconnection rules, most of which are generally similar to
Rule 21.
7)An interconnection agreement is no substitute for assessing
alternatives to developing generation facilities. The
approval of an interconnection agreement to construct a
project is not equal to the review required by the California
Environmental Quality Act (CEQA), which would be used for
determining whether a utility may receive ratepayer funding to
construct a transmission line.
8)Importantly, CAISO has no authority or access to information
regarding distribution level interconnection agreements
pending with the utilities. Only the PUC has access to the
full spectrum of information necessary to determine whether to
issue a certificate of public convenience, including but not
limited to distributed generation programs (Reverse Auction,
Feed in Tariff, Self Generation Incentives, California Solar
Initiative) and energy efficiency programs. The PUC is also
intimately familiar with the facilities in development through
the solicitations for compliance with the Renewable Portfolio
Standard. Additionally, the PUC has information regarding
Resource Adequacy and cost of generation that is critical to
ensuring that California ratepayers do not over pay and
utilities do not over-procure generation (conventional or
renewable fuels). Moreover, the PUC is uniquely situated to
review whether new transmission is needed for reliability and
security or if an alternative to new transmission provides
equal or better ratepayer benefits.
9)The PUC is already required to report to the Legislature
annually on rates and programs.
The author is correct that time is of the essence with regard to
opportunities for project developers to receive the benefits of
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federal tax credit and depreciation programs. Projects that are
completed by December 31, 2011 would receive potentially as much
as 100% depreciation in their first year. Tax credits are
scheduled to sunset December 31, 2016. Renewable energy project
developers knew this when they designed and developed their
projects.
It is not clear that interested and affected parties
(particularly the affected and adjacent property owner would
want to have their opportunity to intervene at the PUC bypassed
by an interconnection decision at the CAISO.
The author may wish to consider an amendment to remove the
requirement that the PUC find a transmission facility is
necessary based on a determination by the CAISO.
REGISTERED SUPPORT / OPPOSITION :
Support
BrightSource Energy (sponsor)
Opposition
Division of Ratepayer Advocates (DRA)
Analysis Prepared by : Sue Kateley / U. & C. / (916) 319-2083