BILL ANALYSIS �
AB 2341
Page 1
Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2341 (Williams) - As Introduced: February 24, 2012
SUBJECT : Distribution grid: distributed generation.
SUMMARY : Requires the California Public Utilities Commission
(PUC) to ensure through its electric general rate cases and
related proceedings, that all investments in the distribution
grid are compatible with optimal deployment of distributed
generation, to the extent grid upgrades are required to meet a
goal of 12,000 megawatts of distributed generation by 2020.
EXISTING LAW :
1)States the PUC has regulatory authority over public utilities,
including electrical corporations, as defined.
2)Requires the PUC to administer, until January 1, 2016, a
self-generation incentive program for distributed generation
resources to facilitate the integration of those resources
into the electrical grid, improve efficiency and reliability
of the distribution and transmission system, and reduce
emissions of greenhouse gases, peak demand, and ratepayer
costs.
3)States requirements apply to projects that interconnect on the
side of the electrical meter that is controlled by a customer
of a utility and designed to provide electricity that is
generally consumed on site by the customer (known as PUC Rule
21). The PUC has oversight of Rule 21.
4)Federal laws apply to projects that interconnect on the side
of the electrical meter that is controlled by the utility and
designed to provide electricity that will be purchased by the
utility for sale to a customer. There are two types of
possible interconnection rules, one for transmission level
interconnection and another for all others. The Generator
Interconnection Process applies to transmission
interconnection requests and is administered by the California
Independent System Operator (CAISO). Local electric utilities
administer the other, distribution level interconnection
request. It is known as the Wholesale Distribution Access
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Tariff, (WDAT). Both GIP and WDAT are overseen by The Federal
Energy Regulatory Commission (FERC).
FISCAL EFFECT : Unknown.
1)COMMENTS : According to the author, "Governor Brown has
established a goal of 12,000 megawatts of new distributed
generation (DG) to help meet California's clean energy and
economic development goals. To achieve this, it's incumbent
upon the state to ensure that investments made on the
distribution grid now, are preparing California for future
with a high level of DG development. Doing so ensures that
ratepayers save money, the State is proactive about DG-capable
grid investments, and DG-developers have more certainty as
they help California move toward meeting the Governor's goal
for new distributed generation."
2)Background : DG refers to electric generation facilities that
are located close to the point of electricity consumption. DG
includes a range of technologies such as solar, wind, fuel
cells powered by natural gas, or biogas.
Governor Brown has established a goal to install 12,000
megawatts of localized energy resources (LER) to help meet
California's clean energy and economic development goals. To
achieve this, more investments into the distribution grid may
be warranted.
The PUC is mandated to ensure that electricity rates meet a
just and reasonable standard. A General Rate Case (GRC) is the
major proceeding under which the PUC has the opportunity to
apply that standard to review a utility's proposed revenues,
expenses, and plant and equipment investments, including
maintaining and enhancing generation and distribution
infrastructure. Thus, the proceeding does not typically
include a comprehensive identification of infrastructure
needs, a comparison of investment option, or cost-benefit
analysis of resource types.
3)Cost-shifting : This bill requires the PUC to ensure that its
decisions in GRC proceedings invest in distribution system
upgrades sufficient to meet a goal of 12,000 MW of LER by
2020. This bill would assign to ratepayers the cost of
investments in the distribution system to achieve such a goal.
This policy approach reverses longstanding PUC policy which
assigns distribution system upgrade costs to the developer.
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Moreover, this bill does not contain any provisions to
determine if the proposed DG upgrades are cost-effective
and/or whether alternative resources, such as energy
efficiency or demand response, would be less expensive. Such
provisions would be most critical to ensure ratepayer
protection.
4)PUC efforts underway : The PUC is examining how to implement
the Governor's 12,000 megawatts goal in several open long-term
planning, procurement, resource adequacy, interconnection, and
smart grid proceedings.
The PUC is addressing issues related to distribution level
interconnection in an open proceeding (R.11-09-011). Phase 2
of the proceeding, which is anticipated to begin in Quarter 3
2012, will address cost issues associated with interconnecting
DG.
Evaluation of the costs and benefits of DG, including
infrastructure costs, is also being conducted in a series of
technical studies being launched this year. The Long-Term
Procurement Plan (LTPP) proceeding serves as the PUC's
umbrella proceeding to consider, in an integrated fashion, the
utilities' procurement of supply resources and ensure
compliance with the loading order resource policies.
Within the PUC's Resource Adequacy proceeding, the PUC will
consider rule changes relating to DG, including a proposal by
the California Independent System Operator (CAISO) to provide
Resource Adequacy Deliverability for DG. CAISO's proposal, if
implemented, will provide additional market signals about
efficient siting of distributed generation and facilitate
Resource Adequacy Deliverability for DG.
Earlier this year the PUC issued requests for proposals for
technical expertise to study and compare costs and benefits
among different types of DG and procurement mechanisms. Work
is anticipated to begin on these studies in the coming months.
5)Suggested amendment : The author and this committee may wish
to amend the bill to give the PUC the flexibility to address
distribution grid investment issues in a separate proceeding,
or combine them with interrelated issues outside of the GRC
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rather than mandating distribution grid investment issues be
vetted in the GRC.
6)Technical concerns : The bill language specifies key terms
such as ensure that all investments are "compatible with
optimal deployment". It is unclear how the author is defining
"compatible" and "optimal deployment".
REGISTERED SUPPORT / OPPOSITION :
Support
Absolutely Solar Inc. (ASI)
American Biogas Council
Clean Coalition (sponsor)
Environmental Health Coalition
Green-Collar Jobs Campaign of the Ella Baker Center for Human
Rights
Sierra Club California
Solar Developers Council
Opposition
California Manufacturers & Technology Association (CMTA)
California Public Utilities Commission (CPUC)
Sempra Energy utilities (SEu)
Southern California Edison (SCE)
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083