BILL ANALYSIS �
AB 2516
Page 1
ASSEMBLY THIRD READING
AB 2516 (Bradford)
As Introduced February 24, 2012
Majority vote
UTILITIES & COMMERCE 12-0
APPROPRIATIONS 15-0
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|Ayes:|Bradford, Buchanan, Fong, |Ayes:|Fuentes, Blumenfield, |
| |Fuentes, Gorell, Roger | |Bradford, Charles |
| |Hern�ndez, Huffman, | |Calderon, Campos, Davis, |
| |Knight, Nestande, | |Donnelly, Gatto, Hall, |
| |Skinner, Swanson, Valadao | |Hill, Lara, Mitchell, |
| | | |Norby, Solorio, Wagner |
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SUMMARY : This bill expands California Independent System
Operator (CAISO) management requirements. Specifically, this
bill adds to existing law governing CAISO operations:
1)Reducing, to the maximum extent possible, overall economic
cost to the state's consumers.
2)Conducting internal operations in a manner that maximizes
electricity reliability at the lowest cost for ratepayers.
3)Communicating, to the maximum extent possible, with all
balancing coordinators operating in California.
EXISTING LAW requires CAISO to manage the transmission grid and
related energy markets in a manner consistent with:
1)Efficient use of available energy resources.
2)Reducing, to the extent possible, overall economic cost to the
state's consumers.
3)Applicable state law intended to protect the public's health
and the environment.
4)Maximizing the availability of existing electric generation
resources necessary to meet the needs of the state's
electricity consumers.
AB 2516
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FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact.
COMMENTS : According to the author, "Following a widespread
power outage that occurred in September 2011 in the San Diego
region, The Assembly Utilities and Commerce Committee held a
hearing to investigate the outage. Based on testimony at the
hearing, it was not clear that CAISO and other balancing
authorities in the region were regularly communicating with each
other before the outage." This bill recognizes the need for all
entities involved with providing or enabling the safe, reliable
supply of electricity to ensure that electricity rates remain
affordable to Californians.
CAISO is responsible for matching California's electricity
supply with demand and maintaining frequency of the power grid.
It manages 80% of California's power grid and an estimated 35%
of all electricity transmission in the west. Other balancing
authorities operating in California include PacifiCorp,
Sacramento Municipal Utility District, Sierra Pacific Power,
Turlock Irrigation District, Nevada Energy, Los Angeles
Department of Water and Power, Western Area Lower Colorado and
Imperial Irrigation District.
While CAISO maintains a robust stakeholder process for
developing new market rules and addressing issues, there is no
mandated requirement for communication between all entities
involved in providing consistent and reliable electricity to
ratepayers.
Annually, CAISO sets revenue requirements consisting of
operations and maintenance budgets, outstanding debt bond
service, capital expenses, and miscellaneous revenue and
expenses. The revenue requirement is then collected from CAISO
customers through the Grid Management Charge (GMC).
CAISO focuses on maintaining cost equity with other CAISO and
Regional Transmission Operator (RTO) peers, the goal being a
bundled GMC cost per megawatt hours (MWh) at or below median
level of the North American Independent System Operator
(ISO)/RTO GMC rates.
1)New England ISO: $1.011.
AB 2516
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2)Independent Electricity System Operator (Ontario): $0.834.
3)Electric Reliability Council of Texas (ERCOT): $0.797.
4)California ISO: $0.791.
5)New York ISO: $0.676.
6)Midwest ISO: $0.437.
7)Pennsylvania-New Jersey-Maryland Interconnection (PJM):
$0.347.
8)Southwest Power Pool: $0.229.
It is not clear that CAISO process considers potential rate
impacts along with reliability and safety when developing these
rules. This bill would clarify that rate impacts should be
considered in a manner that does not diminish or reduce safety
and reliability.
This bill establishes CAISO management priorities that include
communication between all balancing operators in California as
well as a focus on internal operational cost efficiencies.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0003402