BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2159
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          Date of Hearing:   April 21, 2014

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                   AB 2159 (Ammiano) - As Amended:  March 28, 2014
           
          SUBJECT  :   Electrical corporations: community choice  
          aggregation: Joint Exercise of Powers Act, "over the fence"  
          transactions, and access to customer data

           SUMMARY  :   This bill would authorize the board of supervisors of  
          a city and county to elect to enter into an agreement to  
          implement a community choice aggregation (CCA) program, allow  
          over-the-fence transactions, and require an electrical  
          corporation to provide electrical consumption data to community  
          choice aggregators. Specifically,  this bill  :  

          1)Allows the board of supervisors of a city and county to enter  
            an agreement to implement a CCA program with one or more  
            public agencies through a public entity that is separate from  
            the parties to the agreement.

          2)Excludes from the definition of an electrical corporation a  
            transaction involving the transfer of electricity for use or  
            sale between two adjacent properties.

          3)Requires an electrical corporation to provide customer data to  
            a community choice aggregator subject to orders of the  
            California Public Utilities Commission (PUC) or as agreed upon  
            between the electrical corporation and the CCA to protect  
            unauthorized access, destruction, use, modification, or  
            disclosure.

           EXISTING LAW  

          a)Allows electricity customers to aggregate their electric loads  
            as members of their local community with CCAs. (Public  
            Utilities Code 366.2 (a)(1))

          b)Allows CCAs to procure electricity for customers who are  
            customers of the CCA. (Public Utilities Code 366.2 (a)(5))

          c)Requires an electrical corporation to cooperate fully with any  
            community choice aggregators that investigate, pursue, or  
            implement community choice aggregation programs. (Public  








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            Utilities Code 366.2 (9))

          d)Allows two or more entities to participate as a group in  
            forming a CCA through a Joint Powers Agreement (JPA). (Public  
            Utilities Code 366.2 (12)(B))

          e)Excludes the owner of an electric plant that is used for  
            direct transactions from the definition of a public utility.  
            (Public Utilities Code 216 (h))

          f)Excludes from the definition of an electrical corporation a  
            transaction using cogeneration technologies that is between  
            not more than two corporations that are on adjacent properties  
            not under common control unless the properties are divided by  
            an intervening street or if the seller is an independent solar  
            energy producer. (Public Utilities Code 218 (b) and (e))

          g)Prohibits an electrical corporation or gas corporation from  
            sharing, disclosing, or otherwise make accessible to any third  
            party a customer's electrical or gas consumption data, except  
            customer aggregate electrical or gas consumption data for  
            analysis, reporting, or program management if all information  
            has been removed regarding the individual identity of a  
            customer or upon the consent of the customer. (Public  
            Utilities Code 8380)

           FISCAL EFFECT  :   Unknown

           COMMENTS :   

           1)Author's Statement.  "Numerous state departments and  
            organizations from across the country have released reports  
            detailing the methods of success and obstacles causing  
            failures in the implementing of Community Choice Aggregation  
            (CCA) programs. How California responds to the challenges to  
            clean power has implications beyond the Golden State.  
            California has long been an exporter of smart energy policy  
            and innovation in the energy field. 

            "Moving forward, the state is counting on the legislature and  
            Governor Brown to ensure clean energy succeeds by allowing a  
            fair and competitive process in California. Assembly Bill 2159  
            will foster a free market by giving governing boards of  
            jurisdictions options to implement community choice programs  
            and expand limitations on neighboring properties' connections,  








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            also referred to as over-the-fence connections. 

            "California's community choice aggregation effort became law  
            in 2002, and San Francisco's own CCA push began two years  
            later. San Francisco has long had a central city policy to  
            reduce emissions to 25 percent below 1990 levels by 2017, and  
            80 percent below those levels by 2050. Unfortunately, politics  
            has overshadowed good policy, thwarting attempted to allow San  
            Francisco to follow through on those goals through the use of  
            clean energy in the Bay Area. AB2159 will enable San Francisco  
            and other regions to establish clean energy programs, reduce  
            costs, and increase efficiencies for energy users. States like  
            Ohio and Illinois have seen success after removing barriers,  
            similar to the ones plaguing California's clean energy future,  
            AB2159 will help us break through those barriers. 

            "Community Choice Energy Programs are the future of  
            California. AB2159 will allow a clear help established path  
            for future areas to have more options for clean energy  
            programs. Lifting obstacles that impede efforts to establish  
            community choice energy programs is not simply to pursue more  
            clean power, but also to promote greater consumer choice."

           2)City and County of San Francisco and the San Francisco Public  
            Utilities Commission  . San Francisco is the only City and  
            County in California. Thus, Section 1 of AB 2159 is directed  
            at issues related to the formation of a CCA in San Francisco.  
            AB 2159 would allow the San Francisco Board of Supervisors to  
            enter into a JPA to form a CCA with other organizations.  
            According to the San Francisco City and County Charter, the  
            authority to enter into a JPA is currently vested with the San  
            Francisco Public Utilities Commission (SFPUC). The SFPUC  
            Commissioners are appointed by the Mayor and confirmed by the  
            Board of Supervisors.

            Section VIII, B, 120 of the City's Charter provides that the  
            SFPUC "has exclusive control of water, clean water and power  
            assets owned or maintained by the City and County of San  
            Francisco" and Section VIII, B, 121 provides that "The [San  
            Francisco] Public Utilities Commission may enter into Joint  
            Powers Agreements with other public entities in furtherance of  
            the responsibilities of the Commission."

            In 2010, PG&E sponsored a failed ballot initiative that would  
            have made the formation of CCAs more difficult.








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            In August 2013, the SFPUC Commissioners voted (3-2) to not set  
            rates for a proposed CCA. The decision to not set rates  
            effectively delayed attempts to move toward San Francisco's  
            participation in a CCA.

            According to the San Francisco Controller's estimate in August  
            2013 of the proposed electricity supply contract for its CCA,  
            "a price premium of 77% over PG&E's (PG&E is the local  
            electrical corporation) electricity generation rates would be  
            required to break even in Phase 1, or approximately $18 per  
            month or a 23% increase to a typical combined gas and  
            electricity bill for a customer in San Francisco."

            Section 1 of AB 2159 would override the City and County of San  
            Francisco's Charter and override the SFPUC's exclusive control  
            of water, clean water, and power assets under its control.

           3)Over the fence transactions  . Section 2 of AB 2159 would allow  
            sale of electricity among two or more corporations to be  
            excluded from the definition of an electrical corporation. The  
            intent of this provision "is to remove the disincentive  
            stopping buildings from installing solar panels. For example,  
            condominiums can't make use of solar resources because they  
            cannot support multiple units from one solar system. This is a  
            significant disincentive for condominiums to install solar  
            panels. The ability to do a combined solar PV and solar  
            thermal will maximize the use of the suns energy to help meet  
            AB 32 greenhouse gas goals."

            Generally, when generators sell to more than two customers,  
            they fall within the definition of regulated utility (defined  
            as either a public utility or an electrical corporation) and  
            would be subject to the same requirements of other regulated  
            utilities with respect to safety, reliability, affordability,  
            and collection of nonbypassable charges. Several exclusions  
            from the definitions of a public utility and an electrical  
            corporation exist in current law for direct access providers,  
            certain cogeneration transactions, independent solar energy  
            producers, and community choice aggregators.

            Over the fence transactions are generally direct access  
            arrangements between a generator and an electricity user with  
            a contractual arrangement with the generator. The electricity  
            is transferred between the generator and the user via the  








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            transmission and distribution system (the "grid") operated by  
            an electrical corporation. The transfer is generally known as  
            "wheeling" and most generators are required to pay for the use  
            of the electrical corporation's grid.

            If these fees are not remitted by the generator to the  
            electrical corporation the cost of maintaining and operating  
            the grid will be collected from all other ratepayers. This  
            amounts to a cost shift. The extent of the cost shift is  
            unknown as it would depend upon how many customers take  
            electricity directly from generators.

            In order to control the cost impacts on ratepayers the  
            Legislature has established limits on direct access  
            transactions. AB 2159 offers no similar limitations.

            Similarly, AB 2159 does not provide any provisions to ensure  
            that the rates charged in these transactions are fair and  
            reasonable or that the generator meets safety and reliability  
            standards.

            Further, it is unclear whether the generator is obliged to  
            provide all or part of the electricity needs of the customers  
            it sells to. Thus the language in AB 2159 is unclear whether  
            the local electrical corporation would be required to purchase  
            standby power to provide electricity in the event that the  
            generator is unable to meet the needs of their customers.  
            Further, it is unclear whether the generator or the customer  
            would be required to pay standby charges to the electrical  
            corporation.

            Additionally, this provision may create a loophole which  
            allows CCA's to avoid the current requirement for CCAs to pay  
            for electricity transmission services by creating a network  
            within a CCA of over the fence transactions.

            Finally, the Legislature has approved a number of  
            ratepayer-funded programs to assist low income customers and  
            to advance the use of self-generation technologies such as  
            solar and energy storage. It is unclear whether these  
            arrangements would require the customer or the generator would  
            be required to contribute to these programs.

            Allowing private transactions between any number of adjoining  
            properties allows transfer of electricity using the electric  








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            grid  (also called "wheeling") without paying for that use,  
            creates a new form of direct access between sophisticated  
            energy sellers and potentially less informed electricity  
            customers; creates potential safety issues with regard to  
            preventing over-generation on a distribution circuit; and  
            could create a  hazard to workers who may or may not be aware  
            of the presence of an local generation facility that is  
            providing electricity to several locations.

           4)Customer energy data.  Section 3 of AB 2159 would require an  
            electrical corporation to provide customer data to a community  
            choice aggregator subject to orders of the Public Utilities  
            Commission or as agreed upon between the electrical  
            corporation and the CCA to protect unauthorized access,  
            destruction, use, modification, or disclosure.

            The PUC began investigating access to customer energy data  
            under a current proceeding beginning in August 2012. Through a  
            public process the PUC developed a proposed decision on how  
            customer energy data would be made available in a manner that  
            protects customer privacy. The decision was scheduled for PUC  
            to adopt on April 10, 2014 but was pulled by staff. The  
            decision is likely to be heard at the next PUC hearing on May  
            1, 2014. The PUC's decision will create a "one stop process  
            for obtaining customer data." Within the decision the PUC  
            provides that local governments will be able to receive  
            granular (hourly or quarter-hourly) aggregated and anonymous  
            data on an yearly, quarterly, and monthly level and allows for  
            requests for other energy usage data needed  due to specific  
            state or federal statutes which require this data. If even  
            further information is needed by a local government it can  
            seek consent from the individual customer.

            It is unclear why this section of AB 2159 is necessary in  
            light of the decision pending at the PUC which will make  
            energy usage data accessible, in a manner that maintains  
            customer privacy, to communities who seek data on energy  
            usage.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file









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           Opposition 
           
          San Diego Gas and Electric (SDG&E)
           
          Analysis Prepared by  :    Susan Kateley / U. & C. / (916)  
          319-2083