Amended in Senate April 10, 2014

Senate Bill No. 1078

Introduced by Senator Jackson

February 19, 2014

An act to amend Section 345.5 of begin insert , and to add Section 636 to, end insert the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

SB 1078, as amended, Jackson. Electricity: begin delete Independent System Operator. end delete begin insert Emissions of greenhouse gases. end insert

begin insert

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. The Public Utilities Act requires the Public Utilities Commission to review and accept, modify, or reject a procurement plan for each electrical corporation in accordance with specified elements, incentive mechanisms, and objectives. Existing law requires that in any long-term plan adopted by an electrical corporation, or in a procurement plan implemented by a local publicly owned electric utility, that the utility adopt a strategy applicable to both newly constructed or repowered generation owned and procured by the utility to achieve efficiency in the use of fossil fuels and to address carbon emissions.

end insert begin insert

The Warren-Alquist State Energy Resources Conservation and Development Act establishes the State Energy Resources Conservation and Development Commission. The act requires the State Energy Resources Conservation and Development Commission, beginning November 1, 2003, and by November 1 of every odd year thereafter, to adopt an integrated energy policy report which includes an overview of major energy trends and issues facing the state, an assessment and forecast of system reliability, and the need for resource additions, efficiency, and conservation.

end insert begin insert

This bill would require the Public Utilities Commission and the State Energy Resources Conservation and Development Commission, by July 1, 2015, to calculate and identify an anticipated target for reducing emissions of greenhouse gases for the electrical industry to be achieved statewide by 2030, in order to reach anticipated statewide targets to be established for reducing emissions of greenhouse gases from the electrical industry by the year 2050. The bill would require that the targets be established consistent with 2 specified executive orders. The bill would require the State Energy Resources Conservation and Development Commission and the Public Utilities Commission to develop joint long-term electrical demand and generational resource portfolio forecasts to develop scenarios to achieve the anticipated targets.

end insert

The Public Utilities Act provides for the establishment of an Independent System Operator as a nonprofit, public benefit corporation. Existing law requires the Independent System Operator to manage the transmission grid and related energy markets in a manner that is consistent with (1) making the most 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, and (4) maximizing the availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.

This bill would begin delete revise the 4th requirement described above to require that in managing the transmission grid and related energy markets, the Independent System Operator do so consistent with maximizing utilization of existing electrical resources, including all cost-effective demand-side and renewable energy resources, that are connected to the distribution or transmission grid, as are necessary for reliable operation of the grid and sufficient to meet the needs of the state’s electricity consumers. end delete begin insert require the Independent System Operator to consider the joint long-term electrical demand and generational resource portfolio forecasts developed by the State Energy Resources Conservation and Development Commission and the Public Utilities Commission when undertaking long-term transmission planning and to advise the State Energy Resources Conservation and Development Commission and the Public Utilities Commission of any long-term resource actions that it recommends that would facilitate its management of the electrical grid in order to achieve compliance with the state’s long-term policy goals of reducing emissions of greenhouse gases. The bill would require end insert begin insert the Independent System Operator end insert begin insert to undertake its transmission planning consistent with the requirements of the bill. The bill would require the Public Utilities Commission to consider any recommendations made by the Independent System Operator when acting on a long-term procurement plan submitted by an electrical corporation and would require the State Energy Resources Conservation and Development Commission to consider any recommendations made by the Independent System Operator when adopting an integrated energy policy report. end insert

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 345.5 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

345.5.  

(a) The Independent System Operator, as a nonprofit,
public benefit corporation, shall conduct its operations consistent
with applicable state and federal laws and consistent with the
interests of the people of the state.

(b) To ensure the reliability of electric service and the health
and safety of the public, the Independent System Operator shall
manage the transmission grid and related energy markets in a
manner that is consistent with all of the following:

(1) Making the most efficient use of available energy resources.
For purposes of this section, “available energy resources” include
energy, capacity, ancillary services, and demand bid into markets
administered by the Independent System Operator. “Available
energy resources” do not include a schedule submitted to the
Independent System Operator by an electrical corporation or a
local publicly owned electric utility to meet its own customer load.

(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 begin insert , including undertaking its transmission
planning consistent with the requirements of Section 636 end insert .

(4) Maximizing availability of existing electric generation
resources necessary to meet the needs of the state’s electricity
consumers.

(5) Conducting internal operations in a manner that minimizes
cost impact on ratepayers to the extent practicable and consistent
with the provisions of this chapter.

(6) Communicating with all balancing area authorities in
California in a manner that supports electrical reliability.

(c) The Independent System Operator shall do all of the
following:

(1) Consult and coordinate with appropriate state and local
agencies to ensure that the Independent System Operator operates
in furtherance of state law regarding consumer and environmental
protection.

(2) Ensure that the purposes and functions of the Independent
System Operator are consistent with the purposes and functions
of nonprofit, public benefit corporations in the state, including
duties of care and conflict-of-interest standards for officers and
directors of a corporation.

(3) Maintain open meeting standards and meeting notice
requirements consistent with the general policies of the
Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of
the Government Code) and affording the public the greatest
possible access, consistent with other duties of the corporation.
The Independent System Operator’s Open Meeting Policy, as
adopted on April 23, 1998, and in effect as of May 1, 2002, meets
the requirements of this paragraph. The Independent System
Operator shall maintain a policy that is no less consistent with the
Bagley-Keene Open Meeting Act than its policy in effect as of
May 1, 2002.

(4) Provide public access to corporate records consistent with
the general policies of the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of
the Government Code) and affording the public the greatest
possible access, consistent with the other duties of the corporation.
The Independent System Operator’s Information Availability
Policy, as adopted on October 22, 1998, and in effect as of May
1, 2002, meets the requirements of this paragraph. The Independent
System Operator shall maintain a policy that is no less consistent
with the California Public Records Act than its policy in effect as
of May 1, 2002.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 636 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 636. end insert   

(a) The commission and Energy Commission shall, by
July 1, 2015, calculate and identify an anticipated target for
reducing emissions of greenhouse gases for the electrical industry
to be achieved statewide by 2030, in order to reach anticipated
statewide targets to be established for reducing emissions of
greenhouse gases from the electrical industry by the year 2050.
The anticipated targets shall be consistent with Governor’s
Executive Order S-03-05 (June 1, 2005), as modified by Governor’s
Executive Order B-18-12 (April 25, 2012). The statewide
anticipated emissions reduction targets for greenhouse gases for
the electrical industry shall be measured in tons of carbon dioxide
or carbon dioxide equivalent and percentage reductions from 2014
emissions.

(b) The commission and the Energy Commission shall develop
joint long-term electrical demand and generational resource
portfolio forecasts to develop scenarios to achieve the anticipated
targets identified pursuant to subdivision (b). The long-term
electrical demand forecasts shall consider the effects on electricity
demand resulting from cost-effective and reasonably achievable
energy efficiency and demand response measures, shall consider
reasonably foreseeable future demand for electric vehicles, and
shall consider other factors that may shift demand to the electrical
industry from other industry sectors in order to reduce overall
statewide emissions of greenhouse gases. The long-term
generational portfolio forecasts shall include generation by eligible
renewable energy resources procured by retail sellers and local
publicly owned electric utilities, anticipated distributed generation,
hydroelectric generation, anticipated resource flexibility from
energy storage, and generation from burning of fossil fuels,
including reasonably achievable technological improvements in
generation.

(c) The Independent System Operator shall consider the joint
long-term electrical demand and generational resource portfolio
forecasts developed by the commission and the Energy Commission
when undertaking long-term transmission planning. The
Independent System Operator, when undertaking long-term
transmission planning, shall assess the operational characteristics,
locations, and combinations of cost-effective and reasonably
achievable energy efficiency and demand response measures and
generational resources, as well as expansion of, and improvements
to, the transmission grid, that would be needed to achieve the
state’s long-term policy goals of reducing emissions of greenhouse
gases while managing the electrical grid consistent with the
requirements of Section 345.5. The Independent System Operator
shall advise the commission and the Energy Commission of any
long-term resource actions that it recommends that would facilitate
its management of the electrical grid in order to achieve
compliance with the state’s long-term policy goals of reducing
emissions of greenhouse gases.

(d) (1) The commission shall consider any recommendations
made by the Independent System Operator pursuant to subdivision
(c) when acting on a long-term procurement plan submitted by an
electrical corporation pursuant to Section 454.5.

(2) The Energy Commission shall consider any
recommendations made by the Independent System Operator
pursuant to subdivision (c) when adopting an integrated energy
policy report pursuant to Section 25302 of the Public Resources
Code.

end insert

begin delete

SECTION 1.  

Section 345.5 of the Public Utilities Code is
amended to read:

345.5.  

(a) The Independent System Operator, as a nonprofit,
public benefit corporation, shall conduct its operations consistent
with applicable state and federal laws and consistent with the
interests of the people of the state.

(b) To ensure the reliability of electric service and the health
and safety of the public, the Independent System Operator shall
manage the transmission grid and related energy markets in a
manner that is consistent with all of the following:

(1) Making the most efficient use of available energy resources.
For purposes of this section, “available energy resources” include
energy, capacity, ancillary services, and demand bid into markets
administered by the Independent System Operator. “Available
energy resources” do not include a schedule submitted to the
Independent System Operator by an electrical corporation or a
local publicly owned electric utility to meet its own customer load.

(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 utilization of existing electrical resources,
including all cost-effective demand-side and renewable energy
resources, that are connected to the distribution or transmission
grid, as are necessary for reliable operation of the grid and
sufficient to meet the needs of the state’s electricity consumers.

(5) Conducting internal operations in a manner that minimizes
cost impact on ratepayers to the extent practicable and consistent
with the provisions of this chapter.

(6) Communicating with all balancing area authorities in
California in a manner that supports electrical reliability.

(c) The Independent System Operator shall do all of the
following:

(1) Consult and coordinate with appropriate state and local
agencies to ensure that the Independent System Operator operates
in furtherance of state law regarding consumer and environmental
protection.

(2) Ensure that the purposes and functions of the Independent
System Operator are consistent with the purposes and functions
of nonprofit, public benefit corporations in the state, including
duties of care and conflict-of-interest standards for officers and
directors of a corporation.

(3) Maintain open meeting standards and meeting notice
requirements consistent with the general policies of the
Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of
the Government Code) and affording the public the greatest
possible access, consistent with other duties of the corporation.
The Independent System Operator’s Open Meeting Policy, as
adopted on April 23, 1998, and in effect as of May 1, 2002, meets
the requirements of this paragraph. The Independent System
Operator shall maintain a policy that is no less consistent with the
Bagley-Keene Open Meeting Act than its policy in effect as of
May 1, 2002.

(4) Provide public access to corporate records consistent with
the general policies of the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of
the Government Code) and affording the public the greatest
possible access, consistent with the other duties of the corporation.
The Independent System Operator’s Information Availability
Policy, as adopted on October 22, 1998, and in effect as of May
1, 2002, meets the requirements of this paragraph. The Independent
System Operator shall maintain a policy that is no less consistent
with the California Public Records Act than its policy in effect as
of May 1, 2002.

end delete