BILL ANALYSIS �
SB 1414
Page 1
Date of Hearing: August 13, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1414 (Wolk) - As Amended: August 6, 2014
Policy Committee: Utilities and
Commerce Vote: 14-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires utilities and regulators to include demand
response (DR) in resource adequacy plans and long-term
procurement planning as specified. Specifically, this bill:
1)Requires the California Public Utilities Commission (PUC), in
consultation with the Independent System Operator, to include
or maintain demand response products and tariffs as specified
when establishing resource adequacy requirements.
2)Requires each load-serving entity to maintain either
electrical demand reductions or physical generating capacity
adequate to meet its load requirements.
3)Requires the PUC to determine the most efficient and equitable
means to ensure the inclusion of reliable and cost effective
DR to achieve environmental and demand reduction goals and
grid reliability.
4)Requires the PUC to establish, in an existing or new
proceeding, a mechanism to value load modifying demand
response resources as specified.
5)Makes findings and declarations about the benefits of DR
programs.
FISCAL EFFECT
1)Increased one-time costs to the PUC of approximately $300,000
(Public Utilities Reimbursement Account.) for expanding
proceedings.
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2)Ongoing increased compliance costs to the PUC of approximately
$150,000 (Public Utilities Reimbursement Account)
COMMENTS
1)Purpose. According to the author, California currently lags
behind other parts of the nation in utilizing demand response.
This bill will help ensure that regulators and utilities
utilize cost-effective demand response programs to change
their demand for electricity during key times.
2)Background. DR refers to programs that seek to achieve
electric load reductions via actions taken by end-use electric
customers during a given time period, in response to a price
signal, or to address a situation where reliability or safety
of the electricity grid is at risk.
Various programs provide incentives or rate discounts, or
both, to customers who participate in DR programs. Examples of
DR programs include: PG&E Smart Rate, SDG&E Peak Time Rebate
Program, SCE Summer Discount Program, and Business
Interruptible Programs.
The goal is to achieve savings through reduced demand for
electricity which in turn reduces the need to build new
generation and infrastructure.
For the most part, DR programs have been limited to commercial
and industrial users. With the extensive deployment of
residential smart metering, the residential customer is likely
to become a larger focus of DR programs.
3)PUC Proceeding. The PUC has a proceeding underway to address
ways to enhance the use of DR in meeting energy needs. In a
recent PUC decision (D. 14-03-02, March 2014) the PUC
determined that DR can be characterized in one of two ways: DR
as load modifying or DR as a supply resource. The PUC is
seeking comments on which types of DR programs are to be
categorized as load modifying or supply resources (DR as a
supply resource would be treated as if it was a generation
facility). Ultimately, utilities will be authorized to develop
DR programs for the wholesale electricity market. In exchange,
the wholesale DR products could receive payments for resource
adequacy, capacity, or other attributes that might normally be
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paid only to traditional generators.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081