BILL NUMBER: AB 674 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 5, 2015
AMENDED IN ASSEMBLY APRIL 16, 2015
AMENDED IN ASSEMBLY APRIL 6, 2015
AMENDED IN ASSEMBLY MARCH 25, 2015
INTRODUCED BY Assembly Member Mullin
FEBRUARY 25, 2015
An act to add Section 354 to the Public Utilities Code, relating
to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 674, as amended, Mullin. Electricity: distributed generation.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
as defined. Existing law authorizes the Public Utilities Commission
to fix the rates and charges for every public utility, and requires
that those rates and charges be just and reasonable. Existing law
requires the Public Utilities Commission to require each electrical
corporation under the operational control of the Independent System
Operator as of January 1, 2001, to modify tariffs so that all
customers that install new distributed energy resources, as defined,
in accordance with specified criteria are served under rates, rules,
and requirements identical to those of a customer within the same
rate schedule that does not use distributed energy resources, and to
withdraw any provisions in otherwise applicable tariffs that activate
other tariffs, rates, or rules if a customer uses distributed energy
resources. Existing law provides, notwithstanding these
requirements, that a customer that installs new distributed energy
resources not be exempted from (1) reasonable interconnection
charges, (2) charges imposed pursuant to the Reliable Electric
Service Investment Act, and (3) charges imposed to repay the
Department of Water Resources for electricity procurement expenses
incurred in response to the electricity crisis of 2000-01. Existing
law requires the Public Utilities Commission, in establishing the
rates applicable to customers that install new distributed energy
resources, to create a firewall that segregates distribution cost
recovery so that any net costs, taking into account the actual costs
and benefits of distributed energy resources, proportional to each
customer class, as determined by the Public Utilities Commission,
resulting from the tariff modifications granted to members of each
customer class may be recovered only from that class.
This bill would, to the extent authorized by federal law, require
the Public Utilities Commission, by July 1, 2016, to do both of the
following for those electrical corporation customers that
have installed install clean distributed energy
resources, as defined, after January 1, 2016: (1) require each
electrical corporation to collect all applicable nonbypassable
charges fixed, implemented, administered, or imposed by the Public
Utilities Commission based only on the actual metered consumption of
electricity delivered to the customer through the electrical
corporation's transmission or distribution system, which charges are
to be at the same rate per kilowatthour as paid by other customers
that do not employ a clean distributed energy resource, and (2)
calculate a reserve capacity for standby service, if applicable,
based on the capacity needed by an electrical corporation to serve a
customer's electrical demand during an outage of the clean
distributed energy resource providing electric service for that
customer. The bill would require each electrical corporation to
identify the total amount of nonbypassable charges that would be
collected each year from customers served by clean distributed energy
resources installed after January 1, 2016, based on gross
consumption without any adjustment for the generation of the clean
distributed energy resources. The bill would require that this total
amount be fully recovered from customers in the same customer class
as those customers served by clean distributed energy resources
installed after January 1, 2016, and would prohibit any amount from
being shifted to any other customer class. The bill would require a
customer served by a clean distributed energy resource,
upon r equest, to provide relevant data to the Public
Utilities Commission and the State Air Resources Board and the
facility be subject to onsite inspection, to verify equipment
operation and performance, including capacity, thermal output, and
usage to verify criteria air pollutant and greenhouse gases emissions
performance. The bill would require the State Energy Resources
Conservation and Development Commission to report to the Legislature
and the relevant policy committees of the Legislature on the impact
of its provisions on specified issues by July 1, 2021.
Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Clean onsite generation of electricity yields multiple
benefits, including increased electrical reliability and efficiency,
reduced emissions of greenhouse gases and oxides of nitrogen (NOx),
and electrical grid resiliency.
(b) In 2011, Governor Jerry Brown released a Clean Energy Jobs
Plan that called for 12,000 megawatts of localized electrical
generation, also known as distributed generation, to maximize energy
efficiency and minimize environmental impacts, while increasing
reliability and security.
(c) Increased deployment of clean onsite electrical generation
reduces the need for generation that emits higher levels of
greenhouse gases that contribute to climate change and higher levels
of NOx that contribute to smog formation.
(d) Several types of clean onsite electrical generation
technologies currently exist and others are being developed, with
many being developed and manufactured in California.
(e) Residential, commercial, Commercial
and industrial customers are willing to invest their own
capital to install clean onsite generation technologies.
(f) Nonbypassable charges create an economic barrier to the
installation of clean onsite electrical generation and, as a
result, prevent cost savings for all ratepayers and environmental
benefits for all Californians. generation.
(g) Among states with similarly high energy prices and
environmental goals, California is the only state that allows
electrical corporations to apply nonbypassable charges to electricity
produced and consumed onsite.
(h) Ratepayers would see a net cost savings from increased
deployment of onsite electricity generation at customer sites that
pay nonbypassable charges only on their electricity purchases from
the grid. This ratepayer savings arises because onsite electricity
generation reduces demand on the electrical grid, which reduces
market electricity prices, and avoids transmission and distribution
costs and energy losses.
(i) Other cost-saving benefits to all ratepayers from clean onsite
electrical generation include reductions in future generating
capacity requirements, reductions in electrical grid congestion
prices, reductions in emissions of greenhouse gases and criteria air
pollutants, and increases in electrical grid resiliency and security.
SEC. 2. Section 354 is added to the Public Utilities Code, to
read:
354. (a) As used in this section, "clean distributed energy
resource" means a facility that is located on the customer's premises
and generates electricity, or electricity and useful heat, where the
electricity generated is used for a purpose described in paragraph
(1) or (2) of subdivision (b) of Section 218, and that meets either
of the following requirements:
(1) It meets all of the following criteria:
(A) Produces emissions of greenhouse gases that are less than the
levels established by the commission pursuant to paragraph
(2) of subdivision (b) of Section 379.6. average
emissions rate for delivered electricity reported by the electrical
corporation for the service territory in which the project is located
for the calendar year prior to the year the facility is installed.
(B) Produces emissions of nitrogen oxides and sulfur oxides that
are less than the levels permitted for an advanced electrical
distributed generation technology pursuant to Section 379.8.
(C) Has a nameplate rated generation capacity of 20 megawatts or
less.
(D) Is sized to meet the electrical demand of, or use the
available waste heat of, the customer that will be served by the
generating facility.
(2) It is an "eligible renewable energy resource" pursuant to the
California Renewables Portfolio Standard Program (Article 16
(commencing with Section 399.11)), has a nameplate rated generation
capacity of 20 megawatts or less, is sized to meet the electrical
demand of the customer that will be served by the generating
facility, and will not otherwise be addressed in the commission's
implementation of Section 769 or 2827.1.
(b) To the extent authorized by federal law, by July 1, 2016, the
commission shall require each electrical corporation to do the
following for customers served by clean distributed energy resources
installed after January 1, 2016:
(1) (A) Collect all applicable nonbypassable
charges fixed, implemented, administered, or imposed by the
commission based only on the actual metered consumption of
electricity delivered to the customer through the electrical
corporation's transmission or distribution system. All charges shall
be at the same rate per kilowatthour as paid by other customers that
do not employ a clean distributed energy resource under the
electrical corporation's applicable rate schedule.
(B) Identify the total amount of nonbypassable charges that would
be collected each year from customers served by clean distributed
energy resources installed after January 1, 2016, based on gross
consumption without any adjustment for the generation of the clean
distributed energy resources. This total amount shall be fully
recovered from customers in the same customer class as those
customers served by clean distributed energy resources installed
after January 1, 2016, and no amount may be shifted to any other
customer class.
(2) (A) Calculate a reserve capacity for standby service, if
applicable, based on the capacity needed by an electrical corporation
to serve a customer's electrical demand during an outage of the
clean distributed energy resource providing electric service for that
customer.
(B) Initial reserve capacity shall be established by the customer
for a minimum of 12 months based on the clean distributed energy
resource generation technology's historical operation, the number,
size, and outage diversity of the clean distributed energy resource,
and the annual average reduction of customer load that could occur
during an outage.
(C) If after the initial 12-month period, the electrical
corporation reasonably determines that the reserve capacity does not
reflect the customer's actual standby demand, averaged over the
previous 12 months, the electrical corporation shall modify the
reserve capacity once every 12 months to reflect the customer's
actual average annual reserve capacity based on the same criteria
used to establish the initial reserve capacity. Calculation of actual
average annual reserve capacity shall exclude the customer's
electrical demand served by the electrical corporation within 24
hours following an outage of the clean distributed energy resource
resulting from any event on the electrical corporation's transmission
or distribution grid that is outside of the customer's control that
requires the customer to reduce onsite generation.
(c) A customer served by a clean distributed energy resource
shall, upon request, provide relevant data to the commission and the
State Air Resources Board and the facility is subject to onsite
inspection to verify equipment operation and performance, including
capacity, thermal output, and usage to verify criteria air pollutant
and greenhouse gases emissions performance. Requests for relevant
data shall occur no more than once per year.
(c)
(d) (1) By July 1, 2021, the Energy Commission, in
consultation with the commission, shall report on the impacts of this
section to the Legislature and the relevant policy committees of the
Legislature in regard to all of the following:
(A) Avoided transmission and distribution costs.
(B) Avoided energy losses.
(C) Wholesale electricity market prices.
(D) Electricity costs to ratepayers.
(E) Air quality.
(F) Emissions of greenhouse gases.
(G) Job creation.
(H) Energy reliability.
(2) The report to be submitted to the Legislature pursuant to this
subdivision shall be submitted in compliance with Section 9795 of
the Government Code.
(3) The requirement for submitting a report pursuant to this
subdivision is inoperative on July 1, 2025, pursuant to Section
10231.5 of the Government Code.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.