BILL NUMBER: SB 286	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 29, 2015
	AMENDED IN SENATE  APRIL 27, 2015
	AMENDED IN SENATE  APRIL 14, 2015

INTRODUCED BY   Senator Hertzberg

                        FEBRUARY 19, 2015

   An act to amend Section 365.1 of, and to add Section 395.5 to, the
Public Utilities Code, relating to electricity.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 286, as amended, Hertzberg. Electricity: direct transactions.
   The Public Utilities Act requires the Public Utilities Commission,
pursuant to electrical restructuring, to authorize and facilitate
direct transactions between electricity suppliers and retail end-use
customers. Existing law, enacted during the energy crisis of 2000-01,
authorized the Department of Water Resources, until January 1, 2003,
to enter into contracts for the purchase of electricity, and to sell
electricity to retail end-use customers at not more than the
department's acquisition costs and to recover those costs through the
issuance of bonds to be repaid by ratepayers. That law suspended the
right of retail end-use customers, other than community choice
aggregators and a qualifying direct transaction customer, as defined,
to acquire service through a direct transaction until the Department
of Water Resources no longer supplies electricity under that law.
Existing law continues the suspension of direct transactions except
as expressly authorized, until the Legislature, by statute, repeals
the suspension or otherwise authorizes direct transactions. Existing
law requires the commission to authorize direct transactions for
nonresidential end-use customers subject to a reopening schedule that
will phase in over a period of not less than 3 years and not more
than 5 years, and is subject to an annual maximum allowable total
kilowatthour limit established, as specified, for each electrical
corporation.
   The California Renewables Portfolio Standard Program requires a
retail seller, as defined, and local publicly owned electric
utilities to purchase specified minimum quantities of electricity
products from eligible renewable energy resources, as defined, for
specified compliance periods. The program, consistent with the goals
of procuring the least-cost and best-fit eligible renewable energy
resources that meet project viability principles, requires that all
retail sellers procure a balanced portfolio of electricity products
from eligible renewable energy resources,  as specified.
  meeting specified portfolio content categories. 
   This bill would require the commission to adopt and implement a
schedule that implements a 2nd phase-in period for expanding direct
transactions for individual retail nonresidential end-use customers
over a period of not more than 3 years, raising the allowable limit
of kilowatthours that can be supplied by other providers in each
electrical corporation's distribution service territory to 8,000
gigawatt hours above the amount determined by the commission for the
first phase-in period. The bill would require the commission to
ensure that 51% of the new direct transactions are for electricity
products from eligible renewable energy resources  meeting the
portfolio content categories  . The bill would require that an
electrical corporation continue to provide direct access customers
with support functions, as specified, through its own employees,
except that construction of distribution system equipment and line
clearance tree trimming may be performed under contract with the
electrical corporation. The bill would prohibit an electric service
provider from offering consolidated billing beginning January 1,
2016.
   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 expanding the operation of a
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) As the state's electrical system evolves to include more
electricity generated by eligible renewable energy resources and
distributed generation, electrical corporations must continue to
facilitate safe and reliable transactions for electricity. Whether it
comes from efficient natural gas powerplants, large wind or solar
facilities, or customer-owned generation, including rooftop
photovoltaics, fuel cells, or combined heat and power systems, the
role of electrical corporations will be to ensure that electricity
moves from suppliers to customers. In effect, the electrical
corporations will become transmission and distribution companies,
connecting customers with the electrical mix they want when and where
they need it.
   (b) California already has a few examples for this business model,
including community choice aggregation and direct access. Direct
access allows a customer to receive electricity through a direct
transaction with an electric service provider, rather than from the
electrical corporation. The electricity is delivered over the
electrical corporation's transmission and distribution grid and the
direct access customer pays the utility for providing transmission
and distribution service.
   (c) Direct access was suspended in California in 2001, despite not
being a contributing component to the market manipulation,
blackouts, and price spikes that led to the energy crisis of 2000-01.
In 2010, the right of individual retail nonresidential end-use
customers to acquire electric service through a direct transaction
was reopened, but subject to limitations on the amount of electricity
that could be delivered through those transactions.
   (d) Direct access customers currently pay charges for electrical
grid maintenance and pay nonbypassable charges on the distribution of
electricity to support public purpose programs, including the
California Alternate Rates for Energy program, which supports
affordable electric service for low-income customers, and energy
efficiency programs. Other providers of electric service, including
electric service providers and community choice aggregators, are
required to follow the same laws, rules, and regulations as
electrical corporations with respect to resource adequacy (Section
380 of the Public Utilities Code), procurement of electricity
pursuant to the California Renewables Portfolio Standard Program
(Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1
of Division 1 of the Public Utilities Code), and for reducing
emissions of greenhouse gases pursuant to the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code).
   (e) The Public Utilities Commission is required to ensure local
area reliability needs for the benefit of both bundled and unbundled
electric service customers. If the commission determines that new
resources are needed for reliability, the costs are to be shared
equitably, on a fully nonbypassable basis, amongst all customers,
whether the customer receives their electricity from the electrical
corporation, a community choice aggregator, or an electric service
provider. The cost allocation mechanism ensures that there is no cost
shift to bundled customers of the electrical corporation.
   (f) A growing number of businesses are recognizing the importance
of managing their energy supplies and are seeking more control over
their energy management decisions. Many of these businesses also want
options to contract for electricity, with up to 100 percent of that
electricity coming from eligible renewable energy resources. However,
because of the statutory limitations placed upon direct
transactions, most businesses lack the means and necessary tools to
make cost-effective energy decisions, which makes California less
business friendly than other states with more direct access options.
   (g) Given high demand for direct transactions, it is in the
interest of the state to expand the right to direct access
opportunities, especially to provide options for acquiring
electricity from renewable sources of generation.
  SEC. 2.  Section 365.1 of the Public Utilities Code is amended to
read:
   365.1.  (a) Except as expressly authorized by this section, and
subject to the limitations in subdivisions (b) and (c), the right of
retail end-use customers pursuant to this chapter to acquire service
from other providers is suspended until the Legislature, by statute,
lifts the suspension or otherwise authorizes direct transactions. For
purposes of this section, "other provider" means any person,
corporation, or other entity that is authorized to provide electric
service within the service territory of an electrical corporation
pursuant to this chapter, and includes an aggregator, broker, or
marketer, as defined in Section 331, and an electric service
provider, as defined in Section 218.3. "Other provider" does not
include a community choice aggregator, as defined in Section 331.1,
and the limitations in this section do not apply to the sale of
electricity by "other providers" to a community choice aggregator for
resale to community choice aggregation electricity consumers
pursuant to Section 366.2.
   (b) (1) During the first phase-in period for expanding access to
direct transactions, the commission shall allow individual retail
nonresidential end-use customers to acquire electric service from
other providers in each electrical corporation's distribution service
territory, up to a maximum allowable total kilowatthours annual
limit. During this first phase-in period for expanding access to
direct transactions, the maximum allowable annual limit shall be
established by the commission for each electrical corporation at the
maximum total kilowatthours supplied by all other providers to
distribution customers of that electrical corporation during any
sequential 12-month period between April 1, 1998, and the effective
date of this section. Within six months of the effective date of this
section, or by July 1, 2010, whichever is sooner, the commission
shall adopt and implement a reopening schedule that commences
immediately and will phase in the allowable amount of increased
kilowatthours over a period of not less than three years, and not
more than five years, raising the allowable limit of kilowatthours
supplied by other providers in each electrical corporation's
distribution service territory from the number of kilowatthours
provided by other providers as of the effective date of this section,
to the maximum allowable annual limit for that electrical
corporation's distribution service territory. The commission shall
review and, if appropriate, modify its currently effective rules
governing direct transactions, but that review shall not delay the
start of the phase-in schedule.
   (2) The commission shall adopt and implement a second direct
transactions reopening schedule that commences January 1, 2016, and
phases in new direct transactions for individual retail
nonresidential end-use customers over a period of not more than three
years, raising the allowable limit of kilowatthours that can be
supplied by other providers in each electrical corporation's
distribution service territory to 8,000 gigawatt hours above the
amount determined by the commission for the first phase-in period.
Not less than 51 percent of the new direct transactions shall be for
electricity products from eligible renewable energy 
resources. For purposes of this section, "eligible renewable energy
resource" has the same meaning as in the California Renewables
Portfolio Standard Program (Article 16 (commencing with Section
399.11)).   resources meeting the requirements of
subdivisions (b) and (c) of Section 399.16. 
   (c) Once the commission has authorized additional direct
transactions pursuant to subdivision (b), it shall do both of the
following:
   (1) Ensure that other providers are subject to the same
requirements that are applicable to the state's three largest
electrical corporations under any programs or rules adopted by the
commission to implement the resource adequacy provisions of Section
380, the renewables portfolio standard provisions of Article 16
(commencing with Section 399.11), and the requirements for the
electricity sector adopted by the State Air Resources Board pursuant
to the California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code). This
requirement applies notwithstanding any prior decision of the
commission to the contrary.
   (2) (A) Ensure that, in the event that the commission authorizes,
in the situation of a contract with a third party, or orders, in the
situation of utility-owned generation, an electrical corporation to
obtain generation resources that the commission determines are needed
to meet system or local area reliability needs for the benefit of
all customers in the electrical corporation's distribution service
territory, the net capacity costs of those generation resources are
allocated on a fully nonbypassable basis consistent with departing
load provisions as determined by the commission, to all of the
following:
   (i) Bundled service customers of the electrical corporation.
   (ii) Customers that purchase electricity through a direct
transaction with other providers.
   (iii) Customers of community choice aggregators.
   (B) If the commission authorizes or orders an electrical
corporation to obtain generation resources pursuant to subparagraph
(A), the commission shall ensure that those resources meet a system
or local reliability need in a manner that benefits all customers of
the electrical corporation. The commission shall allocate the costs
of those generation resources to ratepayers in a manner that is fair
and equitable to all customers, whether they receive electric service
from the electrical corporation, a community choice aggregator, or
an electric service provider.
   (C) The resource adequacy benefits of generation resources
acquired by an electrical corporation pursuant to subparagraph (A)
shall be allocated to all customers who pay their net capacity costs.
Net capacity costs shall be determined by subtracting the energy and
ancillary services value of the resource from the total costs paid
by the electrical corporation pursuant to a contract with a third
party or the annual revenue requirement for the resource if the
electrical corporation directly owns the resource. An energy auction
shall not be required as a condition for applying this allocation,
but may be allowed as a means to establish the energy and ancillary
services value of the resource for purposes of determining the net
costs of capacity to be recovered from customers pursuant to this
paragraph, and the allocation of the net capacity costs of contracts
with third parties shall be allowed for the terms of those contracts.

   (D) It is the intent of the Legislature, in enacting this
paragraph, to provide additional guidance to the commission with
respect to the implementation of subdivision (g) of Section 380, as
well as to ensure that the customers to whom the net costs and
benefits of capacity are allocated are not required to pay for the
cost of electricity they do not consume.
   (d) (1) If the commission approves a centralized resource adequacy
mechanism pursuant to subdivisions (h) and (i) of Section 380, upon
the implementation of the centralized resource adequacy mechanism the
requirements of paragraph (2) of subdivision (c) shall be suspended.
If the commission later orders that electrical corporations cease
procuring capacity through a centralized resource adequacy mechanism,
the requirements of paragraph (2) of subdivision (c) shall again
apply.
   (2) If the use of a centralized resource adequacy mechanism is
authorized by the commission and has been implemented as set forth in
paragraph (1), the net capacity costs of generation resources that
the commission determines are required to meet urgent system or
urgent local grid reliability needs, and that the commission
authorizes to be procured outside of the Section 380 or 454.5
processes, shall be recovered according to the provisions of
paragraph (2) of subdivision (c).
   (3) Nothing in this subdivision supplants the resource adequacy
requirements of Section 380 or the resource procurement procedures
established in Section 454.5.
   (e) The commission may report to the Legislature on the efficacy
of authorizing individual retail end-use residential customers to
enter into direct transactions, including appropriate consumer
protections.
   (f) An electrical corporation shall continue to provide direct
access customers with support functions, including, but not limited
to, billing, customer service, call centers, support services, and
line clearance tree trimming, through its own employees, except that
construction of distribution system equipment and line clearance tree
trimming may be performed pursuant to contracts between the
electrical corporation and another entity.
  SEC. 3.  Section 395.5 is added to the Public Utilities Code, to
read:
   395.5.  Beginning January 1, 2016, no electric service provider
shall offer consolidated billing.
  SEC. 4.  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.