BILL NUMBER: AB 674 AMENDED
BILL TEXT
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 commission
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 commission
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 commission, Public
Utilities Commiss ion, 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 commission,
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 commission, Public Utilities Commission,
by July 1, 2016, to do both of the following for those
electrical corporation customers that have installed 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 commission 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
reservation 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 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, 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.
(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 emission of carbon dioxide (CO2) at a rate per
megawatthour, accounting for waste heat recovery, where applicable,
and savings on transmission and distribution losses, that is less
than the emissions of CO2 from the marginal generating unit
dispatched to meet the demand on the electrical grid that is avoided
by the electricity generated by the clean distributed energy
resource, as determined by the Energy Commission as of January 30,
2016.
(B) Has an oxide of nitrogen (NOx) emissions rate, including
credit for waste heat recovery, when applicable, that is less than or
equal to 0.07 pounds per megawatthour, or a lower NOx emissions rate
that the State Air Resources Board determines reflects the best
performance achieved in practice by existing electrical generation
technologies pursuant to Section 41514.9 of the Health and Safety
Code.
(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.
(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) 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.
(2) (A) Calculate a reservation 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 reservation 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 reservation
reserve capacity does not reflect the customer's
actual standby demand, averaged over the previous 12 months, the
electrical corporation shall modify the reservation
reserve capacity once every 12 months to reflect
the customer's actual average annual reservation
reserve capacity based on the same criteria used to
establish the initial reservation reserve
capacity. Calculation of actual average annual
reservation 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) (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.
(I) The extent to which the incentives provided pursuant to this
section contribute to achieving the state's distributed generation
and combined heat and power goals.
(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.