Bill Text: CA SB1414 | 2013-2014 | Regular Session | Chaptered
Bill Title: Electricity: demand response.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2014-09-26 - Chaptered by Secretary of State. Chapter 627, Statutes of 2014. [SB1414 Detail]
Download: California-2013-SB1414-Chaptered.html
BILL NUMBER: SB 1414 CHAPTERED
BILL TEXT
CHAPTER 627
FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2014
APPROVED BY GOVERNOR SEPTEMBER 26, 2014
PASSED THE SENATE AUGUST 26, 2014
PASSED THE ASSEMBLY AUGUST 25, 2014
AMENDED IN ASSEMBLY AUGUST 20, 2014
AMENDED IN ASSEMBLY AUGUST 6, 2014
AMENDED IN ASSEMBLY JULY 2, 2014
AMENDED IN ASSEMBLY JUNE 18, 2014
AMENDED IN SENATE MAY 5, 2014
AMENDED IN SENATE MARCH 28, 2014
INTRODUCED BY Senator Wolk
(Coauthors: Assembly Members Mullin and Williams)
FEBRUARY 21, 2014
An act to amend Section 380 of, and to add Section 380.5 to, the
Public Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
SB 1414, Wolk. Electricity: demand response.
(1) The Public Utilities Act requires the Public Utilities
Commission, in consultation with the Independent System Operator, to
establish resource adequacy requirements for all load-serving
entities, as defined, in accordance with specified objectives. The
definition of a "load-serving entity" excludes a local publicly owned
electric utility. The act requires each load-serving entity to
maintain physical generating capacity adequate to meet its load
requirements to provide reliable electric service. The act requires
the Public Utilities Commission to determine the most efficient and
equitable means for achieving prescribed objectives.
The Warren-Alquist State Energy Resources Conservation and
Development Act establishes the State Energy Resources Conservation
and Development Commission and requires it to undertake a continuing
assessment of trends in the consumption of electricity and other
forms of energy, to analyze the social, economic, and environmental
consequences of those trends and to collect from electric utilities,
gas utilities, and fuel producers and wholesalers, and other sources,
forecasts of future supplies and consumption of all forms of energy.
That act requires the State Energy Resources Conservation and
Development Commission, beginning November 1, 2003, and every 2 years
thereafter, to adopt an integrated energy policy report that
includes an overview of major energy trends and issues facing the
state.
This bill would include, as an objective for the resource adequacy
requirements referenced above, establishing new or maintaining
existing demand response products and tariffs that facilitate the
economic dispatch and use of demand response that can either meet or
reduce an electrical corporation's resource adequacy requirements, as
determined by the Public Utilities Commission. The bill would
additionally require each load-serving entity to maintain both
electrical demand response and physical generating capacity adequate
to meet its load requirements. The bill would require the Public
Utilities Commission to determine the most efficient and equitable
means to ensure that investments are made in new and existing demand
response resources that are cost effective and help to achieve
electrical grid reliability and the state's goals for reducing
emissions of greenhouse gases. The bill would require the Public
Utilities Commission to ensure appropriate valuation of both supply
and load modifying demand response resources and to establish a
mechanism to value load modifying demand response resources,
including, but not limited to, the ability of demand response
resources to help meet distribution needs, transmission system needs,
and to help reduce a load-serving entity's resource adequacy
obligation. The bill would require the Public Utilities Commission,
State Energy Resources Conservation and Development Commission, and
the Independent System Operator to ensure that changes in demand
caused by load modifying demand response are expeditiously and
comprehensively reflected in the integrated energy policy report
forecast, as well as planning proceedings and associated analyses,
and encourage reflection of these changes in demand in the operation
of the grid. The bill would require the Public Utilities Commission,
in establishing a demand response program, to take certain actions.
(2) Under existing law, a violation of the Public Utilities Act or
an order or direction of the Public Utilities Commission is a crime.
This bill would be part of the Public Utilities Act and an order
or other action of the Public Utilities Commission would be required
to implement the bill. Because a violation of this bill or an order
or other action of the Public Utilities Commission implementing those
provisions would be a crime, and because the bill would make certain
violations by a load-serving entity a crime, this bill would thereby
impose a state-mandated local program by creating new crimes and by
expanding the definition of existing crimes.
(3) 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the
following:
(1) Demand response programs and tariffs empower customers to save
money and reduce pollution by making electrical demand smart,
dynamic, and responsive.
(2) Demand response allows for a smarter electrical grid that
reduces demand for electricity during peak hours when the grid
operator would otherwise often be forced to rely on quite inefficient
fossil fuel peaking plants.
(3) Demand response can play a pivotal role in integrating clean
energy resources onto the electrical grid by shifting electricity
usage to times when there is abundant electricity generated by
renewable energy resources available and can help provide electrical
capacity in southern California following the closure of the San
Onofre Nuclear Generation Station and the phase out of natural gas
fired powerplants that employ once-through cooling.
(4) Reducing and shifting demand for electricity through demand
response can negate the need for more costly investments in
powerplants and transmission lines.
(5) Increasing the role of demand response will reduce emissions
of greenhouse gases and other pollutants from the electricity sector.
(6) Other regions of the United States have achieved substantial
reductions in peak demand through deployment of demand response.
(b) In enacting this act, it is the intent of the Legislature to
ensure that California and the Public Utilities Commission help meet
the state's greenhouse gas emissions reduction goals and achieve
electrical grid reliability by increasing the utilization of demand
response.
(c) It is further the intent of the Legislature, in enacting this
act, to ensure that the procurement, programmatic, tariff-based, and
other options that the Public Utilities Commission is pursuing or may
pursue in furtherance of demand response are in no way hindered or
superseded by the provisions in this act.
SEC. 2. Section 380 of the Public Utilities Code is amended to
read:
380. (a) The commission, in consultation with the Independent
System Operator, shall establish resource adequacy requirements for
all load-serving entities.
(b) In establishing resource adequacy requirements, the commission
shall achieve all of the following objectives:
(1) Facilitate development of new generating capacity and
retention of existing generating capacity that is economic and
needed.
(2) Establish new or maintain existing demand response products
and tariffs that facilitate the economic dispatch and use of demand
response that can either meet or reduce an electrical corporation's
resource adequacy requirements, as determined by the commission.
(3) Equitably allocate the cost of generating capacity and demand
response in a manner that prevents the shifting of costs between
customer classes.
(4) Minimize enforcement requirements and costs.
(5) Maximize the ability of community choice aggregators to
determine the generation resources used to serve their customers.
(c) Each load-serving entity shall maintain physical generating
capacity and electrical demand response adequate to meet its load
requirements, including, but not limited to, peak demand and planning
and operating reserves. The generating capacity or electrical demand
response shall be deliverable to locations and at times as may be
necessary to maintain electric service system reliability and local
area reliability.
(d) Each load-serving entity shall, at a minimum, meet the most
recent minimum planning reserve and reliability criteria approved by
the Board of Directors of the Western Systems Coordinating Council or
the Western Electricity Coordinating Council.
(e) The commission shall implement and enforce the resource
adequacy requirements established in accordance with this section in
a nondiscriminatory manner. Each load-serving entity shall be subject
to the same requirements for resource adequacy and the renewables
portfolio standard program that are applicable to electrical
corporations pursuant to this section, or otherwise required by law,
or by order or decision of the commission. The commission shall
exercise its enforcement powers to ensure compliance by all
load-serving entities.
(f) The commission shall require sufficient information,
including, but not limited to, anticipated load, actual load, and
measures undertaken by a load-serving entity to ensure resource
adequacy, to be reported to enable the commission to determine
compliance with the resource adequacy requirements established by the
commission.
(g) An electrical corporation's costs of meeting or reducing
resource adequacy requirements, including, but not limited to, the
costs associated with system reliability and local area reliability,
that are determined to be reasonable by the commission, or are
otherwise recoverable under a procurement plan approved by the
commission pursuant to Section 454.5, shall be fully recoverable from
those customers on whose behalf the costs are incurred, as
determined by the commission, at the time the commitment to incur the
cost is made, on a fully nonbypassable basis, as determined by the
commission. The commission shall exclude any amounts authorized to be
recovered pursuant to Section 366.2 when authorizing the amount of
costs to be recovered from customers of a community choice aggregator
or from customers that purchase electricity through a direct
transaction pursuant to this subdivision.
(h) The commission shall determine and authorize the most
efficient and equitable means for achieving all of the following:
(1) Meeting the objectives of this section.
(2) Ensuring that investment is made in new generating capacity.
(3) Ensuring that existing generating capacity that is economic is
retained.
(4) Ensuring that the cost of generating capacity and demand
response is allocated equitably.
(5) Ensuring that community choice aggregators can determine the
generation resources used to serve their customers.
(6) Ensuring that investments are made in new and existing demand
response resources that are cost effective and help to achieve
electrical grid reliability and the state's goals for reducing
emissions of greenhouse gases.
(i) In making the determination pursuant to subdivision (h), the
commission may consider a centralized resource adequacy mechanism
among other options.
(j) The commission shall ensure appropriate valuation of both
supply and load modifying demand response resources. The commission,
in an existing or new proceeding, shall establish a mechanism to
value load modifying demand response resources, including, but not
limited to, the ability of demand response resources to help meet
distribution needs and transmission system needs and to help reduce a
load-serving entity's resource adequacy obligation pursuant to this
section. In determining this value, the commission shall consider how
these resources further the state's electrical grid reliability and
the state's goals for reducing emissions of greenhouse gases. The
commission, Energy Commission, and Independent System Operator shall
jointly ensure that changes in demand caused by load modifying demand
response are expeditiously and comprehensively reflected in the
Energy Commission's Integrated Energy Policy Report forecast, as well
as in planning proceedings and associated analyses, and shall
encourage reflection of these changes in demand in the operation of
the grid.
(k) For purposes of this section, "load-serving entity" means an
electrical corporation, electric service provider, or community
choice aggregator. "Load-serving entity" does not include any of the
following:
(1) A local publicly owned electric utility.
(2) The State Water Resources Development System commonly known as
the State Water Project.
(3) Customer generation located on the customer's site or
providing electric service through arrangements authorized by Section
218, if the customer generation, or the load it serves, meets one of
the following criteria:
(A) It takes standby service from the electrical corporation on a
commission-approved rate schedule that provides for adequate backup
planning and operating reserves for the standby customer class.
(B) It is not physically interconnected to the electrical
transmission or distribution grid, so that, if the customer
generation fails, backup electricity is not supplied from the
electrical grid.
(C) There is physical assurance that the load served by the
customer generation will be curtailed concurrently and commensurately
with an outage of the customer generation.
SEC. 3. Section 380.5 is added to the Public Utilities Code, to
read:
380.5. (a) In establishing a demand response program, the
commission shall do all of the following:
(1) Establish rules consistent with state and federal law for how
and when back-up generation may be used within the program and
establish reporting and data collection requirements to verify
compliance with those rules.
(2) Ensure the program approved for resource adequacy requirements
delivers the expected results and provides ratepayer benefits.
(3) Before the implementation of a program for residential
customers, establish customer protection rules regarding the
participation, cost of participation, and ability to not enroll in
the program. A residential customer who does not enroll in the
program shall lose eligibility for rebates, discounts, and other
incentives offered to customers who participate in the program. The
commission shall prohibit the imposition of charges on a residential
customer for not enrolling in the program.
(4) Establish a method to accurately calculate the customer's load
shift at time intervals in which the customer would be eligible for
demand response program payments or credits.
(5) Establish metering and monitoring policies for the program.
(b) This section does not apply to time-variant pricing as defined
in Section 745, including time-of-use rates, critical peak pricing,
and real-time pricing, or to similar tariffs, including peak time
rebates.
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.
