Bill Text: CA AB1834 | 2023-2024 | Regular Session | Amended

California Assembly Bill 1834

Bill Title: Resource adequacy: Electricity Supply Strategic Reliability Reserve Program.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed) 2024-06-25 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 17. Noes 0.) (June 24). Re-referred to Com. on APPR. [AB1834 Detail]

Download: California-2023-AB1834-Amended.html

Amended IN Assembly April 15, 2024

Amended IN Assembly March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 1834

Introduced by Assembly Member Garcia

January 16, 2024

An act to amend Section 9620 of the Public Utilities Code, and to amend ~~Section 80714~~ Sections 80713, 80714, and 80822 of the Water Code, relating to electricity.

LEGISLATIVE COUNSEL'S DIGEST

AB 1834, as amended, Garcia. Resource adequacy: Electricity Supply Strategic Reliability Reserve ~~Program: local publicly owned electric utilities.~~ Program.

Existing law establishes the Department of Water Resources Electricity Supply Reliability Reserve Fund and continuously appropriates moneys in the fund to the Department of Water Resources for purposes of (1) implementing projects, purchases, and contracts to carry out specified purposes, (2) constructing, owning, and operating, or contracting for the construction and operation of, contracting for the purchase of electricity from, or financing through loans, reimbursement agreements, or other contracts actions to secure resources for summer reliability or to preserve the option to extend the life of specified facilities, and (3) reimbursing electrical corporations for the value of imported energy or import capacity products that were delivered or capable of being delivered between July 1, 2022, and on or before October 31, 2023, and were procured at above-market costs or in excess of procurement authorizations set by the Public Utilities Commission (PUC) and above the requirements needed to serve the electrical corporation’s bundled customers in support of summer electric service reliability.
Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), on or before January 31, 2024, in consultation with the PUC, to submit a report to the appropriate policy and budget committees of the Legislature that includes an assessment of whether each local publicly owned electric utility exceeded, met, or failed to meet its minimum planning reserve margin and specified system resource adequacy requirements, as specified. Upon the submission of that report, if the department determines that resources it procured through the Electricity Supply Strategic Reliability Reserve Program were used in a given month to meet an identified reliability need, existing law requires the executive director of the Energy Commission, on and before June 30, 2027, to annually assess a capacity payment on each local publicly owned electric utility in the Independent System Operator balancing area that during that same month fails to meet its minimum planning reserve margin, as specified.
Existing law establishes the Electricity Supply Strategic Reliability Reserve Program and requires the Department of Water Resources to implement projects, purchases, and contracts related to the procurement of electrical resources, as provided. If the department determines, on or before June 30, 2027, that resources procured through the program were used in a given month to meet a load-serving entity’s or a local publicly owned electric utility’s identified reliability need, existing law requires the Public Utilities Commission (PUC) or the Executive Director of the State Energy Resources Conservation and Development Commission (Energy Commission) to annually assess a capacity payment on each load-serving entity or each local publicly owned electric utility, respectively, that during that same month failed to meet its system resource adequacy requirements. Existing law requires the PUC or the Energy Commission to determine a capacity payment unit cost in kilowatt per month for load-serving entities or local publicly owned electric utilities, respectively, that is based on the monthly cost of the resources procured using the moneys from the program, as provided.

This bill would ~~expressly provide that the identified reliability need is the identified reliability need of the local publicly owned electric utility.~~ require the PUC and the Energy Commission, in determining the capacity payment unit cost, to consider mitigating factors.

Existing law authorizes the department to establish a schedule and mechanism for a local publicly owned electric utility to voluntarily obtain from the department eligible energy resources to be acquired by the department through its central procurement function. Existing law requires the local publicly owned electric utility, if it voluntarily participates, to commit to the imposition of a nonbypassable charge on its ratepayers sufficient to fund its participation, as specified.
This bill would additionally allow the local publicly owned electric utility to commit to an alternative mechanism to fund its voluntary participation. If the local publicly owned electric utility commits to the imposition of a nonbypassable charge, the bill would prohibit the department from adding any cost in excess of the cost of participation to the nonbypassable charge.
Existing law requires each local publicly owned electric utility serving end-use customers to prudently plan for and procure resources that are adequate to meet its planning reserve margin and peak demand and operating reserves sufficient to provide reliable electric service to its customers. Existing law requires the local publicly owned electric utility, upon request, to provide the Energy Commission with any information the Energy Commission determines necessary to evaluate the progress made by the local publicly owned electric utility in meeting that requirement.
This bill would require the Energy Commission to coordinate its request with other entities seeking related information to reduce the overall response burden to the local publicly owned electric utilities.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 9620 of the Public Utilities Code is amended to read:

9620.

(a) Each local publicly owned electric utility serving end-use customers shall prudently plan for and procure resources that are adequate to meet its planning reserve margin and peak demand and operating reserves, sufficient to provide reliable electric service to its customers. Customer generation located on the customer’s site or providing electric service through arrangements authorized by Section 218, shall not be subject to these requirements if the customer generation, or the load it serves, meets one of the following criteria:

(1) It takes standby service from the local publicly owned electric utility on a rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.

(2) It is not physically interconnected to the electric transmission or distribution grid, so that, if the customer generation fails, backup power is not supplied from the electricity grid.

(3) 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.

(b) Each local publicly owned electric utility serving end-use customers shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the Board of Trustees of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.

(c) Each local publicly owned electric utility shall prudently plan for and procure energy storage systems that are adequate to meet the requirements of Section 2836.

(d) A local publicly owned electric utility serving end-use customers shall, upon request, provide the Energy Commission with any information the Energy Commission determines is necessary to evaluate the progress made by the local publicly owned electric utility in meeting the requirements of this section, consistent with the annual targets established pursuant to subdivision (c) of Section 25310 of the Public Resources Code. The Energy Commission shall coordinate its request with other entities seeking related information to reduce the overall response burden to local publicly owned electric utilities to meet the requirements of this subdivision.

(e) The Energy Commission shall report to the Legislature, to be included in each integrated energy policy report prepared pursuant to Section 25302 of the Public Resources Code, regarding the progress made by each local publicly owned electric utility serving end-use customers in meeting the requirements of this section.

(f) A local publicly owned electric utility may meet its minimum planning reserve margin through individual contractual procurement or through an aggregated or pooled portfolio of resources if that aggregation or pooling is defined in a contractual arrangement and each participating local publicly owned electric utility meets its individual minimum planning reserve margin based on its share of the resource portfolio pool.

SEC. 2.

Section 80713 of the Water Code is amended to read:

80713.

(a) (1) On and before June 30, 2027, if the Department of Water Resources determines that resources it procured through the Electricity Supply Strategic Reliability Reserve Program were used in a given month to meet a load-serving entity’s identified reliability need, the Public Utilities Commission shall annually assess a capacity payment on each load-serving entity that during that same month fails to meet its system resource adequacy requirements pursuant to Section 380 of the Public Utilities Code. The capacity payment is not a penalty and does not prohibit the Public Utilities Commission from assessing a penalty on a load-serving entity for a failure to comply with any resource adequacy requirement.

(2) If a load-serving entity fails to comply with its system resource adequacy requirements pursuant to Section 380 in a month when resources procured by the Department of Water Resources through the Electricity Supply Strategic Reliability Reserve Program are used to meet the load-serving entity’s identified reliability need and a penalty is assessed by the commission on the load-serving entity for that failure, then, on and before June 30, 2027, both of the following requirements shall apply:

(A) If the penalty is less than the capacity payment, the capacity payment shall be reduced by the amount of the penalty and the penalty shall be deposited into the Load-Serving Entity Capacity Payment Account.

(B) If the penalty is more than the capacity payment, then an amount of the penalty equal to the otherwise applicable capacity payment shall be deposited into the Load-Serving Entity Capacity Payment Account.

(3) The annual capacity payment shall be remitted to the Load-Serving Entity Capacity Payment Account by a load-serving entity that was assessed a capacity payment pursuant to paragraph (1) within 30 days of the commission notifying the load-serving entity.

(b) The Public Utilities Commission, in consultation with the commission, shall determine a capacity payment unit cost in kilowatt per month for load-serving entities that is based on the monthly cost of the resources procured using moneys from the Department of Water Resources Electricity Supply Reliability Reserve Fund, including the Load-Serving Entity Capacity Payment Account, with the total costs weighted two-thirds for June through September and one-third for the remaining eight months, and this unit cost shall be multiplied by the amount of kilowatts that the load-serving entity was deficient in its system resource adequacy requirements during the same month the Electricity Supply Strategic Reliability Reserve Program resources were used, based on the resource adequacy program rules, requirements, and resource counting conventions in place at the time of the deficiency, after crediting the deficient load-serving entity with its share of any reliability resources procured by other entities on its behalf. The Public Utilities Commission may make any further adjustments to the capacity values of any nonperforming resources included in a load-serving entity’s portfolio when determining the amount of this deficiency. In determining the capacity payment unit cost, the Public Utilities Commission shall consider mitigating factors, including, but not limited to, the extent of scarcity-driven or otherwise above-market costs of those resources procured using moneys from the Department of Water Resources Electricity Supply Reliability Reserve Fund. Any adjustments made by the Public Utilities Commission shall align with any adjustments made by the commission as authorized by subdivision (b) of Section 80714.

SECTION 1.SEC. 3.

Section 80714 of the Water Code is amended to read:

80714.

(a) (1) Upon the submission of the report pursuant to subdivision (d) and on and before June 30, 2027, if the Department of Water Resources determines that resources it procured through the Electricity Supply Strategic Reliability Reserve Program were used in a given month to meet a local publicly owned electric utility’s identified reliability need, the executive director of the commission shall annually assess a capacity payment on each local publicly owned electric utility in the Independent System Operator balancing area that during that same month fails to meet its minimum planning reserve margin.

(2) The annual capacity payment shall be remitted to the Local Publicly Owned Electric Utility Capacity Payment Account by a local publicly owned electric utility that was assessed a capacity payment pursuant to paragraph (1) within 30 days of the executive director notifying the local publicly owned electric utility.

(b) Upon the submission of the report pursuant to subdivision (d), the commission, in consultation with the Public Utilities Commission, shall determine a capacity payment unit cost in kilowatt per month for local publicly owned electric utilities that is based on the monthly cost of the resources procured using moneys from the Department of Water Resources Electricity Supply Reliability Reserve Fund, including the Local Publicly Owned Electric Utility Capacity Payment Account, with the total costs weighted two-thirds for June through September and one-third for the remaining eight months, and this unit cost shall be multiplied by the amount of kilowatts that the local publicly owned electric utility was deficient in its minimum planning reserve margin during the same month the Electricity Supply Strategic Reliability Reserve Program resources were used using the same resource counting conventions applied by the Public Utilities Commission pursuant to subdivision (b) of Section 80713, after crediting the deficient local publicly owned electric utilities with their share of any reliability resources procured by other entities on their behalf. The commission may make any further adjustments to the capacity values of any nonperforming resources included in a local publicly owned electric utility’s portfolio when determining the amount of this deficiency. In determining the capacity payment unit cost, the commission shall consider mitigating factors, including, but not limited to, the extent of scarcity-driven or otherwise above-market costs of those resources procured using moneys from the Department of Water Resources Electricity Supply Reliability Reserve Fund. Any adjustments made by the commission shall align with any adjustments made by the Public Utilities Commission as authorized by subdivision (b) of Section 80713.

(c) Upon the submission of the report pursuant to subdivision (d), the commission may adopt regulations to implement this section.

(d) On or before January 31, 2024, the commission, in consultation with the Public Utilities Commission, shall submit a report to the appropriate policy and budget committees of the Legislature that includes an assessment of whether each local publicly owned electric utility exceeded, met, or failed to meet its minimum planning reserve margin for 2023 and the system resource adequacy requirements from June 1, 2023, to September 30, 2023, inclusive, that the Public Utilities Commission established for load-serving entities pursuant to Section 380 of the Public Utilities Code and adopted in Public Utilities Commission Decision 22-06-050 (June 23, 2022) Decision Adopting Local Capacity Obligations for 2023–2025, Flexible Capacity Obligations for 2023, and Reform Track Framework.

(e) For purposes of this section, “minimum planning reserve margin” means a local publicly owned electric utility’s planning reserve margin, as described in Section 9620 of the Public Utilities Code, unless the local publicly owned electric utility revises that planning reserve margin based on recommendations from the commission pursuant to subdivision (b) of Section 25704.5 of the Public Resources Code, in which case “minimum planning reserve margin” means the local publicly owned electric utility’s revised minimum planning reserve margin.

SEC. 4.

Section 80822 of the Water Code is amended to read:

80822.

(a) Pursuant to Section 80820, the department may establish a schedule and mechanism for a local publicly owned electric utility to voluntarily obtain from the department eligible energy resources to be acquired by the department through its central procurement function on a contract-by-contract basis.

(b) In order to voluntarily participate, a local publicly owned electric utility shall commit to the imposition of a nonbypassable charge on its ratepayers or an alternative mechanism sufficient at all times to fund its participation and on terms and conditions as set forth in Section 80826. If the local publicly owned electric utility commits to the imposition of a nonbypassable charge, the department shall not add any cost in excess of the cost of the local publicly owned electric utility’s participation pursuant to this section to the nonbypassable charge.