Bill Text: CA AB427 | 2021-2022 | Regular Session | Introduced

California Assembly Bill 427 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Electricity: resource adequacy requirements.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Failed) 2022-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB427 Detail]

Download: California-2021-AB427-Introduced.html

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 427

Introduced by Assembly Member Bauer-Kahan

February 04, 2021

An act to amend Section 38530 of the Health and Safety Code, and to amend Section 380 of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL'S DIGEST

AB 427, as introduced, Bauer-Kahan. Electricity: resource adequacy requirements.

Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations. Existing law requires the PUC, in consultation with the Independent System Operator (ISO), to establish resource adequacy requirements for all load-serving entities, defined to include electrical corporations, community choice aggregators, and electric service providers. Existing law requires that the resource adequacy program achieve specified objectives, including to 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 PUC.

This bill would require the PUC, by July 1, 2022, and in furtherance of the above-described objective, to (1) establish rules that allow demand response programs and resources procured by a load-serving entity to meet the load-serving entity’s resource adequacy requirements regardless of whether the program is integrated into the wholesale market overseen by the ISO, (2) adopt a baseline methodology that treats the charging of energy storage as load in baseline calculations for demand response programs, (3) allow customer-sited distributed eligible renewable energy resources and energy storage systems participating in a demand response program, or product developed pursuant to (1), to deliver electricity to the grid for purposes of providing resource adequacy, and (4) establish a capacity valuation methodology for customer-sited energy storage resources and customer-sited hybrid resources, as defined, in consultation with the ISO and the State Energy Resources Conservation and Development Commission, and ensure that the capacity valuation applies to demand response resources coupled with customer-sited hybrid or customer-sited storage resources for the 2023 resource adequacy year.

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

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

SECTION 1.

The Legislature finds and declares all of the following:

(a) Backup electrical supply systems have become increasingly valuable to families and communities due to increases in wildfires and deenergization events intended to prevent wildfires caused by electrical lines and equipment.

(b) Backup electrical supply systems can be used to provide highly reliable, pollution-free electricity to the electrical grid at times when they are not needed to provide a backup source of electricity.

(c) Contracting with customer-sited energy storage systems to provide electrical capacity for the electrical grid can help defray the costs of incentivizing backup generation for critical facilities.

(d) Aggregating customer-sited energy storage systems to provide electricity and capacity to the grid during peak times reduces emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants, reduces the need for new powerplants, and expands access to storage to more families and building types.

(e) Customer-sited energy storage systems supply communities with valuable local capacity without building new fossil fuel-fired powerplants or transmission lines.

(f) Allowing customers to use their energy storage systems to provide clean, flexible, local electricity to the grid can reduce the cost of owning backup battery energy storage systems by providing customers access to capacity and energy markets.

SEC. 2.

Section 38530 of the Health and Safety Code is amended to read:

38530.

(a) On or before January 1, 2008, the state board shall adopt regulations to require the reporting and verification of statewide greenhouse gas emissions and to monitor and enforce compliance with this program.

(b) The regulations shall do all of the following:

(1) Require the monitoring and annual reporting of greenhouse gas emissions from greenhouse gas emission sources beginning with the sources or categories of sources that contribute the most to statewide emissions.

(2) Account for greenhouse gas emissions from all electricity consumed in the state, including transmission and distribution line losses from electricity generated within the state or imported from outside the state. This requirement applies to all retail sellers of electricity, including load-serving entities as defined in ~~subdivision (k) of~~ Section 380 of the Public Utilities Code and local publicly owned electric utilities as defined in Section 224.3 of the Public Utilities Code.

(3) Where appropriate and to the maximum extent feasible, incorporate the standards and protocols developed by the California Climate Action Registry, established pursuant to former Chapter 6 (commencing with Section 42800) of Part 4 of Division 26, as added by Section 1 of Chapter 1018 of the Statutes of 2000. Entities that voluntarily participated in the California Climate Action Registry prior to December 31, 2006, and have developed a greenhouse gas emission reporting program, shall not be required to significantly alter their reporting or verification program except as necessary to ensure that reporting is complete and verifiable for the purposes of compliance with this division as determined by the state board.

(4) Ensure rigorous and consistent accounting of emissions, and provide reporting tools and formats to ensure collection of necessary data.

(5) Ensure that greenhouse gas emission sources maintain comprehensive records of all reported greenhouse gas emissions.

(1) Periodically review and update its emission reporting requirements, as necessary.

(2) Review existing and proposed international, federal, and state greenhouse gas emission reporting programs and make reasonable efforts to promote consistency among the programs established pursuant to this part and other programs, and to streamline reporting requirements on greenhouse gas emission sources.

SEC. 3.

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 ensure the reliability of electrical service in California while advancing, to the extent possible, the state’s goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:

(1) Facilitate development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid 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. In furtherance of this purpose, the commission shall do all the following by July 1, 2022:

(A) Establish rules that allow demand response programs and resources procured by a load-serving entity to meet the load-serving entity’s resource adequacy requirements regardless of whether the program is integrated into the wholesale market overseen by the Independent System Operator.
(B) Adopt a baseline methodology that treats the charging of energy storage as load in baseline calculations for demand response programs supporting this objective.
(C) Allow customer-sited distributed eligible renewable energy resources and energy storage systems participating in a demand response program, or product developed pursuant to subparagraph (A), to deliver electricity to the grid for purposes of providing resource adequacy.
(D) Ensure that the capacity valuation developed pursuant to subdivision (k) applies to demand response resources coupled with customer-sited hybrid or customer-sited storage resources.

(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 electrical service system reliability, local area reliability, and flexibility.

(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, local area reliability, and flexibility, 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.

(7) Minimizing the need for backstop procurement by the Independent System Operator.

(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) The commission, in consultation with the Independent System Operator and the Energy Commission, shall establish a capacity valuation methodology for customer-sited energy storage resources and customer-sited hybrid resources. In determining this value, the commission shall incorporate the full electrical output of the resource, including all electricity delivered to the grid. The commission shall adopt the capacity valuation methodology by no later than July 1, 2022, for the 2023 resource adequacy year.
(l) For purposes of this section, the following terms have the following meanings:
(1) “Hybrid resource” means an energy storage system, as defined in Section 2838.2, that is paired with a colocated eligible renewable energy resource where the energy storage system obtains charging energy from that colocated eligible renewable energy resource.
~~(k)~~

(2) ~~For purposes of this section, “load-serving~~ “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) A local publicly owned electric utility.

~~(2)~~

(B) The State Water Resources Development System commonly known as the State Water Project.

~~(3)~~

(C) 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)~~

(i) 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)~~

(ii) 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)~~

(iii) 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.