Bill Text: CA AB538 | 2023-2024 | Regular Session | Amended
Bill Title: Multistate regional transmission system organization: membership.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2024-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB538 Detail]
Download: California-2023-AB538-Amended.html
|
Amended
IN
Assembly
May 01, 2023 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 538
| Introduced by Assembly Member Holden (Principal coauthor: Senator Dodd) |
February 08, 2023 |
An act to amend Section 399.16 of, to add Division 4.2 (commencing with Section 9000) to, to repeal Section 352 of, to repeal Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, and to repeal and add Section 359 of, the Public Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 538, as amended, Holden.
Multistate regional transmission system organization: membership.
Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to ensure efficient use and reliable operation of the electrical transmission grid consistent with achieving planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. The Clean Energy and Pollution Reduction Act of 2015 provides for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process. That process provides that modifications to the ISO’s governance structure, through changes to its bylaws or other corporate governance documents, will not become effective until the ISO, the Public Utilities Commission (PUC), the State Energy Resources
Conservation and Development Commission (Energy Commission), the State Air Resources Board (state board), the Governor, and the Legislature take specified actions on or before January 1, 2019.
This bill would prohibit a California electrical transmission facility owner, a retail seller of electricity, or a local publicly owned electric utility from joining a multistate regional transmission system organization, as defined, unless the bylaws or other organizational documents that govern the organization, and the organization’s operations, meet Federal Energy Regulatory Commission requirements and other specified requirements. The bill would require a California transmission owner, retail seller, or local publicly owned electric utility, before joining a multistate regional transmission system organization, to submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review.
The bill would require the Energy Commission, in consultation with the PUC and the state board, to review those materials for compliance with the bill’s requirements. The bill would prohibit a California transmission owner, retail seller, or local publicly owned electric utility from joining the multistate regional transmission system organization unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet those requirements. If a California transmission owner, retail seller, or local publicly owned electric utility has joined an independent system operator that becomes a multistate regional transmission system organization and the Energy Commission determines that the organization’s bylaws and organizational documents do not meet those requirements, the bill would require that the California transmission owner, retail seller, or local publicly owned electric utility not remain in the organization. The bill would authorize the ISO to develop and submit to the
Energy Commission a governance proposal that complies with those requirements and to provide notice and a copy of this submission to the Legislature and the Governor at the same time as it is submitted to the Energy Commission. The bill would require the Energy Commission, in consultation with the PUC and state board, to review the proposal for compliance with the bill’s requirements, and, if the Energy Commission determines that the proposal meets those requirements, to submit the governance proposal to the Governor and to the Legislature with a declaration that the Energy Commission has so found. If notice is delivered by the Energy Commission during a regular session of the Legislature, Commission,
and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2024, has entered into an agreement with the ISO indicating its intent to become a participating transmission owner, the bill would authorize the ISO, beginning 270 days after receipt of notice by the Legislature, ISO to proceed to implement the proposal. proposal, as provided.
Existing law, the California Renewables Portfolio Standard Program, requires the PUC to establish a
renewables portfolio standard requiring all retail sellers, defined as electrical corporations, electric service providers, and community choice aggregators, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, at specified percentages of the total kilowatthours sold to their retail end-use customers during specified compliance periods. The program additionally requires each local publicly owned electric utility to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the targets established by the program. The program, consistent with the goals of procuring the least-cost and best-fit electricity products from 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, in 3 specified categories referred to as the portfolio content requirements. Existing law
requires retailer sellers to meet renewable energy procurement obligations by at least 75% of the electricity product that is from a renewable energy resource that meets various requirements, including the requirement on the first point of interconnection of the resource with the state or an agreement to dynamically transfer electricity to a California balancing authority, for compliance periods after December 31, 2016.
This bill would define “point of interconnection” to mean a point connecting with a California balancing authority as the California balancing authority area was on June 30, 2023.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
(a) The Legislature finds and declare all of the following:(1) California aims to accelerate progress on its clean energy goals, spur renewable energy development both offshore and on land, make energy use more efficient and flexible, and scale the state’s energy infrastructure and transmission to meet the state economy’s needs.
(2) All of this is only possible if the state works with its neighbors in the west and create a regional system that expands the footprint for clean energy resources and enables better collaboration, transparency, and integration across
the western electrical transmission grid system.
(3) Engaging with the rest of the region to ensure electric reliability and affordability for California households is critical, as demonstrated in the sustained success of the Western Energy Imbalance Market, which has reduced electricity costs for all participants by more than $3 billion since 2014, and most recently in the inspirational westwide cooperation that sustained the state’s regional electrical grid throughout a historic heat wave in September 2022.
(b) In enacting this act, it is the intent of the Legislature to enable the transition of the Independent System Operator to a regional transmission operator with fully independent governance. To that end, it is the intent of the Legislature to continue work that began with
stakeholder groups throughout the region starting in 2014 with the launch of the Western Energy Imbalance Market, and continuing in 2022 with unanimous bipartisan adoption of Assembly Concurrent Resolution 188 (2022), which identified numerous potential reliability, affordability, and environmental benefits, including significant avoided emissions of carbon dioxide, from further western grid integration.
(c) It is the further intent of the Legislature to ensure that the governance of the Independent System Operator, or its successor, provides stakeholders throughout the west with confidence that the governance structure respects and considers the interests of all stakeholders, and that nothing in the organizational structure will impede California’s ability to meet its clean energy policies as put forward in the
policy specified in Section 454.53 of the Public Utilities Code that a mix of renewables portfolio standard eligible and zero-carbon resources be supplied to serve 100 percent of the state’s retail electricity by December 31, 2045, and 100 percent of electricity procured to serve all state agencies by December 31, 2035.
SEC. 2.
Section 352 of the Public Utilities Code is repealed.SEC. 3.
Section 359 of the Public Utilities Code is repealed.SEC. 4.
Section 359 is added to the Public Utilities Code, to read:359.
(a) The Independent System Operator’s Board of Governors may develop and submit to the Energy Commission a governance(b) The
Energy Commission, in consultation with the commission and the State Air Resources Board, shall convene a docketed public proceeding to review the governance proposal for compliance with the requirements of Chapter 1 (commencing with Section 9000) of Division 4.2. This review shall include public review of, and written comment on, the proposal and at least one public workshop
or hearing at which public comment is received. include, at a minimum, five noticed hearings held throughout the state that provide a full opportunity for the public to review and provide written and oral comments on the proposal.
(c) (1) If the Energy Commission determines determines, though a commission vote during a public meeting, that the governance proposal complies with the requirements of Chapter 1 (commencing with Section
9000) of Division 4.2, the Energy Commission shall submit the governance proposal to the Governor and to the Legislature with a declaration that the Energy Commission has so found. Notice to the Legislature may be at any time during a regular session of the Legislature. Not
(2) Not before 270 days after receipt of notice by the Legislature, provided the notice was delivered during a regular session of the Legislature, Legislature or following 270 days after the
start of a regular session of the Legislature if the receipt of the notice was given prior to the start of a regular session of the Legislature,
and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2024, has entered into an agreement with the Independent System Operator indicating its intent to become a participating transmission owner and the Federal Energy Regulatory Commission has approved any changes to the Independent System Operator’s tariff necessary for the new participating transmission owner to join, then the Independent System Operator may proceed with implementing a governance structure consistent with the proposal. Upon completing implementation of the governance structure, the Independent System Operator or its successor shall provide notice to the Energy Commission.
(d) (1) The Energy Commission shall verify that the Independent
System Operator has implemented a governance structure consistent with this section and, upon so verifying, shall promptly provide notice to the Secretary of State. Upon receipt of notice by the Secretary of State, Article 2 (commencing with Section 334) and Sections 345.5 to 349, inclusive, shall become inoperative.
(2) The Energy Commission shall report to the Legislature its verification and notification to the Secretary of State pursuant to paragraph (1). The report to the Legislature shall be submitted in compliance with Section 9795 of the Government Code.
SEC. 5.
Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.SEC. 6.
Section 399.16 of the Public Utilities Code is amended to read:399.16.
(a) Various electricity products from eligible renewable energy resources located within the WECC transmission network service area shall be eligible to comply with the renewables portfolio standard procurement requirements in Section 399.15. These electricity products may be differentiated by their impacts on the operation of the grid in supplying electricity, as well as meeting the requirements of this article.(b) Consistent with the goals of procuring the least-cost and best-fit electricity products from eligible renewable energy resources that meet project viability principles adopted by the commission pursuant to paragraph (5) of subdivision (a) of Section 399.13 and that provide the benefits set forth in Section 399.11, a balanced portfolio of eligible
renewable energy resources shall be procured consisting of the following portfolio content categories:
(1) Eligible renewable energy resource electricity products that meet either of the following criteria:
(A) Have a first point of interconnection with a California balancing authority, have a first point of interconnection with distribution facilities used to serve end users within a California balancing authority area, or are scheduled from the eligible renewable energy resource into a California balancing authority without substituting electricity from another source. The use of another source to provide real-time ancillary services required to maintain an hourly or subhourly import schedule into a California balancing authority shall be permitted, but only the fraction of the schedule actually generated by the eligible renewable energy resource shall count toward this
portfolio content category.
(B) Have an agreement to dynamically transfer electricity to a California balancing authority.
(2) Firmed and shaped eligible renewable energy resource electricity products providing incremental electricity and scheduled into a California balancing authority.
(3) Eligible renewable energy resource electricity products, or any fraction of the electricity generated, including unbundled renewable energy credits, that do not qualify under the criteria of paragraph (1) or (2).
(c) In order to achieve a balanced portfolio, all retail sellers shall meet the following requirements for all procurement credited toward each compliance period:
(1) Not less than 50 percent
for the compliance period ending December 31, 2013, 65 percent for the compliance period ending December 31, 2016, and 75 percent for each compliance period thereafter, of the eligible renewable energy resource electricity products associated with contracts executed after June 1, 2010, shall meet the product content requirements of paragraph (1) of subdivision (b).
(2) Not more than 25 percent for the compliance period ending December 31, 2013, 15 percent for the compliance period ending December 31, 2016, and 10 percent for each compliance period thereafter, of the eligible renewable energy resource electricity products associated with contracts executed after June 1, 2010, shall meet the product content requirements of paragraph (3) of subdivision (b).
(3) Any renewable energy resources contracts executed on or after June 1, 2010, not subject to the limitations of paragraph (1)
or (2), shall meet the product content requirements of paragraph (2) of subdivision (b).
(4) For purposes of electric service providers only, the restrictions in this subdivision on crediting eligible renewable energy resource electricity products to each compliance period shall apply to contracts executed after January 13, 2011.
(d) Any contract or ownership agreement originally executed prior to June 1, 2010, shall count in full toward the procurement requirements established pursuant to this article, if all of the following conditions are met:
(1) The renewable energy resource was eligible under the rules in place as of the date when the contract was executed.
(2) For an electrical corporation, the contract has been approved by the commission, even
if that approval occurs after June 1, 2010.
(3) Any contract amendments or modifications occurring after June 1, 2010, do not increase the nameplate capacity or expected quantities of annual generation, or substitute a different renewable energy resource. The duration of the contract may be extended if the original contract specified a procurement commitment of 15 or more years.
(e) A retail seller may apply to the commission for a reduction of a procurement content requirement of subdivision (c). The commission may reduce a procurement content requirement of subdivision (c) to the extent the retail seller demonstrates that it cannot comply with that subdivision because of conditions beyond the control of the retail seller as provided in paragraph (5) of subdivision (b) of Section 399.15. The commission shall not, under any circumstance, reduce the obligation specified in
paragraph (1) of subdivision (c) below 65 percent for any compliance period obligation after December 31, 2016.
(f) For purposes of this section, “point of interconnection” means a point connecting with a California balancing authority as the California balancing authority area was on June 30, 2023.
SEC. 6.SEC. 7.
Division 4.2 (commencing with Section 9000) is added to the Public Utilities Code, to read:DIVISION 4.2. Transmission System
CHAPTER 1. Multistate Regional Transmission System Organizations
9000.
For purposes of this chapter, the following definitions apply:(a) “California participating transmission owner” means a California transmission owner that has become a participating transmission owner by turning over operational control of some or all of its bulk electrical transmission facilities to an independent system operator or a multistate regional transmission system organization.
(b) “California transmission owner” means an electrical corporation, local publicly owned electric utility, or other entity that owns bulk electrical transmission facilities located in California.
(c) Except as provided in Section 9005, “multistate regional transmission system organization” means an entity that the Federal Energy Regulatory Commission has determined satisfies the requirements for operating as an independent system operator or regional transmission organization and that has participating transmission owners from multiple states.
(d) “Retail seller” has the same meaning as defined in Section 399.12.
9001.
In order to pursue critical California environmental and human health policy goals and to safeguard existing California authority to protect, preserve, and promote the welfare and well-being of its citizens, a California transmission owner, retail seller, or local publicly owned electric utility shall only join or remain in a multistate regional transmission system organization that maintains, to the fullest extent possible consistent with federal law, market rules and policies that do not conflict with, and allow for consideration of, all of the following:(a) State authority over generation preference, transmission siting, resource portfolios, and resource planning, including, but not
limited to, a prohibition on a centralized capacity market in California of electrical generating capacity that requires capacity to clear at a market clearing price in order to count for resource adequacy purposes.
(b) State rules or public policy requirements to provide reliable electrical service for the safety, health, and welfare of the state’s citizenry and economy, to encourage new or clean generation, reductions in emissions of greenhouse gases, or state-assigned policy attributes of electricity generation, such as requirements for California utilities to purchase electricity products from eligible renewable energy resources and from zero-carbon sources.
(c) State law and regulation over California utilities, including, but not limited to, those that may affect, but do not set,
the rate for the same wholesale sale of electricity at a price different and distinct from the Federal Energy Regulatory Commission-approved
rate.
9002.
A California transmission owner, retail seller, or local publicly owned electric utility shall not join a multistate regional transmission system organization as a California participating transmission owner unless the bylaws or other organizational documents that govern the organization and its operations meet Federal Energy Regulatory Commission requirements and do all of the following:(a) Prohibit a member of the governing board of the organization from any affiliation with a participant in any market overseen by the organization. A member of the governing board also shall not have been an employee of a market participant within two years before becoming a member of the board.
(b) Limit conflicts of interest by prohibiting any member of the governing board from directly owning any interest in energy-related assets that are appreciably affected by the actions of the organization and by requiring annual disclosure of significant financial interests.
(c) Provide for and maintain a decisionmaking process that is independent of control by any market participant or class of participants.
(d) Provide for the establishment of a western states’ committee. The committee shall have an equal number of representatives from each state that has a transmission owner participating in the Independent System Operator. The representatives from California shall be appointed by the Governor, subject to
confirmation by the Senate. The committee shall provide guidance to the Independent System Operator on all matters of interest to more than one state.
(e) Provide for and maintain open meeting standards and meeting notice requirements that are consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and afford the public the greatest possible access to meetings, consistent with other duties of the organization and consistent with the open meeting policy and records availability policy of the Independent System Operator in effect as of January 31, 2023.
(f) Subject to reasonable measures to limit the length of meetings or disruptions to meetings,
authorize interested members of the public and representatives of customers to participate in person or through remote electronic means in meetings of the governing board and in the meetings of any advisory group to the governing board.
(g) Provide public access to the records of the organization consistent with the general policies of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), consistent with the other duties of the organization.
(h) Require that the governing documents of the organization be posted and maintained on the organization’s public internet website.
(i) Protect and preserve a state’s authority over matters regulated by
the state, including procurement policy, resource planning, and resource or transmission siting within the state.
(j) (1) Require retail sellers in each state to meet minimum resource adequacy standards and permit each state to establish resource adequacy standards for its retail sellers that exceed those required by federal law, in the state’s discretion.
(2) Require a participating local publicly owned electric utility in each state to meet minimum resource adequacy standards and permit the governing board of a participating local publicly owned electric utility to establish resource adequacy standards that exceed those required by federal law, in the discretion of the governing body.
(k) Prohibit the
multistate regional transmission system organization from operating a centralized capacity market in California for electrical generating capacity that requires capacity to clear at a market clearing price in order to count for resource adequacy purposes.
(l) Ensure that the dispatch of resources by the multistate regional transmission system organization to serve load in
California appropriately reflects the costs for resources to comply with California’s climate policies, as implemented by the State Air Resources Board. The multistate regional transmission system organization shall maintain a transparent system for tracking emissions of greenhouse gases resulting from resources dispatched to serve California load.
(m) Establish and maintain equitable transmission cost allocation rules through an open stakeholder process approved by the Federal Energy Regulatory Commission. The rules shall ensure that California participating transmission owners receive equitable use of, and just and reasonable compensation for, their past investments in the transmission system assets for which operational control is transferred to a multistate regional transmission system organization.
(n) Enhance the competitive structure of the organization by providing for and maintaining an independent market monitor.
(o) Establish a clear process, structure, and organizational support for state regulators within the region served by the multistate regional transmission system organization to collaborate and provide guidance to the organization on matters of interest to more than one state, including on issues relating to the organization’s independent market monitoring function established by the Federal Energy Regulatory Commission.
(p) Enable participation of demand response, storage, and other distributed energy resources in the organization’s markets.
(q) Provide for and maintain a process for obtaining stakeholder input on policy initiatives requiring approval of the Federal Energy Regulatory Commission that is open to all members of the public and that does not require payment of a membership fee or other charge to participate.
(r) Ensure the right of any participating transmission owner to unilaterally withdraw from the multistate regional transmission system organization, with or without cause, upon giving reasonable notice, not to exceed two years.
9003.
This chapter does not require any California transmission owner, retail seller, or local publicly owned electric utility to join or remain in a multistate regional transmission system organization.9004.
(a) A California transmission owner, retail seller, or local publicly owned electric utility shall, before joining a multistate regional transmission system organization, submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review.(b) Unless specified otherwise in Section 9002, the Energy Commission, in consultation with the commission and the State Air Resources Board, shall review the bylaws and organizational documents that govern the multistate regional transmission system organization for compliance with the requirements of Sections 9001 and 9002. This review
shall include public review of, and written comment on, the materials and at least one public workshop or hearing at which public comment is received.
(c) A California transmission owner, retail seller, or local publicly owned electric utility shall not join a multistate regional transmission system organization unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet the requirements of Sections 9001 and 9002. If a California transmission owner, retail seller, or local publicly owned electric utility has joined an independent system operator that becomes a multistate regional transmission system organization and the Energy Commission determines that the organization’s bylaws and organizational documents do not meet the requirements of Sections 9001 and 9002, the California transmission
owner, retail seller, or local publicly owned electric utility shall not remain in the organization.
