Amended  IN  Assembly  July 05, 2018
Amended  IN  Assembly  June 11, 2018
Amended  IN  Senate  April 26, 2018
Amended  IN  Senate  April 10, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1339

Introduced by Senator Stern

February 16, 2018

An act to add Chapter 4.5 (commencing with Section 8370) to Division 4.1 of the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 1339, as amended, Stern. Electricity: microgrids: tariffs.
(1) Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities, as defined, are under the direction of their governing boards. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
This bill would require the commission, as part of a specified rulemaking, to consider the role of microgrids in providing grid resiliency and to establish a tariff for each electrical corporation for the use of microgrids to provide electrical grid resiliency. The bill would require the commission (1) to direct each electrical corporation to file an advice letter implementing the tariff, (2) to approve an advice letter only if it minimizes costs and maximizes benefits to all ratepayers and meets the requirements of the rulemaking, and (3) to approve, reject, or modify each advice letter before January 1, 2020. PUC, in consultation with the State Energy Resources Conservation and Development Commission and the Independent System Operator, to take specified actions by January 1, 2020, to facilitate the commercialization of microgrids for distribution customers of electrical corporations. The bill would prohibit the PUC from permitting a microgrid that uses diesel backup or gas-combustion generation. The bill would require a local publicly owned electric utility that serves more than 700,000 customers to develop a process for interconnection of customer-supported microgrids and to make this process available by January 1, 2020. The bill would prohibit these local publicly owned electric utilities from permitting a microgrid that uses diesel backup or gas-combustion generation.

This bill would require each local publicly owned electric utility to establish a tariff, to be available for service before January 1, 2020, for the use of microgrids to provide electrical grid resiliency.

This bill would require each state agency to consider integrating microgrids into its infrastructure.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would require an order or other action of the commission to implement, and a violation of that order or action would be a crime, the bill would impose a state-mandated local program.
In addition, by placing requirements upon local publicly owned electric utilities, the bill would impose a state-mandated local program.
(2) 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 specified reasons.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   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)Climate change impacts California’s economy and residents in many ways, including by threatening critical infrastructure, increasing the frequency and severity of climate-related natural disasters, and interrupting critical services, such as the delivery of water, goods, and electricity.

(b)Critical infrastructure, including, but not limited to, hospitals, health centers, data centers, and telecommunications, energy, financial service, water, and transportation infrastructure, comprises physical and virtual systems and assets so vital to California, especially in situations requiring a rapid emergency response or asset deployment, that the incapacity or destruction of them would have a debilitating impact on national and local security, public health and safety, and economic security.

(c)The Office of Emergency Services’ “State of California Threat and Hazard Identification and Risk Assessment” outlined capability targets for infrastructure systems, including to stabilize critical infrastructure functions, such as energy, transportation, telecommunications, water and wastewater services, and public health and medical systems, within the first 72 hours after an incident.

(d)A resilient energy system that is built with the capacity to withstand and rapidly recover from a service disruption, including, but not limited to, a deliberate attack, or an accident, fire, flood, mudslide, or other natural disaster, is necessary to preserve the economic vitality, public health and safety, and well-being of California’s citizenry in the face of natural threats to, or other interruptions of, California’s electrical supply.

(e)Microgrids, and other distributed energy resources and transmission improvements, can make the electrical grid more resilient during and after disruptive events, as a potential source of backup generation and durable supply, to support and aid in the recovery of critical infrastructure functions in emergencies or during disruptions to the electrical supply. Generally, microgrids can enhance system reliability, provide economic benefits, and help the state meet its clean energy and greenhouse gas emissions reduction goals.

(f)Microgrids can also reduce California’s reliance on diesel-fired backup generation resources and thereby help to achieve the state’s aggressive air quality goals, which were furthered by the enactment of Chapters 135 and 136 of the Statutes of 2017, and to ensure all communities achieve high air quality levels. The effects noted in subdivision (e) and this subdivision motivate the adoption of technology solutions with minimal negative impacts to local air pollution, like microgrids.

(g)Each utility should work to incorporate an electrical grid resiliency plan into its overall distribution grid planning process. The plan should identify the investments necessary to increase the resiliency of the electrical grid and reduce the risk of electrical outages affecting emergency services, critical circuits, and critical infrastructure, and should explain how the plan’s execution would increase grid resiliency in a manner that both maximizes the benefits and minimizes the costs to ratepayers.

(h)Additionally, the appropriate state energy agencies, including the Public Utilities Commission and the State Energy Resources Conservation and Development Commission, should, based on the best available data, in consultation with other agencies or entities as appropriate, including, but not limited to, the Office of Emergency Services, the Independent System Operator, and the United States Department of Homeland Security, review the electrical grid resiliency plans and associated investment strategies.

(i)California could benefit from the implementation of microgrids at state-owned facilities and other critical infrastructure sites.

SECTION 1.

 The Legislature finds and declares all of the following:
(a) Many electricity customers are seeing the potential benefits of investing in their own distributed energy resources as part of microgrids, both to ensure their own level of reliability and to better manage their own usage.
(b) Allowing the electricity customer to manage itself according to its needs, and then to act as an aggregated single entity to the distribution system operator, allows for a number of innovations and custom operations.
(c) Key issues facing commercializing microgrids that must be addressed include all the following:
(1) How microgrids operate and their value.
(2) Improving the electrical grid with microgrids.
(3) How microgrids can play a role in implementing policy goals.
(4) How microgrids can support California’s policies to integrate a high concentration of distributed energy resources on the electrical grid.
(5) How microgrids operate in the current California regulatory framework.
(6) Microgrid technical challenges.
(d) The Public Utilities Commission, Independent System Operator, and State Energy Resources Conservation and Development Commission must take action to help transition the microgrid from its current status as a promising emerging technology solution to a successful commercial product that helps California meet its future energy goals and provides end-use electricity customers new ways to manage their individual energy needs.

SEC. 2.

 Chapter 4.5 (commencing with Section 8370) is added to Division 4.1 of the Public Utilities Code, to read:
CHAPTER  4.5. Microgrids

8370.
 For purposes of this chapter, the following definitions shall apply:
(a) “Customer” means a customer of a local publicly owned electric utility or an electrical corporation. A person or entity is a customer of an electrical corporation if the customer is physically located within the service territory of the electrical corporation and receives bundled service, distribution service, or transmission service from the electrical corporation.
(b) “Distributed energy resource” means an electric generation or storage technology that complies with the emissions standards adopted by the State Air Resources Board pursuant to the distributed generation certification program requirements of Section 94203 of Title 17 of the California Code of Regulations, or any successor regulation.
(c) “Grid islanding capacity” means the capability of a microgrid to continue to provide electricity within its electrical boundary when the electrical grid is not providing the microgrid with electricity.
(d) “Large local publicly owned electric utility” means a local publicly owned electric utility as defined in Section 224.3 that serves more than 700,000 customers.

(d)(1)

(e) “Microgrid” means an interconnected system of loads and energy resources, including, but not limited to, distributed energy resources, energy storage, demand response tools, and other management, forecasting, and analytical tools, appropriately sized to meet customer needs, within a clearly defined electrical boundary that can act as a single, controllable entity, and can connect to, disconnect from, or run in parallel with, larger portions of the electrical grid, or can be managed and isolated to withstand larger disturbances and maintain electrical supply to connected critical infrastructure.

(2)A microgrid may be owned by a large electrical corporation, as defined in Section 2827, local publicly owned electric utility, community choice aggregator, third party, or customer.

(e)“Resiliency,” as it relates to the electrical grid, for purposes of a local publicly owned electric utility, means the ability of the electrical grid to adapt to changing weather or other conditions, and to withstand and rapidly recover from disruptions caused by an emergency, natural disaster, or other disturbance.

8371.

(a)The commission, as part of commission Rulemaking 14-07-002 (July 10, 2014), Order Instituting Rulemaking to Develop a Successor to Existing Net Energy Metering Tariffs Pursuant to Public Utilities Code Section 2827.1, and to Address Other Issues Related to Net Energy Metering, and in consultation with the Energy Commission, shall consider the role of microgrids in providing grid resiliency, and shall establish a tariff for each electrical corporation for the use of microgrids to provide electrical grid resiliency, as “grid resiliency” is defined by the commission. The commission shall not permit a microgrid that uses diesel backup or gas-combustion generation.

(b)As part of the rulemaking described in subdivision (a), the commission shall consider all of the following:

(1)The size limitations of microgrids, including megawatts, customers served, and other criteria.

(2)The criteria for establishing a tariff or rate schedule by which a microgrid that can demonstrate grid islanding capacity may expeditiously interconnect to, and nondiscriminatorily access, an electrical corporation’s electrical distribution grid.

(3)The criteria to account for the operational and societal benefits of microgrids generally and ratepayer benefits specifically.

(4)The terms of the microgrid tariffs with respect to rate structure, retail rate components, and monthly charges, and the potential to conform some portion of those terms with the corresponding terms in the contract or tariff to which a customer would be assigned if the customer was not an eligible microgrid resource.

(5)The use of a demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or other charge that would increase a microgrid’s costs.

(6)The conditions under which a microgrid customer shall receive the net energy metering benefits established pursuant to Section 2827.1 for any excess generation the customer exports to the electrical grid.

(c)The commission shall direct each electrical corporation to file an advice letter to implement the tariff described in subdivision (a). The commission shall approve, reject, or modify each advice letter before January 1, 2020. The commission shall approve an advice letter only if it minimizes costs and maximizes benefits to all ratepayers and meets the requirements of the rulemaking described in subdivision (a).

8371.
 (a) The commission, in consultation with the Energy Commission and the Independent System Operator, shall take all the following actions by January 1, 2020, to facilitate the commercialization of microgrids for distribution customers of electrical corporations:
(1) Develop microgrid service standards necessary to meet state and local permitting requirements.
(2) Without shifting costs to ratepayers, develop methods to reduce cost barriers for microgrid interconnection requirements.
(3) Develop guidelines that determine what impact studies are required for microgrids to connect to the electrical corporation grid.
(4) Develop separate electrical corporation rates and tariffs, as necessary, to support microgrids.
(5) Form a working group to codify standards and protocols needed to meet California electrical corporation and Independent System Operator microgrid requirements.
(6) Develop a standard for direct current metering in Electric Rule 21 to streamline the interconnection process and lower interconnection costs for direct current microgrid applications.
(b) The commission shall not permit a microgrid that uses diesel backup or gas-combustion generation.

8372.
 (a) Each large local publicly owned electric utility shall establish a tariff for the use of microgrids to provide electrical grid resiliency and shall not permit a microgrid that uses diesel backup or gas-combustion generation. A tariff established pursuant to this section shall be available for service before develop a process for interconnection of customer-supported microgrids. The process for interconnection shall be made available by January 1, 2020.
(b) A large local publicly owned electric utility shall not permit a microgrid that uses diesel backup or gas-combustion generation.

(b)In establishing a tariff pursuant to subdivision (a), the governing board of a local publicly owned electric utility shall consider all the following:

(1)The size limitations of microgrids, including megawatts, customers served, and other criteria.

(2)The criteria by which a microgrid that can demonstrate grid islanding capacity may expeditiously interconnect to, and nondiscriminatorily access, the local publicly owned electric utility’s electrical distribution grid.

(3)The criteria to account for the operational and societal benefits of microgrids generally and ratepayer benefits specifically.

(4)The terms of the microgrid tariff with respect to rate structure, retail rate components, and monthly charges, and the potential to conform some portion of those terms with the corresponding terms in the contract or tariff to which a customer would be assigned if the customer was not an eligible microgrid resource.

(5)The use of a demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or other charge that would increase a microgrid’s costs.

(6)The conditions under which a microgrid customer shall receive the net energy metering benefits established pursuant to Section 2827 for any excess generation the customer exports to the electrical grid.

8373.

Each state agency shall consider integrating microgrids into its infrastructure.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because 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.