Bill Text: CA SB1369 | 2017-2018 | Regular Session | Amended

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

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Bill Title: Energy: green electrolytic hydrogen.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2018-09-19 - Chaptered by Secretary of State. Chapter 567, Statutes of 2018. [SB1369 Detail]

Download: California-2017-SB1369-Amended.html

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Amended  IN  Senate  April 11, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill

No. 1369

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Introduced by Senator Skinner

February 16, 2018

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An act to amend Section 6354 add Chapter 8.5 (commencing with Section 2847) to Part 2 of Division 1 of the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL'S DIGEST

SB 1369, as amended, Skinner. Energy: municipal public lands use surcharge. green hydrogen.

Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing boards.

This bill would require the PUC, in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission) and the State Air Resources Board, to develop 5 green hydrogen pilot projects meeting certain criteria to produce green hydrogen, as defined. The pilot projects would be required to produce that hydrogen through electrolysis using electricity meeting specified criteria and to reduce emissions of greenhouse gases.

Existing law requires the PUC to adopt a process for each load-serving entity, defined as including electrical corporations, electric service providers, and community choice aggregators, to file for approval an integrated resource plan and a schedule for periodic updates to the plan to ensure that load-serving entities accomplish specified objectives. Existing law requires that the governing board of a local publicly owned electric utility with an annual electrical demand exceeding 700 gigawatthours adopt an integrated resource plan and a process for updating the plan at least once every 5 years to ensure the utility achieves specified objectives. Existing law requires that local publicly owned electric utility integrated resource plans and any updates be filed with the Energy Commission, and requires the Energy Commission to review the plans and plan updates and, if the Energy Commission determines a plan or plan update is deficient, to provide recommendations to correct the deficiencies.

This bill would require the PUC and Energy Commission to consider the existing and potential uses for green hydrogen when evaluating an integrated resource plan.

Existing law authorizes a municipal legislative body to grant a franchise to any person, firm, or corporation to use, or construct and use, poles, wires, conduits, and appurtenances for delivering electricity, or to use, or lay and use, pipes and appurtenances for distributing gas, under terms and conditions provided by law. Existing law requires a transportation customer, as defined, who receives transportation service from an energy transporter, as defined, to pay a municipal surcharge through the energy transporter’s normal billing process, which is remitted to the municipality that granted the applicable franchise, for the use of public lands by the transportation customer. In the event that payment on a transportation customer closed account becomes more than 90 days delinquent, or a transportation customer notifies the utility that the customer refuses to pay the surcharge, existing law requires the energy transporter to notify the municipality of the delinquency and provide information on the name and address of the delinquent transportation customer and the surcharge amount owed.

This bill would make nonsubstantive changes to those delinquency provisions.

Digest Key

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

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Bill Text

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

SECTION 1.

 The Legislature finds and declares all of the following:

(a) Green hydrogen, which is hydrogen gas produced through electrolysis, has become more available and cost effective due to the successful development of new low-cost renewable energy resources, like solar and wind.

(b) Green hydrogen production optimizes valuable eligible renewable energy resources, particularly intermittently generated electricity by converting electricity to green hydrogen.

(c) Green hydrogen will be an important resource to assist the state to maximize intermittent electricity generation and energy storage for short-term, long-term, and seasonal storage applications in the future, as the electrical systems integrates higher levels of intermittent low-cost electricity from eligible renewable energy resources.

(d) California’s goals for reducing emissions of greenhouse gases can be served by utilizing, to the maximum extent possible, eligible renewable energy resources either directly to serve consumers of electricity or indirectly through green hydrogen production to replace existing natural gas applications, including displacing natural gas, gasoline, or other fossil fuel-derived gases for electric generation, heating sources, transportation fuels, and other industrial practices.

(e) Green hydrogen can assist with reducing emissions of greenhouse gases by leveraging the success of the California Renewables Portfolio Standard Program to further reduce emissions of greenhouse gases and criteria air pollutants from other sectors, including the gas and transportation sectors, as an important next step for deeper decarbonization across all economic sectors to meet the state’s overall goals for reducing emissions of greenhouse gases.

(f) Utilizing existing energy infrastructure to produce green hydrogen will benefit consumers by avoiding new, redundant, and excess energy infrastructure and optimizing the use of current system investments.

SEC. 2.

 Chapter 8.5 (commencing with Section 2847) is added to Part 2 of Division 1 of the Public Utilities Code, to read:

CHAPTER  8.5. Green Hydrogen

Article  1. Definitions

2847.

 For purposes of this chapter, the following terms have the following meanings:

(a) “Eligible renewable energy resource” means a source of electrical generation that is an eligible renewable energy resource pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1).

(b) “Green hydrogen” means hydrogen gas produced through electrolysis and does not include hydrogen gas manufactured using steam reforming or some other conversion technology that produces hydrogen from a fossil fuel feedstock.

(c) “Integrated resource plan” means an integrated resource plan filed by a load-serving entity for approval by the commission pursuant to Section 454.52 or an integrated resource plan adopted by a local publicly owned electric utility and filed with the Energy Commission pursuant to Section 9622.

(d) “ISO” means the Independent System Operator or a successor multistate independent system operator.

(e) “Load-serving entity” has the same meaning as defined in Section 380.

(f) “State board” means the State Air Resources Board.

Article  2. Green Hydrogen Pilot Program

2848.

 (a) The commission, in consultation with the Energy Commission and the state board, shall develop five green hydrogen pilot projects to produce green hydrogen that do all of the following:

(1) Utilize electricity transmitted over the electrical grid if the energy optimizes renewable energy resources on the electrical grid or provides overall electrical system balancing benefits, including short-term, multi-day, and seasonal energy storage, reduces demand for peak electrical generation, defers or substitutes for an investment in generation, transmission, or distribution assets, or improves the reliable operation of the electrical transmission or distribution grid.

(2) Utilize electricity from zero-carbon electricity resources as determined by the commission.

(3) Reduce emissions of greenhouse gases.

(b) The pilot projects shall meet the following criteria:

(1) Each shall use no more than five megawatts, unless the commission determines that higher usage is appropriate.

(2) Together, they shall achieve reasonable geographic diversity.

(3) They shall be distributed among various load-serving entities.

(4) They shall facilitate reductions in emissions of greenhouse gases and criteria air pollutants.

(5) They shall produce electrical system benefits and reduce fossil fuel derived natural gas usage.

Article  3. Integrated Resource Planning

2849.

 The commission and the Energy Commission shall consider existing and potential uses for green hydrogen when evaluating an integrated resource plan.

SECTION 1.Section 6354 of the Public Utilities Code is amended to read:

6354.

(a)Surcharges calculated pursuant to Section 6353 shall be recovered from the transportation customer through the energy transporter’s normal billing process.

(b)Surcharges collected from the transportation customer shall be remitted to the municipality granting a franchise pursuant to this division in the manner and at the time prescribed for payment of franchise fees in the energy transporter’s franchise agreement. In recognition of costs to be incurred by energy transporters in administering the surcharge established by this chapter, the energy transporter may retain interest earned on cash balances resulting from the timing difference between the monthly collection of the surcharge and the remittance thereof, as required by individual franchise agreements.

(c)In the event that payment on a transportation customer closed account becomes more than 90 days delinquent, or a transportation customer notifies the utility that the customer refuses to pay the surcharge, the energy transporter shall, within 30 days, notify the municipality of the delinquency and provide information on the name and address of the delinquent transportation customer and the surcharge amount owed. The energy transporter shall not be liable for these delinquent surcharges.

(d)The municipality, including its authorized officials, employees, and agents, shall use the delinquent transportation customer information only for the purpose of enforcing the surcharge and shall not disclose the information to any officials, employees, agents, or any third parties who are not responsible for and involved in the enforcement of the municipality’s franchise agreements. Nothing herein precludes the municipality, through appropriate officials, employees, or agents, from contacting a transportation customer to collect any surcharges due from the transportation customer.

(e)By March 31 of each year, every person, firm, or corporation that transports gas or electricity to any other person, firm, or corporation within a municipality, upon request of the municipality, shall provide the names and addresses of each of its transportation customers and any other information for the preceding calendar year that may be necessary for the municipality to enforce its taxes and fees. The municipality, including its authorized employees and agents, shall use the transportation customer information and any other customer specific information only for the purpose of enforcing its taxes and fees and shall not disclose the information to any officials, employees, agents, or any third parties not responsible for, and involved in, the enforcement of the taxes and fees. Nothing in this subdivision shall prohibit the municipality, through appropriate officials, employees, or agents, from contacting the customer to collect any taxes and fees due from the customer.

(f)Notwithstanding any other provision of law, any transportation customer information provided by an energy transporter to a municipality pursuant to this chapter or pursuant to a utility user tax ordinance is not a public record within the definitions contained in the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).

(g)In acknowledgment of the potential for systems startup costs to be incurred by the energy transporters in implementing this chapter, authorization is hereby granted for each energy transporter to retain 10 percent of the added fees collected pursuant to this chapter on transported gas or electricity for systems startup costs not to exceed seven hundred fifty thousand dollars ($750,000), provided that the portion of collections withheld by the energy transporter shall be apportioned to all municipalities based upon each municipality’s share of total franchise fees allocated by the transporter in the prior calendar year.

(h)Surcharges collected pursuant to this chapter shall be separately identified on the transportation customer’s normal bill. At the request of the energy transporter, the municipality shall publish notice in a newspaper of general circulation announcing the change in method of collecting franchise fees brought about by deregulation. Energy transporters may send out notice to transportation customers announcing the change in method of collecting franchise fees through the surcharge. The mailing costs incurred by the energy transporter shall be considered to be part of the implementation costs referenced in subdivision (g).

(i)In the case of partial payment by a transportation customer, the transportation customer payment shall first be applied to the energy transporter charges. Only after all energy transporter charges have been satisfied, shall remaining payment amounts be used to satisfy the municipality’s surcharge requirement.

(j)Energy transporter collection of the surcharge shall begin on or before April 1, 1994. During the interim period between expiration of the targeted sales program and implementation of the energy transporters surcharge collection program, upon request of the municipality, the energy transporter shall provide the municipality with a monthly list of the names and addresses of the transportation customers within the municipality’s jurisdiction, the volume of transported gas in therms, the applicable tariffed core subscription weighted average cost of gas (WACOG) exclusive of any California sourced franchise factor, and the franchise fee factor authorized by the commission to enable the municipality to collect the surcharge directly from the transportation customers. Notwithstanding any other provision of law, except as provided in Section 6352, a municipality is hereby authorized to collect an interim surcharge computed in accordance with Section 6353 until the energy transporter commences billing of the surcharge pursuant to this chapter.