Amended  IN  Senate  September 06, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 597

Introduced by Senator Hueso

February 22, 2019

An act to amend Sections 454.55, 454.56, 913.10, and 913.11 of the Public Utilities Code, relating to energy. An act to add Section 2839.5 to the Public Utilities Code, relating to energy storage.


LEGISLATIVE COUNSEL'S DIGEST


SB 597, as amended, Hueso. Energy efficiency and demand reduction: reporting. Pumped hydropower system: pilot project.
Existing law requires the Public Utilities Commission to open a proceeding to determine appropriate targets, if any, for each load-serving entity, including electrical corporations, to procure viable and cost-effective energy storage systems, to be achieved by December 31, 2015, and December 31, 2020. If determined to be appropriate, the commission is required to adopt the procurement targets by October 1, 2013, and to reevaluate the determinations not less than once every 3 years.
This bill would require the commission to direct one or more electrical corporations to procure of a single large-scale, long-duration energy storage pilot project meeting certain requirements, as specified. The bill would require an electrical corporation subject to this procurement requirement to submit to the commission for approval a proposed cost-of-service or similar rate to cover the costs of the procurement based on the proportionate benefit derived by each ratepayer class from the pilot project.
Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of an order or decision of the commission implementing the requirements of the bill would be a crime, this bill would impose a state-mandated local program by creating a new crime.
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 a specified reason.

Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law requires each electrical and gas corporation, by July 1, 2018, and every 4 years thereafter, to report on its progress toward achieving certain energy efficiency and demand reduction targets established for electrical and gas corporations by the PUC, in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission).

This bill would require that the reports be submitted every 3 years.

Existing law requires the PUC to report to the Legislature by July 1, 2019, and every 4 years thereafter, on the progress made by electrical and gas corporations toward achieving the energy efficiency and demand reduction targets established for those corporations.

This bill would require the PUC to submit the reports every 3 years.

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

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) California is a world leader in renewable energy and the state already sources nearly one-third of its power from renewable energy sources, mainly solar and wind. California is rapidly moving toward the goal of obtaining 60 percent of its power needs from renewable energy sources by 2030 and seeking even higher levels thereafter.
(b) California must assure energy ratepayers that a renewable grid will be cost-effective and reliable. California must show that the renewable energy revolution will promote inclusive growth that creates good jobs in California that will stay in California, and must ensure that the shift to renewable energy sources will help achieve the state’s goal that renewable energy resources and zero-carbon resources supply 100 percent of all retail sales of electricity by December 31, 2045.
(c) The Independent System Operator has identified long-duration bulk energy storage, when constructed in a sufficiently large scale, as supporting the California electrical grid’s need for fast-ramping and flexible resources to balance the electrical grid and store excess generation from eligible renewable energy resources.
(d) Extensive academic research, along with practical commercial experience, have shown that pumped hydropower energy storage systems are the most cost-effective source of large-scale, long-duration energy storage.
(e) New frameworks are needed to procure pumped hydropower energy storage because the most cost-effective projects are large in scale and have long planning and procurement cycles. A successful procurement project would assist in the design and establishment of a framework and reduce risk for subsequent projects.
(f) Because large-scale, long-duration energy storage will contribute to systemwide reliability of the electrical transmission grid and facilitate additional procurement of renewable sources to support progress toward 100 percent zero-carbon electricity sources, it is appropriate that the procurement be done through a public pilot project procurement process.

SEC. 2.

 Section 2839.5 is added to the Public Utilities Code, to read:

2839.5.
 (a) For purposes of this section, “large-scale, long-duration energy storage pilot project” or “pilot project” means an energy storage project that has all of the following attributes:
(1) The project provides at least 500 megawatts of capacity over a period of at least eight hours.
(2) The project is a pumped hydropower project that is located in southern California.
(3) The main surface water reservoir used by the project is owned, substantially or fully, by one or more public agencies.
(4) The project uses, as a significant feature of the project, a surface water reservoir that has at least 200,000 acre-feet of storage capacity and that is in existence as of January 1, 2019.
(5) The project is located in close proximity to major electricity transmission interconnection facilities and is located close to major load centers.
(b) (1) To promote grid reliability and integration of renewable resources into California’s electricity portfolio to meet, in a cost-effective manner, the requirements of Section 399.15 and the zero-carbon emission objectives pursuant to state policy set forth in Section 454.53, the commission, by January 1, 2021, shall direct an electrical corporation to procure energy storage capacity from a single large-scale, long-duration energy storage project that will commence commercial operation by June 30, 2030.
(2) If the commission finds that it would be more economically efficient for more than one electrical corporation to participate in the procurement of energy storage capacity from the pilot project, the commission may direct two or more electrical corporations to jointly procure energy storage capacity from the pilot project.
(c) The pilot project shall be constructed pursuant to a project labor agreement, as defined in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code, that binds all contractors and subcontractors performing work on the pilot project to use a skilled and trained workforce.
(d) (1) The revenue requirements of the pilot project shall be recovered through a cost-of-service or similar rate that is not to be charged to the customers of the electrical corporation until the date of commercial operation of the pilot project.
(2) (A) An electrical corporation participating in the procurement shall submit to the commission for approval a proposed cost-of-service or similar rate that is based on the proportionate benefit derived from the pilot project by each ratepayer class of the electrical corporation.
(B) The commission, when approving the proposed cost-of-service or similar rate, shall estimate the size and geographic location of the beneficiaries of the pilot project to ensure that the charge imposed pursuant to this section to any class of ratepayers is proportional to the additional ramping and storage services received by that ratepayer class from the pilot project.
(e) All state agencies are encouraged to work closely with the owner of the surface water reservoir for the pilot project in making land available for, and in issuing permits or approvals for, the pilot project.

SEC. 3.

  No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only 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.
SECTION 1.Section 454.55 of the Public Utilities Code is amended to read:
454.55.

(a)(1)The commission, in consultation with the Energy Commission, shall identify all potentially achievable cost-effective electricity efficiency savings and establish efficiency targets for an electrical corporation to achieve, pursuant to Section 454.5, consistent with the targets established pursuant to subdivision (c) of Section 25310 of the Public Resources Code.

(2)By July 1, 2018, and every three years thereafter, each electrical corporation shall report on its progress toward achieving the targets established pursuant to paragraph (1).

(b)(1)By December 31, 2023, the commission shall, in a new or existing proceeding, undertake a comprehensive review of the feasibility, costs, barriers, and benefits of achieving a cumulative doubling of energy efficiency savings and demand reduction by 2030 pursuant to subdivision (c) of Section 25310 of the Public Resources Code.

(2)Notwithstanding subdivision (c) of Section 25310 of the Public Resources Code, if the commission concludes the targets established for electrical corporations to achieve pursuant to subdivision (a) are not cost effective, feasible, or pose potential adverse impacts to public health and safety, the commission shall revise the targets to the level that optimizes the amount of energy efficiency savings and demand reduction and shall modify, revise, or update its policies as needed to address barriers preventing achievement of those targets.

(c)The commission shall ensure that there are sufficient moneys available to electrical corporations to meet the efficiency targets established pursuant to subdivision (a). This subdivision shall not be construed to authorize the commission to impose or increase any tax.

SEC. 2.Section 454.56 of the Public Utilities Code is amended to read:
454.56.

(a)The commission, in consultation with the Energy Commission, shall identify all potentially achievable cost-effective natural gas efficiency savings and establish efficiency targets for the gas corporation to achieve, consistent with the targets established pursuant to subdivision (c) of Section 25310 of the Public Resources Code.

(b)A gas corporation shall first meet its unmet resource needs through all available natural gas efficiency and demand reduction resources that are cost effective, reliable, and feasible.

(c)By July 1, 2018, and every three years thereafter, each gas corporation shall report on its progress toward achieving the targets established pursuant to subdivision (a).

(d)Notwithstanding subdivision (c) of Section 25310 of the Public Resources Code, if the commission concludes in its review pursuant to paragraph (1) of subdivision (b) of Section 454.55 that the targets established for gas corporations to achieve pursuant to subdivision (a) are not cost effective, feasible, or pose potential adverse impacts to public health and safety, the commission shall revise the targets to the level that maximizes the amount of energy efficiency savings and demand reduction and shall modify, revise, or update its policies as needed to address barriers preventing achievement of those targets.

(e)The commission shall ensure that there are sufficient moneys available to gas corporations to meet the efficiency targets established pursuant to subdivision (a). This subdivision shall not be construed to authorize the commission to impose or increase any tax.

SEC. 3.Section 913.10 of the Public Utilities Code is amended to read:
913.10.

By July 1, 2019, and every three years thereafter, the commission shall report to the Legislature on the progress toward achieving the targets established pursuant to subdivision (a) of Section 454.55. The commission shall include specific strategies for, and an update on, progress toward maximizing the contribution of electricity efficiency savings in disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.

SEC. 4.Section 913.11 of the Public Utilities Code is amended to read:
913.11.

By July 1, 2019, and every three years thereafter, the commission shall report to the Legislature on the progress toward achieving the targets established pursuant to subdivision (a) of Section 454.56. The commission shall include specific strategies for, and an update on, progress toward maximizing the contribution of energy efficiency savings in disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.