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AB-2693 Natural gas-fired generating units.(2017-2018)

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Date Published: 04/11/2018 09:00 PM
AB2693:v97#DOCUMENT

Amended  IN  Assembly  April 11, 2018
Amended  IN  Assembly  March 21, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2693


Introduced by Assembly Member Quirk

February 15, 2018


An act to add Section 454.52.5 to the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2693, as amended, Quirk. Natural gas-fired powerplants. generating units.
Under existing law, the Public Utilities Commission has regulatory jurisdiction over electrical and gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility, including electrical and gas corporations, and requires that those rates and charges be just and reasonable.
This bill would require the commission, before January 1, 2020, and every 2 years thereafter, in consultation with the Independent System Operator, to analyze and determine for specified years which natural gas-fired electric generation powerplants generating units in existence at the time of the analysis are needed to ensure short-term and long-term electric local and system electrical reliability in the state. The bill would, after that analysis and determination, require the commission, in consultation with the State Air Resources Board, to identify from among those powerplants generating units preferred powerplants. generating units. The bill would require the commission to ensure that the preferred powerplants generating units receive sufficient revenues to remain operational. The bill would require the commission to modify the gas supply tariff for natural gas-fired powerplants generating units to authorize the collection of rate revenues mostly in demand capacity charges, as specified.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because this bill would be a part of the act and because a violation of an order or decision of the PUC implementing its requirements would be a crime, the 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 454.52.5 is added to the Public Utilities Code, to read:

454.52.5.
 (a) (1) The Legislature finds and declares all of the following:
(A) The California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) requires the state to reduce its emissions of greenhouse gases to 40 percent below 1990 levels by 2030.
(B) The California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3) requires that 50 percent of the state’s electricity come from renewable resources by 2030.
(C) By adopting these requirements, the Legislature expects load-serving entities to procure a greater quantity of renewable resources and to rely less on natural gas-fired powerplants. generating units. The variable generation profile of wind and solar generation changes the resource attributes needed for electric grid reliability and to date has been primarily addressed by relying on natural gas-fired powerplants generating units that can quickly ramp up and down, and come online quickly during grid contingencies.
(D) The Legislature recognizes the need to prepare for reductions in the emissions of greenhouse gases.
(E) California should begin an orderly phase out of its natural gas-fired powerplants generating units while preserving electric system reliability.
(F) There are zero-carbon emitting technologies that can provide some of the same grid reliability services that natural gas-fire powerplants gas-fired generating units currently provide.
(G) Criteria air pollutants associated with cycling and starting up a natural gas-fired powerplant generating unit are significantly higher than emissions associated with steady-state generation.
(H) There is a risk that gas-fire powerplants gas-fired generating units that may be needed for grid reliability will not remain in operation due to insufficient revenues.
(I) Requiring the state to analyze future grid reliability needs, and the appropriate role for natural gas in that future, will provide information needed to ensure sufficient revenue for necessary natural gas-fired powerplants generating units to remain operational.
(2) It is the intent of the Legislature that the commission do all of the following:
(A) Periodically analyze, in consultation with the Independent System Operator, California’s future grid reliability needs.
(B) Determine, in consultation with the State Air Resources Board, which natural gas-fired powerplants generating units can be retired and which units are needed to ensure local and system grid reliability, while minimizing emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants.
(C) In performing the analysis and determination intended pursuant to subparagraphs (A) and (B), the commission should consider all relevant factors.
(D) Ensure that natural gas-fired powerplants generating units determined to be necessary for grid reliability receive sufficient revenue to remain operational.
(E) Revise gas tariffs for natural gas-fired powerplants generating units to allow a gas corporation to collect most of its revenues from rates through demand capacity charges and the remaining revenues through volumetric charges.
(b) Before January 1, 2020, and every two years thereafter, the commission, in consultation with the Independent System Operator, shall analyze and determine for the years 2025 and 2030, and subsequent dates determined appropriate by the commission, which natural gas-fired powerplants generating units in existence at the time of the analysis could be used to ensure short-term and long-term electric local and system electrical reliability in the state, balancing authority area of the Independent System Operator, including during extreme weather events. The commission shall apply an appropriate reliability standard, such as the commonly used “one event in ten years” standard.
(c) Following the analysis and determination pursuant to subdivision (b), the commission, in consultation with the State Air Resources Board, shall determine from among the natural gas-fired powerplants generating units identified in pursuant to subdivision (b) which of those powerplants generating units are preferred. In making this determination, the commission shall consider all of the following factors:
(1) Minimization of Minimizing the systemwide emissions of greenhouse gases from the electrical system.
(2) Minimization of Minimizing the emissions of criteria air pollutants and toxic air contaminants from natural gas-fired powerplants generating units in steady-state operation, partial-load operation, startup, and shutdown.
(3) Minimization of Minimizing impacts on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(4) Efficiency of each natural gas-fired powerplant. generating unit.
(5) The unit characteristics of each natural gas-fired powerplant, generating unit, including, but not limited to, minimum load, ramping, ramp rates, start times, and flexibility.
(6) Feasibility and cost of nonemitting resources. alternatives to natural gas-fired generation.
(7) Minimization of Minimizing the use of fresh water.
(d) The commission shall ensure that the preferred natural gas-fired powerplants generating units identified pursuant to subdivision (c) receive sufficient revenue to remain operational for the time period they are needed, including revenues sufficient to reimburse costs imposed by the gas supply tariffs, as modified pursuant to subdivision (e), while ensuring that owners or operators of powerplants generating units do not exercise market power. The commission may use any of the following mechanisms to ensure this result: collect those revenues from all benefiting customers:
(1) The mechanism described in paragraph (1) of subdivision (c) of Section 365.1.
(2) A resource adequacy program applicable to all load-serving entities that ensures all benefiting customers pay in proportion to their loads.
(3) Another mechanism determined appropriate by the commission that ensures that all benefiting customers pay in proportion to their loads.
(e) The commission shall modify the gas supply tariffs for natural gas-fired powerplants generating units so that the gas corporation supplying the powerplant generating units collects most of its revenue from rates through demand capacity charges and the remaining revenue through volumetric charges.

SEC. 2.

 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.