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AB-813 Multistate regional transmission system organization: membership.(2017-2018)

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Date Published: 08/07/2018 09:00 PM
AB813:v91#DOCUMENT

Amended  IN  Senate  August 07, 2018
Amended  IN  Senate  June 12, 2018
Amended  IN  Senate  June 06, 2018
Amended  IN  Senate  March 08, 2018
Amended  IN  Senate  September 08, 2017
Amended  IN  Senate  August 31, 2017
Amended  IN  Assembly  May 30, 2017
Amended  IN  Assembly  March 21, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 813


Introduced by Assembly Member Holden
(Coauthors: Assembly Members Patterson and Quirk)
(Coauthors: Senators Stern and Wieckowski)

February 15, 2017


An act to add Section 359.5 to, to add Chapter 7 (commencing with Section 8390) to Division 4.1 of, to repeal Section 352 of, to repeal and add Section 359 of, and to repeal Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


AB 813, 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, Commission (PUC), the State Energy Resources Conservation and Development Commission, Commission (Energy Commission), the State Air Resources Board, 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 State Energy Resources Conservation and Development Commission (Energy Commission) for review. The bill would require the Energy Commission, in consultation with the Public Utilities Commission (PUC) PUC and the State Air Resources Board (state board), 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 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, 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 and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2019, has entered into an agreement with the ISO indicating an intent to become a participating transmission owner, would authorize the ISO to proceed to implement the proposal. The bill would prohibit the ISO from implementing the new governance structure prior to January 1, 2021.
Existing law establishes the California Renewables Portfolio Standard Program, which requires the PUC to establish a renewables portfolio standard requiring all retail sellers, defined as including electrical corporations, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatthours of those products sold to their retail end-use customers achieves certain percentages of retail sales by certain dates. 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 procurement requirements established by the program. The program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles adopted by the commission, requires that all retail sellers and local publicly owned electric utilities procure a balanced portfolio of electricity products from specified categories of eligible renewable energy resources, known as portfolio content categories. Existing law provides that electricity products may be differentiated for these purposes by their impacts on the operation of the electrical grid in supplying electricity, as well as meeting the requirements of the program.
If the ISO becomes a multistate regional transmission system organization and thereafter operates an expanded balancing authority area that includes one or more new participating transmission owners located outside of California, this bill would specify that the boundary of the balancing authority area used for determining the portfolio content categories is the boundary of the Independent System Operator’s balancing authority area as of December 31, 2018. However, if another balancing authority in California elects to join the ISO’s balancing authority area, the bill would add the facilities of that balancing authority to the ISO’s balancing authority area for purposes of determining the portfolio content categories.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 (a) In enacting this act, it is the intent of the Legislature to enable the transition of the Independent System Operator to a regional governance structure. To that end, it is the intent of the Legislature that the Independent System Operator continue the work it began with stakeholder groups throughout the region that resulted in the “Second Revised Proposal: Principles for Governance of a Regional ISO” published on October 7, 2016 (October 2016 Proposal).
(b) The October 2016 Proposal included a two-step process for selecting regional board members that consisted of the following: (1) a stakeholder-based nominating committee that selects nominees with the assistance and support of a professional search firm and (2) an approval committee, consisting of the voting members of the western states committee, which would confirm each slate of nominees. It is the intent of the Legislature that the Independent System Operator continue to work with regional stakeholders to develop and refine this proposal, subject to its public process.
(c) The October 2016 Proposal proposed that the western states committee would also have primary approval authority over certain regional Independent System Operator proposals on specific topics within the subject areas of transmission cost allocation and resource adequacy. In that proposal, primary authority means the committee will play the lead role for its defined areas of authority, and approval by the committee would be a prerequisite for any filing made by the Independent System Operator with the Federal Energy Regulatory Commission pursuant to Section 205 of the Federal Power Act (16 U.S.C. Section 824d) for approval of tariff provisions in those areas. It is the intent of the Legislature that the Independent System Operator continue to work with regional stakeholders to develop and refine this proposal, subject to its public process.

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 proposal that complies with each of the requirements of Section 8391. 8392.
(b) For purposes of meeting the requirements of subdivision (n) (m) of Section 8391, 8392, the proposal shall provide for the establishment of a western states’ committee. The committee shall have three 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.
(c) The open meeting policy and records availability policy of the Independent System Operator in effect as of January 31, 2018, shall meet the requirements of subdivisions (d) and (f) of Section 8391. 8392.
(d) The Energy Commission, in consultation with the Public Utilities Commission and the State Air Resources Board, shall review the governance proposal for compliance with the requirements of Chapter 7 (commencing with Section 8390) of Division 4.1. 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.
(e) If the Energy Commission determines that the governance proposal meets the requirements of Chapter 7 (commencing with Section 8390) of Division 4.1 and if a transmission owner from outside California that is not a participating transmission owner as of January 1, 2019, 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. The new governance structure shall not be implemented before January 1, 2021. Upon completing implementation of the governance structure, the Independent System Operator or its successor shall provide notice to the Energy Commission.
(f) (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), Section 345.5, and Sections 346 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.

 Section 395.5 359.5 is added to the Public Utilities Code, to read:

395.5.359.5.
 (a) If the Independent System Operator becomes a multistate regional transmission system organization pursuant to the process set forth in Section 359 and thereafter operates a balancing area that expands beyond the Independent System Operator’s balancing authority area as for December 31, 2018, to include one or more new participating transmission owners located outside of California, the balancing authority area boundary used for determining compliance with the requirements of Section 399.16, except as provided in subdivision (b), shall continue to be the boundary of the Independent System Operator’s balancing authority area as of December 31, 2018.
(b) If another balancing authority in California elects to join the Independent System Operator’s balancing authority area, the balancing authority used for determining compliance with the requirements of Section 399.16 shall include facilities of that other balancing authority that are added to the Independent System Operator’s balancing authority area.

SEC. 6.

 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. 7.

 Chapter 7 (commencing with Section 8390) is added to Division 4.1 of the Public Utilities Code, to read:
CHAPTER  7. Multistate Regional Transmission System Organizations

8390.
 For purposes of this chapter, the following terms have the following meanings:
(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 8394, 8395, “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.

8391.
 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 or other forward procurement 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.

8391.8392.
 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 prior to 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 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.
(e) 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.
(f) Provide public access to the records of the organization consistent with the general policies of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), consistent with the other duties of the organization.
(g) Require that the governing documents of the organization be posted and maintained on the organization’s public Internet Web site.
(h) 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.
(i) (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.
(j) Prohibit the multistate regional transmission organization from operating a centralized capacity market in California for the forward procurement of electrical generating capacity that requires capacity to clear at a market clearing price in order to count for resource adequacy purposes.
(k) Ensure that the dispatch of resources by the multistate regional transmission 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.
(l) 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.
(m) Enhance the competitive structure of the organization by providing for and maintaining an independent market monitor.
(n) 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.
(o) Enable participation of demand response, storage, and other distributed energy resources in the organization’s markets.
(p) 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.
(q) 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.

8392.8393.
 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.

8393.8394.
 (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 8391, 8392, 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 operator for compliance with the requirements of Section 8391. Sections 8391 and 8392. 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 Section 8391. Sections 8391 and 8392. 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 organization and the Energy Commission determines that the organization’s bylaws and organizational documents do not meet the requirements of Section 8391, Sections 8391 and 8392, the California transmission owner, retail seller, or local publicly owned electric utility shall not remain in the organization.

8394.8395.
 The Independent System Operator shall not be deemed to be a multistate regional transmission system organization unless and until it has completed the governance change process requirements of Section 359 and the Energy Commission has provided notice of this change to the Secretary of State pursuant to paragraph (1) of subdivision (e) of that section.