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SB-692 Transmission: transmission and wheeling access charges.(2017-2018)

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Date Published: 06/13/2018 09:00 PM
SB692:v95#DOCUMENT

Amended  IN  Assembly  June 13, 2018
Amended  IN  Assembly  June 05, 2017
Amended  IN  Senate  April 18, 2017
Amended  IN  Senate  March 23, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 692


Introduced by Senator Allen
(Coauthor: Senator Wiener)
(Coauthor: Assembly Member Berman)

February 17, 2017


An act to add Section 350 to the Public Utilities Code, relating to transmission.


LEGISLATIVE COUNSEL'S DIGEST


SB 692, as amended, Allen. Transmission: transmission and wheeling access charges.
Existing law vests the Public Utilities Commission (PUC) with jurisdiction over the delivery of electrical services. Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to make certain filings with the Federal Energy Regulatory Commission (FERC) and to seek authority from FERC as needed to give the ISO the ability to secure generating and transmission resources necessary to guarantee achievement of planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.

This bill would require the ISO to undertake a stakeholder initiative to consider modification of the billing determinants to which the operator applies the transmission and wheeling access charges, as specified. The bill would require the ISO, by June 30, 2018, to submit to FERC proposed modifications of the billing determinants for approval. The bill would require the ISO to fully implement any modification approved by FERC within one year of the date of approval.

This bill would establish a state policy that load serving entities, including local publicly owned electric utilities, should receive direct financial benefit or indirect benefit for their ratepayers for the value of distributed generation resources in avoiding transmission costs. The bill would authorize the PUC, jointly with ISO and in consultation with relevant stakeholders, to convene a stakeholder process to develop modifications of tariffs governing transmission access charges, wheeling access charges, or retail rate structures as necessary to implement that policy and to ensure the tariffs conform to specified conditions. If the stakeholder process is undertaken, the bill would require the completion of the process by July 1, 2020. The bill would require public agencies or corporations with jurisdiction over the modifications to approve those modifications by October 31, 2020. For elements of the modifications that require approval by FERC, the bill would require the submission of those elements to FERC by January 1, 2021, and would require the commission and load serving entities, including local publicly owned electric utilities, with jurisdiction over those elements of the modifications to implement them within one year of the date of approval by FERC. Because the bill would impose additional duties on local publicly owned electric utilities, this bill would impose a state-mandated local program. If no modifications are approved by October 31, 2020, the bill would require each electrical corporation that recovers transmission charges from the customers of more than one load serving entity to modify its rules and tariffs to accomplish certain objectives regarding transmission charges. The bill would require the submission of those modifications to FERC by January 1, 2021.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because the above provisions amend the Public Utilities Act, and the commission would be required to issue an order, decision, rule, direction, demand, or requirement to implement those provisions, a violation of any of which would be a crime, this bill would impose a state-mandated local program.
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: NOYES   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 has long had a policy interest in promoting renewable energy and climate mitigation. Given distributed generation’s significant environmental, economic, and energy resilience benefits to California’s communities, and its potential to address historic inequities, distributed generation should be a significant part of California’s long-term energy and climate change strategy.
(b) Distributed generation provides unique value to energy consumers by generating clean energy in close proximity to customer need, thereby increasing the energy resilience of communities, freeing up capacity on the transmission grid, and decreasing the need for additional transmission infrastructure.
(c) Distributed generation provides unique value to California’s communities by providing local jobs in distributed energy resources installation and maintenance.
(d) Distributed generation can also alleviate the serious environmental justice challenges facing the state by displacing polluting fossil fuel generation such as natural gas peaker plants and diesel generation, which are disproportionately sited in environmentally disadvantaged communities.
(e) Limited transparency as to the costs of delivery for energy, particularly the transmission costs, hampers the ability of customers and load serving entities procuring energy for those customers to make informed decisions that account for social, environmental, economic, and other costs of energy, including both generation and delivery costs.
(f) The Federal Energy Regulatory Commission requires that transmission costs be recovered from those who benefit from use of the transmission system in ways that do not distort energy markets.
(g) California’s transmission costs have grown sharply in recent decades and are projected to continue growing as electric vehicles and building electrification expand as part of California’s efforts to reduce its contribution to climate change.
(h) The California Independent System Operator cited the deployment of distributed generation as a driving factor in saving California ratepayers billions of dollars in transmission costs, yet the load serving entities responsible for procuring distributed generation have not historically received appropriate credit for their contributions to reducing the growth of transmission costs for California ratepayers.
(i) The wholesale distributed generation sector of the renewable energy industry remains underdeveloped in California, which hampers California’s overall efforts to address climate change and foster beneficial community development.
(j) California’s governance of transmission charges is fragmented among various utilities, the Public Utility Commission, and the Independent System Operator, which hampers California’s ability to craft a coherent and functioning transmission cost recovery system. Thus, California needs an integrated and streamlined process to develop a coherent mechanism that incorporates all necessary tariffs and rates throughout the state.
(k) In many areas of California, nonparticipating municipal utilities have accounted for the contribution of distributed generation to avoiding energy delivery costs for many years, which has facilitated their efforts to mitigate their impacts on the transmission grid.
(l) In other areas, especially in the territories of participating transmission owning electrical corporations, distributed generation connected in front of the customer meter remains the only technology that mitigates the strain on the transmission system and slows the demand for a new transmission investment that does not reduce transmission charges for customers, unlike energy efficiency, generation on the customer side of the customer meter, or demand response.

SEC. 2.

 Section 350 is added to the Public Utilities Code, to read:

350.
 (a) For purposes of this section, the following definitions apply:
(1) “Avoided transmission cost” means all future transmission-related expenditures that would otherwise be incurred but for the role of distributed generation and storage, including both specific costs of avoided projects and generalized costs not incurred resulting from reduced use of the transmission system.
(2) “Distributed generation” means renewable energy generation interconnected on the utility side of any customer meter on the distribution system used to serve a local load.
(3) “Load serving entity” has the same definition as in Section 380, except that it includes a local publicly owned electric utility.
(4) “Local load” means energy consumption by customers located within the same distribution area below a single transmission-distribution substation.
(5) “Tariff” means a schedule of rates or charges of a business, public utility, or transmission operator.
(6) “Use,” in reference to the transmission system, means the contemporaneous use of the transmission system to deliver energy from generation that requires the transmission system to form an electrical connection to the customer served.
(b) It is the policy of the State of California that:
(1) Load serving entities should receive either direct financial benefit or indirect benefit for their ratepayers for any distributed generation that meets the local load in order to recognize the value of those resources in avoiding transmission costs. The value of avoided transmission costs shall reflect both historic and prospective investments in distributed resources that have mitigated or will mitigate the impacts on the transmission system and relieve the need for transmission investments to the benefit of all California ratepayers.
(2) Regulatory agencies, quasi-regulatory bodies, local agencies, districts, and corporations with jurisdiction or responsibility over transmission and delivery charges should exercise their authorities to provide for a mechanism for load serving entities to receive compensation to reflect the value of avoided transmission costs.
(c) (1) The commission, jointly with the Independent System Operator, and through consultation with all relevant stakeholders, may convene a stakeholder process for the purpose of developing modifications of the tariffs governing transmission access charges, wheeling access charges, or retail rate structures, as necessary to implement the policies specified in subdivision (b). These modifications may include any set of changes to any set of tariffs that is appropriate to implement those policies and conform to the standards set forth in this subdivision.
(2) The modifications of the tariffs developed pursuant to paragraph (1) shall ensure all of the following:
(A) The formulas for cost recovery reflect a combination of all of the following:
(i) Historic factors, drivers, or justifications for a transmission investment at the time the transmission investment is planned or approved.
(ii) Contemporaneous use of the transmission system.
(iii) Incentives to mitigate drivers of future transmission investment.
(B) Transmission system charges are predominantly assessed on use of transmission system capacity based on the amount of energy delivered across the transmission system.
(C) Supplying electrical load with distribution-connected generation or other distribution system technologies within the same substation area that offsets the contemporaneous use of transmission system capacity results in financial credits to the load serving entities responsible for the deployment of the resources or to their customers.
(D) The basis for applying access charges to each distribution utility, community choice aggregation program, local publicly owned electric utility, and electric service provider is consistent in a manner that fully compensates each of those entities for the distributed generation within the entity’s distribution grid, unless the commission and Independent System Operator each makes a finding, based on substantial evidence, that differential bases are in the best interest of all California end-use electricity customers and further the achievement of California’s environmental goals, including the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)) and the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).
(E) Transmission charges recognize the value provided by distributed energy resources including, but not limited to, the economic, environmental, and system resiliency benefits of distributed resources, and the potential to reduce the use of existing transmission infrastructure and the need for future transmission infrastructure and capacity.
(3) Any rate structure for allocating transmission costs shall be based upon factual findings supported by a preponderance of evidence, and the analytical path from evidence to finding shall be readily discernible. Evidence for these purposes shall not include argument, speculation, unsubstantiated opinion or narrative, or evidence that is clearly erroneous or inaccurate.
(4) (A) If the stakeholder process is undertaken pursuant to this subdivision, the final set of modifications to implement the policies specified in subdivision (b) shall be completed by July 1, 2020.
(B) Each commission, board, corporation, or agency with authority over modifications in the final set shall approve modifications to those tariffs or rules under its jurisdiction by October 31, 2020.
(C) Once approved, any element of the final set of modifications requiring approval by the Federal Energy Regulatory Commission shall be submitted by the relevant commission, board, corporation, or agency, by January 1, 2021, to the Federal Energy Regulatory Commission for approval.
(D) Within one year of the date of approval by the Federal Energy Regulatory Commission of submitted elements of the final set of modifications, the Independent System Operator, the commission, each electrical corporation, and any other load serving entity with jurisdiction over elements of the set of modifications shall fully implement all modifications to the tariffs and rules identified and approved to meet the policies specified in paragraph (b).
(d) (1) If no final set of modifications meeting the standards in paragraph (2) of subdivision (c) has been approved by October 31, 2020, each of the electrical corporations that recovers transmission charges from the customers of more than one load serving entity shall modify its rules and tariffs to accomplish the following:
(A) The customers of each load serving entity shall make up separate retail rate classes from the customers of any other load serving entity for the purposes of assessing transmission fees and cost allocation, for both transmission charges from the Independent System Operator and for the electrical corporation’s own transmission revenue requirements.
(B) Transmission charges shall be billed to customers clearly and understandably as a separate component from any other component of delivery or generation charges on customer bills.
(C) All customer transmission charges and components of those charges shall be reduced by the proportion of energy provided by that customer’s load serving entity as distributed generation serving a local load.
(D) Each electrical corporation recovering transmission charges from customers of more than one load serving entity shall recover a customer’s transmission charges reduced by the proportion of energy generated by distributed generation serving the local load of that customer’s load serving entity.
(2) The modifications and any attendant implementing rules required shall be submitted to Federal Energy Regulatory Commission no later than January 1, 2021.

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.
SECTION 1.

(a)The Legislature finds and declares all of the following:

(1)California has long had a policy interest in promoting renewable energy and climate mitigation. Given its significant environmental, economic, and resilience benefits, distributed generation can and should be a significant part of California’s long-term energy strategy.

(2)Distributed generation provides unique value to energy consumers by generating clean energy in close proximity to customer need, thereby increasing the resilience of communities, freeing up capacity on the transmission grid, and decreasing the need for additional transmission infrastructure.

(3)Energy consumers are provided limited transparency into the costs for delivery of their energy, particularly the transmission costs.

(b)It is the intent of the Legislature that the Independent System Operator consider, via a stakeholder initiative, modification of the billing determinants to which the operator applies the transmission and wheeling access charges and submit any proposed modification to the Federal Energy Regulatory Commission by July 1, 2018.

SEC. 2.Section 350 is added to the Public Utilities Code, to read:
350.

(a)The Independent System Operator shall undertake a stakeholder initiative to consider modification of the billing determinants to which the operator applies the transmission and wheeling access charges and shall make consistent the basis for applying these access charges to each distribution utility, community choice aggregation program, local publicly owned electric utility, and electric services provider in a manner that fully compensates each of those entities for the distributed generation within the entity’s distribution grid, unless the Independent System Operator makes a finding, based on substantial evidence, that differential bases are in the best interest of all California end-use electricity customers and further the achievement of California’s environmental goals, including the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)) and the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).

(b)In undertaking the stakeholder initiative described in subdivision (a), the Independent System Operator shall consider all of the following:

(1)The value provided by distributed energy resources to the Independent System Operator’s balancing area, including, but not limited to, the potential to reduce the use of existing transmission infrastructure and the need for future transmission infrastructure and capacity and to further the state’s goals, including the requirements of the California Renewables Portfolio Standard Program and the California Global Warming Solutions Act of 2006.

(2)The value and equity of metering and assessing the transmission and wheeling access charges at interfaces of the transmission system and distribution systems.

(3)The value of continuing to assess transmission access charges on a volumetric basis.

(c)No later than June 30, 2018, the Independent System Operator shall submit to the Federal Energy Regulatory Commission for approval proposed modifications of the billing determinants to which the Independent System Operator applies the transmission and wheeling access charges.

(d)Within one year of the date of approval by the Federal Energy Regulatory Commission, the Independent System Operator shall fully implement any modifications of the billing determinants to which the Independent System Operator applies the transmission and wheeling access charges.