Bill Text

PDF |Add To My Favorites |Track Bill | print page

SB-692 Transmission: access charge.(2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 03/23/2017 09:00 PM
SB692:v98#DOCUMENT

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 amend Sections 399.13 and 9600 of, and to add Sections 352.8 and 354 to, the Public Utilities Code, relating to transmission.


LEGISLATIVE COUNSEL'S DIGEST


SB 692, as amended, Allen. Transmission: access charge.
(1) 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 adopt transmission energy downflow, as specified, as the billing determinant for the transmission access charge throughout its service territory. The bill would require the ISO to apply the transmission energy downflow billing determinant for all voltage categories of transmission facilities. The bill would require the ISO to continue to use the volumetric per kilowatthour basis in determining the transmission energy downflow billing determinant until stakeholders receive notice and are provided with an opportunity to comment on alternatives. The bill would require the PUC to review the process by which an electrical corporation passes through transmission access charges to ratepayers to ensure that the process achieves certain goals.
(2) The Public Utilities Act requires the PUC to adopt a least-cost, best-fit methodology for determining the integration cost of certain renewable energy resources.
This bill would require the PUC to revise the least-cost, best-fit methodology and other procurement practices of electrical corporations to reflect the ratepayer impact of the changes to the transmission access charges required by this measure.
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 the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.
(3) 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.

 This act shall be known, and may be cited, as the Leveling the Playing Field for Distributed Generation Act of 2017.

SEC. 2.

 The Legislature finds and declares all of the following:
(a) California has long had a policy interest in promoting renewable energy and climate mitgation. Given its significant environmental, economic, and resilience benefits, distributed generation can and should be a significant part of California’ California’s long-term energy strategy.
(b) 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.
(c) Energy consumers are provided limited transparency into the costs for delivery of their energy, particularly the transmission costs.
(d) Transmission access charges distort the market for distributed generation when applied to energy that is not delivered through the transmission grid by increasing the customer’s cost of energy from distributed generation and hindering the development of distributed generation.
(e) Removing transmission access charges on energy from distributed generation would eliminate this market distortion, increase consistency, transparency, and fairness in transmission cost allocation based on cost causation, correct the market signals for distributed generation, and optimize development and economic dispatch of generation based on the cost of generation plus an accurately measured cost of transmission delivery.
(f) Addressing the existing market distortion in this way will avoid delay, leverage the straightforward and simple calculations for existing transmission access rates, and allow for future refinement of the transmission access billing determinant to include the time and rate of delivery of energy and services at each metered transmission interface, as appropriate.
(g) There is a need for urgency in resolving this issue because of a planned regional expansion of the Independent System Operator pursuant to Sections 359 and 359.5, 359.5 of the Public Utilities Code, and so far, the Independent System Operator has refused to remedy not remedied the transmission access charge market distortion.

SEC. 3.

 Section 352.8 is added to the Public Utilities Code, to read:

352.8.
 (a) For purposes of this section and Section 354, the following definitions apply:
(1) “Distributed generation” means an energy generation that interconnects connects directly with the distribution grid from the customer end. grid.
(2) “Distribution grid” means lines for the distribution of electricity that are controlled by an electrical corporation.
(3) “High-voltage transmission facilities” means transmission facilities operating above 200 kilovolts.
(4) “Low-voltage transmission facilities” means transmission facilities operating between 69 kilovolts and 200 kilovolts.
(5) “Transmission access charge” means the charge per kilowatthour levied by the Independent System Operator on the distribution of electricity through the transmission grid.
(6) “Transmission energy downflow” means the volumetric measurement of electricity in kilowatthours delivered from a defined transmission category interface to a subordinate transmission category within the Independent System Operator transmission system. Except as provided in subdivision (c), volumetric measurement shall constitute the billing determinant for the transmission access charge, but this billing determinant volumetric basis may be modified to take into consideration other factors, including the time and rate of delivery of energy and services at each metered transmission interface.
(7) “Transmission grid” means lines for the transmission of electricity that are controlled by the Independent System Operator.
(b) After notice and opportunity to comment, the Independent System Operator shall do both of the following:
(1) Except as provided in subdivision (c), adopt the transmission energy downflow as the billing determinant for the transmission access charge throughout the service territory of the Independent System Operator.
(2) Apply the transmission energy downflow billing determinant for all voltages categories of transmission facilities.
(A) Transmission access charges for low-voltage transmission facilities controlled by the Independent System Operator shall be assessed on transmission energy downflow at the low voltage to distribution interfaces.
(B) Transmission access charges for high-voltage transmission facilities controlled by the Independent System Operator shall be assessed on transmission energy downflow at the high-voltage to low-voltage interfaces.
(c) Until notice to, and opportunity to comment by, relevant stakeholders has have been provided regarding alternative measures, the Independent System Operator shall continue to use the volumetric per kilowatthour basis for determining the transmission energy downflow determinant. downflow.
(d) If the Independent System Operator expands its service territory beyond the state, the Independent System Operator shall, after notice and opportunity to comment, establish a new super-high-voltage category of transmission facilities for new facilities operating at or above 300 kilovolts and for intertie between subregions that are currently separate balancing authority areas. Costs for super-high-voltage transmission facilities shall be assigned to subregions in proportion to each subregion’s share of super-high-voltage to high-voltage transmission energy downflow.
(e) The Independent System Operator shall coordinate with the commission in implementing this section.

SEC. 4.

 Section 354 is added to the Public Utilities Code, to read:

354.
 (a) Except as otherwise provided, the definitions set forth in Section 352.8 shall apply.
(b) The commission shall review the process by which an electrical corporation passes through the transmission access charges to ratepayers to ensure that both of the following are met:
(1) The process retains the same basis and structure of transmission access charges established pursuant to Section 352.8 in allocating transmission costs to ratepayers.
(2) The process increases the transparency of the transmission access charges and other transmission-related fees to ratepayers.
(c) The commission shall revise the methodology adopted pursuant to clause (vi) of subparagraph (A) of paragraph (4) of subdivision (a) of Section 399.13 and other procurement practices that are affected by transmission access charges to reflect the ratepayer impacts of the changes to the transmission access charges required pursuant to this section and Section 352.8.
(d) The commission shall coordinate with the Independent System Operator in the implementation of this section.

SEC. 5.

 Section 399.13 of the Public Utilities Code is amended to read:

399.13.
 (a) (1) The commission shall direct each electrical corporation to annually prepare a renewable energy procurement plan that includes the elements listed in paragraph (5), to satisfy the electrical corporation’s obligations under the renewables portfolio standard. To the extent feasible, this procurement plan shall be proposed, reviewed, and adopted by the commission as part of, and pursuant to, a general procurement plan process. The commission shall require each electrical corporation to review and update its renewable energy procurement plan as it determines to be necessary. The commission shall require all other retail sellers to prepare and submit renewable energy procurement plans that address the requirements identified in paragraph (5).
(2) Every electrical corporation that owns electrical transmission facilities shall annually prepare, as part of the Federal Energy Regulatory Commission Order 890 process, and submit to the commission, a report identifying any electrical transmission facility, upgrade, or enhancement that is reasonably necessary to achieve the renewables portfolio standard procurement requirements of this article. Each report shall look forward at least five years and, to ensure that adequate investments are made in a timely manner, shall include a preliminary schedule when an application for a certificate of public convenience and necessity will be made, pursuant to Chapter 5 (commencing with Section 1001), for any electrical transmission facility identified as being reasonably necessary to achieve the renewable energy resources procurement requirements of this article. Each electrical corporation that owns electrical transmission facilities shall ensure that project-specific interconnection studies are completed in a timely manner.
(3) The commission shall direct each retail seller to prepare and submit an annual compliance report that includes all of the following:
(A) The current status and progress made during the prior year toward procurement of eligible renewable energy resources as a percentage of retail sales, including, if applicable, the status of any necessary siting and permitting approvals from federal, state, and local agencies for those eligible renewable energy resources procured by the retail seller, and the current status of compliance with the portfolio content requirements of subdivision (c) of Section 399.16, including procurement of eligible renewable energy resources located outside the state and within the WECC and unbundled renewable energy credits.
(B) If the retail seller is an electrical corporation, the current status and progress made during the prior year toward construction of, and upgrades to, transmission and distribution facilities and other electrical system components it owns to interconnect eligible renewable energy resources and to supply the electricity generated by those resources to load, including the status of planning, siting, and permitting transmission facilities by federal, state, and local agencies.
(C) Recommendations to remove impediments to making progress toward achieving the renewable energy resources procurement requirements established pursuant to this article.
(4) The commission shall adopt, by rulemaking, all of the following:
(A) A process that provides criteria for the rank ordering and selection of least-cost and best-fit eligible renewable energy resources to comply with the California Renewables Portfolio Standard Program obligations on a total cost and best-fit basis. This process shall take into account all of the following:
(i) Estimates of indirect costs associated with needed transmission investments.
(ii) The cost impact of procuring the eligible renewable energy resources on the electrical corporation’s electricity portfolio.
(iii) The viability of the project to construct and reliably operate the eligible renewable energy resource, including the developer’s experience, the feasibility of the technology used to generate electricity, and the risk that the facility will not be built, or that construction will be delayed, with the result that electricity will not be supplied as required by the contract.
(iv) Workforce recruitment, training, and retention efforts, including the employment growth associated with the construction and operation of eligible renewable energy resources and goals for recruitment and training of women, minorities, and disabled veterans.
(v) (I) Estimates of electrical corporation expenses resulting from integrating and operating eligible renewable energy resources, including, but not limited to, any additional wholesale energy and capacity costs associated with integrating each eligible renewable resource.
(II) No later than December 31, 2015, the commission shall approve a methodology for determining the integration costs described in subclause (I).
(vi) Estimates of the applicable transmission access charges for renewable energy resources, as determined by a methodology approved by the commission by June 30, 2018.
(vii) Consideration of any statewide greenhouse gas emissions limit established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).
(viii) Consideration of capacity and system reliability of the eligible renewable energy resource to ensure grid reliability.
(B) Rules permitting retail sellers to accumulate, beginning January 1, 2011, excess procurement in one compliance period to be applied to any subsequent compliance period. The rules shall apply equally to all retail sellers. In determining the quantity of excess procurement for the applicable compliance period, the commission shall retain the rules adopted by the commission and in effect as of January 1, 2015, for the compliance period specified in subparagraphs (A) to (C), inclusive, of paragraph (1) of subdivision (b) of Section 399.15. For any subsequent compliance period, the rules shall allow the following:
(i) For electricity products meeting the portfolio content requirements of paragraph (1) of subdivision (b) of Section 399.16, contracts of any duration may count as excess procurement.
(ii) Electricity products meeting the portfolio content requirements of paragraph (2) or (3) of subdivision (b) of Section 399.16 shall not be counted as excess procurement. Contracts of any duration for electricity products meeting the portfolio content requirements of paragraph (2) or (3) of subdivision (b) of Section 399.16 that are credited towards a compliance period shall not be deducted from a retail seller’s procurement for purposes of calculating excess procurement.
(iii) If a retail seller notifies the commission that it will comply with the provisions of subdivision (b) for the compliance period beginning January 1, 2017, the provisions of clauses (i) and (ii) shall take effect for that retail seller for that compliance period.
(C) Standard terms and conditions to be used by all electrical corporations in contracting for eligible renewable energy resources, including performance requirements for renewable generators. A contract for the purchase of electricity generated by an eligible renewable energy resource, at a minimum, shall include the renewable energy credits associated with all electricity generation specified under the contract. The standard terms and conditions shall include the requirement that, no later than six months after the commission’s approval of an electricity purchase agreement entered into pursuant to this article, the following information about the agreement shall be disclosed by the commission: party names, resource type, project location, and project capacity.
(D) An appropriate minimum margin of procurement above the minimum procurement level necessary to comply with the renewables portfolio standard to mitigate the risk that renewable projects planned or under contract are delayed or canceled. This paragraph does not preclude an electrical corporation from voluntarily proposing a margin of procurement above the appropriate minimum margin established by the commission.
(5) Consistent with the goal of increasing California’s reliance on eligible renewable energy resources, the renewable energy procurement plan shall include all of the following:
(A) An assessment of annual or multiyear portfolio supplies and demand to determine the optimal mix of eligible renewable energy resources with deliverability characteristics that may include peaking, dispatchable, baseload, firm, and as-available capacity.
(B) Potential compliance delays related to the conditions described in paragraph (5) of subdivision (b) of Section 399.15.
(C) A bid solicitation setting forth the need for eligible renewable energy resources of each deliverability characteristic, required online dates, and locational preferences, if any.
(D) A status update on the development schedule of all eligible renewable energy resources currently under contract.
(E) Consideration of mechanisms for price adjustments associated with the costs of key components for eligible renewable energy resource projects with online dates more than 24 months after the date of contract execution.
(F) An assessment of the risk that an eligible renewable energy resource will not be built, or that construction will be delayed, with the result that electricity will not be delivered as required by the contract.
(6) In soliciting and procuring eligible renewable energy resources, each electrical corporation shall offer contracts of no less than 10 years duration, unless the commission approves of a contract of shorter duration.
(7) (A) In soliciting and procuring eligible renewable energy resources for California-based projects, each electrical corporation shall give preference to renewable energy projects that provide environmental and economic benefits to communities afflicted with poverty or high unemployment, or that suffer from high emission levels of toxic air contaminants, criteria air pollutants, and greenhouse gases.
(B) Subparagraph (A) applies to all procurement of eligible renewable energy resources for California-based projects, whether the procurement occur through all-source requests for offers, eligible renewable resources only requests for offers, or other procurement mechanisms. This subparagraph is declaratory of existing law.
(8) In soliciting and procuring eligible renewable energy resources, each retail seller shall consider the best-fit attributes of resource types that ensure a balanced resource mix to maintain the reliability of the electrical grid.
(b) A retail seller may enter into a combination of long- and short-term contracts for electricity and associated renewable energy credits. Beginning January 1, 2021, at least 65 percent of the procurement a retail seller counts toward the renewables portfolio standard requirement of each compliance period shall be from its contracts of 10 years or more in duration or in its ownership or ownership agreements for eligible renewable energy resources.
(c) The commission shall review and accept, modify, or reject each electrical corporation’s renewable energy resource procurement plan prior to the commencement of renewable energy procurement pursuant to this article by an electrical corporation. The commission shall assess adherence to the approved renewable energy resource procurement plans in determining compliance with the obligations of this article.
(d) Unless previously preapproved by the commission, an electrical corporation shall submit a contract for the generation of an eligible renewable energy resource to the commission for review and approval consistent with an approved renewable energy resource procurement plan. If the commission determines that the bid prices are elevated due to a lack of effective competition among the bidders, the commission shall direct the electrical corporation to renegotiate the contracts or conduct a new solicitation.
(e) If an electrical corporation fails to comply with a commission order adopting a renewable energy resource procurement plan, the commission shall exercise its authority to require compliance.
(f) (1) The commission may authorize a procurement entity to enter into contracts on behalf of customers of a retail seller for electricity products from eligible renewable energy resources to satisfy the retail seller’s renewables portfolio standard procurement requirements. The commission shall not require any person or corporation to act as a procurement entity or require any party to purchase eligible renewable energy resources from a procurement entity.
(2) Subject to review and approval by the commission, the procurement entity shall be permitted to recover reasonable administrative and procurement costs through the retail rates of end-use customers that are served by the procurement entity and are directly benefiting from the procurement of eligible renewable energy resources.
(g) Procurement and administrative costs associated with contracts entered into by an electrical corporation for eligible renewable energy resources pursuant to this article and approved by the commission are reasonable and prudent and shall be recoverable in rates.
(h) Construction, alteration, demolition, installation, and repair work on an eligible renewable energy resource that receives production incentives pursuant to Section 25742 of the Public Resources Code, including work performed to qualify, receive, or maintain production incentives, are “public works” for the purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.

SEC. 6.

 Section 9600 of the Public Utilities Code is amended to read:

9600.
 (a) It is the intent of the Legislature that California’s local publicly owned electric utilities and electric corporations should commit control of their transmission facilities to the Independent System Operator as described in Chapter 2.3 (commencing with Section 330) of Part 1 of Division 1. These utilities should jointly advocate to the Federal Energy Regulatory Commission a pricing methodology for the Independent System Operator that results in an equitable return on capital investment in transmission facilities for all Independent System Operator participants and is based on the following principles:
(1) Utility specific access charge rates as proposed in Docket No. EC96-19-000 as finally approved by the Federal Energy Regulatory Commission reflecting the costs of that utility’s transmission facilities shall go into effect on the first day of the Independent System Operator operation. The utility specific rates shall honor all of the terms and conditions of existing transmission service contracts and shall recognize any wheeling revenues of existing transmission service arrangements to the transmission owner.
(2) (A) No later than two years after the initial operation of the Independent System Operator, the Independent System Operator shall recommend for adoption by the Federal Energy Regulatory Commission a rate methodology determined by a decision of the Independent System Operator governing board, provided that the decision shall be based on principles approved by the governing board including, but not limited to, an equitable balance of costs and benefits, and shall define the transmission facility costs, if any, which shall be rolled in to the transmission service rate and spread equally among all Independent System Operator transmission users, and those transmission facility costs, if any, which should be specifically assigned to a specific utility’s service area.
(B) If there is no governing board decision, the rate methodology shall be determined following a decision by the alternative dispute resolution method set forth in the Independent System Operator bylaws.
(C) If no alternative dispute resolution decision is rendered, then a default rate methodology shall be a uniform regional transmission access charge and a utility specific local transmission access charge, provided that the default rate methodology shall be recommended for implementation upon termination of the cost recovery plan set forth in Section 368 or no later than two years after the initial operation of the Independent System Operator, whichever is later. For purposes of this paragraph, regional transmission facilities are defined to be transmission facilities operating at or above 230 kilovolts plus an appropriate percentage of transmission facilities operating below 230 kilovolts; all other transmission facilities shall be considered local. The appropriate percentage of transmission facilities described above shall be consistent with the guidelines in Federal Energy Regulatory Commission Order No. 888 and any exception approved by that commission.
(D) The Independent System Operator shall establish and assign transmission access charges for the delivery of energy from the transmission system based on the metered transmission energy downflow, as defined in Section 352.8.
(3) If the rate methodology implemented as a result of a decision by the Independent System Operator governing board or resulting from the independent system operator alternative dispute resolution process results in rates different than those in effect prior to the decision for any transmission facility owner, the amount of any differences between the new rates and the prior rates shall be recorded in a tracking account to be recovered from customers and paid to the appropriate transmission owners by the transmission facility owner after termination of the cost recovery plan set forth in Section 368. The recovery and payments shall be based on an amortization period not to exceed three years in the case of the electrical corporations or five years in the case of the local publicly owned electric utilities.
(4) The costs of transmission facilities placed in service after the date of initial implementation of the Independent System Operator shall be recovered using the rate methodology in effect at the time the facilities go into operation.
(5) The electrical corporations and the local publicly owned electric utilities shall jointly develop language for implementation proposals to the Federal Energy Regulatory Commission based on these principles.
(6) Nothing in this section shall compel any party to violate restrictions applicable to facilities financed with tax-exempt bonds or contractual restrictions and covenants regarding use of transmission facilities existing as of December 20, 1995.
(b) Following a final Federal Energy Regulatory Commission decision approving the Independent System Operator, no California electrical corporation or local publicly owned electric utility shall be authorized to collect any competition transition charge authorized pursuant to this division and Chapter 2.3 (commencing with Section 330) of Part 1 of Division 1 unless it commits control of its transmission facilities to the Independent System Operator.

SEC. 7.

 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.