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AB-726 Energy.(2017-2018)

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Date Published: 09/09/2017 04:00 AM
AB726:v92#DOCUMENT

Amended  IN  Senate  September 08, 2017
Amended  IN  Senate  September 06, 2017
Amended  IN  Senate  July 18, 2017
Amended  IN  Senate  July 03, 2017
Amended  IN  Assembly  May 02, 2017
Amended  IN  Assembly  April 06, 2017
Amended  IN  Assembly  March 15, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 726


Introduced by Assembly Member Holden

February 15, 2017


An act to amend Sections 334, 335, 336, 337, 338, 339, 340, 341, 341.1, 341.2, 341.3, 341.4, 341.5, 347, 348, 349, 352, and 359 of, to add Section Sections 399.23 and 745.5 to to, and to repeal and add Section 359.5 of, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 726, as amended, Holden. Electricity: natural gas: rates: notification of energy usage and billing information. Energy.
The existing restructuring of the electrical industry within the Public Utilities Act provides for the establishment of the Electricity Oversight Board and the Independent System Operator (ISO) and requires the ISO to ensure efficient and reliable operation of the electrical transmission grid. Certain existing law prohibits the ISO from entering into a multistate entity or regional organization unless the ISO receives approval from the Electricity Oversight Board. Other existing law states the intent of the Legislature to provide for the evolution of the ISO into a regional organization to promote the development of regional electricity transmission markets in the western states. The Clean Energy and Pollution Reduction Act of 2015 provided for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process, and repealed or made inoperative those other provisions of existing law relating to the ISO entering into a multistate entity or transforming into a regional organization.
This bill would repeal the existing law governing the transformation of the ISO into a regional organization adopted as part of the Clean Energy and Pollution Reduction Act of 2015 and replace it with provisions authorizing the transformation of the ISO into a regional organization if the ISO governing board undertakes certain steps and the Commission on Regional Grid Transformation, which the bill would create, makes specified findings by December 31, 2018. The bill would make inoperative other provisions of existing law relating to the ISO entering into a multistate entity or transforming into a regional organization unless the Commission on Regional Grid Transformation does not make the specified findings by that date. The bill would make existing provisions relating to the formation of advisory committees to the ISO governing board, the adoption of maintenance, repair, and replacement standards for transmission facilities, requiring the ISO to conduct performance reviews following certain major outages, and establishing the Electricity Oversight Board and specifying its responsibilities inoperative if the Commission on Regional Grid Transformation makes the specified findings.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities, as defined, are under the direction of their governing boards. The California Renewables Portfolio Standard Program requires the commission to establish a renewables portfolio standard requiring all retail sellers, as defined, 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 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 40% by December 31, 2024, 45% by December 31, 2027, and 50% by December 31, 2030. 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, 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. The provisions defining these categories and imposing this obligation on retail sellers are referred to as the portfolio content requirements.
This bill would require the commission, by March 31, 2018, to require electrical corporations with more than 100,000 service connections in California to procure tax-advantaged renewable resources, as defined, in an amount specified by the commission that are over and above those resources necessary to meet the procurement requirements for the applicable renewables portfolio standard compliance period if the commission makes specified determinations. The bill would require each electrical corporation, in procuring tax-advantaged renewable resources, to give priority to projects that provide flexible and controllable eligible renewable energy resources that support the grid management needs of the Independent System Operator or that can displace conventional generation in locally constrained resource areas. The bill would require that an electrical corporation submit executed contracts for tax-advantaged renewable resources to the commission for review by no later than September 1, 2018, and require the commission to act on all final contracts by December 31, 2018. The bill would provide that the procurement of tax-advantaged renewable resources pursuant to this authority would be on behalf of retail end-use customers of all retail sellers and would require the commission to authorize an electrical corporation to recover expenses for the procurement subject to certain conditions. The bill would authorize an electric service provider or community choice aggregator meeting certain requirements to elect to provide its proportionate share of tax-advantaged renewable resources specified by the commission that would otherwise be procured by an electrical corporation and would reduce the procurement obligation of the electrical corporation in the event of such an election.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
Existing law requires a provider of mobile telephony services, as defined, to provide subscribers with a means by which a subscriber can obtain reasonably current and available information on the subscriber’s calling plan or plans and service usage. Existing law additionally requires that a provider of mobile telephony services provide subscribers with a means by which a subscriber can obtain reasonably current and available information, as determined by the provider, on the subscriber’s text messaging and Internet usage and charges. A provider of mobile telephony service is required to inform subscribers to their service at the time service is established of the availability of this usage information and how it may be obtained.
Unless the customer exercises the option to not receive notifications, this bill would require an electrical corporation or gas corporation to provide a residential customer with a smart meter with energy usage or energy billing notifications at appropriate times, based on the customer’s usage of electricity or gas, as specified. The bill would require an electrical corporation or gas corporation to offer the option to a residential customer with a smart meter to receive energy bill alert notifications when the customer’s energy bill exceeds an amount specified by the customer or when the customer’s rate of energy usage, if it continues through a billing period, will result in a projected bill that exceeds an amount specified by the customer. The bill would require an electrical corporation or gas corporation to notify a residential customer with a smart meter that the customer may receive notification of the customer’s energy usage and billing information as required by the bill, the manner by which the customer can provide appropriate contact information to receive this information, and the customer’s opportunity to opt in or opt out of receiving this information. The bill would authorize the commission to modify or adjust these requirements for any electrical corporation with fewer than 100,000 service connections, as individual circumstances merit. The bill would require an electrical corporation or gas corporation to seek authority from the commission to be exempted from these requirements with respect to a category of residential customers when compliance is impractical or infeasible and would require the commission to determine whether to grant an exemption on those grounds.
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, 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 334 of the Public Utilities Code is amended to read:

334.
 (a) The Legislature finds and declares that in order to ensure the success of electric industry restructuring, in the transition to a new market structure it is important to ensure a reliable supply of electricity. Reliable electric service is of paramount importance to the safety, health, and comfort of the people of California. Transmission connections between electric utilities allow them to share generation resources and reduce the number of powerplants necessary to maintain a reliable system. The connections between utilities also create exposure to events that can cause widespread and extended transmission and service outages that reach far beyond the originating utility service area. California utilities and those in the western United States voluntarily adhere to reliability standards developed by the Western Electricity Coordinating Council. The economic cost of extended electricity outages, such as those that occurred in California and throughout the Western Electricity Coordinating Council on July 2, 1996, and August 10, 1996, to California’s residential, commercial, agricultural, and industrial customers is significant. The proposed restructuring of the electricity industry would transfer responsibility for ensuring short- and long-term reliability away from electric utilities and regulatory bodies to the Independent System Operator and various market-based mechanisms. The Legislature has an interest in ensuring that the change in the locus of responsibility for reliability does not expose California citizens to undue economic risk in connection with system reliability.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 2.

 Section 335 of the Public Utilities Code is amended to read:

335.
 (a) In order to ensure that the interests of the people of California are served, a five-member Electricity Oversight Board is hereby created as provided in Section 336. For purposes of this chapter, any reference to the Oversight Board shall mean the Electricity Oversight Board. Its functions shall be all of the following:

(a)

(1) To oversee the Independent System Operator and the Power Exchange.

(b)

(2) To determine the composition and terms of service and to exercise the exclusive right to decline to confirm the appointments of specific members of the governing board of the Power Exchange.

(c)

(3) To serve as an appeal board for majority decisions of the Independent System Operator governing board, as they relate to matters subject to exclusive state jurisdiction, as specified in Section 339.

(d)

(4) Those members of the Power Exchange governing board whose appointments the Oversight Board has the exclusive right to decline to confirm include proposed governing board members representing agricultural end users, industrial end users, commercial end users, residential end users, end users at large, nonmarket participants, and public interest groups.

(e)

(5) To investigate any matter related to the wholesale market for electricity to ensure that the interests of California’s citizens and consumers are served, protected, and represented in relation to the availability of electric transmission and generation and related costs, during periods of peak demand.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 3.

 Section 336 of the Public Utilities Code is amended to read:

336.
 (a) The five-member Oversight Board shall be comprised composed as follows:
(1) Three members, who are California residents and electricity ratepayers, appointed by the Governor from a list jointly provided by the California Energy Resources Conservation and Development Commission and the Public Utilities Commission, and subject to confirmation by the Senate.
(2) One member of the Assembly appointed by the Speaker of the Assembly.
(3) One member of the Senate appointed by the Senate Committee on Rules.
(b) Legislative members shall be nonvoting members, however, they are otherwise full members of the board with all rights and privileges pertaining thereto.
(c) Oversight Board members shall serve three-year terms with no limit on reappointment. For purposes of the initial appointments set forth in paragraph (1), the Governor shall appoint one member to a one-year term, one to a two-year term, and one to a three-year term.
(d) The Governor shall designate one of the voting members as the chairperson of the Oversight Board who shall preside over meetings and direct the executive director in the routine administration of the Oversight Board’s business. The chairperson may designate one of the other voting members to preside over meetings in the absence of the chairperson.
(e) Two voting members shall constitute a quorum. Any decision or action of the Oversight Board shall be by majority vote of the voting members.
(f) The members of the Oversight Board shall serve without compensation, but shall be reimbursed for all necessary expenses incurred in the performance of their duties.
(g) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 4.

 Section 337 of the Public Utilities Code is amended to read:

337.
 (a) The Independent System Operator governing board shall be composed of a five-member independent governing board of directors appointed by the Governor and subject to confirmation by the Senate. Any reference in this chapter or in any other provision of law to the Independent System Operator governing board means the independent governing board appointed under this subdivision.
(b) A member of the independent governing board appointed under subdivision (a) may not be affiliated with any actual or potential participant in any market administered by the Independent System Operator.
(c) (1) All appointments shall be for three-year terms.
(2) There is no limit on the number of terms that may be served by any member.
(d) The Oversight Board shall require the articles of incorporation and bylaws of the Independent System Operator to be revised in accordance with this section, and shall make filings with the Federal Energy Regulatory Commission as the Oversight Board determines to be necessary.
(e) For the purposes of the initial appointments to the Independent System Operator governing board, as provided in subdivision (a), the Governor shall appoint one member to a one-year term, two members to a two-year term, and two members to a three-year term.
(f) This section becomes shall become inoperative on if the date Commission on which Regional Grid Transformation makes the governance modifications set forth findings required in Section 359.5 become effective and is repealed on January 1 subdivision (d) of the following year. Section 359.5.

SEC. 5.

 Section 338 of the Public Utilities Code is amended to read:

338.
 (a) The Oversight Board shall have the exclusive right to approve procedures and the qualifications for Power Exchange governing board members specified in paragraph (4) of subdivision (d) (a) of Section 335, all of whom shall be required to be electricity customers in the area served by the Power Exchange. The Power Exchange governing board shall include, but not be limited to, representatives of investor-owned electric distribution companies, publicly owned electric distribution companies, nonutility generators, public buyers and sellers, private buyers and sellers, industrial end-users, commercial end-users, residential end-users, agricultural end-users, public interest groups, and nonmarket participant representatives. The structural composition of the Power Exchange governing board existing on July 1, 1999, shall remain in effect until an agreement with a participating state is legally in effect. However, prior to such an agreement, California shall retain the right to change the Power Exchange governing board into a nonstakeholder board. In the event of such a legislative change, revised bylaws shall be filed with the Federal Energy Regulatory Commission under Section 205 of the Federal Power Act (16 U.S.C.A. Sec. 824d).
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 6.

 Section 339 of the Public Utilities Code is amended to read:

339.
 (a) The Oversight Board is the appeal board for majority decisions of the Independent System Operator governing board relating to matters that are identified in subdivision (b) as they pertain to the Independent System Operator.
(b) The following matters are subject to California’s exclusive jurisdiction:
(1) Selections by California of governing board members, as described in Sections 335, 337, and 338.
(2) Matters pertaining to retail electric service or retail sales of electric energy.
(3) Ensuring that the purposes and functions of the Independent System Operator and Power Exchange are consistent with the purposes and functions of California nonprofit public benefit corporations, including duties of care and conflict of interest standards for directors of the corporations.
(4) State functions assigned to the Independent System Operator and Power Exchange under state law.
(5) Open meeting standards and meeting notice requirements.
(6) Appointment of advisory representatives representing state interests.
(7) Public access to corporate records.
(8) The amendment of bylaws relevant to these matters.
(c) Only members of the Independent System Operator governing board may appeal a majority decision of the Independent System Operator related to any of the matters specified in subdivision (b) to the Oversight Board.
(d) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 7.

 Section 340 of the Public Utilities Code is amended to read:

340.
 (a) The Oversight Board shall take the steps that are necessary to ensure the earliest possible incorporation of the Independent System Operator and the Power Exchange as separately incorporated public benefit, nonprofit corporations under the Corporations Code.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 8.

 Section 341 of the Public Utilities Code is amended to read:

341.
 The Oversight Board may do all of the following:
(a) Meet at the times and places it may deem proper.
(b) Accept appropriations, grants, or contributions from any public source, private foundation, or individual.
(c) Sue and be sued.
(d) Contract with state, local, or federal agencies for services or work required by the Oversight Board.
(e) Contract for or employ any services or work required by the Oversight Board that in its opinion cannot satisfactorily be performed by its staff or by other state agencies.
(f) Appoint advisory committees from members of other public agencies and private groups or individuals.
(g) As a body, or on the authorization of the Oversight Board, as a subcommittee composed of one or more members, hold hearings at the times and places it may deem proper.
(h) Issue subpoenas to compel the production of books, records, papers, accounts, reports, and documents and the attendance of witnesses.
(i) Administer oaths.
(j) Adopt or amend rules and regulations to carry out the purposes and provisions of this chapter, and to govern the procedures of the Oversight Board.
(k) Exercise any authority consistent with this chapter delegated to it by a federal agency or authorized to it by federal law.
(l) Make recommendations to the Governor and the Legislature at the time or times the Oversight Board deems necessary.
(m) Participate in proceedings relevant to the purposes of this chapter or to the purposes of Division 4.9 (commencing with Section 9600) or, as part of any coordinated effort by the state, participate in activities to promote the formation of interstate agreements to enhance the reliability and function of the electricity system and the electricity market.
(n) Do any and all other things necessary to carry out the purposes of this chapter.
(o) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 9.

 Section 341.1 of the Public Utilities Code is amended to read:

341.1.
 (a) Regulations adopted within 120 days of the effective date of this section may be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of the Government Code, and for the purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health, safety, and general welfare.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 10.

 Section 341.2 of the Public Utilities Code is amended to read:

341.2.
 (a) 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) applies to meetings of the Oversight Board. In addition to the allowances of that act, the Oversight Board may hold a closed session to consider the appointment of one or more candidates to the governing board of the Power Exchange, deliberate on matters involving the removal of a member of the governing board of the Power Exchange, or to consider a matter based on information that has received a grant of confidential status pursuant to regulations of the Oversight Board, provided that any action taken on such a matter shall be taken by vote in an open session.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 11.

 Section 341.3 of the Public Utilities Code is amended to read:

341.3.
 (a) Voting members of the Oversight Board shall be required to file financial disclosure statements with the Fair Political Practices Commission. The appointing authority for voting members shall avoid appointing persons with conflicts of interest.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 12.

 Section 341.4 of the Public Utilities Code is amended to read:

341.4.
 (a) The Oversight Board shall appoint, and fix the salary of, an executive director who shall have charge of administering the affairs of the Oversight Board, including entering into contracts, subject to the direction and policies of the Oversight Board. Notwithstanding Sections 11042 and 11043 of the Government Code, the Oversight Board shall appoint an attorney who shall advise the Oversight Board and each member and represent the Oversight Board as a party in any state or federal action or proceeding related to the purposes of this chapter or to an action of the Oversight Board and who shall perform generally all the duties of attorney to the Oversight Board. For purposes of this section, the Oversight Board may appoint a person exempt pursuant to subdivision (e) of Section 4 of Article VII of the California Constitution. The executive director shall, in accordance with Article VII of the California Constitution and subject to the approval of the Oversight Board, appoint employees as may be necessary to carry out the Oversight Board’s duties and responsibilities.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 13.

 Section 341.5 of the Public Utilities Code is amended to read:

341.5.
 (a) The Independent System Operator and Power Exchange bylaws shall contain provisions that identify those matters specified in subdivision (b) of Section 339 as matters within state jurisdiction. The bylaws shall also contain provisions which state that California’s bylaws approval function with respect to the matters specified in subdivision (b) of Section 339 shall not preclude the Federal Energy Regulatory Commission from taking any action necessary to address undue discrimination or other violations of the Federal Power Act (16 U.S.C.A. Sec. 791a et seq.) or to exercise any other commission responsibility under the Federal Power Act. In taking any such action, the Federal Energy Regulatory Commission shall give due respect to California’s jurisdictional interests in the functions of the Independent System Operator and Power Exchange and to attempt to accommodate state interests to the extent those interests are not inconsistent with the Federal Energy Regulatory Commission’s statutory responsibilities. The bylaws shall state that any future agreement regarding the apportionment of the Independent System Operator and Power Exchange board appointment function among participating states associated with the expansion of the Independent System Operator and Power Exchange into multistate entities shall be filed with the Federal Energy Regulatory Commission pursuant to Section 205 of the Federal Power Act (16 U.S.C.A. Sec. 824d).
(b) Any necessary bylaw changes to implement the provisions of Section 335, 337, 338, 339, or subdivision (a) of this section, or changes required pursuant to an agreement as contemplated by subdivision (a) of this section with a participating state for a regional organization, shall be effective upon approval of the respective governing boards and the Oversight Board and acceptance for filing by the Federal Energy Regulatory Commission.
(c) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 14.

 Section 347 of the Public Utilities Code is amended to read:

347.
 (a) The Independent System Operator governing board may form appropriate technical advisory committees composed of market and nonmarket participants to advise the Independent System Operator governing board on issues including, but not limited to, rules and protocols and operating procedures.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 15.

 Section 348 of the Public Utilities Code is amended to read:

348.
 (a) The Independent System Operator shall adopt inspection, maintenance, repair, and replacement standards for the transmission facilities under its control no later than September 30, 1997. The standards, which shall be performance or prescriptive standards, or both, as appropriate, for each substantial type of transmission equipment or facility, shall provide for high quality, safe, and reliable service. In adopting its standards, the Independent System Operator shall consider: cost, local geography and weather, applicable codes, national electric industry practices, sound engineering judgment, and experience. The Independent System Operator shall also adopt standards for reliability, and safety during periods of emergency and disaster. The Independent System Operator shall report to the Oversight Board, at such times as the Oversight Board may specify, on the development and implementation of the standards in relation to facilities under the operational control of the Independent System Operator. The Independent System Operator shall require each transmission facility owner or operator to report annually on its compliance with the standards. That report shall be made available to the public.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 16.

 Section 349 of the Public Utilities Code is amended to read:

349.
 (a) The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operator’s operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner. If the Independent System Operator finds that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(b) This section shall become inoperative if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5.

SEC. 17.

 Section 352 of the Public Utilities Code is amended to read:

352.
 (a) The Independent System Operator may not enter into a multistate entity or a regional organization as authorized in Section 359 unless that entry is approved by the Oversight Board.
(b) This section becomes shall become inoperative on the date on which the governance modifications set forth in if the Commission on Regional Grid Transformation makes the findings required in subdivision (d) of Section 359.5 become effective and is repealed on January 1 of the following year. 359.5.

SEC. 18.

 Section 359 of the Public Utilities Code is amended to read:

359.
 (a) It is the intent of the Legislature to provide for the evolution of the Independent System Operator into a regional organization to promote the development of regional electricity transmission markets in the western states and to improve the access of consumers served by the Independent System Operator to those markets.
(b) The preferred means by which the voluntary evolution described in subdivision (a) should occur is through the adoption of a regional compact or other comparable agreement among cooperating party states, the retail customers of which states would reside within the geographic territories served by the Independent System Operator.
(c) The agreement described in subdivision (b) should provide for all of the following:
(1) An equitable process for the appointment or confirmation by party states of members of the governing boards of the Independent System Operator.
(2) A respecification of the size, structure, representation, eligible membership, nominating procedures, and member terms of service of the governing boards of the Independent System Operator.
(3) Mechanisms by which each party state, jointly or separately, can oversee effectively the actions of the Independent System Operator as those actions relate to the assurance of electricity system reliability within the party state and to matters that affect electricity sales to the retail customers of the party state or otherwise affect the general welfare of the electricity consumers and the general public of the party state.
(4) The adherence by publicly owned and investor-owned utilities located in party states to enforceable standards and protocols to protect the reliability of the interconnected regional transmission and distribution systems.
(d) (1) Except for paragraphs (2) and (3), this section becomes inoperative on January 1, 2016.
(2) This section becomes operative on January 1, 2019, if Article 5.5 (commencing with Section 359.5) becomes inoperative on that date.
(3) If the governance modifications set forth in Section 359.5 This article shall become effective, this article is repealed inoperative if the Commission on January 1 of Regional Grid Transformation makes the year following the effective date findings required in subdivision (d) of the governance modifications. Section 359.5.

SEC. 19.

 Section 359.5 of the Public Utilities Code is repealed.
359.5.

(a)It is the intent of the Legislature to provide for the transformation of the Independent System Operator into a regional organization to promote the development of regional electricity transmission markets in the western states and to improve the access of consumers served by the Independent System Operator to those markets, and that the transformation should only occur where it is in the best interests of California and its ratepayers.

(b)The transformation of the Independent System Operator into a regional organization shall not alter its obligations to the state or to electricity consumers within the state or its obligations to comply with state laws. The Independent System Operator shall retain its obligations set forth in Section 345.5, shall maintain the standards for open meetings and public access to corporate records as set forth in Section 345.5, and shall facilitate effective tracking and reporting mechanisms in support of state enforcement of Division 25.5 (commencing with Section 38500) of the Health and Safety Code.

(c)The voluntary transformation described in subdivision (a) shall occur through additional transmission owners joining the Independent System Operator with approval from their own state or local regulatory authorities, as applicable.

(d)Modifications to the Independent System Operator governance structure, through changes to its bylaws or other corporate governance documents, would be needed to allow this transformation.

(e)The Independent System Operator shall prepare the governance modifications needed as described in subdivision (d), but they shall not become effective until all of the following occur:

(1)The Independent System Operator conducts one or more studies of the impacts of a regional market enabled by the proposed governance modifications, including overall benefits to ratepayers, including the creation or retention of jobs and other benefits to the California economy, environmental impacts in California and elsewhere, impacts in disadvantaged communities, emissions of greenhouse gases and other air pollutants, and reliability and integration of renewable energy resources. The modeling, including all assumptions underlying the modeling, shall be made available for public review.

(2)The commission, Energy Commission, and State Air Resources Board jointly hold at least one public workshop where the Independent System Operator presents the proposed governance modifications and the results of the studies described in paragraph (1). The related Independent System Operator documents shall be made public before the workshop.

(3)The Independent System Operator submits to the Governor the studies described in paragraph (1) and revised bylaws or other corporate governance documents setting forth the proposed modifications to its governance structure.

(4)The Governor transmits to the Legislature the studies described in paragraph (1) and revised bylaws or other corporate governance documents setting forth the proposed modifications to its governance structure, no later than December 31, 2017.

(5)The Legislature enacts a statute implementing the revised governance changes.

(f)The Independent System Operator shall expeditiously adopt the modifications to its governance structure enacted by the Legislature pursuant to paragraph (5) of subdivision (e) so that the modifications become effective before new transmission owners from outside California complete the process of joining the Independent System Operator.

(g)The revised governance structure shall not alter or abridge the contractual rights of a transmission owner to withdraw from participation in the Independent System Operator.

(h)One year after the seating of the new, revised governing board of the Independent System Operator pursuant to the modifications of its governance structure, and every two years thereafter, the Independent System Operator shall prepare a report to the states within the areas it serves documenting its furtherance of applicable state and federal laws and regulations affecting the electric industry.

(i)This article is repealed on January 1, 2019, if a statute implementing the governance modifications has not become effective on or before January 1, 2019.

SEC. 20.

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

359.5.
 (a) (1) It is the intent of the Legislature to establish a process to change the governance of the Independent System Operator, consistent with the requirements set forth in this section.
(2) It is the intent of the Legislature that the Public Utilities Commission should continue to act in the interests of California ratepayers and pursue strong principles of cost causation, including economic efficiency, alignment of transmission development with the public interest, and encouraging application of best practices for quality of service and price levels.
(3) It is the intent of the Legislature that the State Air Resources Board continue to consult with California balancing authorities to ensure that the state board can quantify changes in emissions of greenhouse gases for the purposes of the state’s greenhouse gas inventory and climate programs.
(4) It is the intent of the Legislature to facilitate the transition to a regional grid to provide benefits to California ratepayers, including benefits with respect to the creation or retention of jobs and other benefits to the California economy, environmental impacts in California and elsewhere, impacts in disadvantaged communities, emissions of greenhouse gases and other air pollutants, and the reliability and integration of renewable energy resources.
(b) On or before October 31, 2018, the Independent System Operator governing board shall develop and approve proposed revised corporate governing documents and shall submit those documents to the Commission on Regional Grid Transformation established pursuant to subdivision (f) for review and certification as set forth in subdivision (d). The proposed revised corporate governing documents shall be developed through a process that includes opportunity for public review and comment.
(c) The proposed revised corporate governing documents shall set forth a proposed governance structure that does all of the following:
(1) Acknowledges and preserves state authority over matters traditionally regulated by the states themselves, including the continuing right of all states to determine and control resource procurement policy, resource adequacy, planning for their electrical utilities, and other policy issues. The proposal must also include a transparent mechanism for tracking emissions of greenhouse gases and other air pollutants from sources of electricity generation that use the services of the Independent System Operator.
(2) Includes an open and transparent governance framework, a robust and meaningful stakeholder process, and inclusive public participation, that includes both of the following:
(A) One or more diverse stakeholder advisory committees, advisory to the governing board, that include, but are not necessarily limited to, members chosen by each state with a participating transmission owner that is under the operational control of the Independent System Operator, as well as representatives of participating transmission owners, transmission-dependent utilities, local publicly owned electric utilities, end-use consumers, environmental and environmental justice interests, exempt wholesale generators, emerging technologies, and labor organizations.
(B) Access to data and reasoning underlying decisions.
(3) Permits participating transmission owners to withdraw from the Independent System Operator, including if required to do so by a participating transmission owner’s state or local regulatory authority.
(4) Includes a process for transitioning the Independent System Operator’s governing board to a new independent board when, and if, the Commission of Regional Grid Transformation issues the findings described in subdivision (d).
(d) The proposed revised corporate governing documents developed by the Independent System Operator shall not become effective unless, on or before December 31, 2018, the Commission on Regional Grid Transformation finds that all the following are true:
(1) The proposed revised corporate governing documents comply with the requirements of subdivision (c).
(2) The proposal ensures that individual states or intervening parties, including state regulators, regulated utilities, local publicly owned electric utilities, direct access customers, and individual plaintiffs, are not hindered or inhibited from challenging a transmission project or allocation of costs before the Federal Energy Regulatory Commission.
(3) The proposal provides a role for state regulators on issues regarding transmission needs and cost allocations, including provisions ensuring that any such involvement by state regulators shall not hinder or inhibit the individual states or their utility regulators from acting to protect the interests of ratepayers through challenges to new transmission projects, tariffs, or transmission cost allocation in filings made before the Federal Energy Regulatory Commission.
(4) The proposal ensures that no member of the new governing board is affiliated with any actual or potential participant in any market administered by the Independent System Operator and the board, as a whole, is diverse in terms of geography and expertise, and reflects the interests of its stakeholders.
(e) Before making the findings described in subdivision (d), the Commission on Regional Grid Transformation shall hold at least one public meeting.
(f) The Commission on Regional Grid Transformation is hereby created. The membership of the Commission on Regional Grid Transformation shall be as follows:
(1) The Governor or his or her representative, who shall chair the commission.
(2) The chair of the Assembly Committee on Utilities and Energy.
(3) The chair of the Senate Committee on Energy, Utilities and Communications.
(4) The chair of the Energy Commission.
(5) The president of the Public Utilities Commission.
(6) The chair of the California Air Resources Board.
(7) A member of the Assembly appointed by the Speaker of the Assembly.
(8) A member of the Senate appointed by the Senate Committee on Rules.
(g) At least annually, the balancing authorities operating in California, in consultation with the State Air Resources Board, shall make available a public report on emissions of greenhouse gases from resources used to serve California load in their balancing authority areas, and shall describe those emissions of greenhouse gases, and trends in those emissions, from the resources supplying that electricity.
(h) This article is repealed on January 1, 2019, unless by December 31, 2018, the Commission on Regional Grid Transformation makes the findings required in subdivision (d). The Commission on Regional Grid Transformation shall promptly notify the Secretary of State and the Legislative Counsel if it makes the findings required in subdivision (d), and shall notify those same parties if it has not made the findings by December 31, 2018.

SEC. 21.

 Section 399.23 is added to the Public Utilities Code, to read:

399.23.
 (a) The Legislature finds and declares all of the following:
(1) The California Renewables Portfolio Standard Program requires all retail sellers to procure a minimum quantity of electricity products from eligible renewable energy resources. Preliminary modeling results in the commission Rulemaking 16-02-007 (filed February 11, 2016), Order Instituting Rulemaking to Develop an Electricity Integrated Resource Planning Framework and to Coordinate and Refine Long-Term Procurement Planning Requirements, has identified a potential ratepayer savings of six hundred thirty-three million dollars ($633,000,000) from procuring up to 4,000 megawatts of eligible renewable energy resources that qualify for federal investment tax credits and production tax credits before those tax credits begin to expire in 2020.
(2) While early procurement of eligible renewable energy resources that are eligible for federal production tax credits and investment tax credits would reduce long-term electricity costs for ratepayers, there are already sufficient resources to meet forecasted electrical demand in the portions of the state served by the Independent System Operator and California’s large electrical corporations have contracts with eligible renewable energy resources to meet their compliance obligations under the renewables portfolio standard. Additionally, long-term load forecasts for the electrical corporations are uncertain due to expansion of community choice aggregators and associated departing load from the electrical corporations.
(3) While accelerated procurement of tax advantaged, eligible renewable energy resources will benefit California ratepayers in the long term, it may result in early procurement of resources not needed until later in the California Renewables Portfolio Standard Program, especially for electrical corporations. In the near term, such procurement could lead to increases in the need for the Independent System Operator to curtail electricity supplied by eligible renewable energy resources at certain times of the year, but curtailments to date have been minimal, and the benefits of early procurement will outweigh the potential for increased curtailment. Additionally, state agencies and the Independent System Operator are already working to minimize the impact of curtailment.
(4) While any requirement to accelerate procurement of eligible renewable energy resources will benefit California ratepayers as a whole, it could negatively impact ratepayers of electrical corporations unless they are able to equitably spread the cost of that procurement to customers who depart the service of the electrical corporation to receive service from other entities, including community choice aggregators and electric service providers.
(5) In order for wind and solar projects to be eligible for the federal tax credits, and for the identified ratepayer savings to occur, projects must begin construction no later than December 31, 2019.
(6) The Legislature intends that the accelerated procurement of eligible renewable energy resources authorized in this section should be implemented by the commission in a manner that effectuates the purposes of this section. To the extent necessary to implement this section, the commission should develop rules for this procurement that are separate from the rules implementing the procurement and compliance obligations of the renewables portfolio standard generally. Any special rules should be for the purposes of implementing this section only, and should not be applied to any other aspects of the California Renewables Portfolio Standard Program. Any procurement of eligible renewable energy resources under this section may count toward a retail seller’s renewables portfolio standard procurement obligation under this article.
(b) For purposes of this section, “tax-advantaged renewable resource” means a new or repowered eligible renewable energy resource that satisfies all of the following:
(1) Achieves initial commercial operation after January 1, 2019.
(2) Is eligible for a federal investment tax credit (26 U.S.C. Sec. 48) of at least 22 percent or the federal production tax credit (26 U.S.C. Sec. 45) of at least 80 percent and passes the savings associated with these credits through to retail sellers and their customers.
(3) Provides a bundled renewable electricity product meeting the product content category requirements of paragraph (1) of subdivision (b) of Section 399.16.
(4) Was not under contract to any retail seller or local publicly owned electric utility, including load serving entities serving customers outside the state, as of September 30, 2017.
(c) In order to reduce the long-term costs of procuring eligible renewable energy resources by taking advantage of available federal incentives, by no later than March 31, 2018, the commission shall require electrical corporations to procure tax - advantaged renewable resources. The commission may exercise this authority to require an electrical corporation with more than 100,000 service connections in California to procure a specified amount of tax-advantaged renewable resources over and above those resources necessary to meet the procurement requirements for the applicable compliance period only if the commission determines that procuring those resources would be consistent with the reference system plan developed by the commission in support of its duties pursuant to Sections 454.51 and 454.52, and the plan shows that earlier-than-required procurement in order to meet the procurement requirements of this article will reduce the overall long-term expense of procuring eligible renewable energy resources of retail end-use customers of all retail sellers.
(d) In conducting procurement of tax-advantaged renewable resources pursuant to this section, each electrical corporation shall give priority to projects that provide flexible and controllable eligible renewable energy resources that support the grid management needs of the Independent System Operator or can displace conventional generation in locally constrained resource areas. Contracts executed by an electrical corporation for tax-advantaged renewable resources shall be submitted to the commission for review by no later than September 1, 2018.
(e) Procurement of tax-advantaged renewable resources pursuant to subdivision (c) shall be on behalf of retail end-use customers of all retail sellers. The commission shall act on all final contracts by December 31, 2018, and shall authorize an electrical corporation to recover expenses for the procurement of tax-advantaged renewable resources pursuant to subdivision (c), subject to both of the following:
(1) Each retail seller operating within the service territory of an electrical corporation shall be allocated the portion of the tax-advantaged renewable resource, including all associated renewable energy credits, assigned to its retail end-use customers. This portion shall be adjusted annually in the event that retail end-use customers elect to be served by other retail sellers.
(2) Upon the delivery of electricity products to them, the retail end-use customers shall be deemed to have purchased that electricity from the electrical corporation. Payment for any sale shall be a direct obligation of the retail end-use customer.
(f) The electricity products and associated renewable energy credits allocated to the retail end-use customers of a retail seller other than an electrical corporation pursuant to subdivision (e) shall be applied to that retail seller’s requirements to procure electricity products from eligible renewable energy resources meeting the portfolio content requirements of paragraph (1) of subdivision (b) of Section 399.16.
(g) An electric service provider, community choice aggregator serving retail end-use customers as of September 1, 2017, or community choice aggregator receiving certification of an implementation plan pursuant to paragraph (7) of subdivision (c) of Section 366.2 prior to September 1, 2017, may elect to provide its proportionate share of any tax-advantaged renewable resource identified by the commission pursuant subdivision (c) through procurement of long-term contracts on behalf of its retail end-use customers subject to all of the following:
(1) The electrical corporation’s obligation to procure tax-advantaged renewable resources pursuant to subdivision (c) shall be reduced by the proportionate share of any electric service provider or community choice aggregator electing to self-provide.
(2) An electric service provider or community choice aggregator electing to self-provide shall notify the commission of its intent by written declaration within 30 days after the commission has imposed a procurement obligation on electrical corporations pursuant to subdivision (c), and shall demonstrate that sufficient contracts have been executed and approved no later than September 1, 2018, by reporting its plan for compliance to the commission.
(3) Retail end-use customers of an electric service provider or community choice aggregator demonstrating successful self-provision shall not be subject to any of the cost obligations in subdivision (e).
(4) If any electric service provider or community choice aggregator electing to self-provide fails to demonstrate the execution of sufficient enforceable and financeable procurement commitments by September 1, 2018, any shortfall attributable to their retail end-use customers shall be procured by the respective electrical corporation pursuant to subdivision (e).

SECTION 1.SEC. 22.

 Section 745.5 is added to the Public Utilities Code, to read:

745.5.
 (a) For purposes of this section, the following terms have the following meanings:
(1) “Energy utility” means an electrical corporation, a gas corporation, or both an electrical corporation and a gas corporation.
(2) “Smart meter” means a meter that is capable of recording electricity or gas consumption at minimum daily intervals and that is capable of communicating the consumption information to the utility providing electric or gas service.
(b) (1) An energy utility shall provide energy usage or energy billing information to a residential customer with a smart meter that promotes the customer’s ability to make informed energy usage decisions and to minimize the risk of the customer being unpleasantly surprised after the fact by the size of the customer’s energy bill during a billing period.
(2) The energy usage or energy billing notification requirements of this section apply to those residential customers of an energy utility who have smart meters.
(3) The energy usage or energy billing notification requirements of this section do not apply if the customer exercises the option to not receive energy usage or billing information.
(4) Implementation of a system for providing energy usage or energy billing notifications to those customers that are not exempt or do not opt out of receiving notifications shall be completed not later than when the energy utility commences to provide service pursuant to a default time-of-use rate structure or December 31, 2019, whichever comes first.
(c) Unless the customer has exercised the option to not receive notifications, a residential customer of an energy utility with a smart meter shall receive energy usage or energy billing notifications from the customer’s energy utility at appropriate times, which may include when the customer’s usage of electricity or gas approaches a level that will cause the customer to be charged for electricity or gas consumption in excess of his or her average monthly bill, when crossing into a higher tiered rate, or when significantly exceeding the customer’s historical pace of electricity or gas usage at some point during a billing period.
(d) An energy utility shall offer the option to a customer to receive energy bill alert notifications when the customer’s projected bill exceeds an amount specified by the customer or when the customer’s rate of electricity or gas usage, if it continues through a billing period, will result in a periodic bill that exceeds an amount specified by the customer. Notification shall inform the customer as to how much the customer’s bill would be for that billing period if usage continues at the rate of usage up to the time of the notification.
(e) The commission may adopt more demanding requirements for an energy utility to provide electricity or gas bill alert notifications to residential customers and may review the requirements of this section to ensure that customers are positioned to make informed decisions as to their electricity or gas usage and avoid experiencing higher than expected energy bills.
(f) When available, notification pursuant to this section shall be by electronic mail, mobile software application, or another electronic method of communication. Notification shall not be by automatic dialing-announcing device, commonly known as a robocaller, or short message service, commonly known as a text message, unless the customer expressly elects to receive notification in one of these manners. Notifications may, but need not, include specification of taxes, special fees imposed by order of the commission, or special discounts.
(g) An energy utility shall notify a residential customer with a smart meter that the customer may receive notification of the customer’s energy usage or billing information as required pursuant to this section, the manner by which the customer can provide appropriate contact information to receive notifications, and the customer’s opportunity to opt in to or opt out of receiving notifications. If a customer provides appropriate contact information to receive energy usage or billing information notifications pursuant to this section, the customer shall be deemed to have opted in to receiving notifications unless the customer notifies the energy utility that the customer does not wish to receive notifications. If the customer has previously provided the energy utility with an electronic mail address, the customer shall be deemed to have opted in to receiving notifications by electronic mail unless the customer notifies the energy utility that the customer does not wish to receive notifications. If the customer, after having received appropriate notice as required by this subdivision, fails to supply the energy utility with any contact information to receive notifications, the customer shall be deemed to have opted out of receiving notifications. If a customer supplies contact information but the supplied means of contact are inappropriate or inadequate to supply the customer with the required notifications, the customer shall be deemed to have opted out of receiving notifications. A customer may opt in to or out of these notification services in any other manner determined by the commission.
(h) The commission may modify or adjust the requirements of this section for any electrical corporation with fewer than 100,000 service connections, as individual circumstances merit.
(i) An energy utility shall seek authority from the commission to be exempted from the requirements of this section with respect to a category of residential customers when complying with those requirements is impracticable or infeasible with respect to those customers. If, in response to a request by an energy utility pursuant to this subdivision, the commission determines that it is impractical or infeasible to comply with the requirements of this section for a category of customers, the commission shall exempt the energy utility from the requirements of this section with respect to those customers.
(j) A customer notification provided pursuant to this section is not, and shall not be construed to be, a bill forecast, and no electrical corporation or gas corporation shall be liable if actual bills differ from information provided in the notifications required by this section.

SEC. 2.SEC. 23.

 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.