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

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Date Published: 03/08/2018 09:00 PM
AB813:v94#DOCUMENT

Amended  IN  Senate  March 08, 2018
Amended  IN  Senate  September 08, 2017
Amended  IN  Senate  August 31, 2017
Amended  IN  Assembly  May 30, 2017
Amended  IN  Assembly  March 21, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 813


Introduced by Assembly Member Holden
(Coauthor: Senator Wieckowski)

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


LEGISLATIVE COUNSEL'S DIGEST


AB 813, as amended, Holden. Electricity: Independent System Operator: California Renewables Portfolio Standard Program: procurement. Multistate regional transmission system organization: membership.
Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to ensure efficient use and reliable operation of the electrical transmission grid consistent with achieving planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. The Clean Energy and Pollution Reduction Act of 2015 provides for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process. That process provides that modifications to the ISO’s governance structure, through changes to its bylaws or other corporate governance documents, will not become effective until the ISO, the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, the State Air Resources Board, the Governor, and the Legislature take specified actions on or before January 1, 2019.
This bill would prohibit a California electrical transmission facility owner, a retail seller of electricity, or a local publicly owned electric utility from participating in a multistate regional transmission system organization, as defined, unless the bylaws or other organizational documents that govern the organization, and the organization’s operations, meet Federal Energy Regulatory Commission requirements and other specified requirements. The bill would require a California transmission owner, retail seller, or local publicly owned electric utility, before joining a multistate regional transmission system organization, to submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the State Energy Resources Conservation and Development Commission (Energy Commission) for review. The bill would require the Energy Commission, in consultation with the Public Utilities Commission (PUC) and the State Air Resources Board (state board), to review those materials for compliance with the bill’s requirements. The bill would prohibit a California transmission owner, retail seller, or local publicly owned electric utility from joining the multistate regional transmission system operator unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet those requirements. The bill would authorize the ISO, by an unspecified date, to develop and submit to the Energy Commission a governance proposal that complies with those requirements, require the Energy Commission, in consultation with the PUC and state board, to review the proposal for compliance with the bill’s requirements, and, if the Energy Commission determines that the proposal meets those requirements and if, by an unspecified date, one or more transmission owners from outside California have entered into a memorandum of understanding or other agreement with the ISO indicating an intent to join the ISO by becoming a participating transmission owner, would authorize the ISO to implement the proposal.

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, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because violation of an order of the commission made pursuant to the bill’s provisions would be a crime, this 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: YESNO  

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


SECTION 1.

 Section 352 of the Public Utilities Code is repealed.
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 inoperative on the date on which the governance modifications set forth in Section 359.5 become effective and is repealed on January 1 of the following year.

SEC. 2.

 Section 359 of the Public Utilities Code is repealed.
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 become effective, this article is repealed on January 1 of the year following the effective date of the governance modifications.

SEC. 3.

 Section 359 is added to the Public Utilities Code, to read:

359.
 (a) On or before ____, the Independent System Operator’s Board of Governors may develop and submit to the Energy Commission a governance proposal that complies with each of the requirements of Section 8391.
(b) For purposes of meeting the requirements of subdivision (n) of Section 8391, the proposal shall provide for the establishment of a western states’ committee. The committee shall have three representatives from each state that has a transmission owner participating in the Independent System Operator. The committee shall provide input to the Independent System Operator on all matters of interest to more than one state.
(c) The open meeting policy and records availability policy of the Independent System Operator in effect as of January 31, 2018, shall meet the requirements of subdivisions (d) and (f) of Section 8391.
(d) The Energy Commission, in consultation with the Public Utilities Commission and the State Air Resources Board, shall review the governance proposal for compliance with the requirements of Chapter 7 (commencing with Section 8390) of Division 4.1. This review shall be completed by no later than ____, and shall include public review of, and written comment on, the proposal and at least one public workshop or hearing at which public comment is received.
(e) If the Energy Commission determines that the governance proposal meets the requirements of Chapter 7 (commencing with Section 8390) of Division 4.1 and if by ____, one or more transmission owners from outside California has entered into a memorandum of understanding or other agreement with the Independent System Operator indicating its intent to join the Independent System Operator by becoming a participating transmission owner, then the Independent System Operator may implement a governance structure consistent with the proposal. Upon completing implementation of the governance structure, the Independent System Operator or its successor shall provide notice to the Energy Commission.
(f) (1) The Energy Commission shall verify that the Independent System Operator has implemented a governance structure consistent with this section and, upon so verifying, shall promptly provide notice to the Secretary of State. Upon receipt of notice by the Secretary of State, Article 2 (commencing with Section 334), Section 345.5, and Sections 347 to 349, inclusive, shall become inoperative.
(2) The Energy Commission shall report to the Legislature its verification and notification to the Secretary of State pursuant to paragraph (1). The report to the Legislature shall be submitted in compliance with Section 9795 of the Government Code.

SEC. 4.

 Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.

SEC. 5.

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

8390.
 For purposes of this chapter, the following terms have the following meanings:
(a) “California participating transmission owner” means a California transmission owner that has become a participating transmission owner by turning over operational control of some or all of its bulk electrical transmission facilities to an independent system operator or a multistate regional transmission system organization.
(b) “California transmission owner” means an electrical corporation, local publicly owned electric utility, or other entity that owns bulk electrical transmission facilities located in California.
(c) “Multistate regional transmission system organization” means an entity that the Federal Energy Regulatory Commission has determined satisfies the requirements for operating as an independent system operator or regional transmission organization and that has participating transmission owners from multiple states.
(d) “Retail seller” has the same meaning as defined in Section 399.12.

8391.
 A California transmission owner, retail seller, or local publicly owned electric utility shall not participate in a multistate regional transmission system organization unless the bylaws or other organizational documents that govern the organization and the organization’s operations meet Federal Energy Regulatory Commission requirements and do all of the following:
(a) Prohibit a member of the governing board of the organization from any actual or potential affiliation with a participant in any market overseen by the organization. A member of the governing board also shall not have been an employee of a market participant within two years prior to becoming a member of the board.
(b) Limit conflicts of interest by prohibiting any member of the governing board from directly owning any interest in energy-related assets that are appreciably affected by the actions of the organization and by requiring annual disclosure of significant financial interests.
(c) Provide for and maintain a decisionmaking process that is independent of control by any market participant or class of participants.
(d) Provide for and maintain open meeting standards and meeting notice requirements that are consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and afford the public the greatest possible access to meetings, consistent with other duties of the organization.
(e) Subject to reasonable measures to limit the length of meetings or disruptions to meetings, authorize interested members of the public and representatives of customers to participate in person or through remote electronic means in meetings of the governing board and in the meetings of any advisory group to the governing board.
(f) Provide public access to the records of the organization consistent with the general policies of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), consistent with the other duties of the organization.
(g) Require that the governing documents of the organization be posted and maintained on the organization’s public Internet Web site.
(h) Protect and preserve a state’s authority over matters regulated by the state, including procurement policy, resource planning, and resource or transmission siting within the state.
(i) Require retail sellers in each state to meet minimum resource adequacy standards as required under federal law and permit each state to establish resource adequacy standards for its retail sellers that exceed those required by federal law, in the state’s discretion.
(j) Prohibit operation of a centralized capacity market in California for the forward procurement of electrical generating capacity that requires capacity to clear at a state or balancing authority’s market clearing price in order to count for resource adequacy purposes.
(k) Ensure the proper allocation of the costs of compliance with California’s market-based compliance mechanism for limiting emissions of greenhouse gases in the dispatch of resources to serve load in California. The multistate regional transmission system organization shall maintain a transparent system for tracking emissions of greenhouse gases resulting from resources dispatched to serve load.
(l) Establish and maintain equitable transmission cost allocation rules through an open stakeholder process approved by the Federal Energy Regulatory Commission.
(m) Enhance the competitive structure of the organization by providing for and maintaining an independent market monitor.
(n) Establish a clear process, structure, and organizational support for state regulators within the region served by the multistate regional transmission system organization to collaborate and provide input to the organization on matters of interest to more than one state, including on issues relating to the organization’s independent market monitoring function established by the Federal Energy Regulatory Commission.
(o) Enable and facilitate participation of demand response, storage, and other distributed energy resources in the organization’s markets.
(p) Provide for and maintain a process for obtaining stakeholder input on policy initiatives requiring approval of the Federal Energy Regulatory Commission that is open to all members of the public and that does not require payment of a membership fee or other charge to participate.
(q) Ensure the right of any participating transmission owner to unilaterally withdraw from the multistate regional transmission system organization, with or without cause, upon giving reasonable notice, not to exceed two years.

8392.
 This chapter does not require any California transmission owner, retail seller, or local publicly owned electric utility to join or remain in a multistate regional transmission system organization.

8393.
 (a) A California transmission owner, retail seller, or local publicly owned electric utility shall, before joining a multistate regional transmission system organization, submit the bylaws and other organizational documents that govern the multistate regional transmission system organization to the Energy Commission for review.
(b) The Energy Commission, in consultation with the commission and the State Air Resources Board, shall review the bylaws and organizational documents that govern the multistate regional transmission system operator for compliance with the requirements of Section 8391. This review shall include public review of, and written comment on, the materials and at least one public workshop or hearing at which public comment is received.
(c) A California transmission owner, retail seller, or local publicly owned electric utility shall not join a multistate regional transmission system operator unless the Energy Commission has determined that the organization’s bylaws and organizational documents meet the requirements of Section 8391.