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AB-1720 Energy: long-duration energy storage: procurement.(2019-2020)

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Date Published: 07/27/2020 09:00 PM
AB1720:v96#DOCUMENT

Amended  IN  Senate  July 27, 2020
Amended  IN  Senate  June 29, 2020
Amended  IN  Assembly  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1720


Introduced by Assembly Member Carrillo

February 22, 2019


An act to amend and repeal Section 21168.6.20 of the Public Resources Code, to add Sections 2837.5 2837.5, 2837.6, and 2837.7 to the Public Utilities Code, and to amend Sections 80010, 80200, and 80260 of, to add Sections 80001, 80002.6, 80013, and 80201 to, and to add Article 2 (commencing with Section 80125) to Chapter 2 of Division 27 of, the Water Code, relating to energy, and to make an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1720, as amended, Carrillo. Energy: long-duration energy storage: environmental review and procurement.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA establishes a procedure by which a person may seek judicial review of the decision of the lead agency made pursuant to CEQA.

This bill would establish specified procedures for the administrative and judicial review of the environmental review and approvals granted for a pumped hydroelectric energy storage project undertaken by the San Diego County Water Authority in the vicinity of the San Vicente Reservoir in the County of San Diego that has a storage capacity rate not to exceed 4,000 megawatthour per day. The bill would apply certain rules of court establishing procedures requiring actions or proceedings seeking judicial review pursuant to CEQA or the granting of project approvals, including any appeals therefrom, to be resolved, to the extent feasible, within 270 days of the filing of the certified record of proceedings with the court to an action or proceeding seeking judicial review of the lead agency’s action related to the project. The bill would, except as provided, prohibit the San Diego County Water Authority from prequalifying or shortlisting or awarding a contract to perform any portion of the project. The bill would repeal these provisions on January 1, 2026.

Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations. Existing law requires the PUC to open a proceeding to determine appropriate targets, if any, for each load-serving entity, as defined, to procure viable and cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. If determined to be appropriate, the PUC is required to adopt the procurement targets, targets by October 1, 2013, and to reevaluate the determinations not less than once every 3 years. Pursuant to these provisions, the PUC has adopted decisions establishing energy storage system procurement targets. Existing law requires each load-serving entity, by January 1, 2016, and again by January 1, 2021, to submit a report to the PUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the PUC.
Existing law requires the PUC to adopt a process for each load-serving entity to file an integrated resource plan and a schedule for periodic updates to the plan to ensure that load-serving entities accomplish specified objectives. Existing law requires each load-serving entity to prepare and file an integrated resource plan consistent with those objectives on a time schedule directed by the PUC and subject to PUC review.
Pursuant to these authorities, the PUC has adopted a decision establishing 2 thresholds for the emissions of greenhouse gases, to meet by 2030, as the target ranges for the electric sector as part of the PUC’s 2019–20 integrated resource planning process. That decision also establishes the amount of long-duration energy storage, and the in-service date of the storage, that are required to be included in the load-serving entity’s integrated resource plans.
This bill would require the PUC, by January 4, 2021, to report to the Governor, the Independent System Operator, the Department of Water Resources, and the State Energy Resources Conservation and Development Commission (Energy Commission) on the specific types and amount of long-duration energy storage and in-service dates of that storage included in the integrated resource plans submitted by load-serving entities. The bill would require the PUC, in the report, to state whether it will issue an order on or before March 1, 2021, requiring load-serving entities, in the aggregate, to procure, at a minimum, the amount of long-duration energy storage capacity identified in the commission’s decision referenced above for a specific threshold of emissions of greenhouse gases. The bill would require the Department of Water Resources, if the PUC does not issue that order, to procure that amount of long-duration energy storage capacity, as specified, and would specify that the long-duration energy storage capacity is procured on behalf and for the benefit of the customers of the load-serving entities. The bill would provide that the costs incurred by the department resulting from the procurement are recoverable as a revenue requirement from those customers. The bill would require the PUC, upon request by the Department of Water Resources, to order electrical corporations to act as the agent of the department, to provide billing, collection, and other related services on terms and conditions that reasonably compensate the electrical corporations for their services, and to adequately secure payment to the department. The bill would establish the Long-Duration Energy Storage Account in the Department of Water Resources Electric Power Fund as a repository for moneys recovered from the customers of load-serving entities. The bill would, except as provided, would continuously appropriate moneys in the account to the department for purposes of the procurement, thereby making an appropriation.
This bill would require the PUC and the Energy Commission to timely incorporate consideration of long-duration energy storage systems, as defined, into their energy and resource planning. The bill would require the PUC and the Energy Commission to consider measures to advance described objectives for long-duration energy storage, including support through research and development, demonstration, procurement, and incentives.
Under existing law, a violation of an order, decision, rule, direction, demand, or​ requirement of the commission is a crime.
Because a violation of an order or decision of the commission implementing the​ requirements of the bill would be a crime, this bill would impose a state-mandated ​local program by creating a new crime.
The bill would prohibit the San Diego County Water Authority from prequalifying or shortlisting or awarding a contract to perform any portion of a long-duration energy storage project, except as provided.
This bill would make legislative findings and declarations as to the necessity of a special statute for the County of San Diego.
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: YES   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 In regards to Sections 3 to 12, inclusive, of this act, the The Legislature finds and declares all of the following:
(a) California must urgently respond to the economic adversity created by the coronavirus without abandoning the state’s leadership in combating the threats posed by climate change. Climate change imperils human health and economic prosperity by threatening more frequent droughts, devastating wildfires, intense storms, and extreme heat. This legislation acts on an identified need for clean energy investment and urgently addresses two immediate threats to California, high unemployment and the perils of climate change.
(b) The purpose of this act is to directly invest in clean energy infrastructure, to create good paying jobs, with benefits and pensions, and accelerate California’s investment in technologies to reduce emissions of greenhouse gases. This act will create both multiyear construction jobs as well as long-term employment and tax revenues fostering economic recovery of communities without reliance on California state budget revenues.
(c) California remains heavily reliant on the burning of natural gas for the generation of electricity, large hydroelectric generation, and imported electricity to meet customer demand and balance the variable production of generation by eligible renewable energy resources. Changes to the generation portfolio outside of California, including aging coal-fired powerplant retirements and more west wide renewable energy development, render future reliance on those resources ill advised.
(d) The state’s clean energy targets create a need for low-carbon, grid support resources to integrate generation from eligible renewable energy resources to meet customer demand. Investment in energy storage is needed to support reliable grid operations, meet customer demand during periods when variable wind and solar resources are not generating electricity, and efficiently capture, rather than curtail, renewable generation during periods of over-generation when variable wind and solar resources exceed customer demand.
(e) Multiple energy storage technologies hold promise to help maintain reliability while also cost-effectively integrating increasing amounts of eligible renewable energy resources to achieve the state’s 2030 and 2045 renewable and zero-carbon electricity goals. They include, but are not limited to, electrochemical, compressed air, liquified liquefied air, pumped hydroelectric, flow batteries, electrolytic and renewable hydrogen, and several other chemical, mechanical, gravity-based, and thermal energy storage technologies.
(f) In Decision 20-03-028 (March 26, 2020) 2019–2020 Electric Resource Portfolios to Inform Integrated Resource Plans and Transmission Planning, the Public Utilities Commission has adopted a range of 46,000,000 to 38,000,000 metric tons of greenhouse gas emissions by 2030 as the target range for the electric sector as part of its 2019–20 integrated resource planning process. Modeling conducted by the commission as part of its 2019–20 integrated resource planning process indicates that over 16 gigawatts of energy storage, both short and long duration, will be needed to cost-effectively maintain reliability under the 38,000,000 metric tons target. Much of that amount, including long-duration energy storage, is needed by 2026.
(g) The need for substantial amounts of zero greenhouse gas emission capacity is immediate and pressing, as evidenced by the Public Utilities Commission’s Decision 19-11-016 (November 7, 2019) Decision Requiring Electric System Reliability Procurement for 2021–2023, finding an urgent need for, and ordering the immediate procurement of, 3,300 megawatts of resource adequacy capacity to be in service starting on August 1, 2021. The commission took this action as well as proposing to extend the operational life of once-through cooling natural gas powerplants to avoid electrical system resource adequacy shortages beginning as soon as 2021.
(h) The State Energy Resources Conservation and Development Commission has identified a number of barriers to long-duration energy storage systems and certain other zero-carbon resources, including, for some technologies, long development timelines and uncertainty surrounding cost recovery and allocation.
(i) The Public Utilities Commission is the lead agency to direct procurement of long-duration energy storage. However, in Decision 19-04-040, 19-04-040 (April 25, 2019) Decision Adopting Preferred System Portfolio and Plan for 2017–2018 Integrated Resource Plan Cycle, the commission recognized the challenges to long-duration energy storage procurement and in the summer of 2020 will commence, in a procurement track in the current resource planning cycle, to assess how to address these challenges. In September 2020, all load-serving entities are required to submit to the commission their integrated resource plans so that by the end of 2020 the commission will know whether the load-serving entities have plans to procure long-duration energy storage and, if so, by when, how much much, and what types.
(j) It is in the interest of the state that there be an approved alternative procurement path in the event the load-serving entities do not include sufficient long-duration energy storage in their integrated resource plans or the Public Utilities Commission cannot successfully require the procurement of the amount needed to ensure the state meets its statutory climate and reliability goals. This act is intended to provide the additional tools necessary to enable the timely development and deployment of long-duration energy storage in the years leading up to 2030.
SEC. 2.Section 21168.6.20 is added to the Public Resources Code, to read:
21168.6.20.

(a)For purposes of this section, the following definitions apply:

(1)“Project” means a pumped hydroelectric energy storage project undertaken by the San Diego County Water Authority in the vicinity of the San Vicente Reservoir in the County of San Diego that has a storage capacity rate not to exceed 4,000 megawatthour per day.

(2)“Project labor agreement” has the same meaning as in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.

(3)“Skilled and trained workforce” has the same meaning as provided in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code.

(b)(1) Except as provided in paragraph (2), an entity shall not be prequalified or shortlisted or awarded a contract by the San Diego County Water Authority to perform any portion of the project unless the entity provides an enforceable commitment to the San Diego County Water Authority that the entity and its subcontractors at every tier will use a skilled and trained workforce to perform all work on the project or contract that falls within an apprenticeable occupation in the building and construction trades.

(2)Paragraph (1) does not apply if any of the following requirements are met:

(A)The San Diego County Water Authority has entered into a project labor agreement that will bind all contractors and subcontractors performing work on the project or contract to use a skilled and trained workforce, and the entity agrees to be bound by that project labor agreement.

(B)The project or contract is being performed under the extension or renewal of a project labor agreement that was entered into by the San Diego County Water Authority before January 1, 2021.

(C)The entity has entered into a project labor agreement that will bind the entity and all of its subcontractors at every tier performing the project or contract to use a skilled and trained workforce.

(c)Rules 3.2220 to 3.2237, inclusive, of the California Rules of Court, as may be amended by the Judicial Council, shall apply to any action or proceeding brought to attack, review, set aside, void, or annul the certification or adoption of any environmental impact report for the project or the granting of any project approvals, to require the action or proceeding, including any potential appeals therefrom, to be resolved, to the extent feasible, within 270 days of the filing of the certified record of proceedings with the court. On or before September 1, 2021, the Judicial Council shall amend the California Rules of Court, as necessary, to implement this subdivision.

(d)(1) The draft and final environmental impact report shall include a notice in not less than 12-point type stating the following:


THIS ENVIRONMENTAL IMPACT REPORT IS SUBJECT TO SECTION 21168.6.20 OF THE PUBLIC RESOURCES CODE, WHICH PROVIDES, AMONG OTHER THINGS, THAT THE LEAD AGENCY NEED NOT CONSIDER CERTAIN COMMENTS FILED AFTER THE CLOSE OF THE PUBLIC COMMENT PERIOD, IF ANY, FOR THE DRAFT ENVIRONMENTAL IMPACT REPORT. ANY JUDICIAL ACTION CHALLENGING THE CERTIFICATION OR ADOPTION OF THE ENVIRONMENTAL IMPACT REPORT OR THE APPROVAL OF THE PROJECT DESCRIBED IN SECTION 21168.6.20 OF THE PUBLIC RESOURCES CODE IS SUBJECT TO THE PROCEDURES SET FORTH IN THAT SECTION. A COPY OF SECTION 21168.6.20 OF THE PUBLIC RESOURCES CODE IS INCLUDED IN THE APPENDIX TO THIS ENVIRONMENTAL IMPACT REPORT.


(2)The draft environmental impact report and final environmental impact report shall contain, as an appendix, the full text of this section.

(3)Within 10 days after the release of the draft environmental impact report, the lead agency shall conduct an informational workshop to inform the public of the key analyses and conclusions of that document.

(4)Within 10 days before the close of the public comment period, the lead agency shall hold a public hearing to receive testimony on the draft environmental impact report. A transcript of the hearing shall be included as an appendix to the final environmental impact report.

(5)(A) Within five days following the close of the public comment period, a commenter on the draft environmental impact report may submit to the lead agency a written request for nonbinding mediation. The lead agency shall participate in nonbinding mediation with all commenters who submitted timely comments on the draft environmental impact report and who requested the mediation. Mediation conducted pursuant to this paragraph shall end no later than 35 days after the close of the public comment period.

(B)A request for mediation shall identify all areas of dispute raised in the comment submitted by the commenter that are to be mediated.

(C)The lead agency shall select one or more mediators who shall be retired judges or recognized experts with at least five years’ of experience in land use and environmental law or science, or mediation. The lead agency shall bear the costs of mediation.

(D)A mediation session shall be conducted on each area of dispute with the parties requesting mediation on that area of dispute.

(E)The lead agency shall adopt, as a condition of approval, any measures agreed upon by the lead agency and any commenter who requested mediation. A commenter who agrees to a measure pursuant to this subparagraph shall not raise the issue addressed by that measure as a basis for an action or proceeding challenging the lead agency’s decision to certify or to adopt the environmental impact report or to grant project approval.

(6)The lead agency need not consider written comments submitted after the close of the public comment period, unless those comments address any of the following:

(A)New issues raised in the response to comments by the lead agency.

(B)New information released by the lead agency subsequent to the release of the draft environmental impact report, such as new information set forth or embodied in a staff report, proposed permit, proposed resolution, ordinance, or similar documents.

(C)Changes made to the project after the close of the public comment period.

(D)Proposed conditions for approval, mitigation measures, or proposed findings required by Section 21081 or a proposed reporting or monitoring program required by paragraph (1) of subdivision (a) of Section 21081.6, if the lead agency releases those documents subsequent to the release of the draft environmental impact report.

(E)New information that was not reasonably known and could not have been reasonably known during the public comment period.

(7)The lead agency shall file the notice required by subdivision (a) of Section 21152 within five days after the last initial project approval.

(e)(1) The lead agency shall prepare and certify the record of the proceedings in accordance with this subdivision and in accordance with Rule 3.1365 of the California Rules of Court.

(2)No later than three business days following the date of the release of the draft environmental impact report, the lead agency shall make available to the public in a readily accessible electronic format the draft environmental impact report and all other documents submitted to or relied on by the lead agency in the preparation of the draft environmental impact report. A document prepared by the lead agency after the date of the release of the draft environmental impact report that is a part of the record of the proceedings shall be made available to the public in a readily accessible electronic format within five business days after the document is prepared by the lead agency.

(3)Notwithstanding paragraph (2), documents submitted to or relied on by the lead agency that were not prepared specifically for the project and are copyright protected are not required to be made readily accessible in an electronic format. For those copyright-protected documents, the lead agency shall make an index of the documents available in an electronic format no later than the date of the release of the draft environmental impact report, or within five business days if the document is received or relied on by the lead agency after the release of the draft environmental impact report. The index shall specify the libraries or lead agency offices in which hardcopies of the copyrighted materials are available for public review.

(4)The lead agency shall encourage written comments on the project to be submitted in a readily accessible electronic format, and shall make any such comments available to the public in a readily accessible electronic format within five days of their receipt.

(5)Within seven business days after the receipt of any comment that is not in an electronic format, the lead agency shall convert that comment into a readily accessible electronic format and make it available to the public in that format.

(6)The lead agency shall indicate in the record of proceedings comments received that were not considered by the lead agency pursuant to paragraph (6) of subdivision (d) and need not include the content of the comments as a part of the record of proceedings.

(7)Within five days after the filing of the notice required by subdivision (a) of Section 21152, the lead agency shall certify the record of proceedings for the approval or determination and shall provide an electronic copy of the record of proceedings to a party that has submitted a written request for a copy. The lead agency may charge and collect a reasonable fee from a party requesting a copy of the record of proceedings for the electronic copy, which shall not exceed the reasonable cost of reproducing that copy.

(8)Within 10 days after being served with a complaint or a petition for a writ of mandate, the lead agency shall lodge a copy of the certified record of proceedings with the superior court.

(9)Any dispute over the content of the record of proceedings shall be resolved by the superior court. Unless the superior court directs otherwise, a party disputing the content of the record of proceedings shall file a motion to augment the record of proceedings at the time it files its initial brief.

(10)The contents of the record of proceedings shall be as set forth in subdivision (e) of Section 21167.6.

(f)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.

SEC. 3.SEC. 2.

 Section 2837.5 is added to the Public Utilities Code, to read:

2837.5.
 (a) For purposes of this section, the following terms have the following meanings:
(1) “Decision 20-03-028” means commission Decision 20-03-028 (March 26, 2020) 2019–2020 Electric Resource Portfolios to Inform Integrated Resource Plans and Transmission Planning.
(2) “Department” means the Department of Water Resources.
(3) “Load-serving entity” has the same meaning as that defined in Section 380.
(4) (A) “Long-duration energy storage system” means an electrolyzer or an energy storage system, as defined in Section 2835, interconnected to the electrical grid in California that has the capability to continuously discharge at its full discharge capacity for at least eight hours, including both energy storage systems designed to complete a full charge and discharge cycle within a single day and those designed to do so over multiple days.
(B) “Long-duration energy storage system” does not include either of the following:
(i)An include an energy storage system associated with the Lake Elsinore Advanced Pumped Storage System (LEAPS) located in Lake Elsinore, California.

(ii)An energy storage system whose construction is not subject to a project labor agreement as defined in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.

(b) (1) No later than January 4, 2021, the commission shall report to the Governor, the Independent System Operator, the department, and the Energy Commission on the specific types and amount of long-duration energy storage and in-service dates of that storage included in the integrated resource plans submitted by load-serving entities pursuant to Decision 20-03-028.
(2) In the report required pursuant to paragraph (1), the commission shall state whether it intends to propose an order on or before March 1, 2021, requiring load-serving entities, in the aggregate, to procure, at a minimum, the amount of new long-duration energy storage capacity identified in Decision 20-03-028 under the 38,000,000 metric ton electric sector greenhouse gases emissions scenario. That order, if issued, shall require that all contracts of the following:
(A) All contracts procuring long-duration energy storage shall be approved by the commission no later than March 1, 2022. The
(B) The contracts shall require that the long-duration energy storage systems be operational and providing placed in service between January 1, 2026, and December 31, 2030.
(C) The entire capacity of a long-duration energy storage project shall be procured by the load-serving entities subject to the procurement order.
(c) If the commission does not issue the order specified in subdivision (b) by March 1, 2021, the department shall procure, pursuant to Article 2 (commencing with Section 80125) of Chapter 2 of Division 27 of the Water Code, not less than the required new long-duration energy storage capacity and on the same timeframe as specified in paragraph (2) of subdivision (b).
(d) If the department becomes responsible for the procurement of the long-duration energy storage systems as provided in subdivision (c), all of the following apply:
(1) The department shall consult with the commission and Independent System Operator before undertaking any procurement to ensure that the long-duration energy storage systems from which it procures capacity are consistent with Decision 20-03-028 and meet the needs of the electrical system.

(1)

(2) Long-duration energy storage services procured by the department shall be deemed to have been purchased on behalf of retail end-use customers of load-serving entities and, pursuant to Water Code Section 80110, Section 80110 of the Water Code, the department shall be entitled to recover, as a revenue requirement, at amounts, and at times, necessary to enable it to recover the costs incurred by the procurement.

(2)

(3) The department’s costs shall be recovered from all retail end-use customers of load-serving entities entities, as determined by the commission.

(3)

(4) The long-term energy storage services procured by the department shall be credited to the load-serving entities’ long-duration energy storage procurement requirements in proportion to the costs paid by the customers of each load-serving entity, as determined by the commission.
(5) The department’s authority to procure long-duration energy storage services is limited to achieving the 38,000,000-metric-ton electric sector target identified in Decision 20-03-028. No additional procurement by the department is authorized by this section.
(e) Except as otherwise set forth in this section and in Section 80220 80125 of the Water Code, this section does not disrupt, delay, or supersede any procurement of, or otherwise disturb any final finding as to the need for, other generation or storage capacity ordered by the commission, whether before or after January 1, 2021, including requirements established by the commission pursuant to Sections 2837.7 and 454.51 to 454.54, inclusive.

SEC. 3.

 Section 2837.6 is added to the Public Utilities Code, to read:

2837.6.
 (a) For purposes of this section, the following definitions apply:
(1) “Project labor agreement” has the same meaning as in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(2) “Skilled and trained workforce” has the same meaning as in subdivision (d) of Section 2601 of the Public Contract Code.
(b) (1) Except as provided in paragraph (2), an entity shall not be prequalified or shortlisted or awarded a contract by the San Diego County Water Authority to perform any portion of the development of a long-duration energy storage system, as defined in Section 2837.5, unless the entity provides an enforceable commitment to the San Diego County Water Authority that the entity and its subcontractors at every tier will use a skilled and trained workforce to perform all construction work on the project or contract that falls within an apprenticeable occupation in the building and construction trades.
(2) Paragraph (1) does not apply if any of the following requirements are met:
(A) The San Diego County Water Authority has entered into a project labor agreement that will bind all contractors and subcontractors performing work on the project or contract to use a skilled and trained workforce, and the entity agrees to be bound by that project labor agreement.
(B) The project or contract is being performed under the extension or renewal of a project labor agreement that was entered into by the San Diego County Water Authority before January 1, 2021.
(C) The entity has entered into a project labor agreement that will bind the entity and all of its subcontractors at every tier performing the project or contract to use a skilled and trained workforce.

SEC. 4.

 Section 2837.7 is added to the Public Utilities Code, to read:

2837.7.
 (a) For purposes of this section, “long-duration energy storage system” has the same meaning as defined in Section 2837.5.
(b) It is the intent of the Legislature that the state supports the development of a robust market for long-duration energy storage systems that will eventually be free of commercial barriers, including barriers to multiple technologies and technologies capable of providing storage over multiple days, to cost-effectively integrate increasing amounts of electricity from eligible renewable energy resources and meet the state’s renewable energy resource goals for 2030 and 2045 as described in subparagraph (B) of paragraph (2) of subdivision (b) of Section 399.15 and subdivision (a) of Section 454.53, while maintaining electrical system operational flexibility and electrical grid reliability.
(c) The commission and the Energy Commission shall timely incorporate consideration of long-duration energy storage systems into their energy and resource planning.
(d) The commission and the Energy Commission shall consider measures to advance the objective set forth in subdivision (b), including, but not limited to, support through research and development, demonstration, procurement, and incentives. Any measures adopted pursuant to this subdivision shall be in addition to any solicitation process authorized by Section 2837.5.
(e) In order to support eligible renewable energy resource goals, to support operational flexibility and reliability, and to enhance resiliency on the local and distribution level, the commission, as part of the integrated resource planning process, shall do all of the following:
(1) Evaluate and analyze the potential for long-duration energy storage systems to help integrate generation from eligible renewable energy resources into the electrical grid on a daily, multiday, and seasonal basis, including, but not limited to, consideration of the capacity contribution of long-duration energy storage systems as a function of duration.
(2) Identify the role of long-duration energy storage systems to ensure grid reliability during multiday weather events that reduce output from eligible renewable energy resources.
(3) Identify mechanisms to encourage eligible renewable energy resources to be increasingly firmed and dispatchable.
(4) Develop a long-term assessment of the capacity contribution of combined eligible renewable energy resources and energy storage that considers the installed capacity of the generating and storage resources and storage duration.
(5) Incorporate consideration of long-duration energy storage systems into the commission’s preferred system plans.
(f) This section does not prohibit the commission from evaluating or approving an application for funding or recovery of costs for any ongoing or new development, demonstration, or testing of a long-duration energy storage system outside of the process required by this chapter.

SEC. 5.

 Section 80001 is added to the Water Code, to read:

80001.
 The Legislature further finds and declares that the effort to reduce emissions of greenhouse gases is essential for the safety, health, and well-being of the people of California. A number of factors create significant challenges to the Public Utilities Commission’s ability to meet the state’s need for large scale long-duration energy storage projects with multiple beneficiary system-side grid benefits in the timeframe identified by the Public Utilities Commission’s modeling in the 2019–2020 integrated resource planning proceeding and warrant requiring the department to undertake this effort should the commission not do so.

SEC. 6.

 Section 80002.6 is added to the Water Code, to read:

80002.6.
 It is the intent of the Legislature that electrical capacity and output acquired by the department pursuant to Section 2837.5 of the Public Utilities Code shall provide energy storage services that will, among other things, facilitate the integration of eligible renewable resources, enhance grid balancing, reduce emissions of greenhouse gases, and minimize curtailment of generation by eligible renewable energy resources and that these services are for the benefit of the retail end-use customers being served by load-serving entities in light of the system-wide benefits that will be realized. Notwithstanding the foregoing, the department may sell electrical capacity and output, power, to the extent practicable, as determined by the department, to those local publicly owned electric utilities requesting that electrical capacity and output. power.

SEC. 7.

 Section 80010 of the Water Code is amended to read:

80010.
 As used in this division, unless the context otherwise requires, the following terms have the following meanings:
(a) “Bonds” means bonds, notes, or other evidences of indebtedness issued solely for the purposes of paying the cost of electric power and transmission, scheduling, and other related expenses incurred by the department on and after the effective date of this division, or to reimburse expenditures from the fund for those purposes; repaying to the General Fund any advances made to the department from appropriations made to the fund pursuant hereto or hereafter for purposes of this division, any advances made to the department from the Water Resources Electric Power Fund, and General Fund moneys expended by the department pursuant to the Governor’s Emergency Proclamation dated January 17, 2001; establishing or maintaining reserves in connection with the bonds; costs of issuance of bonds or incidental to their payment or security; capitalized interest; or to renew or refund any bonds.
(b) “Commission” means the Public Utilities Commission.
(c) “Decision 20-03-028” means commission Decision 20-03-028 (March 26, 2020) 2019–2020 Electric Resource Portfolios to Inform Integrated Resource Plans and Transmission Planning.
(d) “Electrical corporation” has the same meaning as that term is defined in Section 218 of the Public Utilities Code.
(e) “Fund” means the Department of Water Resources Electric Power Fund established by Section 80200.
(f) “Load-serving entity” has the same meaning as that defined in Section 380 of the Public Utilities Code.
(g) “Local publicly owned electric utility” has the same meaning as defined in Section 224.3 of the Public Utilities Code.
(h) “Long-duration energy storage system” has the same meaning as defined in subdivision (a) of Section 2837.5 of the Public Utilities Code.
(i) “Power” means electricity and energy, including, but not limited to, capacity and output, or any of them. “Power” shall also include energy storage service available from a long-duration energy storage system.
(j) “Public utility” has the same meaning as that term is defined in Section 216 of the Public Utilities Code.

SEC. 8.

 Section 80013 is added to the Water Code, to read:

80013.
 The department shall do those things necessary and authorized pursuant to Article 2 (commencing with Section 80125) to enter into long-duration energy storage agreements for electrical capacity and output pursuant to Section 2837.5 of Public Utilities Code.

SEC. 9.

 Article 2 (commencing with Section 80125) is added to Chapter 2 of Division 27 of the Water Code, to read:
Article  2. Long-Duration Energy Storage

80125.
 Except as provided in Section 80125.2, the department, pursuant to Section 2837.5 of the Public Utilities Code, shall enter into long-duration energy storage agreements on terms, conditions, and for time periods as the department prescribes, subject to the good faith of each party, and at prices the department deems appropriate, taking into account all of the following:
(a) The energy storage agreement requires the long-duration energy storage system to meet or exceed the minimum requirements for long-duration energy storage specified by Decision 20-03-028.
(b) The length of the energy storage agreement is commensurate with the useful life of the long-duration energy storage system and minimizes near-term cost impacts to ratepayers of a load-serving entity.
(c) The long-duration energy storage system shall be placed in service between January 1, 2026, and December 31, 2030.
(d) Costs paid under any energy storage agreement shall be just and reasonable, as defined in subdivision (a) of Section 80125.2.
(e) The long-duration energy storage agreement may provide for periodic price adjustments to recover reasonably unforeseeable changes in operations and maintenance expenses or the need for future capital investment, but only to the extent necessary to ensure the continued efficient, expected operational performance of the long-duration energy storage system over the term of the energy storage agreement or to otherwise increase the value of the electrical capacity and output power provided by the long-duration energy storage system.
(f) The developer of the long-duration energy storage system shall make available accounts and records for periodic audits of costs and evaluation of price terms.
(g) Before commercial operation the developer shall provide periodic progress reports.
(h) The entire capacity of each long-duration energy storage project shall be procured by the department pursuant to this procurement.

80125.2.
 (a) For purposes of this article, costs incurred pursuant to an agreement to procure long-duration energy storage shall be just and reasonable if either of the following is true:
(1) The long-duration energy storage agreement price is at or below the cost assumptions the commission used for long-duration energy storage in Decision 20-03-028.
(2) The developer of the long-duration energy storage system is able to establish to the department’s satisfaction that the costs in excess of the commission’s cost assumptions described in paragraph (1) are justifiable in light of documented or projected costs and confirmed by an independent evaluator, provided, however, those costs shall not exceed the cost assumption benchmarks identified in paragraph (1) by more than 15 percent in aggregate.
(b) The department shall have no obligation to execute an agreement for the procurement of long-duration energy storage services contract if the developer is found to have misrepresented its costs in any material respect or if the agreement would not satisfy subdivision (a).

(c)The department shall not enter into a long-duration energy storage services contract under this section if the associated long-duration energy storage project is subject to review under Division 13 (commencing with Section 21000) of the Public Resources Code unless it finds that the project developer has agreed to acceptable mitigation measures to avoid significant impact on any tribal cultural resource, as defined in subdivision (a) or (b) of Section 21074 of Public Resources Code. The department shall not make this finding unless the California Native American Tribe, if any, that is culturally and traditionally affiliated with the geographic area in which the project is located concurs in this finding.

80125.4.
 (a) A long-duration energy storage agreement made pursuant to this article may provide for assignment on any terms and conditions as the agreement may specify. The agreements shall allow assignment to a central procurement authority, if one is created, so long as the payment and security provisions are comparable to those provided in this article.
(b) Any long-duration energy storage agreement shall contain any contractual terms and security provisions as are determined by the department to be necessary or appropriate and the department may enter into such arrangements as may be necessary or appropriate.

(c)Any long-duration energy storage agreement made pursuant to this article shall require that the developer of the long-duration energy storage system use or require its contractors to use a multicraft project labor agreement, as that term is defined paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code, for construction and contracted out maintenance of the long-duration energy storage system facility. The project labor agreements shall conform to the industry standard agreements recently used for private large thermal powerplant projects, including side letters for high-voltage transmission and related work.

80125.5.
 (a) For purposes of this section, the following definitions apply:
(1) “Project labor agreement” has the same meaning as in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(2) “Skilled and trained workforce” has the same meaning as in subdivision (d) of Section 2601 of the Public Contract Code.
(b) (1) Any long-duration energy storage agreement made pursuant to this article shall require that the developer of the long-duration energy storage system use or require its contractors and its subcontractors at every tier to use a skilled and trained workforce to perform all construction and contracted-out maintenance work on the project that falls within an apprenticeable occupation in the building and construction trades.
(2) Paragraph (1) does not apply if the developer or its general contractor has entered into a project labor agreement that will bind the entity and all of its subcontractors at every tier performing the project or contract to use a skilled and trained workforce.

80125.6.
 Upon the delivery of electrical capacity and output power pursuant to a long-duration energy storage agreement made pursuant to this article, the benefited retail end-use customers shall be deemed to have purchased that electrical capacity or output power from the department. Payment for any sale shall be a direct obligation of the retail end-use customer to the department.

80125.8.
 (a) The department may contract with any electrical corporation whose retail end-use customers are deemed to have benefited from the electrical capacity or output power to act as agent of the department, provide billing, collection, and other related services on terms and conditions that reasonably compensate the electrical corporation for its services, and adequately secure payment to the department.
(b) At the request of the department, the commission shall order the electrical corporation to act as agent of the department, to provide billing, collection, and other related services on terms and conditions that reasonably compensate the electrical corporation for its services, and adequately secure payment to the department.
(c) The commission may issue rules regulating the enforcement of the agency function pursuant to this chapter, including collection and payment to the department.

80126.
 (a) The department shall be entitled to recover, as a revenue requirement, amounts and at the times necessary to enable it to comply with Section 80134, and shall advise the commission as the department determines to be appropriate. The revenue requirements shall be recovered through a cost-of-service or similar rate that is not to be charged to end-use customers until the date of operation of a project delivering energy storage services pursuant to this article.
(b) For the purposes of this article and except as otherwise provided in this section, the commission’s authority as set forth in Section 451 of the Public Utilities Code shall apply, except any just and reasonable review under Section 451 shall be conducted and determined by the department.
(c) The commission may enter into an agreement with the department with respect to charges under Section 451 of the Public Utilities Code for purposes of this article, and that agreement shall have the force and effect of a financing order adopted in accordance with Article 5.5 (commencing with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, as determined by the commission.
(d) The department shall have the same rights with respect to the payment by retail end-use customers for electrical capacity and output purchased by the department pursuant to this article as do providers of electrical capacity and output power to the customers.

80126.2.
 All money collected with respect to any electrical capacity or output power acquired and sold pursuant to this article and all money paid directly or indirectly to or for the account of the department with respect to any sale, exchange, transfer, or disposition of electrical capacity or output power acquired pursuant to this article, shall constitute property of the department and shall be deposited in the fund in accordance with subdivision (b) of Section 80200. To the extent any moneys are received by an electrical corporation pursuant to Section 80125.6 or Section 80125.8 in the process of collection, and pending their transfer to the department, they shall be segregated by the electrical corporation on terms and conditions established by the department and shall be held in trust for the benefit of the department.

80126.4.
 The department shall exercise operational control over the long-duration energy storage systems in a manner that seeks to maximize benefits to retail end-use customers and, in so doing, may buy electrical capacity and output power from or sell electrical output and capacity power to any person or public or private entity, including the Independent System Operator in whatever way and upon those terms and conditions as are advantageous, necessary, or otherwise enhances ratepayer benefits.

80126.6.
 The department may fix and establish the procedure and charges for the sale or other disposal of electrical capacity or output power purchased by the department pursuant to this article.

80126.8.
 The department may do any of the following as may be, in the determination of the department, necessary for the purposes of this article:
(a) Hire and appoint employees as required, at salary levels determined by the director to be competitive to attract and retain persons with the necessary expertise and skills. Prior to hiring or appointing an employee at a salary in excess of a salary approved by the Department of Human Resources, the director shall submit the proposed salary to the Director of Finance who shall submit it to the Legislature in accordance with Section 27.00 of the annual Budget Act. No excess salary authorized under this section may be paid on or after January 1, 20__. 2023. The excess portion of a salary authorized under this section may not be considered salary in the calculation of final compensation for purposes of benefits under the Public Employees’ Retirement System.
(b) Engage the services of private parties to render professional and technical assistance and advice and other services in carrying out the purposes of this division.
(c) Contract for the services of other public agencies.
(d) The State Personnel Board and the Department of Human Resources shall assist the department in expediting the hiring of personnel necessary and desirable for the timely and successful implementation and administration of the department’s duties and responsibilities pursuant to this division.

80127.
 For purposes of any agreements entered into pursuant to this article, the department shall not rely upon or otherwise use the authority provided in Article 1 (commencing with Sections 80100) or Chapter 2.5 (commencing with Sections 80130), with the exception of Section 80134, which shall apply to commitments made pursuant to this article.

SEC. 10.

 Section 80200 of the Water Code is amended to read:

80200.
 (a) There is hereby established in the State Treasury the Department of Water Resources Electric Power Fund. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated, without regard to fiscal year, to the department, and shall be available for the purposes of this division. It is the intent of the Legislature that this fund be a continuation of the fund created in Chapter 3 of the Statutes of 2001 (SB 7 of the First 2001–02 Extraordinary Session).
(b) Except for revenues payable to the department pursuant to Article 2 (commencing with Section 80125) of Chapter 2, all revenues payable to the department under this division shall be deposited in the fund. Notwithstanding any other provision of law, interest accruing on money in the fund shall remain in the fund and shall be used for the purposes of this division. Payments from the fund may be made only for the purposes authorized by this division, including, but not limited to, payments for any of the following:
(1) The cost of electric power and transmission, scheduling, and other related expenses incurred by the department.
(2) The pooled money investment rate on funds advanced for electric power purchases prior to the receipt of payment for those purchases by the purchasing entity.
(3) Payment of any bonds or other contractual obligations authorized by this division.
(4) Repayment to the General Fund of appropriations made to the fund pursuant hereto or hereafter for purposes of this division, appropriations made to the Department of Water Resources Electric Power Fund, and General Fund moneys expended by the department pursuant to the Governor’s Emergency Proclamation dated January 17, 2001. That repayment shall be made as soon as practicable.
(c) Except as provided in subdivision (b) of Section 5 of the statute adding this section, the administrative costs of the department incurred in administering this division shall be provided in the annual Budget Act.
(d) Obligations authorized by this division shall be payable solely from the fund. Neither the full faith and credit nor the taxing power of the state are or may be pledged for any payment under any obligation authorized by this division.
(e) While any obligations of the department incurred under this division remain outstanding and not fully performed or discharged, the rights, powers, duties, and existence of the department and the commission shall not be diminished or impaired in any manner that will affect adversely the interests and rights of the holders of or parties to such obligations. The department may include this pledge and undertaking of the state in the department’s obligations.

SEC. 11.

 Section 80201 is added to the Water Code, to read:

80201.
 (a) There is hereby established the Long-Duration Energy Storage Account in the Department of Water Resources Electric Power Fund. Notwithstanding Section 13340 of the Government Code and except as provided in subdivision (c), Code, all moneys in the account are continuously appropriated, without regard to fiscal year, to the department, and shall be available for purposes of Article 2 (commencing with Section 80125) of Chapter 2.
(b) All revenues payable to the department pursuant to Article 2 (commencing with Section 80125) of Chapter 2 shall be deposited in the Long-Duration Energy Storage Account. Notwithstanding any other law, interest accruing on money in the account shall remain in the account and shall be used for the purposes of that article.
(c) The administrative costs of the department incurred in administering Article 2 (commencing with Section 80125) of Chapter 2 shall be provided in the annual Budget Act. payable solely from the Long-Duration Energy Storage Account.
(d) Obligations authorized by Article 2 (commencing with Section 80125) of Chapter 2 shall be payable solely from the Long-Duration Energy Storage Account.

SEC. 12.

 Section 80260 of the Water Code is amended to read:

80260.
 (a) Except as provided in subdivision (b), on and after January 1, 2003, the department shall not contract under this division for the purchase of electrical power.
(b) On or before March 31, 2022, the department may enter into agreements for energy storage services for long-duration energy storage pursuant to section Section 2837.5 of the Public Utilities Code consistent with the requirements of Article 2 (commencing with Section 80125) of Chapter 2.
(c) This section does not affect the authority of the department to administer contracts entered into prior to those dates or the department’s authority to sell electrical capacity or output of energy storage services from a long-duration energy storage system.

SEC. 13.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 14.

 In regards to Section 2 3 of this act, the Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances regarding the pumped hydroelectric energy storage facility in the vicinity of the San Vicente Reservoir in the County of San Diego.

SEC. 15.

 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.