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SB-1347 Energy storage systems: procurement.(2017-2018)



Current Version: 07/03/18 - Amended Assembly

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SB1347:v94#DOCUMENT

Amended  IN  Assembly  July 03, 2018
Amended  IN  Senate  May 10, 2018
Amended  IN  Senate  May 01, 2018
Amended  IN  Senate  April 18, 2018
Amended  IN  Senate  April 02, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill
No. 1347

Introduced by Senator Stern

February 16, 2018

An act to add Section 2837.5 to the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 1347, as amended, Stern. Energy storage systems: procurement.
Existing law requires the Public Utilities Commission to determine appropriate targets, if any, for each load-serving entity, including an electrical corporation, to procure viable and cost-effective energy storage systems to be achieved by December 31, 2020. Existing law requires the commission to direct the state’s three largest electrical corporations to file applications for programs and investments to accelerate widespread deployment of distributed energy storage systems.
This bill would, by January 1, 2020, would require the commission, in addition to the requirements described above, to direct on or before January 1, 2020, to consider procurement strategies for the installation of a statewide total of up to 2,000 megawatts of energy storage systems. As part of the procurement strategies considered by the commission, the bill would require the commission to consider appropriate targets, if any, for electrical corporations, community choice aggregators, electric service providers, and certain electrical cooperatives (collectively, load-serving entities) to procure their proportionate share of a total of 2,000 megawatts, in aggregate, of viable and cost-effective energy storage systems and would authorize the commission to direct the load-serving entities to procure additional energy storage system capacity, as specified. The bill would authorize the electrical corporations to own and operate a certain percentage of these energy storage systems, measured by capacity, if certain conditions are met. systems, to be achieved by December 31, 2030. If the commission imposes an energy storage system procurement target on load-serving entities, the bill would authorize each load-serving entity to meet up to 50% of its procurement target through energy storage systems that it owns, that are interconnected at the transmission or distribution level, or that are located on the customer side of the meter, as specified. The bill would authorize community choice aggregators, electric service providers, and certain electrical cooperatives to own and operate energy storage systems to meet their allocated shares. The bill would require the commission to develop and make available to all load-serving entities a cost recovery mechanism that meets certain requirements. require the commission to reconsider procurement strategies and appropriate targets not less than once every 3 years.
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 this bill would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for 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 2837.5 is added to the Public Utilities Code, to read:

2837.5.
 (a) (1) In addition to the requirements of Sections 2836 and 2838.2, on or before January 1, 2020, the commission shall consider procurement strategies for the installation of a statewide total of up to 2,000 megawatts of energy storage systems.
(2) As part of the procurement strategies considered by the commission, the commission shall consider appropriate targets, if any, for each load-serving entity to procure viable and cost-effective energy storage systems to be achieved by December 31, 2030, and may consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems, including refinement of existing procurement methods to properly value energy storage systems.
(b) The commission shall reconsider procurement strategies and appropriate targets, as described in subdivision (a), not less than once every three years.
(c) Nothing in this section prohibits the commission’s evaluation and approval of any application for funding or recovery of costs of any ongoing or new development, trialing, and testing of energy storage projects or technologies outside of a proceeding required by this chapter.
(d) If the commission imposes an energy storage system procurement target on a load-serving entity pursuant to this section, the load-serving entity may meet up to 50 percent of its procurement target through energy storage systems owned by the load-serving entity, interconnected at the transmission or distribution level, or located on the customer side of the meter, and may propose an energy storage system in its applicable integrated resource plan, but shall make a showing of the energy storage system’s viability and cost-effectiveness in the integrated resource plan.

SEC. 2.

 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.
SECTION 1.

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

(1)Properly designed and dispatched energy storage systems will help manage energy costs, help reduce overall system peak energy demands, help integrate increased levels of intermittent renewable energy on the grid, improve public health, improve grid reliability, and assist the state in achieving its greenhouse gas emissions reduction goals.

(2)Energy storage systems are uniquely situated to assist the state in reducing emissions of greenhouse gases associated with electrical generation by optimizing the use of intermittent renewable generation.

(3)As the market for energy storage systems develops and transforms, diverse ownership, operation, and solutions for energy storage systems, including electrical corporation ownership of a portion of energy storage systems can contribute to providing increased flexibility and options to utilize energy storage systems over their operating lives, reduce development and market operating risks, diversify the supply of energy storage, and facilitate innovation. The coordinated deployment of energy storage systems owned and operated by electrical corporations and those owned and operated by third parties can guide market development of new energy storage products and services.

(4)Electrical corporations can utilize energy storage systems for distribution and transmission reliability and to optimize the use of energy storage systems.

(b)It is the policy of the state and the intent of the Legislature to facilitate and encourage increased utilization of energy storage, including a diversity of ownership models and technologies, as a means to achieve the state’s greenhouse gas emissions reduction goals, system reliability, efficient operation of the grid, and ratepayer benefits.

SEC. 2.Section 2837.5 is added to the Public Utilities Code, to read:
2837.5.

(a)(1)(A)In addition to the requirements of Sections 2836 and 2838.2, on or before January 1, 2020, the commission shall direct all load-serving entities to procure their proportionate share of a statewide total of 2,000 megawatts of energy storage systems.

(B)In addition to subparagraph (A), the commission may direct all load-serving entities to procure additional energy storage system capacity to facilitate the state’s ability to meet its energy and climate goals.

(C)The commission shall allocate the 2,000 megawatts required pursuant to subparagraph (A) and any additional procurement authorized pursuant to subparagraph (B) to each load-serving entity based on its prorata share of customer demand as of July 1, 2019.

(2)(A)Each electrical corporation shall have the right to own and operate energy storage systems at its sole election as follows:

(i)Up to 50 percent of the capacity required pursuant to subparagraph (A) of paragraph (1) allocated to the electrical corporation pursuant to subparagraph (C) of paragraph (1).

(ii)Up to 50 percent of any capacity required by the commission pursuant to subparagraph (B) of paragraph (1) allocated to the electrical corporation pursuant to subparagraph (C) of paragraph (1) for energy storage systems with an expected commercial operation date of December 31, 2030, or earlier.

(iii)Up to 35 percent of any capacity required by the commission pursuant to subparagraph (B) of paragraph (1) allocated to the electrical corporation pursuant to subparagraph (C) of paragraph (1) for energy storage systems with an expected commercial operation date of January 1, 2031, or later.

(B)Within 90 days of the issuance of an order pursuant to paragraph (1), if an electrical corporation elects to own and operate a percentage of the energy storage systems pursuant to subparagraph (A), the electrical corporation shall notify the commission of its election.

(C)Community choice aggregators may own and operate energy storage systems following guidelines determined by their local governing boards, consistent with paragraph (5) of subdivision (a) of Section 366.2.

(D)Electric service providers and electrical cooperatives may own and operate all or a portion of the energy storage system allocated to them pursuant to subparagraph (C) of paragraph (1).

(E)The commission shall order all load-serving entities to procure their prorata share of energy storage systems on the same timelines.

(b)The commission shall approve an electrical corporation’s ownership and operation of energy storage systems pursuant to paragraph (2) of subdivision (a) and shall grant cost recovery in rates for any investments in those energy storage systems if all of the following conditions are met:

(1)The electrical corporation competitively sources the energy storage equipment and installation services.

(2)The energy storage systems are systems connected to the electrical grid in front of the electrical corporation’s customers’ meters.

(3)(A)The electrical corporation has proposed a schedule for competitive solicitations to contract for an equivalent or greater amount of third-party-owned energy storage systems with proposed commercial operation dates in its filing to the commission for cost recovery for energy storage systems owned and operated by the electrical corporations.

(B)The cost recovery mechanism is in the best interest of the ratepayers.

(c)The commission shall expedite review and approval of contracts for third-party ownership and operation of energy storage systems pursuant to this section through the use of a tier 3 advice letter process.

(d)The commission shall develop and make available to all load-serving entities a cost recovery mechanism that meets all of the following requirements:

(1)It does not unduly shift costs between customers receiving generation services from electrical corporations and those receiving generation services from other load-serving entities.

(2)It can be equally applied to all load-serving entities.

(3)It is transparent.

(4)It is consistent with paragraph (5) of subdivision (a) of Section 366.2 and paragraph (5) of subdivision (a) of Section 380.

(e)The net costs to an electrical corporation of energy storage systems approved pursuant to this section shall be recovered from all retail end-use customers of the electrical corporation on a fully nonbypassable charge basis in a manner determined by the commission.

(f)For purposes of this section, “load-serving entity” does not include an electrical cooperative, as defined in Section 2776, if the electrical cooperative has an annual electrical demand of less than 700 gigawatthours, as determined on a three-year average, commencing with January 1, 2013.

SEC. 3.

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.