BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AJR 45 - Canciamilla Hearing Date:
August 28, 2002 A
As Amended: August 12, 2002 Non-FISCAL J
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DESCRIPTION
This resolution makes various findings regarding customer-owned
generation, states that a "gross metering" policy proposed by the
Independent System Operator (ISO) treats customer generation unfairly,
and urges the Federal Energy Regulatory Commission (FERC) to:
1.Maintain federal policies to promote development of customer
generation.
2.Ensure that customer generation not pay transmission costs beyond
those provided for in utility standby service rates.
3.Reject the ISO's gross metering policy, and any other policy
detrimental to further development of customer generation in
California.
BACKGROUND
Customer-owned generation resources may meet some or all of a
customer's energy needs. Customer generators may also sell excess
power to adjacent sites ("over the fence" transactions). Typically,
customer generators remain connected to the utility's distribution
system, with larger generators connected directly at the transmission
level. These customers rely on the utility grid for electricity to
serve load not met by their own generation, and for other reliability
services. Grid-connected customers generators pay a standby charge to
their utility to reserve the capacity needed to serve them.
According to the ISO, Western Electricity Coordinating Council (WECC)
reliability standards require it to purchase reserves for the entire
load served by customer generators, rather than the customer's load
net of its own generation resources. Calculating and purchasing (and
charging the customer for) reserves according to gross load is
referred to a "gross metering." ISO states it is responsible for
ensuring uninterrupted service and the utilities don't provide
reserves sufficient to respond to the sudden failure of their
grid-connected customer generators. ISO says it wouldn't need to
purchase reserves itself to cover customer generators if utilities'
demonstrated they had self-provided adequate reserves.
Western States Petroleum Association (WSPA), the sponsors of this
resolution, disputes that WECC standards require the ISO to purchase
reserves for customer generators according to gross load.
Essentially, WSPA contends the ISO is purchasing reserves on behalf of
customer generators which are unnecessary and for which customers
already pay via utility standby service. WECC is currently
considering this dispute. The dispute is also being litigated in
proceedings at FERC. Whether a customer generator is metered on a net
or gross basis may also determine the amount it is billed for other
ISO-provided services.
COMMENTS
1.Legitimacy of underlying ISO reserve procurement practices not
addressed. This resolution says that customer generators shouldn't
pay ISO charges according to their gross load, but doesn't address
directly the issue of whether the ISO should purchase reserves
according to gross load in the first place. If FERC prevents the
ISO from charging customer generators according to gross load, but
reliability standards nonetheless require the ISO to purchase
reserves according to gross load, other ISO customers would have to
bear those costs. The author and committee may wish to consider
whether this resolution should address the question of whether the
reserves are required, not just whether customer generators should
pay for the reserves whether or not they are required.
2.Scope of request exceeds gross metering issue. In addition to
requesting rejection of the ISO's gross metering policy, this
resolution urges FERC to reject "other policies detrimental to the
further development of customer generation in California." The
author and the committee may wish to consider whether it's
appropriate to issue a blanket request to reject unspecified
policies whose impact on customer generators and others is unknown.
ASSEMBLY VOTES
Assembly Floor (76-0)
Assembly Utilities and Commerce Committee (13-0)
POSITIONS
Sponsor:
Western States Petroleum Association
Support:
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|California Chamber of Commerce | Cogeneration Association of |
|California Cogeneration Council | California |
|California Independent Petroleum | Goodrich Aerostructures |
|Association | Silicon Valley Manufacturing |
|California Manufacturers & | Group |
|Technology Association | Smurfit-Stone Container |
|California Portland Cement Company | Corporation |
|California Public Utilities | TXI Riverside Cement |
|Commission | US Borax, Inc. |
| | |
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Oppose:
None on file
Lawrence Lingbloom
AJR 45 Analysis
Hearing Date: August 28, 2002