BILL ANALYSIS
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THIRD READING
Bill No: AJR 45
Author: Canciamilla (D), et al
Amended: 8/12/02 in Assembly
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-0, 8/28/02
AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray
ASSEMBLY FLOOR : 76-0, 8/12/02 - See last page for vote
SUBJECT : Independent System Operator
SOURCE : Western States Petroleum Association
DIGEST : This resolution urges the Federal Energy
Regulatory Commission to reject a proposed ISO fee tariff
so that electricity load served by customer generation will
not incur costs for any transmission related service beyond
those included in standby service rates.
ANALYSIS : 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.
CONTINUED
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2
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.
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.
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Cost allocation provisions of the ISO's proposed gross
metering policy, provided that the reliability standards,
established by an official determination of the Western
Electricity Coordinating Council, do not require the ISO to
procure ancillary services according to the gross load of
customer generators.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 8/28/02)
Western States Petroleum Association (source)
California Chamber of Commerce
California Cogeneration Council
California Independent Petroleum Association
California Independent System Operator
California Manufacturers Technology Association
California Portland Cement Company
State Public Utilities Commission
Cogeneration Association of California
Goodrich Aerostructures
Silicon Valley Manufacturing Group
Smurfit-Stone Container Corporation
TXI Riverside Cement
US Borax, Inc.
ASSEMBLY FLOOR
AYES: Aanestad, Alquist, Aroner, Ashburn, Bates, Bogh,
Briggs, Calderon, Bill Campbell, Canciamilla, Cardenas,
Cardoza, Cedillo, Chan, Chavez, Chu, Cogdill, Cohn,
Corbett, Correa, Cox, Daucher, Diaz, Dickerson, Dutra,
Firebaugh, Florez, Frommer, Goldberg, Harman, Havice,
Hertzberg, Hollingsworth, Horton, Keeley, Kehoe, Kelley,
Koretz, La Suer, Leach, Leonard, Leslie, Liu, Longville,
Lowenthal, Maddox, Maldonado, Matthews, Migden, Mountjoy,
Nakano, Nation, Negrete McLeod, Oropeza, Robert Pacheco,
Rod Pacheco, Papan, Pavley,
Pescetti, Richman, Runner, Salinas, Shelley, Simitian,
Steinberg, Strickland, Thomson, Vargas, Washington,
Wayne, Wiggins, Wright, Wyland, Wyman, Zettel, Wesson
NC:kb 8/29/02 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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