BILL NUMBER: AB 2307	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 6, 2002
	AMENDED IN ASSEMBLY  APRIL 23, 2002

INTRODUCED BY   Assembly Member Kehoe
    (Coauthor:  Assembly Member Diaz) 
    (Coauthors:  Senators Alpert, Figueroa, and Morrow) 

                        FEBRUARY 21, 2002

   An act to amend Section 353.1 of the Public Utilities Code,
relating to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2307, as amended, Kehoe.  Electrical corporations:  distributed
energy resources.
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations.
The commission must require every electrical corporation under the
operational control of the Independent System Operator as of January
1, 2001, to modify its tariffs so that customers that install
distributed energy resources, as defined, are served under rates,
rules, and requirements identical to those of a customer within the
same rate schedule that does not use distributed energy resources,
and to withdraw any provisions in otherwise applicable tariffs that
activate other tariffs, rates, or rules if a customer uses
distributed energy resources.   Existing law requires the
commission, in establishing these uniform rates, to create a firewall
that segregates distribution cost recovery, so that any net costs
resulting from the tariff modifications granted to members of each
customer class may be recovered only from that class. 
"Distributed energy resources" are defined as any electric generation
technology that (a) commences initial operation between May 1, 2001,
and June 1, 2003, except that gas-fired distributed energy resources
that are not operated in a combined heat and power application must
commence operation no later than September 1, 2002, (b) is located
within a single facility, (c) is 5 megawatts or smaller, (d) serves
onsite loads or over-the-fence transactions, (e) is powered by any
fuel other than diesel, and (f) complies with emission standards and
guidance adopted by the State Air Resources Board.
   This bill would revise the definition of "distributed energy
resources" to include technology commencing operation between May 1,
2001, and June 1, 2005, except as exempted under existing law.  
The bill would require the commission to protect ratepayers, by
applying the firewall that segregates distribution cost recovery, to
distributed energy resources that commence operation between June 1,
2003, and June 1, 2005.    The bill would require that,
if the commission determines that these changes would cause net costs
that would otherwise be borne by ratepayers, the operators of
distributed energy resources that commence initial operation between
June 1, 2003, and May 31, 2005, bear those net costs. 
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 353.1 of the Public Utilities Code is amended
to read:
   353.1.  As used in this article, "distributed energy resources"
means any electric generation technology that meets all of the
following criteria:
   (a) Commences initial operation between May 1, 2001, and June 1,
2005, except that gas-fired distributed energy resources that are not
operated in a combined heat and power application must commence
operation no later than September 1, 2002.
   (b) Is located within a single facility.
   (c) Is five megawatts or smaller in aggregate capacity.
   (d) Serves onsite loads or over-the-fence transactions allowed
under Sections 216 and 218.
   (e) Is powered by any fuel other than diesel.
   (f) Complies with emission standards and guidance adopted by the
State Air Resources Board pursuant to Sections 41514.9 and 41514.10
of the Health and Safety Code.  Prior to the adoption of those
standards and guidance, for the purpose of this article, distributed
energy resources shall meet emissions levels equivalent to nine parts
per million oxides of nitrogen, or the equivalent standard taking
into account efficiency as determined by the State Air Resources
Board, averaged over a three-hour period, or best available control
technology for the applicable air district, whichever is lower,
except for distributed generation units that displace and therefore
significantly reduce emissions from natural gas flares or reinjection
compressors, as determined by the State Air Resources Control Board.
  These units shall comply with the applicable best available control
technology as determined by the air pollution control district or
air quality management district in which they are located.  
If the commission determines that, as a result of this act, that net
costs exist that would otherwise be borne by ratepayers, those net
costs shall not be borne by ratepayers, but shall be borne by the
operators of distributed energy resources that commence initial
operation between June 1, 2003, and May 31, 2005.  
   (g) For distributed energy resources that commence initial
operation between June 1, 2003, and June 1, 2005, ratepayers shall be
protected pursuant to Section 353.9.