BILL NUMBER: AB 1685 ENROLLED
BILL TEXT
PASSED THE ASSEMBLY SEPTEMBER 11, 2003
PASSED THE SENATE SEPTEMBER 8, 2003
AMENDED IN SENATE SEPTEMBER 4, 2003
AMENDED IN SENATE AUGUST 18, 2003
AMENDED IN SENATE JULY 16, 2003
AMENDED IN ASSEMBLY MAY 13, 2003
AMENDED IN ASSEMBLY APRIL 24, 2003
AMENDED IN ASSEMBLY APRIL 10, 2003
INTRODUCED BY Assembly Member Leno
(Coauthors: Assembly Members Hancock, Jackson, and Koretz)
FEBRUARY 21, 2003
An act to amend Sections 353.2 and 379.5 of, and to add Section
379.6 to, the Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1685, Leno. Energy: self-generation incentive program: peak
reduction.
Existing law requires the Public Utilities Commission on or before
March 7, 2001, and in consultation with the Independent System
Operator, to take certain actions, including, in consultation with
the State Energy Resources Conservation and Development Commission
(Energy Commission), adopting energy conservation demand-side
management and other initiatives in order to reduce demand for
electricity and reduce load during peak demand periods, including,
but not limited to, differential incentives for renewable or
superclean distributed generation resources. Pursuant to this
requirement, the commission has developed a Self Generation Incentive
Program to encourage customers of electrical corporations to install
distributed generation that operates on renewable fuel or
contributes to system reliability. Existing law defines "ultra-clean
and low-emission distributed generation" as an electric generation
technology that produces zero emissions during operation or that
produces emissions that are equal to or less than limits established
by the State Air Resources Board, if the electric generation
technology commences operation between January 1, 2003, and December
31, 2005.
This bill would require the commission, in consultation with the
Energy Commission, to administer, until January 1, 2008, a
self-generation incentive program for distributed generation
resources in the same form that exists on January 1, 2004, but would
require that combustion-operated distributed generation projects
using fossil fuels commencing January 1, 2005, meet a NOx emission
standard, and commencing January 1, 2007, meet a more stringent NOx
emission standard and a minimum efficiency standard, to be eligible
for incentive rebates under the program. The bill would establish a
credit for combined heat and power units that meet a certain
efficiency standard.
The bill would revise the definition of an ultra-clean and
low-emission distributed generation to include electric generation
technologies that commence operation prior to December 31, 2008.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares each of the
following:
(a) Increasing California's reliance on renewable energy
resources, particularly solar, "ultra-clean," and "low-emission"
electricity generation, promotes stable electricity prices, protects
public health, improves environmental quality, stimulates sustainable
economic development, creates new employment opportunities, and
reduces reliance on imported fuels.
(b) The development of renewable energy resources, particularly
nonpolluting solar electricity generation, ameliorates air quality
problems throughout the state and improves public health by reducing
the burning of fossil fuels and the associated environmental impacts.
(c) The Self Generation Incentive Program administered by the
Public Utilities Commission and established pursuant to Section 379.5
(Decision 01-03-073, March 27, 2001), has been a critically
important subsidy for the growth of solar electricity generation in
California, but is set to expire at the end of 2004.
(d) The Legislature intends that the commission continue the Self
Generation Incentive Program in order to subsidize solar electricity
generation.
SEC. 2. Section 353.2 of the Public Utilities Code is amended to
read:
353.2. (a) As used in this article, "ultra clean and low emission
distributed generation" means any electric generation technology
that meets both of the following criteria:
(1) Commences initial operation between January 1, 2003, and
December 31, 2008.
(2) Produces zero emissions during its operation or produces
emissions during its operation that are equal to or less than the
2007 State Air Resources Board emission limits for distributed
generation, except that technologies operating by combustion must
operate in a combined heat and power application with a 60-percent
system efficiency on a higher heating value.
(b) In establishing rates and fees, the commission may consider
energy efficiency and emissions performance to encourage early
compliance with air quality standards established by the State Air
Resources Board for ultra clean and low emission distributed
generation.
SEC. 3. Section 379.5 of the Public Utilities Code is amended to
read:
379.5. Notwithstanding any other provision of law, on or before
March 7, 2001, the commission, in consultation with the Independent
System Operator, shall take all of the following actions, and shall
include the reasonable costs involved in taking those actions in the
distribution revenue requirements of utilities regulated by the
commission, as appropriate:
(a) (1) Identify and undertake those actions necessary to reduce
or remove constraints on the state's existing electrical transmission
and distribution system, including, but not limited to,
reconductoring of transmission lines, the addition of capacitors to
increase voltage, the reinforcement of existing transmission
capacity, and the installation of new transformer banks. The
commission shall, in consultation with the Independent System
Operator, give first priority to those geographical regions where
congestion reduces or impedes electrical transmission and supply.
(2) Consistent with the existing statutory authority of the
commission, afford electrical corporations a reasonable opportunity
to fully recover costs it determines are reasonable and prudent to
plan, finance, construct, operate, and maintain any facilities under
its jurisdiction required by this section.
(b) In consultation with the State Energy Resources Conservation
and Development Commission, adopt energy conservation demand-side
management and other initiatives in order to reduce demand for
electricity and reduce load during peak demand periods. Those
initiatives shall include, but not be limited to, all of the
following:
(1) Expansion and acceleration of residential and commercial
weatherization programs.
(2) Expansion and acceleration of programs to inspect and improve
the operating efficiency of heating, ventilation, and
air-conditioning equipment in new and existing buildings, to ensure
that these systems achieve the maximum feasible cost-effective energy
efficiency.
(3) Expansion and acceleration of programs to improve energy
efficiency in new buildings, in order to achieve the maximum feasible
reductions in uneconomic energy and peak electricity consumption.
(4) Incentives to equip commercial buildings with the capacity to
automatically shut down or dim nonessential lighting and
incrementally raise thermostats during a peak electricity demand
period.
(5) Evaluation of installing local infrastructure to link
temperature setback thermostats to real-time price signals.
(6) Incentives for load control and distributed generation to be
paid for enhancing reliability.
(7) Differential incentives for renewable or super clean
distributed generation resources pursuant to Section 379.6.
(8) Reevaluation of all efficiency cost-effectiveness tests in
light of increases in wholesale electricity costs and of natural gas
costs to explicitly include the system value of reduced load on
reducing market clearing prices and volatility.
(c) In consultation with the Energy Resources Conservation and
Development Commission, adopt and implement a residential,
commercial, and industrial peak reduction program that encourages
electric customers to reduce electricity consumption during peak
power periods.
SEC. 4. Section 379.6 is added to the Public Utilities Code, to
read:
379.6. (a) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall until
January 1, 2008, administer a self-generation incentive program for
distributed generation resources, in the same form as exists on
January 1, 2004.
(b) Notwithstanding subdivision (a), the self-generation incentive
program shall do all of the following:
(1) Commencing January 1, 2005, require all combustion-operated
distributed generation projects using fossil fuels to meet an oxides
of nitrogen (NOx) emissions rate standard of 0.14 pounds per
megawatthour to be eligible for self-generation rebates.
(2) Commencing January 1, 2007, require all combustion-operated
distributed generation projects using fossil fuels to meet an oxides
of nitrogen (NOx) emissions rate standard of 0.07 pounds per
megawatthour and a minimum efficiency of 60 percent, to be eligible
for self-generation rebates. A minimum efficiency of 60 percent
shall be measured as useful energy output divided by fuel input. The
efficiency determination shall be based on 100 percent load.
(3) Combined heat and power units that meet the 60 percent
efficiency standard may take a credit to meet the applicable oxides
of nitrogren (NOx) emission standard of 0.14 pounds per megawatthour
or 0.07 pounds per megawatthour. Credit shall be at the rate of one
megawatthour for each 3.4 million British Thermal Units (BTUs) of
heat recovered.
(4) Provide the commission with flexibility in administering the
self-generation incentive program, including, but not limited to,
flexibility with regard to the amount of rebates, inclusion of other
ultra clean and low emission distributed generation technologies, and
evaluation of other public policy interests, including, but not
limited to, ratepayers, and energy efficiency and environmental
interests.