BILL NUMBER: AB 380 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 28, 2005
AMENDED IN ASSEMBLY MAY 2, 2005
AMENDED IN ASSEMBLY APRIL 26, 2005
AMENDED IN ASSEMBLY APRIL 12, 2005
INTRODUCED BY Assembly Member Nunez
FEBRUARY 11, 2005
An act to add Sections 380 and 9620 to the Public Utilities Code,
relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 380, as amended, Nunez. Electricity: electrical restructuring:
resource adequacy.
The California Constitution establishes the Public Utilities
Commission, and provides it with jurisdiction over all public
utilities. The Constitution grants the commission certain general
powers over all public utilities, subject to control by the
Legislature, and authorizes the Legislature, unlimited by the other
provisions of the Constitution, to confer additional authority and
jurisdiction upon the commission, that is cognate and germane to the
regulation of public utilities.
The existing Public Utilities Act imposes various duties and
responsibilities on the commission with respect to the purchase of
electricity and requires the commission to review and adopt a
procurement plan and a renewable energy procurement plan for each
electrical corporation pursuant to the California Renewables
Portfolio Standard Program. Existing law relative to electrical
restructuring, authorizes electrical service to be provided, in
certain circumstances, by electric service providers, as defined, and
community choice aggregators, as defined.
The existing Warren-Alquist State Energy Resources Conservation
and Development Act establishes the State Energy Resources
Conservation and Development Commission (Energy Commission) and
requires it to undertake a continuing assessment of trends in the
consumption of electricity and other forms of energy and to analyze
the social, economic, and environmental consequences of those trends
and to collect from electric utilities, gas utilities, and fuel
producers and wholesalers and other sources, forecasts of future
supplies and consumption of all forms of energy. Existing law
requires the Energy Commission, beginning November 1, 2003, and every
2 years thereafter, to adopt an integrated energy policy report
which includes an assessment and forecast of system reliability and
the need for resource additions, efficiency, and conservation.
This bill would require the commission, in consultation with the
Independent System Operator (ISO), to establish resource adequacy
requirements to ensure that adequate physical generating capacity,
dedicated to serving all load requirements of load -
serving entities , is available to meet peak demand
plus requisite planning and operating reserves , and
at or deliverable to locations and at times as may be
necessary to provide reliable electric service at just and reasonable
rates. The bill would require that, at a minimum, the
resource adequacy requirements meet the most recent minimum planning
reserve and reliability criteria approved by the Board of Trustees of
the Western Systems Coordinating Council until minimum planning
reserve and reliability criteria are adopted by the Western
Electricity Coordinating Council. The bill would require the
commission to implement and enforce these resource adequacy
requirements in a nondiscriminatory manner on all load
serving entities, with certain exceptions.
load-serving entities. For these purposes, a
"load-serving entity" would not include a local publicly owned
electric utility, as defined, the State Water Resources Development
System commonly known as the State Water Project, or
certain customer generation. The bill would make specified
enforcement provisions within the Public Utilities Act, applicable to
all load serving load-serving
entities, with respect to these resource adequacy requirements and
would require the commission to impose a penalty upon any
load serving load-serving entity that fails to
procure adequate generational resources in violation of an order or
decision of the commission, in an amount sufficient to deter
violations. The bill would require that the cost of meeting resource
adequacy requirements, including the costs associated with system
reliability and local area reliability found reasonable by the
commission, or otherwise recoverable under an electrical
corporation's approved procurement plan, be fully recoverable
from all customers taking service from an electrical corporation on a
nonbypassable basis at the time the commitment to incur the cost is
made or thereafter. The bill would prohibit an electrical
corporation from recovering from ratepayers, any cost that would have
been avoided if the electrical corporation had procured adequate
generational resources as required by an order or decision of the
commission. The bill would require that all load
serving load-serving entities, including
electric service providers and community choice aggregators, are
subject to the same requirements for resource adequacy,
resource diversity, cost-effective energy efficiency, and
the renewables portfolio standard, as are applicable to electrical
corporations. The bill would require the commission, in consultation
with the ISO, to require all electrical load serving
load-serving entities to report information to
the commission on anticipated load, actual load, and measures
undertaken by the load serving load-serving
entity to ensure resource adequacy. The commission would be
required to share information provided by load serving
load- serving entities with the
Energy Commission. The Energy Commission would be required to utilize
the information supplied by the commission in its biennial
integrated energy policy reports.
Existing law relative to electrical restructuring states the
intent of the Legislature that the state's local publicly owned
electric utilities, as defined, and electrical corporations should
commit control of their transmission facilities to the
Independent System Operator ISO .
This bill would require that every local publicly owned electric
utility serving end-use customers ensure that adequate
physical generating capacity dedicated to serving all of its load
requirements is available to meet peak demand and planning and
operating reserves, at or deliverable to locations and at times as
may be necessary to ensure local area reliability and system
reliability, at just and reasonable rates prudently
plan for and procure resources that are adequate to meet its planning
reserve margin and peak demand and operating reserves,
sufficient to provide reliable electric service to its customers
. The bill would require that every local publicly owned
electric utility report to the State Energy Resources
Conservation and Development Commission that information required by
the commission relative to the utility's resource plan and status in
meeting its resource plan, thereby imposing a state-mandated local
program serving end-use customers, at a minimum, meet
the most recent minimum planning reserve and reliability criteria
approved by the Board of Trustees of the Western Systems Coordinating
Council until minimum planning reserve and reliability criteria are
adopted by the Western Electricity Coordinating Council. The bill
would require a local publicly owned electric utility serving end-use
customers, upon request, to provide the Energy Commission with that
information the Energy Commission determines is necessary to evaluate
the progress made by the utility in meeting these requirements, and
would require the Energy Commission to report the progress made by
each util ity to the Legislature .
Because this bill would establish various requirements to be met
by local publicly owned utilities, this bill would impose a
state-mandated local program.
Under existing law, a violation of the Public Utilities Act or an
order or direction of the commission is a crime.
Certain provisions of this bill would be part of the act and an
order or other action of the commission would be required to
implement certain of the provisions. Because a violation of those
provisions or an order or other action of the commission implementing
those provisions would be a crime, and because the bill would make
certain violations by a load serving
load-serving entity a crime, this bill would thereby impose a
state-mandated local program by creating new crimes and by expanding
the definition of existing crimes.
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 specified reasons.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 380 is added to the Public Utilities Code, to
read:
380.
(a) The commission, in consultation with the Independent System
Operator, shall establish a resource adequacy requirements mechanism
to ensure that adequate physical generating capacity dedicated to
serving all load requirements of load-serving entities is
available to meet peak demand and planning and operating reserves, at
or deliverable to locations and at times as may be necessary to
ensure local area reliability and system reliability,
provide reliable electric service at just and
reasonable rates. These resource adequacy
requirements shall, at a minimum, meet the most recent minimum
planning reserve and reliability criteria approved by the Board of
Trustees of the Western Systems Coordinating Council until minimum
planning reserve and reliability criteria are adopted by the Western
Electricity Coordinating Council. The resource adequacy requirements
mechanism shall ensure that investment is made in new generating
capacity, that existing generating capacity that is economic is
retained, and that the cost of generating capacity is allocated
equitably.
(b) All electrical load serving
load-serving entities, including nonutility electric service
providers and community choice aggregators, shall be subject to the
same requirements for resource adequacy, resource diversity,
cost-effective energy efficiency, and the renewables
portfolio standard program, that are applicable to electrical
corporations pursuant to this section, or otherwise as required by
law, or by order or decision of the commission. The resource adequacy
requirements mechanism shall be designed to minimize enforcement
requirements and costs, to prevent shifting of costs, and to ensure
that adequate generating capacity exists or is brought online to
timely meet identified resource adequacy needs. The commission, in
consultation with the Independent System Operator, shall require all
electrical load serving load-serving
entities to report information to the commission on anticipated load,
actual load, and measures undertaken by the load serving
load-serving entity to ensure resource adequacy.
The commission shall require sufficient information to be reported
to enable the commission to determine compliance with the resource
adequacy requirements adopted by the commission. The commission may
require a scheduling coordinator approved by the Independent System
Operator to provide information when necessary or useful to determine
compliance by load serving load-serving
entities with the resource adequacy requirements adopted by the
commission. The commission shall share information provided by the
load serving load-serving entities with
the State Energy Resources Conservation and Development Commission.
The State Energy Resources Conservation and Development Commission
shall utilize the information supplied by the commission in the
biennial integrated energy policy reports prepared pursuant to
Section 25302 of the Public Resources Code in a manner that
ensures the confidentiality of market sensitive information as
required by subdivision (g) of Section 454.5 .
(c) The commission, in consultation with the Independent System
Operator, shall implement and enforce these resource adequacy
requirements in a nondiscriminatory manner as to all load
serving load-serving entities. For purposes of
enforcing the resource adequacy requirements established pursuant to
this section, all electrical load serving
load-serving entities, including those entities that are not
electrical corporations, are subject to Sections 2101, 2102, 2103,
2104, 2104.5, 2105, 2106, 2107, 2107.5, 2108, 2109, 2110, 2111, 2112,
2113, and 2114. In addition to any remedy or enforcement power that
the commission may exercise pursuant to Chapter 11 (commencing with
Section 2100), the commission shall impose a penalty upon any
load serving load-serving entity that
fails to procure adequate generational resources in violation of an
order or decision of the commission made pursuant to this section, in
an amount sufficient to deter violations. The electrical corporation'
s costs of meeting those resource adequacy requirements, including
the costs associated with system reliability and local area
reliability, that are found reasonable by the commission , or
are otherwise recoverable under a procurement plan approved by the
commission pursuant to Section 454.5 , shall be fully
recoverable from those customers taking service from the electrical
corporation, at the time the commitment to incur the cost is made or
thereafter, on a fully nonbypassable basis pursuant to rates that are
just and reasonable, as determined by the commission. The commission
shall develop mechanisms that ensure cost recovery by electrical
corporations for costs incurred in providing resource adequacy, that
avoid shifting of costs, and that avoid stranded costs
, and that avoid cost responsibility surcharges. In addition
to any remedy or enforcement power that the commission may exercise
pursuant to Chapter 11 (commencing with Section 2100), an electrical
corporation shall not recover from ratepayers, any cost that would
have been avoided if the electrical corporation had procured adequate
generational resources as required by an order or decision of the
commission made pursuant to this section. .
(d) For purposes of this section, "load serving
"load-serving entity" does not include a local publicly
owned electric utility as defined in Section 9604, the State Water
Resources Development System commonly known as the State Water
Project, or customer generation, if the customer generation (1) takes
standby service from the electrical corporation on a
commission-approved rate schedule that requires the customer's
load serving load-serving entity to
provide for adequate backup planning and operating reserves for that
customer generation or (2) is not physically interconnected to the
transmission grid, so that if the customer generation fails, backup
power is not supplied from the electricity grid.
(e) The commission shall determine if a centralized resource
adequacy mechanism, or some other appropriate mechanism, is the most
efficient and equitable means of meeting the objectives of this
section and of ensuring that investment is made in new generating
capacity, that existing generating capacity that is economic is
retained, and that the cost of generating capacity is allocated
equitably.
SEC. 2. Section 9620 is added to the Public Utilities Code, to
read:
9620.
(a) Every local publicly owned electric utility serving end-use
customers, shall ensure that adequate physical generating
capacity dedicated to serving all of its load requirements is
available to meet peak demand and planning and operating reserves, at
or deliverable to locations and at times as may be necessary to
ensure local area reliability and system reliability, at just and
reasonable rates.
(b) Every local
publicly owned electric utility shall report to the State Energy
Resources Conservation and Development Commission, that information
required by the commission relative to the utility's resource plan
and status in meeting its resource plan. prudently
plan for and procure resources that are adequate to meet its planning
reserve margin and peak demand and operating reserves, sufficient to
provide reliable electric service to its customers. Every local
publicly owned electric utility serving end-use customers shall, at a
minimum, meet the most recent minimum planning reserve and
reliability criteria approved by the Board of Trustees of the Western
Systems Coordinating Council until minimum planning
reserve and reliability criteria are adopted by the Western
Electricity Coordinating Council.
(b) A local publicly owned electric utility serving end-use
customers shall, upon request, provide the State Energy Resources
Conservation and Development Commission with that information the
commission determines is necessary to evaluate the progress made by
the utility in meeting the requirements of this section.
(c) The State Energy Resources Conservation and Development
Commission shall report to the Legislature regarding the progress
made by each local publicly owned electric utility serving end-use
customers in meeting the requirements of this section.
SEC. 3.
No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because certain 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.
As to certain other costs, no reimbursement is required by this
act pursuant to Section 6 of Article XIII B of the California
Constitution because a local agency or school district has the
authority to levy service charges, fees, or assessments sufficient to
pay for the program or level of service mandated by this act, within
the meaning of Section 17556 of the Government Code.