BILL NUMBER: AB 380 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 16, 2005
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
(1) 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 to ensure that
adequate physical generating capacity, dedicated to serving all load
requirements of for load-serving entities,
is available as defined, in accordance with
specified objectives. The bill would require each load-serving entity
to maintain physical generating capacity adequate to meet
its load requirements, including, but not limited to,
peak demand plus requisite and
planning and operating reserves 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 each load-serving entity to
meet , 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 or
the Western Electricity Coordinating Council. The bill would
require the commission to implement and enforce these
the resource adequacy requirements
established pursuant to the bill in a nondiscriminatory manner
. on all 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 entities, with respect to these
resource adequacy requirements and would require the commission to
impose a penalty upon any 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 subject each load-serving entity to the
same requirements for resource adequacy, cost-effective energy
efficiency, and the renewables portfolio standard program that are
applicable to electrical corporations, or otherwise required by law,
or by order or decision of the commission . The bill would
require that the cost costs of an
electrical corporation in 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 as specified , be
fully recoverable from all those
customers taking service from an the
electrical corporation on a nonbypassable basis
, at the time the commitment to incur the cost is made or
thereafter , on a fully nonbypassable basis, pursuant to rates
that are determined by the commission to be just and reasonable
. The bill would require that all load-serving entities,
including electric service providers and community choice
aggregators, are subject to the same requirements for resource
adequacy, 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 entities to report information to
the commission on anticipated load, actual load, and measures
undertaken by the load-serving entity to ensure resource adequacy.
The commission would be required to share information provided by
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.
The bill would require the commission to determine the
most efficient and equitable means for achieving prescribed
objectives. The bill would exclude from the definition of a
"load-serving entity" 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.
Existing
(2) 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 ISO.
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 that every each
local publicly owned electric utility serving end-use customers
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 each
local publicly owned electric utility 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 or 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
any 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 utility 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 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
(3) 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 resource adequacy requirements for
load-serving entities.
(b) In establishing resource adequacy requirements, the commission
shall achieve all of the following objectives:
(1) Facilitate development of new generating capacity and
retention of existing generating capacity that is economic and
needed.
(2) Equitably allocate the cost of generating capacity and prevent
shifting of costs between customer classes.
(3) Minimize enforcement requirements and costs.
(c) Each load-serving entity shall maintain physical generating
capacity adequate to meet its load requirements, including, but not
limited to, peak demand and planning and operating reserves. The
generating capacity shall be deliverable to locations and at times as
may be necessary to provide reliable electric service at just and
reasonable rates.
(d) Each load-serving entity 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 or
the Western Electricity Coordinating Council.
(e) The commission shall implement and enforce the resource
adequacy requirements established in accordance with this section in
a nondiscriminatory manner. Each load-serving entity shall be subject
to the same requirements for resource adequacy, cost-effective
energy efficiency, and the renewables portfolio standard program that
are applicable to electrical corporations pursuant to this section,
or otherwise required by law, or by order or decision of the
commission. The commission shall exercise its enforcement powers to
ensure compliance by all load-serving entities.
(f) The commission shall require sufficient information,
including, but not limited to, anticipated load, actual load, and
measures undertaken by a load-serving entity to ensure resource
adequacy, to be reported to enable the commission to determine
compliance with the resource adequacy requirements established by the
commission.
(g) An electrical corporation's costs of meeting resource adequacy
requirements, including, but not limited to, the costs associated
with system reliability and local area reliability, that are
determined to be 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.
(h) The commission shall determine the most efficient and
equitable means for achieving all of the following:
(1) Meeting the objectives of this section.
(2) Ensuring that investment is made in new generating capacity.
(3) Ensuring that existing generating capacity that is economic is
retained.
(4) Ensuring that the cost of generating capacity is allocated
equitably.
(i) For purposes of this section, "load-serving entity" means an
electrical corporation, electric service provider, or community
choice aggregator. "Load-serving entity" does not include any of the
following:
(1) A local publicly owned electric utility as defined in Section
9604.
(2) The State Water Resources Development System commonly known as
the State Water Project.
(3) Customer-owned generation, if the customer-owned generation
meets one of the following criteria:
(A) It takes standby service from the electrical corporation on a
commission-approved rate schedule that requires the customer's
load-serving entity to provide for adequate backup planning and
operating reserves for that customer generation.
(B) It is not physically interconnected to the transmission grid,
so that if the customer generation fails, backup power is not
supplied from the electricity grid.
SEC. 2. Section 9620 is added to the
Public Utilities Code , to read:
9620. (a) Each local publicly owned electric utility serving
end-use customers, shall 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.
(b) Each 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 or the Western Electricity
Coordinating Council.
(c) A local publicly owned electric utility serving end-use
customers shall, upon request, provide the State Energy Resources
Conservation and Development Commission with any information the
State Energy Resources Conservation and Development Commission
determines is necessary to evaluate the progress made by the local
publicly owned electric utility in meeting the requirements of this
section.
(d) 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.
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
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 entities, including nonutility
electric service providers and community choice aggregators, shall be
subject to the same requirements for resource adequacy,
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 entities to report information to the
commission on anticipated load, actual load, and measures undertaken
by the 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 entities with the resource adequacy
requirements adopted by the commission. The commission shall share
information provided by the 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
entities. For purposes of enforcing the resource adequacy
requirements established pursuant to this section, all electrical
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 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.
(d) For purposes of this section, "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 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 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.