BILL ANALYSIS
AB 380
Page 1
Date of Hearing: May 11, 2005
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 380 (Nunez) - As Amended: May 2, 2005
Policy Committee:
UtilitiesVote:11-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Public Utilities Commission (PUC) to
establish and enforce requirements ensuring that all electricity
providers have adequate generating capacity to meet peek demand
and operating reserves at just and reasonable rates.
Specifically, this bill:
1)Requires the PUC, in consultation with the Independent System
Operator (ISO), to establish the resource adequacy
requirements for all load-serving entities (LSEs).
2)Requires all LSEs, including nonutility electric service
providers and community choice aggregators (CCAs), to be
subject to the same requirements as the requirements for
investor-owned utilities (IOUs), including resource adequacy,
resource diversity, cost-effective energy efficiency, and the
renewables portfolio standard.
3)Requires the PUC to require LSEs to report to the commission
such information as needed to enable the PUC to determine
compliance with the adopted resource adequacy requirements.
4)Requires the California Energy Commission (CEC) to use the
information reported to the PUC pursuant to (4) in its
biennial integrated policy report.
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5)Requires the PUC to implement and enforce the resource
adequacy requirements on all LSEs.
6)Requires the PUC to ensure that costs incurred on behalf of an
investor-owned utility's (IOU's) customers are recovered in a
non-bypassable manner from the customers on whose behalf they
were incurred and to develop a mechanism to ensure no shifting
of costs.
7)Requires every local publicly owned electric utility (muni) to
ensure adequate generating resources to meet peak demand to
ensure local area reliability, and to report to the CEC
information required relative to the utility's resource plan.
8)Requires the PUC to impose penalties on any LSEs that fail to
procure adequate generating resources in accordance with PUC's
order implementing the above requirements.
FISCAL EFFECT
Absorbable costs to the PUC and the CEC. The PUC indicates that
it is already engaged in much of what the bill would require.
COMMENTS
Background and Purpose . LSEs include all retail electricity
providers-IOUs, electric service providers (ESPs), CCAs, and
munis. The IOUs are currently required to procure 115 to 117
percent of projected peak demand to ensure they have adequate
resources to meet the demand of their customer base. The IOU
customers pay for the reserve requirements through their rates.
According to the PUC, the commission is in the process of
developing resource adequacy rules, applicable to both utilities
and ESPs, to ensure that each retail electric service provider
has sufficient resources available to ensure reliable service
under adverse conditions.
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There have been concerns that the IOUs have been asked to
procure reserves not only on their own behalf but also on the
behalf of direct access customers because the PUC does not have
a process in place by which it can verify whether the ESPs are
actually procuring sufficient electricity and needed reserves.
To the extent IOUs buy reserves on behalf of direct-access
customers, costs are shifted from the direct-access customers to
the IOU customers.
Even if there are no cost shifts, there may be a reliability
risk for IOU customers because the ESPs have not purchased
power. If the ESP has failed to procure enough resources, the
customer continues to draw electricity from the IOU's reserves,
which compromises reliability for the IOU's customers, or
increases costs across all of its customers if the IOU has to
purchase additional resources on the spot market for these
unanticipated customers.
According to the author, this bill will require the PUC to
ensure that non-utility energy service providers and CCAs are
subject to the same resource adequacy, resource diversity,
cost-effective energy efficiency, and renewable portfolio
standard requirements as are the IOUs.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081