BILL NUMBER: SB 1048 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 14, 2005
INTRODUCED BY Senator Machado
FEBRUARY 22, 2005
An act to amend Sections 353.1, 353.2, and 353.13 of
add Section 353.17 to the Public Utilities Code,
relating to electrical restructuring.
LEGISLATIVE COUNSEL'S DIGEST
SB 1048, as amended, Machado. Electrical restructuring:
distributed energy resources.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations.
Existing law pertaining to electrical restructuring requires the
commission to impose requirements upon electrical corporations to
facilitate customer generation of electricity from distributed energy
resources and ultraclean and low-emission distributed
generation. Existing law defines "distributed energy resources" to
mean any electric generation technology that meets certain criteria,
including: (1) having commenced 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,
and (2) being 5 megawatts or smaller in aggregate capacity. Existing
law defines "ultraclean 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, 2008. That definition requires that technologies
operating by combustion operate in a combined heat and power
application with a 60% system efficiency on a higher heating value
.
This bill would change the criteria for distributed energy
resources to include electric generation technology that commences
initial operation between May 1, 2001, and December 31, 2010, and has
40 megawatts or smaller in aggregate capacity. The bill would modify
the definition of "ultraclean 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 the limits established by the State Air Resources
Board, if the electric generation technology commences operation
between January 1, 2003, and December 31, 2010. The bill would make
other conforming changes.
This bill would state the intent of the Legislature to develop
distributed generation projects for generating electricity utilizing
natural gas produced in association with oil production in
California, and that these projects reduce air pollution,
economically benefit electricity consumers, and provide economic
benefits for the owners of facilities for the generation of
electricity.
Vote: majority. Appropriation: no. Fiscal committee: no.
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:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Disposal of natural gas that is produced in association with
the production of oil is a significant problem in California.
(b) The current practice of burning at the source natural gas that
is produced in association with the production of oil, causes air
pollution and wastes a potentially useful source of energy.
(c) One alternative to burning at the source natural gas that is
produced in association with the production of oil, is to use the gas
as a low cost fuel to generate electricity, an alternative that can
provide economic benefits for both consumers and owners of facilities
for the generation of electricity.
(d) It is in the public interest that effective and economic
methods of utilizing gas that would otherwise go to waste to produce
electricity be implemented as an alternative to burning the gas at
the source.
SEC. 2 Section 353.17 is added to the Public
Utilities Code , to read:
353.17. It is the intent of the Legislature that distributed
generation projects be developed for generating electricity utilizing
natural gas produced in association with oil production in
California. It is the further intent of the Legislature that these
projects reduce air pollution, economically benefit electricity
consumers, and that provide economic benefits for the owners of
facilities for the generation of electricity.
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 December
31, 2010.
(b) Is located within a single facility.
(c) Is 40 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.
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, 2010.
(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 353.13 of the Public Utilities Code is amended to
read:
353.13. (a) The commission shall require each electrical
corporation to establish new tariffs on or before January 1, 2003,
for customers using distributed energy resources, including, but not
limited to, those that do not meet all of the criteria described in
Section 353.1. However, after January 1, 2003, distributed energy
resources that meet all of the criteria described in Section 353.1
shall continue to be subject only to those tariffs in existence
pursuant to Section 353.3, until June 1, 2011. Those tariffs required
pursuant to this section shall ensure that all net distribution
costs incurred to serve each customer class, taking into account the
actual costs and benefits of distributed energy resources,
proportional to each customer class, as determined by the commission,
are fully recovered only from that class. The commission shall
require each electrical corporation, in establishing those rates, to
ensure that customers with similar load profiles within a customer
class will, to the extent practicable, be subject to the same utility
rates, regardless of their use of distributed energy resources to
serve onsite loads or over-the-fence transactions allowed under
Sections 216 and 218. Customers with dedicated facilities shall
remain responsible for their obligations regarding payment for those
facilities.
(b) The commission shall prepare and submit to the Legislature, on
or before June 1, 2002, a report describing its proposed methodology
for determining the new rates and the process by which it will
establish those rates.
(c) In establishing the tariffs, the commission shall consider
coincident peakload, and the reliability of the onsite generation, as
determined by the frequency and duration of outages, so that
customers with more reliable onsite generation and those that reduce
peak demand pay a lower cost-based rate.