BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: SB 919 Hearing Date: April 12, 2016 ----------------------------------------------------------------- |Author: |Hertzberg | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |April 6, 2016 Amended | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Dennis O'Connor | | | | ----------------------------------------------------------------- Subject: Water supply: creation or augmentation of local water supplies BACKGROUND AND EXISTING LAW Under existing law, the California Public Utilities Commission (CPUC) has regulatory authority over public utilities, including electrical corporations. The existing California Renewables Portfolio Standard Program requires a retail seller of electricity and local publicly owned electric utilities to purchase specified minimum quantities of electricity products from eligible renewable energy resources for specified compliance periods, sufficient to ensure that the level of procurement of electricity products from eligible renewable energy resources reaches a specified percentage of retail sales by a specified date. PROPOSED LAW This bill would require the CPUC, before July 1, 2018, in consultation with the Independent System Operator, to address the oversupply of renewable energy resources through a tariff or other economic incentive for electricity purchased by customers operating "facilities that create or augment local water supplies." The bill further defines "facilities that create or augment local water supplies" to "include desalination, brackish water desalting, water recycling, water reuse, and groundwater SB 919 (Hertzberg) Page 2 of ? recharge facilities." ARGUMENTS IN SUPPORT According to the author, "Due to California's successful renewable energy programs, regulators have identified an "oversupply" of power during the day. The result is lower wholesale prices for renewable energy, a trend that is increasing in frequency and is not reflected in retail energy prices. Oversupply increases costs to ratepayers and represents a failure of the regulatory system to send proper price signals." "If we could let water suppliers know when there is an oversupply of energy, processes could be changed to take advantage of the low or negative pricing, reducing the cost of making water locally. This, in turn, helps the grid operate more efficiently and saves money for ratepayers." ARGUMENTS IN OPPOSITION: None received COMMENTS As Noted In Energy, Utilities and Communications? This bill was heard in and passed out of the Senate Committee on Energy, Utilities and Communications on April 5, 2016. That committee's analysis noted: "Water facilities have limited ability to absorb excess electric generation. According to staff of both the CPUC and the CEC, local water supply augmentation facilities currently present little potential to sop up excess electricity supply. True, desalination plants and similar facilities are somewhat intensive energy users. However, currently, there are very few desalination plants in California. Both operating needs and contractual obligations limit the ability of such plants to quickly ramp production up or down." "That said, it is conceivable that future desalination plants and similar facilities could be designed and operated to allow greater amounts of ramping. The tariff or other economic incentive could encourage development of facilities better SB 919 (Hertzberg) Page 3 of ? able to utilize excess electricity generation." What about stormwater capture? If the purpose of this bill is to see how various local water supply or augmentation systems might be able to take advantage of low or negative electricity pricing, it might make sense to also include stormwater and dry weather runoff capture and use projects in the CPUC's analysis. SUGGESTED AMENDMENT AMENDMENT: On page 3, line 16, after "reuse," insert: stormwater and dry weather runoff capture and use, SUPPORT Independent Energy Producers Association (Sponsor) Association of California Water Agencies, if amended California Association of Sanitation Agencies California Municipal Utilities Association, if amended San Diego County Water Authority OPPOSITION None Received -- END --