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
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          |Author:    |Hertzberg              |           |                 |
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          |Version:   |April 6, 2016    Amended                             |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Dennis O'Connor                                      |
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           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  
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          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  
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            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

          
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