BILL ANALYSIS Ó
SB 919
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Date of Hearing: June 15, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
SB
919 (Hertzberg) - As Amended May 31, 2016
SENATE VOTE: 35-0
SUBJECT: Water supply: creation or augmentation of local water
supplies
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to address the oversupply of renewable energy resources
through development of a tariff or other economic incentive
available to facilities that create or augment local water
supplies. Specifically, this bill:
1)Requires the CPUC, before January 1, 2018, to approve a tariff
or other economic incentive for electricity purchased by
customers operating facilities that create or augment local
water supplies to reduce the cost of electricity to those
facilities.
2)Defines "facilities that create or augment local water
supplies" to include desalination, brackish water desalting,
water recycling, water reuse, stormwater and dry weather
runoff capture and use, and groundwater recharge facilities.
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EXISTING LAW:
1)Authorizes the CPUC to fix rates, establish rules, examine
records, issue subpoenas, administer oaths, take testimony,
punish for contempt, and prescribe a uniform system of
accounts for all public utilities, including electrical and
gas corporations, subject to its jurisdiction. (Article 12 of
the California Constitution)
2)Requires that all charges demanded or received by any public
utility for any product, commodity or service be just and
reasonable, and that every unjust or unreasonable charge is
unlawful. (Public Utilities Code Section 451)
3)Requires retail sellers of electricity - investor-owned
utilities (IOU), community choice aggregators (CCAs), and
energy service providers (ESPs) - and publicly-owned utilities
(POU) to increase purchases of renewable energy such that at
least 50% of retail sales are procured from renewable energy
resources by December 31, 2030. This is known as the
Renewable Portfolio Standard (RPS). (Public Utilities Code
Section 399.11 et seq.)
4)Requires the CPUC to adopt a process for each IOU to file an
integrated resource plan to ensure the IOUs meet the
greenhouse gas (GHG) emissions reduction targets for the
electricity sector; procure at least 50% eligible renewable
energy resources by December 31, 2030; enable each IOU to
fulfill its obligation to serve its customers at just and
reasonable rates; minimize impacts on ratepayers' bills;
ensure system and local reliability; strengthen the diversity,
sustainability, and resilience of the bulk transmission and
distribution systems, and local communities; enhance
distribution systems and demand-side energy management; and
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minimize localized air pollutants and other GHG emissions,
with early priority on disadvantaged communities. (Public
Resources Code Section 454.52)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "Senate Bill 919 encourages the
development and diversification of local water supplies
through water recycling, reclamation, and desalination by
directing renewable energy 'oversupply' to those water
suppliers. An ancillary benefit is that the bill requires
better coordination of California's renewable energy resources
and demand for power and enables better, more cost-effective
utilization of renewable power as it is generated."
2)Background: California remains in a historic drought.
Scientists predict our changing climate will increase the
frequency, length, and severity of droughts. The solution will
require new sustainable, local water supplies, such as water
recycling, ocean desalination, storm water capture, and
brackish desalting (i.e., cleaning up water that is too salty
to drink, but not as salty as seawater).
According to wastewater agencies, most of the demand for
recycled water is for irrigation, and due to nighttime
watering rules, there is no way to avoid daytime production
when retail costs are highest.
The author opines that there is a solution to this mismatch in
demand for power at water facilities in the daytime and cost
of electricity. Due to California's successful renewable
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energy programs, regulators have identified an "oversupply" of
power during the day. The result is low (or negative)
wholesale prices for renewable energy, a trend that is
increasing in frequency but is not reflected in retail prices.
Oversupply increases costs to ratepayers and represents a
failure of the regulatory system to send proper price signals.
3)Renewable Energy Oversupply: In 2013, the California
Independent System Operator (CAISO) published the "duck
chart," which shows a significant drop in mid-day net load on
a spring day as solar photovoltaics (PV) are added to the
state's electric grid. The chart raised concerns that the
state's electric grid will not be able to maintain
reliability, particularly on days characterized by the duck
shape. This could result in "overgeneration" and curtailed
renewable energy, increasing its costs and reducing its
environmental benefits.
In March 2015, the Union of Concerned Scientists pointed out
in its study of California grid reliability stated that: "The
CAISO currently handles overgeneration situations by reducing
or 'curtailing' the generation from renewable energy
facilities. This is a missed opportunity because it wastes
electricity from clean sources while natural gas plants are
kept online. Primarily relying on natural gas plants to meet
energy needs and grid reliability services will prevent
California from achieving its long-term emission reduction
goals. "
In other words, gas plants are running at the same time that
"renewable oversupply" in the duck chart. Other generation
facilities that are running include nuclear (Diablo Canyon)
and hydroelectric facilities. In addition, at the same time
there is a renewable oversupply California is usually
importing electricity from out-of-state. Efforts to absorb
"renewable oversupply" do not address the underlying use of
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natural gas, as well as out-of-state coal, to meet
California's electricity needs.
This bill will increase demand for electricity and provides
for use of such mechanisms as time-of-use rates, demand
response, or dynamic pricing, thus providing a means to help
create demand for electricity at times when it would be
helpful for electric grid management.
4)State Desalination Policies: On May 6, 2015, the State Water
Resources Control Board (SWRCB) approved an amendment to the
state's Water Quality Control Plan for the Ocean Waters of
California (Ocean Plan) to address effects associated with the
construction and operation of seawater desalination facilities
to support the use of ocean water as a reliable supplement to
traditional water supplies while protecting marine life and
water quality. This amendment provides a uniform, consistent
process for permitting of seawater desalination facilities
statewide, provides direction for regional water boards when
permitting new or expanded facilities, and provides specific
implementation and monitoring and reporting requirements. The
amendment received final approval from the California Office
of Administrative Law in January 2016.
The California Department of Water Resources (DWR) provides
grants for the planning, design, and construction of water
desalination facilities for both brackish and ocean water. It
also provides grants for pilot, demonstration, and research
projects. DWR conducted three rounds of funding since 2005. In
November 2014, California voters passed Proposition 1, a part
of which is the Water Quality, Supply and Infrastructure
Improvement Act of 2014 (California Water Code, Division 26.7,
Section 79700, et seq). Chapter 9 of Proposition 1 provides
$725 million for grants/loans for water recycling and advanced
treatment, including desalination projects. DWR's Water
Desalination Grant Program will incorporate the Proposition 1
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desalination elements.
Water Boards draw authority for storm water regulation from
the federal Water Pollution Control Act (Clean Water Act) and
from direction within the Clean Water Act which puts the
framework for regulating storm water discharges under the
National Pollutant Discharge Elimination System Permit system.
Cities and other jurisdictions that operate large and medium
and small storm water systems as well as specific industrial
activity sites, including constructions sites that disturb
more than an acre of land, must apply for storm water permits.
The SWRCB provides policy and regulatory oversight, on behalf
of the federal government.
5)Existing Desalination Facilities. According to information
available from the SWRCB there are 15 proposed desalination
facilities and 12 existing desalination facilities in
California.
Proposed plants include the Bay Area Regional Desalination
Project, California Water Service Company, Santa Cruz and
Soquel Creek, Central Coast Regional Water Project, Regional
Desalination Project (CalAm), Ocean View Plaza, Monterey
Peninsula Water Management District, Cambria Community
Services District, Oceano Community Services District, West
Basin Municipal Water District, City of Oceanside, and the San
Diego County Water Authority.
Other facilities may also be in the planning process, but not
included in the SWRCB list, such as the People's Moss Landing
Water Desal Project.
Table 1: Existing desalination facilities
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--------------------------------------------------------------
| | Operator/ Location | Production Capacity | Status |
| | |(Millions of Gallons | |
| | | per Day) | |
| | | | |
|-------+--------------------+---------------------+-----------|
|1. |Monterey Bay |0.04 |Active |
| |Aquarium | | |
|-------+--------------------+---------------------+-----------|
|2. |Marina Coast Water |0.3 |Temporarily|
| |District | | idle |
|-------+--------------------+---------------------+-----------|
|3. |Duke Energy, Moss |0.5 |Active |
| |Landing | | |
|-------+--------------------+---------------------+-----------|
|4. |Sand City |0.3 |Active |
|-------+--------------------+---------------------+-----------|
|5. |City of Morro Bay |0.6 |Intermitten|
| | | |t use |
|-------+--------------------+---------------------+-----------|
|6. |Duke Energy |0.4 |Not known |
|-------+--------------------+---------------------+-----------|
|7. |Pacific Gas & |0.6 |Not known |
| |Electric (PG&E) | | |
|-------+--------------------+---------------------+-----------|
|8. |Chevron USA |0.4 |Active |
|-------+--------------------+---------------------+-----------|
|9. |City of Santa |2.8-8.9 |Temporarily|
| |Barbara | | idle |
|-------+--------------------+---------------------+-----------|
|10. |U.S. Navy |0.02 |Not known |
|-------+--------------------+---------------------+-----------|
|11. |Southern California |0.12 |Inactive |
| |Edison (SCE) | | |
|-------+--------------------+---------------------+-----------|
|12. |Carlsbad |50 |Active |
| |Desalination Plant | | |
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--------------------------------------------------------------
A May 2016 report on marine and coastal impacts of
desalination in California was published by Water in the West
(a partnership of the faculty, staff and students of the
Stanford Woods Institute for the Environment and the Bill Lane
Center for the American West) the Monterey Bay Aquarium, the
Nature Conservancy and the Center for Ocean Solutions. This
report found, among other things, that the role of ocean
desalination will be minor in the context of California's
overall water budget, although it may be very important in
some local areas and that communities should compare all costs
and benefits (social, environmental and economic) of
desalination with the true costs and benefits of other water
supply sources.
6)Brackish water desalination: According to California
desalination advocacy group, CalDesal, there are a number of
brackish water desalination projects currently in operation in
California. According to CalDesal, most projects produce less
than 5 million gallons per day (or 5,600 acre-feet per year)
but there are some larger-scale plants, with more expected in
the coming years. Examples of currently operating brackish
water desalination projects are:
a) West Basin Municipal Water Distric produces 5 million
gallons per day of high quality water to consumers.
b) Chino Basin Desalter Authority operates a desalination
project that produces 14 million gallons a day of fresh
water from brackish water pumped from wells throughout the
Chino area. Brine left over from the process is transported
by a regional brine line and subsequently discharged to the
ocean.
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c) Alameda County Water District operates a series of wells
that remove brackish water from groundwater.
7)Coordination with the SWRCB: Given that the CPUC has little
expertise in the areas of brackish water desalting, water
recycling, water reuse, stormwater and dry weather runoff
capture and use, and groundwater recharge facilities, the CPUC
should consult with the SWRCB in the development of the tariff
to ensure that the projects create or augment local water
supplies and to ensure consistency with the federal Water
Pollution Control Act.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Water Agencies, If Amended
California Association of Sanitation Agencies
California Municipal Utilities Association, If Amended
Independent Energy Producers Association
San Diego County Water Authority
Opposition
None on file
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Analysis Prepared by:Sue Kateley / U. & C. / (916)
319-2083