BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 919


                                                                    Page  1





          SENATE THIRD READING


          SB  
          919 (Hertzberg)


          As Amended  August 11, 2016


          Majority vote


          SENATE VOTE:  35-0


           -------------------------------------------------------------------- 
          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Utilities       |15-0 |Gatto, Patterson,      |>                    |
          |                |     |Burke, Chávez, Dahle,  |                     |
          |                |     |Eggman, Cristina       |                     |
          |                |     |Garcia, Eduardo        |                     |
          |                |     |Garcia, Hadley,        |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |Roger Hernández,       |                     |
          |                |     |Obernolte, Quirk,      |                     |
          |                |     |Santiago, Ting,        |                     |
          |                |     |Williams               |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Water           |15-0 |Levine, Gallagher,     |>                    |
          |                |     |Bigelow, Dodd, Eggman, |                     |
          |                |     |Cristina Garcia,       |                     |
          |                |     |Eduardo Garcia, Gomez, |                     |








                                                                     SB 919


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          |                |     |Harper, Lopez, Mathis, |                     |
          |                |     |Nazarian, Olsen,       |                     |
          |                |     |Salas, Williams        |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,     |>                    |
          |                |     |Bloom, Bonilla, Bonta, |                     |
          |                |     |Calderon, Chang, Daly, |                     |
          |                |     |Eggman, Gallagher,     |                     |
          |                |     |Eduardo Garcia,        |                     |
          |                |     |Holden, Jones,         |                     |
          |                |     |Obernolte, Quirk,      |                     |
          |                |     |Santiago, Wagner,      |                     |
          |                |     |Weber, Wood, Chau      |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
           -------------------------------------------------------------------- 


          SUMMARY:  Requires the California Public Utilities Commission  
          (CPUC), in consultation with the California Independent System  
          Operator (CAISO), to address, by January 1, 2018, the oversupply  
          of renewable energy resources through the development of a  
          tariff or other economic incentive for the electricity purchased  
          by customers operating facilities that create or augment local  
          water supplies.  


          This bill 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, groundwater recharge facilities, and  
          groundwater treatment and remediation activities.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, the requirements of this bill can be addressed  
          through existing proceedings including the Long Term Procurement  
          Planning, the Water-Energy Nexus Order Instituting Rulemaking,  








                                                                     SB 919


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          and the Time-of-Use Order Instituting Rulemaking.  However, the  
          deadline in this bill may require staff to shift from working on  
          long term over-supply mitigation to focusing on meeting the  
          requirements of the bill. 


          COMMENTS:


          1)Rationale:  Scientists predict California's changing climate  
            will increase the frequency, length, and severity of future  
            droughts.  The solution will require new sustainable, local  
            water supplies, such as water recycling, ocean desalination,  
            stormwater capture, and brackish desalting (i.e., cleaning up  
            water that is too salty to drink, but not as salty as  
            seawater). 


            Due to California's successful renewable 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.


            According to the author, there is a solution to this mismatch  
            in demand for power at water facilities in the daytime and the  
            cost of electricity.  This bill encourages the development and  
            diversification of local water supplies by directing renewable  
            energy 'oversupply' to those water suppliers.  


          2)Renewable Energy Oversupply:  In 2013, the CAISO published the  
            "duck chart," which shows a significant drop in mid-day net  
            load on a spring day as solar photovoltaics are added to the  
            state's electric grid.  The chart raised concerns that the  
            state's electric grid will not be able to maintain  








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            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.


            This bill provides for the use of such mechanisms as time  
            variant rates, demand response, or dynamic pricing, to help  
            create demand for electricity at times when it would be  
            helpful for electric grid management.




          Analysis Prepared by:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:  
          0003969