SB 765: Energy: California Market Transformation Administrator.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-08-18
The Reliable Electric Service Investments Act requires the Public Utilities Commission (PUC), in evaluating energy efficiency investments, to ensure that local and regional interests, multifamily dwellings, and energy service industry capabilities are incorporated into program portfolio design and that local governments, community-based organizations, and energy efficiency service providers are encouraged to participate in program implementation where appropriate.
This bill would require the PUC, in ensuring that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, to contract with an independent entity to serve as the California Market Transformation Administrator (CalMTA). The bill would require the PUC to require the CalMTA to take certain actions, including, among other actions, working work in concert with other energy efficiency administrators that are carrying out energy efficiency activities under the PUCs oversight to incorporate long-term market transformation strategies into the states energy efficiency portfolio and to encourage portfolio. The bill would require the PUC to modify the energy efficiency programs that it adopts to incorporate a portfolio of long-term market transformation initiatives on a statewide basis. The bill would require the PUC, as part of the portfolio, to take certain actions, including, among other actions, encouraging local publicly owned electric utilities to voluntarily participate in the CalMTAs planning efforts and support the market transformation initiatives administered by the CalMTA adopted by the PUC to ensure statewide consistency and full market deployment. Because a violation of these requirements would be a crime, this bill would impose a state-mandated local program. The bill would require the PUC to consult with the CalMTA regarding demand-side energy management programs.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Reliable Electric Service Investments Act requires the Public Utilities Commission (PUC), in evaluating energy efficiency investments, to ensure that local and regional interests, multifamily dwellings, and energy service industry capabilities are incorporated into program portfolio design and that local governments, community-based organizations, and energy efficiency service providers are encouraged to participate in program implementation where appropriate.
This bill would require the PUC, in ensuring that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, to contract with an independent entity to serve as the California Market Transformation Administrator (CalMTA). The bill would require the PUC to require the CalMTA to take certain actions, including, among other actions, working in concert with other energy efficiency administrators that are carrying out energy efficiency activities under the PUCs oversight to incorporate long-term market transformation strategies into the states energy efficiency portfolio and to work with the State Energy Resources Conservation and Development Commission to encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment. Because a violation of these requirements would be a crime, this bill would impose a state-mandated local program. The bill would require the PUC to consult with the CalMTA regarding demand-side energy management programs.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Reliable Electric Service Investment Investments Act requires the Public Utilities Commission (PUC), in evaluating energy efficiency investments, to ensure that local and regional interests, multifamily dwellings, and energy service industry capabilities are incorporated into program portfolio design and that local governments, community-based organizations, and energy efficiency service providers are encouraged to participate in program implementation where appropriate.
This bill would require the PUC, in ensuring that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, to contract with an independent entity to serve as the California Market Transformation Administrator (CalMTA). The bill would require the PUC to require the CalMTA to take certain actions, including, among other actions, working in concert with other energy efficiency administrators that are carrying out energy efficiency activities under the PUCs oversight to incorporate long-term market transformation strategies into the states energy efficiency portfolio and to work with the State Energy Resources Conservation and Development Commission to encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment. Because a violation of these requirements would be a crime, this bill would impose a state-mandated local program. The bill would require the PUC to consult with the CalMTA regarding demand-side energy management programs.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Reliable Electric Service Investment Act requires the Public Utilities Commission (PUC), in evaluating energy efficiency investments, to ensure that local and regional interests, multifamily dwellings, and energy service industry capabilities are incorporated into program portfolio design and that local governments, community-based organizations, and energy efficiency service providers are encouraged to participate in program implementation where appropriate.
This bill would require the PUC, in ensuring that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, to contract with an independent entity to serve as the California Market Transformation Administrator (CalMTA). The bill would require the PUC to require the CalMTA to take certain actions, including, among other actions, working in concert with other energy efficiency administrators that are carrying out energy efficiency activities under the PUCs oversight to incorporate long-term market transformation strategies into the states energy efficiency portfolio and to work with the State Energy Resources Conservation and Development Commission to encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment. Because a violation of these requirements would be a crime, this bill would impose a state-mandated local program. The bill would require the PUC to consult with the CalMTA regarding demand-side energy management programs.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, relative to private energy producers, requires every electric utility to develop a standard contract or tariff providing for net energy metering and to make this contract or tariff available to eligible customer-generators upon request for generation by a renewable electrical generation facility. Existing law requires that the net energy metering calculation be made by measuring the difference between the electricity supplied to an eligible customer-generator and the electricity generated by the eligible customer-generator and fed back to the electrical grid over a 12-month period. Existing law establishes rules for the annualized net metering calculation, which, among other things, authorizes an eligible customer-generator with multiple meters to elect to aggregate the electrical load of the meters located on the property where the renewable electrical generation facility is located and on all property adjacent or contiguous to the property on which the generation facility is located, if those properties are solely owned, leased, or rented by the eligible customer-generator. Existing law specifies that an eligible customer-generator who elects to aggregate under that provision is permanently ineligible to receive net surplus electricity compensation and the electric utility would retain any kilowatthours in excess of the eligible customer-generators electricity load generated during the 12-month period.
This bill would delete this provision, thereby allowing an eligible customer-generator who elects to aggregate to receive net surplus electricity compensation.
Existing law, relative to private energy producers, requires every electric utility to develop a standard contract or tariff providing for net energy metering and to make this contract or tariff available to eligible customer-generators upon request for generation by a renewable electrical generation facility. Existing law requires that the net energy metering calculation be made by measuring the difference between the electricity supplied to an eligible customer-generator and the electricity generated by the eligible customer-generator and fed back to the electrical grid over a 12-month period. Existing law establishes rules for the annualized net metering calculation, which, among other things, authorizes an eligible customer-generator with multiple meters to elect to aggregate the electrical load of the meters located on the property where the renewable electrical generation facility is located and on all property adjacent or contiguous to the property on which the generation facility is located, if those properties are solely owned, leased, or rented by the eligible customer-generator. Existing law specifies that an eligible customer-generator who elects to aggregate under that provision is permanently ineligible to receive net surplus electricity compensation and the electric utility would retain any kilowatthours in excess of the eligible customer-generators electricity load generated during the 12-month period.
This bill would delete this provision, thereby allowing an eligible customer-generator who elects to aggregate to receive net surplus electricity compensation.
(a)This article shall be known, and may be cited, as the Reliable Electric Service Investments Act.
(b)The Legislature finds and declares that safe, reliable electric service is of utmost importance to the citizens of this state, and its economy.
(c)The Legislature further finds and declares that in order to ensure that the citizens of this state continue to receive safe, reliable, affordable, and environmentally sustainable electric service, it is essential that prudent investments continue to be made in all of the following areas:
(1)To protect the integrity of the electric distribution grid.
(2)To ensure an adequately sized and trained utility workforce.
(3)To ensure cost-effective energy efficiency improvements.
(4)To achieve a sustainable supply of renewable energy.
(5)To advance public interest research, development, and demonstration programs not adequately provided by competitive and regulated markets.
(d)It is the intent of the Legislature to reaffirm, without requiring revision, Californias doctrine, as reflected in regulatory and judicial decisions, regarding electrical corporations reasonable opportunity to recover costs and investments associated with their electric distribution grid and the reasonable opportunity to attract capital for investment on reasonable terms.
(e)The Legislature further finds and declares all of the following:
(1)Acting under applicable constitutional and statutory authorities, the Public Utilities Commission and the boards of local publicly owned electric utilities have included in regulated electricity prices, investments that are essential to maintaining system reliability, reducing California electricity users bills, and mitigating environmental costs of California users electricity consumption.
(2)Among the most important of these system benefits investments categories are energy efficiency, renewable energy, and public interest research, development and demonstration (RD&D).
(3)Energy efficiency investments funded from Californias usage-based charges on electricity distribution help improve systemwide reliability by reducing demand in times and areas of system congestion, and at the same time reduce all California electricity users costs. These investments also significantly reduce environmental costs associated with Californias electricity consumption, including, but not limited to, degradation of the states air, water, and land resources.
(4)Californias in-state renewable energy resources help alleviate supply deficits that could threaten electric system reliability, reduce environmental costs associated with Californias electricity consumption, and increase the diversity of the electricity systems fuel mix, reducing electricity users exposure to fossil fuel price volatility.
(5)Californias public interest RD&D investments enhance private and regulated sector investment in electricity system technologies, and are designed specifically to help ensure sustained improvement in the economic and environmental performance of the distribution, transmission, and generation and end-use systems that serve California electricity users.
(6)California has established a long tradition of recovering system benefits investments through usage-based electricity charges, which is reflected in at least two decades of electricity price regulation by the commission, the boards of local publicly owned electric utilities, and the mandate of the Legislature in Chapter 854 of the Statutes of 1996 (Assembly Bill 1890 of the 199596 Regular Session of the Legislature) and Chapter 905 of the Statutes of 1997 (Senate Bill 90 of the 199798 Regular Session of the Legislature).
(7)Unless the Legislature acts to extend the mandate of this article for minimum levels of usage based system benefits charges, California electricity users are at substantial risk of higher economic and environmental costs and degraded reliability.
(f)(1)The Legislature further finds and declares all of the following:
(A)Targeted energy efficiency market transformation initiatives aimed at long-term transformation of defined markets are a necessary component of a comprehensive, balanced, and cost-effective energy efficiency portfolio.
(B)Because tensions can exist between market transformation initiatives and energy efficiency resource acquisition strategies, it is important to recognize the differences between what each of these strategies can accomplish and to pursue both in California.
(C)The existing energy efficiency portfolio overseen by the commission focuses on energy efficiency resource acquisition.
(D)The creation of a single entity with responsibility for planning, coordinating, and managing the execution of statewide energy efficiency market transformation initiatives in concert with other state energy efficiency activities, subject to the commissions oversight and that carries out its duties in consultation with the Energy Commission and all interested local publicly owned electric utilities, would assist the state in advancing its energy efficiency and greenhouse gas reduction goals without increasing the overall funding for the energy efficiency portfolio overseen by the commission.
(2)It is the intent of the Legislature that demand-side energy management programs should be coordinated, to the extent practicable, to support utility customers in making well-informed, cost-effective decisions about investments in onsite energy efficiency, demand response, and renewable distributed generation, and to provide efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
SEC. 2.Section 399.5 is added to the Public Utilities Code, to read:399.5.(a)For purposes of this section and Section 399.6, section, the following terms mean the following:
(1)Demand-side energy management programs has the same meaning as set forth in Section 323.5.
(2)California Market Transformation Administrator or CalMTA means a private contractor selected by the commission to coordinate the planning and execution of the states efforts to advance electricity and natural gas energy efficiency through long-term market transformation strategies.
(3)Energy efficiency means delivering equal or more services with less energy input from an energy source.
(3)
(4)Market transformation means a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice. Targeted intervention strategies that induce sustained adoption and market penetration of energy efficient technologies and practices through structural changes in the market and in behaviors of market actors such that government intervention in the form of monetary inducements is no longer necessary.
(4)Resources acquisition means the generation of electricity or natural gas savings that are sufficiently reliable, predictable, and measurable to replace electricity or natural gas supplies in the utility energy resource planning process.
(b)(1)In carrying out its responsibilities to ensure that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, the commission, on or before July 1, 2017, shall contract with an independent entity to serve as the California Market Transformation Administrator that will coordinate the planning and execution of the states efforts to advance energy efficiency through long-term market transformation strategies, as well as advise on and otherwise assist the commission with the coordination of demand-side energy management programs under the commissions jurisdiction.
(2)The initial CalMTA contract shall be for a period of not less than five years and may be terminated if the CalMTA fails to meet the performance benchmarks established in the contract.
(c)(1)An entity eligible to be a CalMTA shall have a mission that is fully aligned with promoting energy efficiency and conservation, including market transformation.
(2)The marketing, education, and outreach plans for the CalMTAs market transformation initiatives shall be developed and implemented as part of the Energy Upgrade California statewide marketing, education, and outreach efforts, where practical.
(d)The commission shall require the CalMTA, at a minimum, to do all of the following: work in concert with other energy efficiency administrators carrying out energy efficiency activities under the commissions oversight to incorporate long-term market transformation strategies into the states portfolio.
(1)Work in concert with other energy efficiency administrators carrying out energy efficiency activities under the commissions oversight to incorporate long-term market transformation strategies into the states portfolio.
(e)The commission shall modify the energy efficiency programs that it adopts to incorporate a portfolio of long-term market transformation initiatives on a statewide basis, and, as part of the portfolio, shall do all of the following, without increasing the overall funding for the energy efficiency programs:
(2)
(1)Create market conditions that will accelerate and sustain the market adoption of emerging energy efficiency products, services, and practices in California.
(3)
(2)Meet interim and long-term targets adopted by the commission related to the transformation of targeted markets, as well as provide a cost-effective portfolio of market transformation initiatives over the life of the contract. initiatives.
(4)Submit to the commission quarterly reports detailing expenditures and annual reports showing expenditures and progress towards commission-established interim and long-term targets.
(5)
(3)Contribute improved efficiencies in the delivery of ratepayer-funded energy efficiency activities in California by taking a statewide approach to defined markets targeted for transformation.
(6)
(4)Coordinate the planning for and execution of market transformation initiatives, as appropriate, with utility administered energy efficiency activities, other energy efficiency activities under the commissions jurisdiction, including, but not limited to, energy efficiency activities administered by community choice aggregators pursuant to Section 381.1, and low-income energy efficiency programs in California, including the rate-payer funded program required by Section 2790 and overseen by the commission, as well as the federal Low-Income Home Energy Assistance Program administered by the Department of Community Services and Development.
(7)Build upon the energy efficiency expertise and capabilities developed in the state, such as by providing flexibility for other energy efficiency administrators to carry out some of the market transformation activities identified by the CalMTA, so as to minimize confusion and leverage existing relationships between utilities, community choice aggregators, and other providers of energy efficiency services, and their customers.
(8)
(5)Encourage local publicly owned electric utilities to voluntarily participate in the CalMTAs planning efforts in, and otherwise support support, the market transformation initiatives administered by the CalMTA adopted by the commission to ensure statewide consistency and full market deployment.
(9)Collaborate
(6)Collaborate, as necessary, with regional and national energy efficiency entities on market transformation efforts.
(e)
(f)The commission shall protect ratepayers from performance risks inherent in market transformation initiatives by, at a minimum, doing all of the following:
(1)Requiring a rigorous upfront vetting process for program concepts, to be conducted either by the commission as part of its oversight function or by the CalMTA. The CalMTA shall make a convincing case that concepts to ensure each proposed market intervention would produce lasting energy efficiency benefits that would more than pay for the long-term costs of the market intervention.
(2)Balancing the level of ratepayer investment in market transformation initiatives against resources acquisition initiatives, such that:
(A)The budget for market transformation initiatives, including the budget to be managed by the CalMTA and the commissions costs associated with managing the contract with the CalMTA, is initially set by the commission at a level not more than 10 percent of the total budget for energy efficiency activities overseen by the commission, excluding low-income energy efficiency programs.
(B)The reasonableness of the initial funding level for market transformation initiatives is evaluated by the commission over the course of the initial contract term with the CalMTA and adjusted as the commission deems appropriate to support the objectives of this section.
(3)
(2)Continuously evaluating the market transformation initiatives administered by the CalMTA and focusing on whether the targeted markets are evolving in the manner intended, such that the initiatives can be corrected mid-course or abandoned, as necessary, to maximize long-term energy savings from the CalMTAs portfolio of initiatives.
(f)
(g)In implementing this section, the commission shall consult with the Energy Commission to ensure that market transformation functions carried out by the CalMTA are appropriately coordinated with the energy efficiency related activities conducted or overseen by the Energy Commission.
(g)
(h)The commission shall evaluate and adopt, as necessary, new criteria to support and accurately evaluate the benefits of market transformation.
(h)The commission, in consultation with the Energy Commission and the CalMTA, shall determine when and how to reflect potentially achievable cost-effective electricity and natural gas savings from energy efficiency market transformation initiatives in carrying out its obligations pursuant to Sections 454.55 and 454.56. In setting energy efficiency targets for electrical or gas corporations pursuant to Section 454.55 or 454.56, the commission shall consider whether energy savings expected to be delivered through market transformation initiatives administered by the CalMTA should be excluded from the targets established for the electrical or gas corporations.
SEC. 3.Section 399.6 is added to the Public Utilities Code, to read:399.6.(a)The commission shall consult with the CalMTA on how best to integrate demand-side energy management programs to support utility customers in making well-informed, cost-effective decisions about investment in onsite energy efficiency, demand response, and renewable distributed generation, as well as customer-sited energy storage systems, and to provide economic and organizational efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
(b)The commission shall consult with the CalMTA on how best to design and deploy demand-side energy management programs and encourage customer-sited energy storage systems so as to provide the most cost-effective environmental and economic benefits from an electric system planning and operation perspective.
(c)The commission shall include in the contract executed with a CalMTA pursuant to Section 399.5 the advisory functions specified in this section related to integrating demand-side energy management programs.
SEC. 4.SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)This article shall be known, and may be cited, as the Reliable Electric Service Investments Act.
(b)The Legislature finds and declares that safe, reliable electric service is of utmost importance to the citizens of this state, and its economy.
(c)The Legislature further finds and declares that in order to ensure that the citizens of this state continue to receive safe, reliable, affordable, and environmentally sustainable electric service, it is essential that prudent investments continue to be made in all of the following areas:
(1)To protect the integrity of the electric distribution grid.
(2)To ensure an adequately sized and trained utility workforce.
(3)To ensure cost-effective energy efficiency improvements.
(4)To achieve a sustainable supply of renewable energy.
(5)To advance public interest research, development, and demonstration programs not adequately provided by competitive and regulated markets.
(d)It is the intent of the Legislature to reaffirm, without requiring revision, Californias doctrine, as reflected in regulatory and judicial decisions, regarding electrical corporations reasonable opportunity to recover costs and investments associated with their electric distribution grid and the reasonable opportunity to attract capital for investment on reasonable terms.
(e)The Legislature further finds and declares all of the following:
(1)Acting under applicable constitutional and statutory authorities, the Public Utilities Commission and the boards of local publicly owned electric utilities have included in regulated electricity prices, investments that are essential to maintaining system reliability, reducing California electricity users bills, and mitigating environmental costs of California users electricity consumption.
(2)Among the most important of these system benefits investments categories are energy efficiency, renewable energy, and public interest research, development and demonstration (RD&D).
(3)Energy efficiency investments funded from Californias usage-based charges on electricity distribution help improve systemwide reliability by reducing demand in times and areas of system congestion, and at the same time reduce all California electricity users costs. These investments also significantly reduce environmental costs associated with Californias electricity consumption, including, but not limited to, degradation of the states air, water, and land resources.
(4)Californias in-state renewable energy resources help alleviate supply deficits that could threaten electric system reliability, reduce environmental costs associated with Californias electricity consumption, and increase the diversity of the electricity systems fuel mix, reducing electricity users exposure to fossil fuel price volatility.
(5)Californias public interest RD&D investments enhance private and regulated sector investment in electricity system technologies, and are designed specifically to help ensure sustained improvement in the economic and environmental performance of the distribution, transmission, and generation and end-use systems that serve California electricity users.
(6)California has established a long tradition of recovering system benefits investments through usage-based electricity charges, which is reflected in at least two decades of electricity price regulation by the commission, the boards of local publicly owned electric utilities, and the mandate of the Legislature in Chapter 854 of the Statutes of 1996 (Assembly Bill 1890 of the 199596 Regular Session of the Legislature) and Chapter 905 of the Statutes of 1997 (Senate Bill 90 of the 199798 Regular Session of the Legislature).
(7)Unless the Legislature acts to extend the mandate of this article for minimum levels of usage based system benefits charges, California electricity users are at substantial risk of higher economic and environmental costs and degraded reliability.
(f)(1)The Legislature further finds and declares all of the following:
(A)Targeted energy efficiency market transformation initiatives aimed at long-term transformation of defined markets are a necessary component of a comprehensive, balanced, and cost-effective energy efficiency portfolio.
(B)Because tensions can exist between market transformation initiatives and energy efficiency resource acquisition strategies, it is important to recognize the differences between what each of these strategies can accomplish and to pursue both in California.
(C)The existing energy efficiency portfolio overseen by the commission focuses on energy efficiency resource acquisition.
(D)The creation of a single entity with responsibility for planning, coordinating, and managing the execution of statewide energy efficiency market transformation initiatives in concert with other state energy efficiency activities, subject to the commissions oversight and that carries out its duties in consultation with the Energy Commission and all interested local publicly owned electric utilities, would assist the state in advancing its energy efficiency and greenhouse gas reduction goals without increasing the overall funding for the energy efficiency portfolio overseen by the commission.
(2)It is the intent of the Legislature that demand-side energy management programs should be coordinated, to the extent practicable, to support utility customers in making well-informed, cost-effective decisions about investments in onsite energy efficiency, demand response, and renewable distributed generation, and to provide efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
SEC. 2.Section 399.5 is added to the Public Utilities Code, to read:399.5.(a)For purposes of this section and Section 399.6, the following terms mean the following:
(1)Demand-side energy management programs has the same meaning as set forth in Section 323.5.
(2)California Market Transformation Administrator or CalMTA means a private contractor selected by the commission to coordinate the planning and execution of the states efforts to advance electricity and natural gas energy efficiency through long-term market transformation strategies.
(3)Market transformation means a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
(4)Resources acquisition means the generation of electricity or natural gas savings that are sufficiently reliable, predictable, and measurable to replace electricity or natural gas supplies in the utility energy resource planning process.
(b)(1)In carrying out its responsibilities to ensure that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, the commission, on or before July 1, 2017, shall contract with an independent entity to serve as the California Market Transformation Administrator that will coordinate the planning and execution of the states efforts to advance energy efficiency through long-term market transformation strategies, as well as advise on and otherwise assist the commission with the coordination of demand-side energy management programs under the commissions jurisdiction.
(2)The initial CalMTA contract shall be for a period of not less than five years and may be terminated if the CalMTA fails to meet the performance benchmarks established in the contract.
(c)(1)An entity eligible to be a CalMTA shall have a mission that is fully aligned with promoting energy efficiency and conservation, including market transformation.
(2)The CalMTA shall carry out its marketing, education, and outreach-related energy efficiency outreach plans for the CalMTAs market transformation and the coordination of demand-side energy management programs under initiatives shall be developed and implemented as part of the Energy Upgrade California brand name. statewide marketing, education, and outreach efforts, where practical.
(d)The commission shall require the CalMTA, at a minimum, to do all of the following:
(1)Work in concert with other energy efficiency administrators carrying out energy efficiency activities under the commissions oversight to incorporate long-term market transformation strategies into the states portfolio.
(2)Create market conditions that will accelerate and sustain the market adoption of emerging energy efficiency products, services, and practices in California.
(3)Meet interim and long-term targets adopted by the commission related to the transformation of targeted markets, as well as provide a cost-effective portfolio of market transformation initiatives over the life of the contract.
(4)Submit to the commission quarterly reports detailing expenditures, expenditures and annual reports showing expenditures and progress towards commission-established interim and long-term targets.
(5)Contribute improved efficiencies in the delivery of ratepayer-funded energy efficiency activities in California by taking a statewide approach to defined markets targeted for transformation.
(6)Coordinate the planning for and execution of market transformation initiatives, as appropriate, with utility administered energy efficiency activities, other energy efficiency activities under the commissions jurisdiction, including, but not limited to, energy efficiency activities administered by community choice aggregators pursuant to Section 381.1, and low-income energy efficiency programs in California, including the rate-payer funded program required by Section 2790 and overseen by the commission, as well as the federal Low-Income Home Energy Assistance Program administered by the Department of Community Services and Development.
(7)Build upon the energy efficiency expertise and capabilities developed in the state, such as by providing flexibility for other energy efficiency administrators to carry out some of the market transformation activities identified by the CalMTA, so as to minimize confusion and leverage existing relationships between utilities, community choice aggregators, and other providers of energy efficiency services, and their customers.
(8)Work with the Energy Commission to encourage Encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and otherwise support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment.
(9)Collaborate with regional and national energy efficiency entities on market transformation efforts.
(e)The commission shall protect ratepayers from performance risks inherent in market transformation initiatives by, at a minimum, doing all of the following:
(1)Requiring a rigorous upfront vetting process for program concepts, to be conducted either by the commission as part of its oversight function or by the CalMTA. The CalMTA shall make a convincing case that each proposed market intervention would produce lasting energy efficiency benefits that would more than pay for the long-term costs of the market intervention.
(2)Balancing the level of ratepayer investment in market transformation initiatives against resources acquisition initiatives, such that:
(A)The budget for market transformation initiatives, including the budget to be managed by the CalMTA and the commissions costs associated with managing the contract with the CalMTA, is initially set by the commission at a level not more than 10 percent of the total budget for energy efficiency activities overseen by the commission, excluding low-income energy efficiency programs.
(B)The reasonableness of the initial funding level for market transformation initiatives is evaluated by the commission over the course of the initial contract term with the CalMTA and adjusted as the commission deems appropriate to support the objectives of this section.
(3)Continuously evaluating the market transformation initiatives administered by the CalMTA and focusing on whether the targeted markets are evolving in the manner intended, such that the initiatives can be corrected mid-course or abandoned, as necessary, to maximize long-term energy savings from the CalMTAs portfolio of initiatives.
(f)In implementing this section, the commission shall consult with the Energy Commission to ensure that functions carried out by the CalMTA are appropriately coordinated with the energy efficiency related activities conducted or overseen by the Energy Commission.
(g)The commission shall evaluate and adopt, as necessary, new criteria to support and accurately evaluate the benefits of market transformation.
(h)The commission, in consultation with the Energy Commission and the CalMTA, shall determine when and how to reflect potentially achievable cost-effective electricity and natural gas savings from energy efficiency market transformation initiatives in carrying out its obligations pursuant to Sections 454.55 and 454.56. In setting energy efficiency targets for electrical or gas corporations pursuant to Section 454.55 or 454.56, the commission shall consider whether energy savings expected to be delivered through market transformation initiatives administered by the CalMTA should be excluded from the targets established for the electrical or gas corporations.
SEC. 3.Section 399.6 is added to the Public Utilities Code, to read:399.6.(a)The commission shall consult with the CalMTA on how best to integrate demand-side energy management programs to support utility customers in making well-informed, cost-effective decisions about investment in onsite energy efficiency, demand response, and renewable distributed generation, as well as customer-sited energy storage systems, and to provide economic and organizational efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
(b)The commission shall consult with the CalMTA on how best to design and deploy demand-side energy management programs and encourage customer-sited energy storage systems so as to provide the most cost-effective environmental and economic benefits from an electric system planning and operation perspective.
(c)The commission shall include in the contract executed with a CalMTA pursuant to Section 399.5 the advisory functions specified in this section related to integrating demand-side energy management programs.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)This article shall be known, and may be cited, as the Reliable Electric Service Investments Act.
(b)The Legislature finds and declares that safe, reliable electric service is of utmost importance to the citizens of this state, and its economy.
(c)The Legislature further finds and declares that in order to ensure that the citizens of this state continue to receive safe, reliable, affordable, and environmentally sustainable electric service, it is essential that prudent investments continue to be made in all of the following areas:
(1)To protect the integrity of the electric distribution grid.
(2)To ensure an adequately sized and trained utility workforce.
(3)To ensure cost-effective energy efficiency improvements.
(4)To achieve a sustainable supply of renewable energy.
(5)To advance public interest research, development development, and demonstration programs not adequately provided by competitive and regulated markets.
(d)It is the intent of the Legislature to reaffirm, without requiring revision, Californias doctrine, as reflected in regulatory and judicial decisions, regarding electrical corporations reasonable opportunity to recover costs and investments associated with their electric distribution grid and the reasonable opportunity to attract capital for investment on reasonable terms.
(e)The Legislature further finds and declares all of the following:
(1)Acting under applicable constitutional and statutory authorities, the Public Utilities Commission and the boards of local publicly owned electric utilities have included in regulated electricity prices, investments that are essential to maintaining system reliability, reducing California electricity users bills, and mitigating environmental costs of California users electricity consumption.
(2)Among the most important of these system benefits investments categories are energy efficiency, renewable energy, and public interest research, development and demonstration (RD&D).
(3)Energy efficiency investments funded from Californias usage-based charges on electricity distribution help improve systemwide reliability by reducing demand in times and areas of system congestion, and at the same time reduce all California electricity users costs. These investments also significantly reduce environmental costs associated with Californias electricity consumption, including, but not limited to, degradation of the states air, water, and land resources.
(4)Californias in-state renewable energy resources help alleviate supply deficits that could threaten electric system reliability, reduce environmental costs associated with Californias electricity consumption, and increase the diversity of the electricity systems fuel mix, reducing electricity users exposure to fossil-fuel fossil fuel price volatility.
(5)Californias public interest RD&D investments enhance private and regulated sector investment in electricity system technologies, and are designed specifically to help ensure sustained improvement in the economic and environmental performance of the distribution, transmission, and generation and end-use systems that serve California electricity users.
(6)California has established a long tradition of recovering system benefits investments through usage-based electricity charges, which is reflected in at least two decades of electricity price regulation by the commission, the boards of local publicly owned electric utilities, and the mandate of the Legislature in Chapter 854 of the Statutes of 1996 (Assembly Bill 1890 of the 199596 Regular Session of the Legislature) and Chapter 905 of the Statutes of 1997 (Senate Bill 90 of the 199798 Regular Session of the Legislature).
(7)Unless the Legislature acts to extend the mandate of this article for minimum levels of usage based system benefits charges, California electricity users are at substantial risk of higher economic and environmental costs and degraded reliability.
(f)(1)The Legislature further finds and declares all of the following:
(A)Targeted energy efficiency market transformation initiatives aimed at long-term transformation of defined markets are a necessary component of a comprehensive, balanced, and cost-effective energy efficiency portfolio.
(B)Because tensions can exist between market transformation initiatives and energy efficiency resource acquisition strategies, it is important to recognize the differences between what each of these strategies can accomplish and to pursue both in California.
(C)The existing energy efficiency portfolio overseen by the commission focuses on energy efficiency resource acquisition.
(D)The creation of a single entity with responsibility for planning, coordinating, and managing the execution of statewide energy efficiency market transformation initiatives in concert with other state energy efficiency activities, subject to the commissions oversight and that carries out its duties in consultation with the Energy Commission and all interested local publicly owned electric utilities, would assist the state in advancing its energy efficiency and greenhouse gas reduction goals. goals without increasing the overall funding for the energy efficiency portfolio overseen by the commission.
(2)It is the intent of the Legislature that demand-side energy management programs should be coordinated, to the extent practicable, to support utility customers in making well-informed, cost-effective decisions about investments in onsite energy efficiency, demand response, and renewable distributed generation, and to provide efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
SEC. 2.Section 399.5 is added to the Public Utilities Code, to read:399.5.(a)For purposes of this section and Section 399.6, the following terms mean the following:
(1)Demand-side energy management programs has the same meaning as set forth in Section 323.5.
(2)California Market Transformation Administrator or CalMTA means a private contractor selected by the commission to coordinate the planning and execution of the states efforts to advance electricity and natural gas energy efficiency through long-term market transformation strategies.
(3)Market transformation means a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
(4)Resources acquisition means the generation of electricity or natural gas savings that are sufficiently reliable, predictable, and measurable to replace electricity or natural gas supplies in the utility energy resource planning process.
(b)(1)In carrying out its responsibilities to ensure that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, the commission, on or before July 1, 2017, shall contract with an independent entity to serve as the California Market Transformation Administrator that will coordinate the planning and execution of the states efforts to advance energy efficiency through long-term market transformation strategies, as well as advise on and otherwise assist the commission with the coordination of demand-side energy management programs under the commissions jurisdiction.
(2)The initial CalMTA contract shall be for a period of not less than five years and may be terminated if the CalMTA fails to meet the performance benchmarks established in the contract.
(c)(1)An entity eligible to be a CalMTA shall have a mission that is fully aligned with promoting energy efficiency and conservation, including market transformation.
(2)The CalMTA shall carry out its marketing, education, and outreach-related energy efficiency market transformation and the coordination of demand-side energy management programs under the Energy Upgrade California brand name.
(d)The commission shall require the CalMTA, at a minimum, to do all of the following:
(1)Work in concert with other energy efficiency administrators carrying out energy efficiency activities under the commissions oversight to incorporate long-term market transformation strategies into the states portfolio.
(2)Create market conditions that will accelerate and sustain the market adoption of emerging energy efficiency products, services, and practices in California.
(3)Meet interim and long-term targets adopted by the commission related to the transformation of targeted markets, as well as provide a cost-effective portfolio of market transformation initiatives over the life of the contract.
(4)Submit to the commission quarterly reports detailing expenditures, and annual reports showing expenditures and progress towards commission-established interim and long-term targets.
(5)Contribute improved efficiencies in the delivery of ratepayer-funded energy efficiency activities in California by taking a statewide approach to defined markets targeted for transformation.
(6)Coordinate the planning for and execution of market transformation initiatives, as appropriate, with utility administered energy efficiency activities, other energy efficiency activities under the commissions jurisdiction, including, but not limited to, energy efficiency activities administered by community choice aggregators pursuant to Section 381.1, and low-income energy efficiency programs in California, including the rate-payer funded program required by Section 2790 and overseen by the commission, as well as the federal Low-Income Home Energy Assistance Program administered by the Department of Community Services and Development.
(7)Build upon the energy efficiency expertise and capabilities developed in the state, such as by providing flexibility for other energy efficiency administrators to carry out some of the market transformation activities identified by the CalMTA, so as to minimize confusion and leverage existing relationships between utilities, community choice aggregators, and other providers of energy efficiency services, and their customers.
(8)Work with the Energy Commission to encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and otherwise support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment.
(9)Collaborate with regional and national energy efficiency entities on market transformation efforts.
(e)The commission shall protect ratepayers from performance risks inherent in market transformation initiatives by, at a minimum, doing all of the following:
(1)Requiring a rigorous upfront vetting process for program concepts, to be conducted either by the commission as part of its oversight function or by the CalMTA. The CalMTA shall make a convincing case that each proposed market intervention would produce lasting energy efficiency benefits that would more than pay for the long-term costs of the market intervention.
(2)Balancing the level of ratepayer investment in market transformation initiatives against resources acquisition initiatives, such that:
(A)The budget for market transformation initiatives, including the budget to be managed by the CalMTA and the commissions costs associated with managing the contract with the CalMTA, is initially set by the commission at a level between 5 percent and not more than 10 percent of the total budget for energy efficiency activities overseen by the commission, excluding low-income energy efficiency programs.
(B)The reasonableness of the initial funding level for market transformation initiatives is evaluated by the commission over the course of the initial contract term with the CalMTA and adjusted as the commission deems appropriate to support the objectives of this section.
(3)Continuously evaluating the market transformation initiatives administered by the CalMTA and focusing on whether the targeted markets are evolving in the manner intended, such that the initiatives can be corrected mid-course or abandoned, as necessary, to maximize long-term energy savings from the CalMTAs portfolio of initiatives.
(f)In implementing this section, the commission shall consult with the Energy Commission to ensure that functions carried out by the CalMTA are appropriately coordinated with the energy efficiency related activities conducted or overseen by the Energy Commission.
(g)The commission shall evaluate and adopt, as necessary, new criteria to support and accurately evaluate the benefits of market transformation.
(h)The commission, in consultation with the Energy Commission and the CalMTA, shall determine when and how to reflect potentially achievable cost-effective electricity and natural gas savings from energy efficiency market transformation initiatives in carrying out its obligations pursuant to Sections 454.55 and 454.56. In setting energy efficiency targets for electrical or gas corporations pursuant to Section 454.55 or 454.56, the commission shall consider whether energy savings expected to be delivered through market transformation initiatives administered by the CalMTA should be excluded from the targets established for the electrical or gas corporations.
SEC. 3.Section 399.6 is added to the Public Utilities Code, to read:399.6.(a)The commission shall consult with the CalMTA on how best to integrate demand-side energy management programs to support utility customers in making well-informed, cost-effective decisions about investment in onsite energy efficiency, demand response, and renewable distributed generation, as well as customer-sited energy storage systems, and to provide economic and organizational efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
(b)The commission shall consult with the CalMTA on how best to design and deploy demand-side energy management programs and encourage customer-sited energy storage systems so as to provide the most cost-effective environmental and economic benefits from an electric system planning and operation perspective.
(c)The commission shall include in the contract executed with a CalMTA pursuant to Section 399.5 the advisory functions specified in this section related to integrating demand-side energy management programs.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)This article shall be known, and may be cited, as the Reliable Electric Service Investments Act.
(b)The Legislature finds and declares that safe, reliable electric service is of utmost importance to the citizens of this state, and its economy.
(c)The Legislature further finds and declares that in order to ensure that the citizens of this state continue to receive safe, reliable, affordable, and environmentally sustainable electric service, it is essential that prudent investments continue to be made in all of the following areas:
(1)To protect the integrity of the electric distribution grid.
(2)To ensure an adequately sized and trained utility workforce.
(3)To ensure cost-effective energy efficiency improvements.
(4)To achieve a sustainable supply of renewable energy.
(5)To advance public interest research, development and demonstration programs not adequately provided by competitive and regulated markets.
(d)It is the intent of the Legislature to reaffirm, without requiring revision, Californias doctrine, as reflected in regulatory and judicial decisions, regarding electrical corporations reasonable opportunity to recover costs and investments associated with their electric distribution grid and the reasonable opportunity to attract capital for investment on reasonable terms.
(e)The Legislature further finds and declares all of the following:
(1)Acting under applicable constitutional and statutory authorities, the Public Utilities Commission and the boards of local publicly owned electric utilities have included in regulated electricity prices, investments that are essential to maintaining system reliability, reducing California electricity users bills, and mitigating environmental costs of California users electricity consumption.
(2)Among the most important of these system benefits investments categories are energy efficiency, renewable energy, and public interest research, development and demonstration (RD&D).
(3)Energy efficiency investments funded from Californias usage-based charges on electricity distribution help improve systemwide reliability by reducing demand in times and areas of system congestion, and at the same time reduce all California electricity users costs. These investments also significantly reduce environmental costs associated with Californias electricity consumption, including, but not limited to, degradation of the states air, water, and land resources.
(4)Californias in-state renewable energy resources help alleviate supply deficits that could threaten electric system reliability, reduce environmental costs associated with Californias electricity consumption, and increase the diversity of the electricity systems fuel mix, reducing electricity users exposure to fossil-fuel price volatility.
(5)Californias public interest RD&D investments enhance private and regulated sector investment in electricity system technologies, and are designed specifically to help ensure sustained improvement in the economic and environmental performance of the distribution, transmission, and generation and end-use systems that serve California electricity users.
(6)California has established a long tradition of recovering system benefits investments through usage-based electricity charges, which is reflected in at least two decades of electricity price regulation by the commission, the boards of local publicly owned electric utilities, and the mandate of the Legislature in Chapter 854 of the Statutes of 1996 (Assembly Bill 1890 of the 199596 Regular Session of the Legislature) and Chapter 905 of the Statutes of 1997 (Senate Bill 90 of the 199798 Regular Session of the Legislature).
(7)Unless the Legislature acts to extend the mandate of this article for minimum levels of usage based system benefits charges, California electricity users are at substantial risk of higher economic and environmental costs and degraded reliability.
(f)(1)The Legislature further finds and declares all of the following:
(A)Targeted energy efficiency market transformation initiatives aimed at long-term transformation of defined markets are a necessary component of a comprehensive, balanced, and cost-effective energy efficiency portfolio.
(B)Because tensions can exist between market transformation initiatives and energy efficiency resource acquisition strategies, it is important to recognize the differences between what each of these strategies can accomplish and to pursue both in California.
(C)The existing energy efficiency portfolio overseen by the commission focuses on energy efficiency resource acquisition.
(D)The creation of a single entity with responsibility for planning, coordinating, and managing the execution of statewide energy efficiency market transformation initiatives in concert with other state energy efficiency activities, subject to the commissions oversight and that carries out its duties in consultation with the Energy Commission and all interested local publicly owned electric utilities, would assist the state in advancing its energy efficiency and greenhouse gas reduction goals.
(2)It is the intent of the Legislature that demand-side energy management programs should be coordinated, to the extent practicable, to support utility customers in making well-informed, cost-effective decisions about investments in onsite energy efficiency, demand response, and renewable distributed generation, and to provide efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
SEC. 2.Section 399.5 is added to the Public Utilities Code, to read:399.5.(a)For purposes of this section and Section 399.6, the following terms mean the following:
(1)Demand-side energy management programs has the same meaning as set forth in Section 323.5.
(2)California Market Transformation Administrator or CalMTA means a private contractor selected by the commission to coordinate the planning and execution of the states efforts to advance electricity and natural gas energy efficiency through long-term market transformation strategies.
(3)Market transformation means a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
(4)Resources acquisition means the generation of electricity or natural gas savings that are sufficiently reliable, predictable, and measurable to replace electricity or natural gas supplies in the utility energy resource planning process.
(b)(1)In carrying out its responsibilities to ensure that prudent investments in energy efficiency are made and produce cost-effective energy savings, reduce customer demand, and support the states greenhouse gas emissions reduction goals, the commission, on or before July 1, 2017, shall contract with an independent entity to serve as the California Market Transformation Administrator that will coordinate the planning and execution of the states efforts to advance energy efficiency through long-term market transformation strategies, as well as advise on and otherwise assist the commission with the coordination of demand-side energy management programs under the commissions jurisdiction.
(2)The initial CalMTA contract shall be for a period of not less than five years and may be terminated if the CalMTA fails to meet the performance benchmarks established in the contract.
(c)(1)An entity eligible to be a CalMTA shall have a mission that is fully aligned with promoting energy efficiency and conservation, including market transformation.
(2)The CalMTA shall carry out its marketing, education, and outreach-related energy efficiency market transformation and the coordination of demand-side energy management programs under the Energy Upgrade California brand name.
(d)The commission shall require the CalMTA, at a minimum, to do all of the following:
(1)Work in concert with other energy efficiency administrators carrying out energy efficiency activities under the commissions oversight to incorporate long-term market transformation strategies into the states portfolio.
(2)Create market conditions that will accelerate and sustain the market adoption of emerging energy efficiency products, services, and practices in California.
(3)Meet interim and long-term targets adopted by the commission related to the transformation of targeted markets, as well as provide a cost-effective portfolio of market transformation initiatives over the life of the contract.
(4)Submit to the commission quarterly reports detailing expenditures, and annual reports showing expenditures and progress towards commission-established interim and long-term targets.
(5)Contribute improved efficiencies in the delivery of ratepayer-funded energy efficiency activities in California by taking a statewide approach to defined markets targeted for transformation.
(6)Coordinate the planning for and execution of market transformation initiatives, as appropriate, with utility administered energy efficiency activities, other energy efficiency activities under the commissions jurisdiction, including, but not limited to, energy efficiency activities administered by community choice aggregators pursuant to Section 381.1, and low-income energy efficiency programs in California, including the rate-payer funded program required by Section 2790 and overseen by the commission, as well as the federal Low-Income Home Energy Assistance Program administered by the Department of Community Services and Development.
(7)Build upon the energy efficiency expertise and capabilities developed in the state, such as by providing flexibility for other energy efficiency administrators to carry out some of the market transformation activities identified by the CalMTA, so as to minimize confusion and leverage existing relationships between utilities, community choice aggregators, and other providers of energy efficiency services, and their customers.
(8)Work with the Energy Commission to encourage local publicly owned electric utilities to participate in the CalMTAs planning efforts and provide funding for and otherwise support the market transformation initiatives administered by the CalMTA to ensure statewide consistency and full market deployment.
(9)Collaborate with regional and national energy efficiency entities on market transformation efforts.
(e)The commission shall protect ratepayers from performance risks inherent in market transformation initiatives by, at a minimum, doing all of the following:
(1)Requiring a rigorous upfront vetting process for program concepts, to be conducted either by the commission as part of its oversight function or by the CalMTA. The CalMTA shall make a convincing case that each proposed market intervention would produce lasting energy efficiency benefits that would more than pay for the long-term costs of the market intervention.
(2)Balancing the level of ratepayer investment in market transformation initiatives against resources acquisition initiatives, such that:
(A)The budget for market transformation initiatives, including the budget to be managed by the CalMTA and the commissions costs associated with managing the contract with the CalMTA, is initially set by the commission at a level between 5 percent and 10 percent of the total budget for energy efficiency activities overseen by the commission, excluding low-income energy efficiency programs.
(B)The reasonableness of the initial funding level for market transformation initiatives is evaluated by the commission over the course of the initial contract term with the CalMTA and adjusted as the commission deems appropriate to support the objectives of this section.
(3)Continuously evaluating the market transformation initiatives administered by the CalMTA and focusing on whether the targeted markets are evolving in the manner intended, such that the initiatives can be corrected mid-course or abandoned, as necessary, to maximize long-term energy savings from the CalMTAs portfolio of initiatives.
(f)In implementing this section, the commission shall consult with the Energy Commission to ensure that functions carried out by the CalMTA are appropriately coordinated with the energy efficiency related activities conducted or overseen by the Energy Commission.
(g)The commission shall evaluate and adopt, as necessary, new criteria to support and accurately evaluate the benefits of market transformation.
(h)The commission, in consultation with the Energy Commission and the CalMTA, shall determine when and how to reflect potentially achievable cost-effective electricity and natural gas savings from energy efficiency market transformation initiatives in carrying out its obligations pursuant to Sections 454.55 and 454.56. In setting energy efficiency targets for electrical or gas corporations pursuant to Section 454.55 or 454.56, the commission shall consider whether energy savings expected to be delivered through market transformation initiatives administered by the CalMTA should be excluded from the targets established for the electrical or gas corporations.
SEC. 3.Section 399.6 is added to the Public Utilities Code, to read:399.6.(a)The commission shall consult with the CalMTA on how best to integrate demand-side energy management programs to support utility customers in making well-informed, cost-effective decisions about investment in onsite energy efficiency, demand response, and renewable distributed generation, as well as customer-sited energy storage systems, and to provide economic and organizational efficiencies in the administration and delivery of ratepayer-funded demand-side energy management programs in California.
(b)The commission shall consult with the CalMTA on how best to design and deploy demand-side energy management programs and encourage customer-sited energy storage systems so as to provide the most cost-effective environmental and economic benefits from an electric system planning and operation perspective.
(c)The commission shall include in the contract executed with a CalMTA pursuant to Section 399.5 the advisory functions specified in this section related to integrating demand-side energy management programs.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
All matter omitted in this version of the bill appears in the bill as introduced in the Senate, February 27, 2015. (JR11)(a)The Legislature finds and declares that a program to provide net energy metering combined with net surplus compensation, co-energy metering, and wind energy co-metering for eligible customer-generators is one way to encourage substantial private investment in renewable energy resources, stimulate in-state economic growth, reduce demand for electricity during peak consumption periods, help stabilize Californias energy supply infrastructure, enhance the continued diversification of Californias energy resource mix, reduce interconnection and administrative costs for electricity suppliers, and encourage conservation and efficiency.
(b)As used in this section, the following terms have the following meanings:
(1)Co-energy metering means a program that is the same in all other respects as a net energy metering program, except that the local publicly owned electric utility has elected to apply a generation-to-generation energy and time-of-use credit formula as provided in subdivision (i).
(2)Electrical cooperative means an electrical cooperative as defined in Section 2776.
(3)Electric utility means an electrical corporation, a local publicly owned electric utility, or an electrical cooperative, or any other entity, except an electric service provider, that offers electrical service. This section shall not apply to a local publicly owned electric utility that serves more than 750,000 customers and that also conveys water to its customers.
(4)(A)Eligible customer-generator means a residential customer, small commercial customer as defined in subdivision (h) of Section 331, or commercial, industrial, or agricultural customer of an electric utility, who uses a renewable electrical generation facility, or a combination of those facilities, with a total capacity of not more than one megawatt, that is located on the customers owned, leased, or rented premises, and is interconnected and operates in parallel with the electrical grid, and is intended primarily to offset part or all of the customers own electrical requirements.
(B)(i)Notwithstanding subparagraph (A), eligible customer-generator includes the Department of Corrections and Rehabilitation using a renewable electrical generation technology, or a combination of renewable electrical generation technologies, with a total capacity of not more than eight megawatts, that is located on the departments owned, leased, or rented premises, and is interconnected and operates in parallel with the electrical grid, and is intended primarily to offset part or all of the facilitys own electrical requirements. The amount of any wind generation exported to the electrical grid shall not exceed 1.35 megawatt at any time.
(ii)Notwithstanding any other law, an electrical corporation shall be afforded a prudent but necessary time, as determined by the executive director of the commission, to study the impacts of a request for interconnection of a renewable generator with a capacity of greater than one megawatt under this subparagraph. If the study reveals the need for upgrades to the transmission or distribution system arising solely from the interconnection, the electrical corporation shall be afforded the time necessary to complete those upgrades before the interconnection and those costs shall be borne by the customer-generator. Upgrade projects shall comply with applicable state and federal requirements, including requirements of the Federal Energy Regulatory Commission.
(5)Large electrical corporation means an electrical corporation with more than 100,000 service connections in California.
(6)Net energy metering means measuring the difference between the electricity supplied through the electrical grid and the electricity generated by an eligible customer-generator and fed back to the electrical grid over a 12-month period as described in subdivisions (c) and (h).
(7)Net surplus customer-generator means an eligible customer-generator that generates more electricity during a 12-month period than is supplied by the electric utility to the eligible customer-generator during the same 12-month period.
(8)Net surplus electricity means all electricity generated by an eligible customer-generator measured in kilowatthours over a 12-month period that exceeds the amount of electricity consumed by that eligible customer-generator.
(9)Net surplus electricity compensation means a per kilowatthour rate offered by the electric utility to the net surplus customer-generator for net surplus electricity that is set by the ratemaking authority pursuant to subdivision (h).
(10)Ratemaking authority means, for an electrical corporation, the commission, for an electrical cooperative, its ratesetting body selected by its shareholders or members, and for a local publicly owned electric utility, the local elected body responsible for setting the rates of the local publicly owned utility.
(11)Renewable electrical generation facility means a facility that generates electricity from a renewable source listed in paragraph (1) of subdivision (a) of Section 25741 of the Public Resources Code. A small hydroelectric generation facility is not an eligible renewable electrical generation facility if it will cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(12)Wind energy co-metering means any wind energy project greater than 50 kilowatts, but not exceeding one megawatt, where the difference between the electricity supplied through the electrical grid and the electricity generated by an eligible customer-generator and fed back to the electrical grid over a 12-month period is as described in subdivision (h). Wind energy co-metering shall be accomplished pursuant to Section 2827.8.
(c)(1)Except as provided in paragraph (4) and in Section 2827.1, every electric utility shall develop a standard contract or tariff providing for net energy metering, and shall make this standard contract or tariff available to eligible customer-generators, upon request, on a first-come-first-served basis until the time that the total rated generating capacity used by eligible customer-generators exceeds 5 percent of the electric utilitys aggregate customer peak demand. Net energy metering shall be accomplished using a single meter capable of registering the flow of electricity in two directions. An additional meter or meters to monitor the flow of electricity in each direction may be installed with the consent of the eligible customer-generator, at the expense of the electric utility, and the additional metering shall be used only to provide the information necessary to accurately bill or credit the eligible customer-generator pursuant to subdivision (h), or to collect generating system performance information for research purposes relative to a renewable electrical generation facility. If the existing electrical meter of an eligible customer-generator is not capable of measuring the flow of electricity in two directions, the eligible customer-generator shall be responsible for all expenses involved in purchasing and installing a meter that is able to measure electricity flow in two directions. If an additional meter or meters are installed, the net energy metering calculation shall yield a result identical to that of a single meter. An eligible customer-generator that is receiving service other than through the standard contract or tariff may elect to receive service through the standard contract or tariff until the electric utility reaches the generation limit set forth in this paragraph. Once the generation limit is reached, only eligible customer-generators that had previously elected to receive service pursuant to the standard contract or tariff have a right to continue to receive service pursuant to the standard contract or tariff. Eligibility for net energy metering does not limit an eligible customer-generators eligibility for any other rebate, incentive, or credit provided by the electric utility, or pursuant to any governmental program, including rebates and incentives provided pursuant to the California Solar Initiative.
(2)An electrical corporation shall include a provision in the net energy metering contract or tariff requiring that any customer with an existing electrical generating facility and meter who enters into a new net energy metering contract shall provide an inspection report to the electrical corporation, unless the electrical generating facility and meter have been installed or inspected within the previous three years. The inspection report shall be prepared by a California licensed contractor who is not the owner or operator of the facility and meter. A California licensed electrician shall perform the inspection of the electrical portion of the facility and meter.
(3)(A)On an annual basis, every electric utility shall make available to the ratemaking authority information on the total rated generating capacity used by eligible customer-generators that are customers of that provider in the providers service area and the net surplus electricity purchased by the electric utility pursuant to this section.
(B)An electric service provider operating pursuant to Section 394 shall make available to the ratemaking authority the information required by this paragraph for each eligible customer-generator that is their customer for each service area of an electrical corporation, local publicly owned electrical utility, or electrical cooperative, in which the eligible customer-generator has net energy metering.
(C)The ratemaking authority shall develop a process for making the information required by this paragraph available to electric utilities, and for using that information to determine when, pursuant to paragraphs (1) and (4), an electric utility is not obligated to provide net energy metering to additional eligible customer-generators in its service area.
(4)(A)An electric utility that is not a large electrical corporation is not obligated to provide net energy metering to additional eligible customer-generators in its service area when the combined total peak demand of all electricity used by eligible customer-generators served by all the electric utilities in that service area furnishing net energy metering to eligible customer-generators exceeds 5 percent of the aggregate customer peak demand of those electric utilities.
(B) The commission shall require every large electrical corporation to make the standard contract or tariff available to eligible customer-generators, continuously and without interruption, until such times as the large electrical corporation reaches its net energy metering program limit or July 1, 2017, whichever is earlier. A large electrical corporation reaches its program limit when the combined total peak demand of all electricity used by eligible customer-generators served by all the electric utilities in the large electrical corporations service area furnishing net energy metering to eligible customer-generators exceeds 5 percent of the aggregate customer peak demand of those electric utilities. For purposes of calculating a large electrical corporations program limit, aggregate customer peak demand means the highest sum of the noncoincident peak demands of all of the large electrical corporations customers that occurs in any calendar year. To determine the aggregate customer peak demand, every large electrical corporation shall use a uniform method approved by the commission. The program limit calculated pursuant to this paragraph shall not be less than the following:
(i)For San Diego Gas and Electric Company, when it has made 607 megawatts of nameplate generating capacity available to eligible customer-generators.
(ii)For Southern California Edison Company, when it has made 2,240 megawatts of nameplate generating capacity available to eligible customer-generators.
(iii)For Pacific Gas and Electric Company, when it has made 2,409 megawatts of nameplate generating capacity available to eligible customer-generators.
(C)Every large electrical corporation shall file a monthly report with the commission detailing the progress toward the net energy metering program limit established in subparagraph (B). The report shall include separate calculations on progress toward the limits based on operating solar energy systems, cumulative numbers of interconnection requests for net energy metering eligible systems, and any other criteria required by the commission.
(D)Beginning July 1, 2017, or upon reaching the net metering program limit of subparagraph (B), whichever is earlier, the obligation of a large electrical corporation to provide service pursuant to a standard contract or tariff shall be pursuant to Section 2827.1 and applicable state and federal requirements.
(d)Every electric utility shall make all necessary forms and contracts for net energy metering and net surplus electricity compensation service available for download from the Internet.
(e)(1)Every electric utility shall ensure that requests for establishment of net energy metering and net surplus electricity compensation are processed in a time period not exceeding that for similarly situated customers requesting new electric service, but not to exceed 30 working days from the date it receives a completed application form for net energy metering service or net surplus electricity compensation, including a signed interconnection agreement from an eligible customer-generator and the electric inspection clearance from the governmental authority having jurisdiction.
(2)Every electric utility shall ensure that requests for an interconnection agreement from an eligible customer-generator are processed in a time period not to exceed 30 working days from the date it receives a completed application form from the eligible customer-generator for an interconnection agreement.
(3)If an electric utility is unable to process a request within the allowable timeframe pursuant to paragraph (1) or (2), it shall notify the eligible customer-generator and the ratemaking authority of the reason for its inability to process the request and the expected completion date.
(f)(1)If a customer participates in direct transactions pursuant to paragraph (1) of subdivision (b) of Section 365, or Section 365.1, with an electric service provider that does not provide distribution service for the direct transactions, the electric utility that provides distribution service for the eligible customer-generator is not obligated to provide net energy metering or net surplus electricity compensation to the customer.
(2)If a customer participates in direct transactions pursuant to paragraph (1) of subdivision (b) of Section 365 or 365.1 with an electric service provider, and the customer is an eligible customer-generator, the electric utility that provides distribution service for the direct transactions may recover from the customers electric service provider the incremental costs of metering and billing service related to net energy metering and net surplus electricity compensation in an amount set by the ratemaking authority.
(g)Except for the time-variant kilowatthour pricing portion of any tariff adopted by the commission pursuant to paragraph (4) of subdivision (a) of Section 2851, each net energy metering contract or tariff shall be identical, with respect to rate structure, all retail rate components, and any monthly charges, to the contract or tariff to which the same customer would be assigned if the customer did not use a renewable electrical generation facility, except that eligible customer-generators shall not be assessed standby charges on the electrical generating capacity or the kilowatthour production of a renewable electrical generation facility. The charges for all retail rate components for eligible customer-generators shall be based exclusively on the customer-generators net kilowatthour consumption over a 12-month period, without regard to the eligible customer-generators choice as to from whom it purchases electricity that is not self-generated. Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or any other charge that would increase an eligible customer-generators costs beyond those of other customers who are not eligible customer-generators in the rate class to which the eligible customer-generator would otherwise be assigned if the customer did not own, lease, rent, or otherwise operate a renewable electrical generation facility is contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs.
(h)For eligible customer-generators, the net energy metering calculation shall be made by measuring the difference between the electricity supplied to the eligible customer-generator and the electricity generated by the eligible customer-generator and fed back to the electrical grid over a 12-month period. The following rules shall apply to the annualized net metering calculation:
(1)The eligible residential or small commercial customer-generator, at the end of each 12-month period following the date of final interconnection of the eligible customer-generators system with an electric utility, and at each anniversary date thereafter, shall be billed for electricity used during that 12-month period. The electric utility shall determine if the eligible residential or small commercial customer-generator was a net consumer or a net surplus customer-generator during that period.
(2)At the end of each 12-month period, where the electricity supplied during the period by the electric utility exceeds the electricity generated by the eligible residential or small commercial customer-generator during that same period, the eligible residential or small commercial customer-generator is a net electricity consumer and the electric utility shall be owed compensation for the eligible customer-generators net kilowatthour consumption over that 12-month period. The compensation owed for the eligible residential or small commercial customer-generators consumption shall be calculated as follows:
(A)For all eligible customer-generators taking service under contracts or tariffs employing baseline and over baseline rates, any net monthly consumption of electricity shall be calculated according to the terms of the contract or tariff to which the same customer would be assigned to, or be eligible for, if the customer was not an eligible customer-generator. If those same customer-generators are net generators over a billing period, the net kilowatthours generated shall be valued at the same price per kilowatthour as the electric utility would charge for the baseline quantity of electricity during that billing period, and if the number of kilowatthours generated exceeds the baseline quantity, the excess shall be valued at the same price per kilowatthour as the electric utility would charge for electricity over the baseline quantity during that billing period.
(B)For all eligible customer-generators taking service under contracts or tariffs employing time-of-use rates, any net monthly consumption of electricity shall be calculated according to the terms of the contract or tariff to which the same customer would be assigned, or be eligible for, if the customer was not an eligible customer-generator. When those same customer-generators are net generators during any discrete time-of-use period, the net kilowatthours produced shall be valued at the same price per kilowatthour as the electric utility would charge for retail kilowatthour sales during that same time-of-use period. If the eligible customer-generators time-of-use electrical meter is unable to measure the flow of electricity in two directions, paragraph (1) of subdivision (c) shall apply.
(C)For all eligible residential and small commercial customer-generators and for each billing period, the net balance of moneys owed to the electric utility for net consumption of electricity or credits owed to the eligible customer-generator for net generation of electricity shall be carried forward as a monetary value until the end of each 12-month period. For all eligible commercial, industrial, and agricultural customer-generators, the net balance of moneys owed shall be paid in accordance with the electric utilitys normal billing cycle, except that if the eligible commercial, industrial, or agricultural customer-generator is a net electricity producer over a normal billing cycle, any excess kilowatthours generated during the billing cycle shall be carried over to the following billing period as a monetary value, calculated according to the procedures set forth in this section, and appear as a credit on the eligible commercial, industrial, or agricultural customer-generators account, until the end of the annual period when paragraph (3) shall apply.
(3)At the end of each 12-month period, where the electricity generated by the eligible customer-generator during the 12-month period exceeds the electricity supplied by the electric utility during that same period, the eligible customer-generator is a net surplus customer-generator and the electric utility, upon an affirmative election by the net surplus customer-generator, shall either (A) provide net surplus electricity compensation for any net surplus electricity generated during the prior 12-month period, or (B) allow the net surplus customer-generator to apply the net surplus electricity as a credit for kilowatthours subsequently supplied by the electric utility to the net surplus customer-generator. For an eligible customer-generator that does not affirmatively elect to receive service pursuant to net surplus electricity compensation, the electric utility shall retain any excess kilowatthours generated during the prior 12-month period. The eligible customer-generator not affirmatively electing to receive service pursuant to net surplus electricity compensation shall not be owed any compensation for the net surplus electricity unless the electric utility enters into a purchase agreement with the eligible customer-generator for those excess kilowatthours. Every electric utility shall provide notice to eligible customer-generators that they are eligible to receive net surplus electricity compensation for net surplus electricity, that they must elect to receive net surplus electricity compensation, and that the 12-month period commences when the electric utility receives the eligible customer-generators election. For an electric utility that is an electrical corporation or electrical cooperative, the commission may adopt requirements for providing notice and the manner by which eligible customer-generators may elect to receive net surplus electricity compensation.
(4)(A)An eligible customer-generator with multiple meters may elect to aggregate the electrical load of the meters located on the property where the renewable electrical generation facility is located and on all property adjacent or contiguous to the property on which the renewable electrical generation facility is located, if those properties are solely owned, leased, or rented by the eligible customer-generator. If the eligible customer-generator elects to aggregate the electric load pursuant to this paragraph, the electric utility shall use the aggregated load for the purpose of determining whether an eligible customer-generator is a net consumer or a net surplus customer-generator during a 12-month period.
(B)If an eligible customer-generator chooses to aggregate pursuant to subparagraph (A), the eligible customer-generator shall be permanently ineligible to receive net surplus electricity compensation, and the electric utility shall retain any kilowatthours in excess of the eligible customer-generators aggregated electrical load generated during the 12-month period.
(C)
(B)If an eligible customer-generator with multiple meters elects to aggregate the electrical load of those meters pursuant to subparagraph (A), and different rate schedules are applicable to service at any of those meters, the electricity generated by the renewable electrical generation facility shall be allocated to each of the meters in proportion to the electrical load served by those meters. For example, if the eligible customer-generator receives electric service through three meters, two meters being at an agricultural rate that each provide service to 25 percent of the customers total load, and a third meter, at a commercial rate, that provides service to 50 percent of the customers total load, then 50 percent of the electrical generation of the eligible renewable generation facility shall be allocated to the third meter that provides service at the commercial rate and 25 percent of the generation shall be allocated to each of the two meters providing service at the agricultural rate. This proportionate allocation shall be computed each billing period.
(D)
(C)This paragraph shall not become operative for an electrical corporation unless the commission determines that allowing eligible customer-generators to aggregate their load from multiple meters will not result in an increase in the expected revenue obligations of customers who are not eligible customer-generators. The commission shall make this determination by September 30, 2013. In making this determination, the commission shall determine if there are any public purpose or other noncommodity charges that the eligible customer-generators would pay pursuant to the net energy metering program as it exists prior to aggregation, that the eligible customer-generator would not pay if permitted to aggregate the electrical load of multiple meters pursuant to this paragraph.
(E)
(D)A local publicly owned electric utility or electrical cooperative shall only allow eligible customer-generators to aggregate their load if the utilitys ratemaking authority determines that allowing eligible customer-generators to aggregate their load from multiple meters will not result in an increase in the expected revenue obligations of customers that are not eligible customer-generators. The ratemaking authority of a local publicly owned electric utility or electrical cooperative shall make this determination within 180 days of the first request made by an eligible customer-generator to aggregate their load. In making the determination, the ratemaking authority shall determine if there are any public purpose or other noncommodity charges that the eligible customer-generator would pay pursuant to the net energy metering or co-energy metering program of the utility as it exists prior to aggregation, that the eligible customer-generator would not pay if permitted to aggregate the electrical load of multiple meters pursuant to this paragraph. If the ratemaking authority determines that load aggregation will not cause an incremental rate impact on the utilitys customers that are not eligible customer-generators, the local publicly owned electric utility or electrical cooperative shall permit an eligible customer-generator to elect to aggregate the electrical load of multiple meters pursuant to this paragraph. The ratemaking authority may reconsider any determination made pursuant to this subparagraph in a subsequent public proceeding.
(F)
(E)For purposes of this paragraph, parcels that are divided by a street, highway, or public thoroughfare are considered contiguous, provided they are otherwise contiguous and under the same ownership.
(G)
(F)An eligible customer-generator may only elect to aggregate the electrical load of multiple meters if the renewable electrical generation facility, or a combination of those facilities, has a total generating capacity of not more than one megawatt.
(H)
(G)Notwithstanding subdivision (g), an eligible customer-generator electing to aggregate the electrical load of multiple meters pursuant to this subdivision shall remit service charges for the cost of providing billing services to the electric utility that provides service to the meters.
(5)(A)The ratemaking authority shall establish a net surplus electricity compensation valuation to compensate the net surplus customer-generator for the value of net surplus electricity generated by the net surplus customer-generator. The commission shall establish the valuation in a ratemaking proceeding. The ratemaking authority for a local publicly owned electric utility shall establish the valuation in a public proceeding. The net surplus electricity compensation valuation shall be established so as to provide the net surplus customer-generator just and reasonable compensation for the value of net surplus electricity, while leaving other ratepayers unaffected. The ratemaking authority shall determine whether the compensation will include, where appropriate justification exists, either or both of the following components:
(i)The value of the electricity itself.
(ii)The value of the renewable attributes of the electricity.
(B)In establishing the rate pursuant to subparagraph (A), the ratemaking authority shall ensure that the rate does not result in a shifting of costs between eligible customer-generators and other bundled service customers.
(6)(A)Upon adoption of the net surplus electricity compensation rate by the ratemaking authority, any renewable energy credit, as defined in Section 399.12, for net surplus electricity purchased by the electric utility shall belong to the electric utility. Any renewable energy credit associated with electricity generated by the eligible customer-generator that is utilized by the eligible customer-generator shall remain the property of the eligible customer-generator.
(B)Upon adoption of the net surplus electricity compensation rate by the ratemaking authority, the net surplus electricity purchased by the electric utility shall count toward the electric utilitys renewables portfolio standard annual procurement targets for the purposes of paragraph (1) of subdivision (b) of Section 399.15, or for a local publicly owned electric utility, the renewables portfolio standard annual procurement targets established pursuant to Section 399.30.
(7)The electric utility shall provide every eligible residential or small commercial customer-generator with net electricity consumption and net surplus electricity generation information with each regular bill. That information shall include the current monetary balance owed the electric utility for net electricity consumed, or the net surplus electricity generated, since the last 12-month period ended. Notwithstanding this subdivision, an electric utility shall permit that customer to pay monthly for net energy consumed.
(8)If an eligible residential or small commercial customer-generator terminates the customer relationship with the electric utility, the electric utility shall reconcile the eligible customer-generators consumption and production of electricity during any part of a 12-month period following the last reconciliation, according to the requirements set forth in this subdivision, except that those requirements shall apply only to the months since the most recent 12-month bill.
(9)If an electric service provider or electric utility providing net energy metering to a residential or small commercial customer-generator ceases providing that electric service to that customer during any 12-month period, and the customer-generator enters into a new net energy metering contract or tariff with a new electric service provider or electric utility, the 12-month period, with respect to that new electric service provider or electric utility, shall commence on the date on which the new electric service provider or electric utility first supplies electric service to the customer-generator.
(i)Notwithstanding any other provisions of this section, paragraphs (1), (2), and (3) shall apply to an eligible customer-generator with a capacity of more than 10 kilowatts, but not exceeding one megawatt, that receives electric service from a local publicly owned electric utility that has elected to utilize a co-energy metering program unless the local publicly owned electric utility chooses to provide service for eligible customer-generators with a capacity of more than 10 kilowatts in accordance with subdivisions (g) and (h):
(1)The eligible customer-generator shall be required to utilize a meter, or multiple meters, capable of separately measuring electricity flow in both directions. All meters shall provide time-of-use measurements of electricity flow, and the customer shall take service on a time-of-use rate schedule. If the existing meter of the eligible customer-generator is not a time-of-use meter or is not capable of measuring total flow of electricity in both directions, the eligible customer-generator shall be responsible for all expenses involved in purchasing and installing a meter that is both time-of-use and able to measure total electricity flow in both directions. This subdivision shall not restrict the ability of an eligible customer-generator to utilize any economic incentives provided by a governmental agency or an electric utility to reduce its costs for purchasing and installing a time-of-use meter.
(2)The consumption of electricity from the local publicly owned electric utility shall result in a cost to the eligible customer-generator to be priced in accordance with the standard rate charged to the eligible customer-generator in accordance with the rate structure to which the customer would be assigned if the customer did not use a renewable electrical generation facility. The generation of electricity provided to the local publicly owned electric utility shall result in a credit to the eligible customer-generator and shall be priced in accordance with the generation component, established under the applicable structure to which the customer would be assigned if the customer did not use a renewable electrical generation facility.
(3)All costs and credits shall be shown on the eligible customer-generators bill for each billing period. In any months in which the eligible customer-generator has been a net consumer of electricity calculated on the basis of value determined pursuant to paragraph (2), the customer-generator shall owe to the local publicly owned electric utility the balance of electricity costs and credits during that billing period. In any billing period in which the eligible customer-generator has been a net producer of electricity calculated on the basis of value determined pursuant to paragraph (2), the local publicly owned electric utility shall owe to the eligible customer-generator the balance of electricity costs and credits during that billing period. Any net credit to the eligible customer-generator of electricity costs may be carried forward to subsequent billing periods, provided that a local publicly owned electric utility may choose to carry the credit over as a kilowatthour credit consistent with the provisions of any applicable contract or tariff, including any differences attributable to the time of generation of the electricity. At the end of each 12-month period, the local publicly owned electric utility may reduce any net credit due to the eligible customer-generator to zero.
(j)A renewable electrical generation facility used by an eligible customer-generator shall meet all applicable safety and performance standards established by the National Electrical Code, the Institute of Electrical and Electronics Engineers, and accredited testing laboratories, including Underwriters Laboratories Incorporated and, where applicable, rules of the commission regarding safety and reliability. A customer-generator whose renewable electrical generation facility meets those standards and rules shall not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance.
(k)If the commission determines that there are cost or revenue obligations for an electrical corporation that may not be recovered from customer-generators acting pursuant to this section, those obligations shall remain within the customer class from which any shortfall occurred and shall not be shifted to any other customer class. Net energy metering and co-energy metering customers shall not be exempt from the public goods charges imposed pursuant to Article 7 (commencing with Section 381), Article 8 (commencing with Section 385), or Article 15 (commencing with Section 399) of Chapter 2.3 of Part 1.
(l)A net energy metering, co-energy metering, or wind energy co-metering customer shall reimburse the Department of Water Resources for all charges that would otherwise be imposed on the customer by the commission to recover bond-related costs pursuant to an agreement between the commission and the Department of Water Resources pursuant to Section 80110 of the Water Code, as well as the costs of the department equal to the share of the departments estimated net unavoidable power purchase contract costs attributable to the customer. The commission shall incorporate the determination into an existing proceeding before the commission, and shall ensure that the charges are nonbypassable. Until the commission has made a determination regarding the nonbypassable charges, net energy metering, co-energy metering, and wind energy co-metering shall continue under the same rules, procedures, terms, and conditions as were applicable on December 31, 2002.
(m)In implementing the requirements of subdivisions (k) and (l), an eligible customer-generator shall not be required to replace its existing meter except as set forth in paragraph (1) of subdivision (c), nor shall the electric utility require additional measurement of usage beyond that which is necessary for customers in the same rate class as the eligible customer-generator.
(n)It is the intent of the Legislature that the Treasurer incorporate net energy metering, including net surplus electricity compensation, co-energy metering, and wind energy co-metering projects undertaken pursuant to this section as sustainable building methods or distributive energy technologies for purposes of evaluating low-income housing projects.
|
Date
|
Status
|
|---|---|
| Jun 2, 2015 | Read second time and amended. Ordered to third reading. |
| Aug 27, 2015 | Joint Rule 62(a) suspended. |
| Aug 27, 2015 | August 27 hearing: Held in committee and under submission. |
| Aug 26, 2015 | August 26 set for first hearing. Placed on APPR. suspense file. |
| Aug 18, 2015 | Read second time and amended. Re-referred to Com. on APPR. |
| Aug 17, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 5.) (July 13). |
| Aug 17, 2015 | (Received at desk July 17 pursuant to JR 61(a)(10)) |
| Jul 7, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on U. & C. |
| Jun 18, 2015 | Referred to Com. on U. & C. |
| Jun 4, 2015 | In Assembly. Read first time. Held at Desk. |
| Jun 3, 2015 | Read third time. Passed. (Ayes 23. Noes 17.) Ordered to the Assembly. |
| Jun 3, 2015 | Read third time. Passed. (Ayes 23. Noes 17. Page 1307.) Ordered to the Assembly. |
| Feb 27, 2015 | Introduced. To Com. on RLS. for assignment. To print. |
| Jun 1, 2015 | From committee: Do pass as amended. (Ayes 5. Noes 2.) (May 28). |
| Jun 1, 2015 | From committee: Do pass as amended. (Ayes 5. Noes 2. Page 1160.) (May 28). |
| May 23, 2015 | Set for hearing May 28. |
| May 4, 2015 | May 4 hearing: Placed on APPR. suspense file. |
| Apr 24, 2015 | Set for hearing May 4. |
| Apr 21, 2015 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 2. Page 724.) (April 21). Re-referred to Com. on APPR. |
| Apr 6, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U., & C. |
| Mar 24, 2015 | Set for hearing April 21. |
| Mar 19, 2015 | Referred to Com. on E., U., & C. |
| Mar 2, 2015 | Read first time. |
| Mar 2, 2015 | From printer. May be acted upon on or after April 1. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jul 13, 2015 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Utilities and Commerce |
Passed |
|
| Jun 3, 2015 | Senate 3rd Reading SB765 Wolk | Senate Floor |
Passed |
|
| May 28, 2015 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| May 4, 2015 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 21, 2015 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| American Planning Association | * Against Unless Amend | Jun 27, 2018 |
| American Planning Association | * Against | Jun 27, 2018 |
| BRIDGE Housing | * Support | Jun 27, 2018 |
| BRIDGE Housing | * Support | Jun 27, 2018 |
| California Apartment Association | * Support | Jun 27, 2018 |
| California Business Properties Association | * Support | Jun 27, 2018 |
| California Environmental Justice Alliance | * Indeterminate | Jul 13, 2015 |
| California Environmental Justice Alliance | * Support | Jul 13, 2015 |
| California Housing Consortium | * Neutral | Jun 27, 2018 |
| California Rural Legal Assistance Foundation | * Against Unless Amend | Jun 27, 2018 |
| California Rural Legal Assistance Foundation | * Against Unless Amend | Jun 27, 2018 |
| California State ASsociaiton of Counties | * Against Unless Amend | Jun 27, 2018 |
| Center for Sustainable Energy | * Indeterminate | Jul 13, 2015 |
| Center for Sustainable Energy | * Support | Jul 13, 2015 |
| Environment California | * Support | Jul 13, 2015 |
| Environment California | * Indeterminate | Jul 13, 2015 |
| Estate Building and Construction Trades Council | * Support | Jun 27, 2018 |
| Housing California | * Neutral | Jun 27, 2018 |
| League Of California Cities | * Against Unless Amend | Jun 27, 2018 |
| Natural Resources Defense Counsel | ** Against | Jul 13, 2015 |
| Office of Ratepayer Advocates | ** Support | Jul 13, 2015 |
| Public Advocates | * Against Unless Amend | Jun 27, 2018 |
| Rural County Represenatatives of California | * Against Unless Amend | Jun 27, 2018 |
| Rural County Represenatatives of California | * Against | Jun 27, 2018 |
| San Diego Gas and Electric | ** Against | Jul 13, 2015 |
| Sierra Club | * Indeterminate | Jul 13, 2015 |
| Sierra Club California | * Support | Jul 13, 2015 |
| Southern California Edison | ** Against | Jul 13, 2015 |
| Southern California Gas Company | ** Against | Jul 13, 2015 |
| State Building and Construction Trades Council | * Support | Jun 27, 2018 |
| The Greenlining Institute | ** Support | Jul 13, 2015 |
| The Urban Counties of California | * Against | Jun 27, 2018 |
| The Utility Reform Network | * Support | Jul 13, 2015 |
| The Utility Reform Network | * Indeterminate | Jul 13, 2015 |
| The Western Center on Law and Poverty | * Against Unless Amend | Jun 27, 2018 |
| U. & C. | ** Against | Jul 13, 2015 |
| Urban Counties of California | * Against | Jun 27, 2018 |
| Western Center On Law And Poverty Inc. | * Neutral | Jun 27, 2018 |
Date of Hearing: August 26, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 765
(Wolk) – As Amended August 18, 2015
Policy Committee: |
Utilities and Commerce |
Vote: |
8 - 5 |
|
|
|
|
|
|
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill requires the California Public Utilities Commission (PUC) to contract with an independent entity, to be known as the California Market Transformation Administrator (CalMTA), to coordinate the state’s energy efficiency market transformation activities.
FISCAL EFFECT:
Cost pressures, likely between $50 million and $100 million (Public Utilities Reimbursement Account) to fund the program.
Increased annual PUC administrative costs of approximately $500,000 to $1 million (Public Utilities Reimbursement Account).
COMMENTS:
Purpose. According to the author, the CalMTA will be responsible for planning, coordinating and managing the execution of statewide energy efficiency market transformation initiatives subject to PUC oversight. Its creation positions California to unlock deeper, cost-effective energy savings that are necessary to realize Governor Brown’s goal to double energy efficiency savings by 2030.
Background. The PUC authorizes the collection of ratepayer funds at about $1 billion per year to support programs to increase energy efficiency in California. Financial incentives include loans and rebates for installing energy efficient appliances, lighting, windows, heating, ventilation, and air conditioning (HVAC) systems, whole-house retrofits, marketing and education programs, and specialized programs aimed at benefiting a variety of sectors.
In 2007, the PUC adopted the Big Bold Energy Efficiency Strategies (BBEES) to accelerate market transformation toward greater adoption of energy efficiency. The goals of the strategies include: (1) all new residential construction will be Zero Net Energy (ZNE) by 2020, (2) all new commercial construction will be ZNE by 2030, (3) the HVAC industry will be re-shaped to deliver maximum system performance by 2020, and (4) all eligible low-income customers will have an opportunity to participate in the Energy Savings Assistance Program and will be provided with cost effective energy efficiency measures in their homes by 2020.
In 2008, the PUC adopted a California Energy Efficiency Long-Term Strategic Plan to maximize cost effective energy efficiency in California’s electricity and natural gas sectors. According to the PUC, the unifying objective of the Strategic Plan was to compel sustained market transformation to move California toward long-term, deeper savings achievable only through high-impact programs.
The PUC 2010-2012 energy efficiency portfolio included several new market transformation programs: Energy Upgrade California, HVAC quality installation and maintenance, Lighting Market Transformation, and Integrated Demand-side Management, among others.
In the PUC decision authorizing the 2013-2014 energy efficiency programs, the PUC directed the IOUs to establish a new statewide lighting program and subsume the current statewide Lighting Market Transformation program as a subprogram within it.
The PUC is likely able to contract with a third-party and establish this program within its existing authority.
Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081
SB 765
Page 10
Date of Hearing:
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
SB 765
(Wolk) – As Amended July 7, 2015
SENATE VOTE: 23-17
SUBJECT: Energy: California Market Transformation Administrator.
SUMMARY: This bill requires the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator (CalMTA), to coordinate the state’s energy efficiency market transformation activities.
Specifically, this bill:
Defines “market transformation” as a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
Requires the CPUC, by July 1, 2017, to contract with an independent entity to serve as the CalMTA, pursuant to a contract of at least five years, to coordinate planning and execution of the state’s energy efficiency efforts through long-term market transformation strategies.
States that an entity eligible to be a CalMTA shall have a mission that is fully aligned with promoting energy efficiency and conservation, including market transformation and the marketing, education, and outreach plans for the CalMTA’s market transformation initiatives shall be developed and implemented as part of the Energy Upgrade California statewide marketing, education, and outreach efforts, where practical.
States that the CalMTC shall work with other energy efficiency administrators to incorporate long-term market transformation strategies; create market conditions that will accelerate and sustain the market adoption of emerging energy efficiency products, services and practices in California; meet interim and long-term targets related to the transformation of targeted markets; and provide a cost-effective portfolio of market transformation initiatives over the life of the contract.
Sets the budget for market transformation activities – including CalMTA’s budget and the CPUC’s costs to manage the contract with CalMTA – at no more than 10% of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs.
Requires CalMTA to meet interim and long-term targets set by the CPUC, and to submit quarterly expense reports and annual progress reports.
Requires the CPUC to consider whether energy savings expected to be delivered through CalMTA market transformation initiatives should be excluded from the targets established by the CPUC for investor-owned utilities (IOUs).
EXISTING LAW: Requires the CPUC to identify all potentially achievable cost-effective electricity and natural gas efficiency savings and to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. (Public Utilities Code Section 454.55 and 454.56.)
FISCAL EFFECT:
According to the Senate Appropriations Committee:
Annual costs of up to $730,000 to the Public Utilities Reimbursement Account for additional workload at the CPUC to oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy Resources Program Account to coordinate with the CPUC on market transformation activities.
COMMENTS:
Author's Statement: "SB 765 requires the California Public Utilities Commission to create an independent entity, to be known as the California Market Transformation Administrator (or CalMTA), to coordinate the state’s energy efficiency market-transformation activities.
"Studies have shown that California has not successfully utilized energy efficiency market transformation as a tool to realize deeper cuts in our energy demand. A reason for this could rest with the fact that the IOUs are either too large and, therefore, they are too slow to adapt to fast moving innovative markets. Or they face pressure from their shareholders to produce short-term profits, which is incompatible with investing in long-term market transformation. However, SB 765 does not take away administration of energy efficiency programs from the IOUs. It seeks to build upon and work with existing IOU energy efficiency programs."
"This new standalone entity, the CalMTA, will be responsible for planning, coordinating and managing the execution of statewide energy efficiency market transformation initiatives subject to PUC oversight. Its creation positions California to unlock deeper, cost-effective energy savings that are necessary to realize Governor Brown’s goal to double energy efficiency savings by 2030."
Ratepayer funded energy efficiency programs: The CPUC authorizes collections of ratepayer funds at about $1 billion per year to support programs to increase energy efficiency in California. These programs include a portfolio of financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, heating, ventilation, and air conditioning (HVAC) systems, whole-house retrofits, marketing and education programs, and specialized programs aimed at benefiting a variety of sectors.
What is Market Transformation? According to SB 765, defines market transformation as a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
A recent consultant paper published by the CPUC suggests market transformation is intervention strategies aimed at long-term transformation of narrowly defined technology markets. As written, SB 765 is more expansive than the CPUC paper's definition.
The idea of market transformation is that it will result in structural changes in the market that leads to long-term savings and that those savings are achieved by mobilizing the market. The CPUC also notes that market transformation is not policy objective because all markets are not in need of, or susceptible to being transformed.
The CPUC notes that while market transformation could lead to savings, it is fundamentally risky. The CPUC suggests that to manage those risks there must be continuous evaluation to decide whether to maintain course, alter direction, or abandon the effort. It also requires that risks be allocated rationally across stakeholders.
Examples of market transformation suggested in the CPUC's paper are: changes in lighting retailer stocking practices, an increase in the number of contractors catering to the multifamily sector, changes in the specification practices of engineers, changes in the views of financial entities regarding the viability of targeting loans for energy efficiency measures.
The CPUC's paper also identified several successful market transformation programs in California and one outside of California, including:
Current program administrators worked with manufacturers of commercial-size transformers to improve their efficiency. Utilities worked with the manufacturers to encourage them to be the first to claim their niche as energy efficiency products. Copper mining interests marketed the concept because these efficient transformers use more copper.
Current program administrators worked to develop a voluntary national standard to increase the energy efficiency of computer power supplies because once it became a standard, 60% to 80% of the market would follow.
An alliance of more than 140 Northwest utilities and energy efficiency organizations in the Pacific Northwest worked with window manufacturers to promote a voluntary national standard. The program used fact sheets, press releases, brochures, and sales team kits. According to this organization, after 2001, the program ended because savings continued to accumulate without further intervention or cost.
The author may wish to consider an amendment to narrow the definition of market transformation, include a definition for energy efficiency, and clarify the definition for resources acquisition.
History of CPUC Market Transformation: The CPUC already funds a number of market transformation programs within the existing energy efficiency programs:
In 2007, the CPUC adopted the Big Bold Energy Efficiency Strategies (BBEES), programmatic initiatives to accelerate market transformation toward greater adoption of energy efficiency. They are (1) all new residential construction will be Zero Net Energy (ZNE) by 2020, (2) all new commercial construction will be ZNE by 2030, (3) the HVAC industry will be re-shaped to deliver maximum system performance by 2020, and (4) all eligible low-income customers will have an opportunity to participate in the Energy Savings Assistance Program and will be provided all cost effective energy efficiency measures in their homes by 2020.
In 2008, the CPUC adopted a California Energy Efficiency Long-Term Strategic Plan to maximize achievement of cost effective energy efficiency in California’s electricity and natural gas sectors between 2009 and 2020, and beyond. According to the CPUC, the unifying objective of the Strategic Plan was to compel sustained market transformation to move California toward long-term, deeper savings achievable only through high-impact programs.
The CPUC 2010-2012 energy efficiency portfolio included several new “market transformation” programs: Energy Upgrade California, HVAC quality installation and maintenance, Lighting Market Transformation, and Integrated Demand-side Management, among others.
In the CPUC decision authorizing the 2013-2014 energy efficiency programs, the CPUC directed the IOUs to establish a new statewide lighting program and subsume the current statewide Lighting Market Transformation program as a subprogram within it.
The author may wish to require the CPUC consolidate all of its marketing transformation activities into a single program so that it is clear what is and what is not within this program, how much ratepayer funding has already been allocated in this area, and whether the programs are delivering results.
In addition, the author may wish to consider striking paragraphs (C) and (D) in section 399(f)(1) of the bill.
Market Transformation Administrator: SB 765 allocates up to 10%, or $100 million a year for 5 years to the CalMTA, for a total of up to $500 million. Since the CalMTA does not yet exist, the contract would also include creating the CalMTA. It is unclear whether a single entity responsible for market transformation will be any more or less effective than the CPUC's current market transformation activities. The CPUC currently has authority to authorize contracts for consultant services. If the CPUC believes it needs additional authority to award contracts, it can propose a change in statute or submit a budget change proposal through the normal administration process.
In 2005, the CPUC considered a variety of program administration methods for its energy efficiency programs. At the time, TURN and ORA together proposed an independent administrator. The CPUC noted that:
"While the Commission can and does exercise control of contractors by defining the terms and scope of work, entities that sign contracts with the Commission do not by that fact alone become subject to the Commission’s regulatory jurisdiction. In fact, according to the presumed contract terms under the TURN/ORA Coalition proposal, the only expedient remedy for unsatisfactory performance is the termination of the program administrator’s contract. Any other remedy could require us to litigate the matter in Superior Court, which is time consuming, expensive and uncertain, and less satisfactory than direct regulation. In either case, we would be forced to assign an interim administrator, a scenario that could be highly disruptive and costly."
Regarding CPUC contract management, the CPUC also said:
"Effective staff contract management requires that the contract manager review monthly invoices to ensure that expenses are reasonable and within the approved scope of work, prior to authorizing payments. Requiring our Energy Division staff to extend this type of contract management to a program administrator (or multiple administrators) responsible for an annual budget of over $400 million raises the same issues of resource allocation we discussed earlier. The required level of fiscal control and the business systems needed to support that control are complex and expensive. As ICF Associates points out, there are few, if any, existing non-IOU organizations with an understanding of the energy efficiency business that have managed anywhere near that level of funding. Even if organizations responding to the RFP for program administrators demonstrated the required level of fiscal control and business systems, we are skeptical that they could accomplish these functions with a total staffing of 25."
And:
"In sum, even if we desired to pursue a model that transfers funds from the IOUs to an outside entity, we would first need to seek legislation similar to the provisions that authorize the transfer of telecommunication public purpose funds to treasury accounts, or PGC funds to the CEC treasury accounts. This would delay our ability to move forward with a permanent administrative structure for energy efficiency until the Legislature (and Governor) enacted a statute. Moreover, the outcome of that process would be highly uncertain. We note that once those funds are in the state treasury, then state contracting rules apply."
The concerns raised by the CPUC then would apply equally to the independent administrator proposed by this bill. In addition, recent revelations regarding multiple sole source contracts issued by the CPUC for legal services causes concern, one of which was originally awarded for $49,000 and later amended to become a $5.2 million contract.
The author may wish to consider striking the language in the bill that would establish a Market Transformation Administrator.
CalMTA consulting and advisory provisions: The language in Section 399.6 suggests that the CPUC is to consult with the CalMTA on demand side management programs. It is unclear why the CPUC should consult with an unknown organization or how this consultation would be considered if it occurred outside of a CPUC proceeding or how such consultation would be included in the record of a proceeding. In addition, it is unclear whether the CalMTA would be subject to open meeting, transparency, public records requirements that the CPUC must comply with. Further, it is unclear whether this organization currently exists, and it would be important to understand who this organization is in order to better understand whether there are any potential conflicts of interest, particularly if it is already under contract to perform similar services. In addition, as noted in this analysis, the CPUC has already established an advisory committee so it is unclear why the CPUC would need an additional advisory committee or more than one advisory committee.
The author may wish to consider striking section 399.6 from the bill.
Proposed amendments:
399. (f)(1) (C) The existing energy efficiency portfolio
overseen by the commission focuses on energy efficiency resource
acquisition.
(D) The creation of a single entity with responsibility
for planning, coordinating, and managing the execution of statewide
energy efficiency market transformation initiatives in concert with
other state energy efficiency activities, subject to the commission’s
oversight and that carries out its duties in consultation with the
Energy Commission and all interested local publicly owned electric
utilities, would assist the state in advancing its energy efficiency
and greenhouse gas reduction goals without increasing the overall
funding for the energy efficiency portfolio overseen by the
commission.
Insert the following in 399.5(a)
As used in this section, energy efficiency means delivering equal or more services with less energy input from an energy source.
399.5(a)(3) “Market transformation” means a
strategic process to intervene in a market to create lasting change
in market behavior by removing identified barriers or exploiting
opportunities to accelerate the adoption of all cost-effective energy
efficiency as a matter of standard practice. targeted
intervention strategies that induce sustained adoption and market
penetration of energy efficient technologies and practices through
structural changes in the market and in behaviors of market actors
such that government intervention is no longer necessary, with few or
no monetary inducements,
(4) “Resources acquisition” means the generation
of electricity or natural gas savings that are sufficiently reliable,
predictable, and measurable to replace electricity
electric generation or natural gas supplies in the utility
energy resource planning process.
399.5 (2) “California Market Transformation
Administrator” or “CalMTA” means a private contractor selected
by the commission to coordinate the planning and execution of the
state’s efforts to advance electricity and natural gas energy
efficiency through long-term market transformation strategies.
399.5 (b) (1) In carrying out its responsibilities
to ensure that prudent investments in energy efficiency are made and
produce cost-effective energy savings, reduce customer demand, and
support the state’s greenhouse gas emissions reduction goals, the
commission, on or before July 1, 2017, shall contract with an
independent entity to serve as the California Market Transformation
Administrator that will coordinate the planning and execution of the
state’s efforts to advance energy efficiency through long-term
market transformation strategies, as well as advise on and otherwise
assist the commission with the coordination of demand-side energy
management programs under the commission’s jurisdiction.
(2) The initial CalMTA contract shall be for a period of
not less than five years and may be terminated if the CalMTA fails to
meet the performance benchmarks established in the contract.
(c) (1) An entity eligible to be a CalMTA shall
have a mission that is fully aligned with promoting energy efficiency
and conservation, including market transformation.
(2) The marketing, education, and outreach plans for the
CalMTA’s market transformation initiatives shall be developed and
implemented as part of the Energy Upgrade California statewide
marketing, education, and outreach efforts, where practical.
(d) The commission shall require the CalMTA, at a
minimum, to do all of the following:
(1) Work in concert with other energy efficiency
administrators carrying out energy efficiency activities under the
commission’s oversight to incorporate long-term market
transformation strategies into the state’s portfolio.
The commission shall modify the existing energy efficiency program to incorporate a portfolio of long-term market transformation initiatives on a statewide basis, and ensure that this portfolio will achieve the following without increasing the overall funding for the energy efficiency program:
(2) Create (1) Market conditions that
will accelerate and sustain the market adoption of emerging energy
efficiency products, services, and practices in California.
(3) (2) Meet interim and long-term targets
adopted by the commission related to the transformation of targeted
markets, as well as provide a cost-effective portfolio of market
transformation initiatives over the life of the contract.
(4) Submit to the commission quarterly reports detailing
expenditures and annual reports showing expenditures and progress
towards commission-established interim and long-term targets.
(5) (3) Contribute improved efficiencies
in the delivery of ratepayer-funded energy efficiency activities in
California by taking a statewide approach to defined markets targeted
for transformation.
(6) (4) Coordinate the planning for and
execution of market transformation initiatives, as appropriate, with
utility administered energy efficiency activities,
other energy efficiency activities under the commission’s
jurisdiction, including, but not limited to, energy efficiency
activities administered by community choice aggregators pursuant to
Section 381.1, and low-income energy efficiency programs in
California, including the rate-payer funded program required by
Section 2790 and overseen by the commission, as well as the federal
Low-Income Home Energy Assistance Program administered by the
Department of Community Services and Development.
(7) Build upon the energy efficiency expertise and
capabilities developed in the state, such as by providing flexibility
for other energy efficiency administrators to carry out some of the
market transformation activities identified by the CalMTA, so as to
minimize confusion and leverage existing relationships between
utilities, community choice aggregators, and other providers of
energy efficiency services, and their customers.
(8) (5) Encourage local publicly owned
electric utilities to voluntarily participate in the
CalMTA’s planning efforts and otherwise support the market
transformation initiatives administered by the CalMTA
authorized by the commission to ensure statewide consistency and full
market deployment.
(9) (6) Collaborate, as necessary,
with regional and national energy efficiency entities on market
transformation efforts.
(e) (c) The commission shall protect
ratepayers from performance risks inherent in market transformation
initiatives by, at a minimum, doing all of the following:
(1) Requiring a rigorous upfront vetting process for program
concepts, to be conducted either by the commission as part of
its oversight function or by the CalMTA. The CalMTA shall
make a convincing case to ensure that each
proposed market intervention would produce lasting energy efficiency
benefits that would more than pay for the long-term costs of the
market intervention.
(2) Balancing the level of ratepayer investment in
market transformation initiatives against resources acquisition
initiatives, such that:
(A) The budget for market transformation initiatives,
including the budget to be managed by the CalMTA and the commission’s
costs associated with managing the contract with the CalMTA, is
initially set by the commission at a level not more than 10 percent
of the total budget for energy efficiency activities overseen by the
commission, excluding low-income energy efficiency programs.
(B) The reasonableness of the initial funding level for
market transformation initiatives is evaluated by the commission over
the course of the initial contract term with the CalMTA and adjusted
as the commission deems appropriate to support the objectives of this
section.
(3) Continuously evaluating the market transformation
initiatives administered by the CalMTA and focusing
on whether the targeted markets are evolving in the manner intended,
such that the initiatives can be corrected mid-course or abandoned,
as necessary, to maximize long-term energy savings from the
CalMTA’s portfolio of initiatives.
(f) (e) In implementing this section,
the commission shall consult with the Energy Commission to ensure
that functions carried out by the CalMTA are
appropriately coordinated with the energy efficiency related
activities conducted or overseen by the Energy Commission.
(g) (f) The commission shall evaluate
and adopt, as necessary, new criteria to support and accurately
evaluate the benefits of market transformation.
(h) The commission, in consultation with the Energy
Commission and the CalMTA, shall determine when and how to reflect
potentially achievable cost-effective electricity and natural gas
savings from energy efficiency market transformation initiatives in
carrying out its obligations pursuant to Sections 454.55 and 454.56.
In setting energy efficiency targets for electrical or gas
corporations pursuant to Section 454.55 or 454.56, the commission
shall consider whether energy savings expected to be delivered
through market transformation initiatives administered by the CalMTA
should be excluded from the targets established for the electrical or
gas corporations.
Section 399.6 is added to the Public Utilities Code, to read:
399.6. (a) The commission
shall consult with the CalMTA on how best to integrate demand-side
energy management programs to support utility customers in making
well-informed, cost-effective decisions about investment in onsite
energy efficiency, demand response, and renewable distributed
generation, as well as customer-sited energy storage systems, and to
provide economic and organizational efficiencies in the
administration and delivery of ratepayer-funded demand-side energy
management programs in California.
(b) The commission shall consult with the CalMTA on how
best to design and deploy demand-side energy management programs and
encourage customer-sited energy storage systems so as to provide the
most cost-effective environmental and economic benefits from an
electric system planning and operation perspective.
(c) The commission shall include in the contract
executed with a CalMTA pursuant to Section 399.5 the advisory
functions specified in this section related to integrating
demand-side energy management programs.
Related Legislation:
AB 793 (Quirk): This bill requires that weatherization programs for low-income customers, administered by electrical and gas corporations, include home energy management technology and education programs on how to use advanced meters.
AB 1013 (Quirk): This bill would make various changes in statutes related to the CEC building energy efficiency standards.
AB 1094 (Williams): This bill requires the CEC, in collaboration with the CPUC, to set greenhouse gas reduction targets for plug-in equipment based on analysis of plug-in equipment energy consumption.
AB 1150 (Levine): This bill expands the existing Energy Efficiency Partnership Program between the University of California and IOUs to include POUs that are willing to participate in the program.
AB 1330 (Bloom): This bill establishes an annual energy efficiency resource standard.
AB 802 (Williams): This bill requires the CPUC to authorize electrical corporations to administer a program for improving existing building energy efficiency.
Support and Opposition:
Supporters state SB 765:
Removes identified market barriers or exploiting opportunities to accelerate the adoption and penetration of energy-efficient technologies and actions,
Address the lack of focus from the state on recognizing market transformations as an energy efficiency strategy,
Supports California’s goal of increasing our reliance on energy efficiency, and create an important tool for addressing greenhouse gas emissions in the energy sector, and
Makes energy efficiency measures more accessible and more affordable to low- and moderate-income families.
Opponents state SB 286:
May have unintended consequences of being disruptive, cause market confusion and lead to short-term losses of valuable energy efficiency gains,
Disrupts California’s current efforts at market transformation, which are proven and successful,
Creates a statewide program paid for only by IOU customers, raising significant equity concerns,
Market transformation is inherently difficult to define, the CPUC should have discretion over contracting (single vs. multiple), do not require the CPUC to contract to provide advisory services on integrating demand-side programs, and
An independent entity does not guarantee market transformation will happen.
REGISTERED SUPPORT / OPPOSITION:
Support
The Utility Reform Network (sponsor)
California Environmental Justice Alliance
Center for Sustainable Energy
Environment California
Office of Ratepayer Advocates
Sierra Club California
The Greenlining Institute
Opposition
Natural Resources Defense Counsel (unless amended)
Pacific Gas and Electric Company
San Diego Gas and Electric
Southern California Edison
Southern California Gas Company
Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083
SB 765
Page 4
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 765
Amended: 6/2/15
SENATE ENERGY, U. & C. COMMITTEE: 8-2, 4/21/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk
NOES: Cannella, Morrell
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Energy: California Market Transformation Administrator
SOURCE: The Utility Reform Network
DIGEST: This bill requires the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator (CalMTA), to coordinate the state’s energy efficiency market-transformation activities.
ANALYSIS: Existing law requires the CPUC to identify all potentially achievable cost-effective electricity and natural gas efficiency savings and to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. (Public Utilities Code §§ 454.55 and 454.56.)
This bill:
Defines “market transformation” as a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
Requires the CPUC, by July 1, 2017, to contract with an independent entity to serve as the CalMTA, pursuant to a contract of at least five years, to coordinate planning and execution of the state’s energy efficiency efforts through long-term market transformation strategies.
Sets the budget for market transformation activities – including CalMTA’s budget and the CPUC’s costs to manage the contract with CalMTA – at no more than 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs.
Requires CalMTA to meet interim and long-term targets set by the CPUC and to submit quarterly expense reports and annual progress reports.
Directs CalMTA to work with the California Energy Commission to encourage local publicly-owned electric utilities to participate in the CalMTA’s planning efforts and provide funding and support for CalMTA’s market transformation initiatives.
Requires the CPUC to consider whether energy savings expected to be delivered through CalMTA market transformation initiatives should be excluded from the targets established by the CPUC for investor-owned utilities (IOUs).
Background
Energy Efficiency Programs. California’s IOUs administer energy efficiency programs with ratepayer funds approved by the CPUC. Currently funded at about $1 billion per year, the programs include a portfolio of financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, HVAC [heating, ventilation, and air conditioning] systems, whole-house retrofits, and specialized programs aimed at a variety of sectors.
This bill follows a white paper by consultants to the Energy Division of the CPUC on energy efficiency market transformation. [Building a Policy Framework to Support Energy Efficiency Market Transformation in California, Ralph Prahl and Ken Keating, December 2014.] That work notes that CPUC energy efficiency programs oftentimes have as an end goal “market transformation,” meaning long-lasting, sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where continuation of the same publicly-funded intervention is no longer appropriate in that specific market. The paper notes that energy efficiency programs often pursue the end goal of market transformation through the use of resource acquisition, such as the offering of rebates.
However, the paper contends that resource acquisition and market transformation are oftentimes incompatible. This is because resource acquisition programs tend to focus on relatively certain near-term savings, whereas market transformation is risky and slow to be realized. Bureaucratic and market incentives therefore too often focus on resource acquisition to the detriment of market transformation.
The paper recasts market transformation from an end goal to a tool or strategy, rather than simply an end goal. The concept behind SB 765, and most of its particulars, flows directly from the white paper.
Recent Amendments. The Senate Appropriations Committee amended this bill to change the funding parameters of the CalMTA program. Previously, this bill directed CPUC to fund the program at between five percent and 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs. The amendments, in contrast, direct the CPUC to fund the program at no more than 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
Annual costs of up to $730,000 to the Public Utilities Reimbursement Account (special) for additional workload at the CPUC to oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy Resources Program Account (General Fund) to coordinate with the CPUC on market transformation activities.
The Utility Reform Network (source)
Center for Sustainable Energy
Office of Ratepayer Advocates
Sierra Club California
The Greenlining Institute
Pacific Gas and Electric Company
San Diego Gas and Electric
Southern California Edison
Southern California Gas Company
ARGUMENTS IN SUPPORT: According to the author, market transformation and resource acquisition are two separate energy efficiency tools with differing applicability. The energy efficiency programs overseen by the CPUC should be administered accordingly. Further, the most-successful models of energy efficiency programs that distinguish between market transformation and resource acquisition rely on third-party market transformation administrators. The CPUC should follow this successful model.
ARGUMENTS IN OPPOSITION: The IOUs (opponents) argue that establishing a third party to implement energy efficiency market transformation adds unneeded bureaucratic costs that take funding from other energy efficiency programs and, in its establishment, distracts from those programs; and ignores the momentum and market knowledge of the IOUs. The IOUs contend that they are best positioned to implement a program focused on market transformation, should the CPUC wish to require an energy efficiency program distinct from resource acquisition programs.
Prepared by: Jay Dickenson / E.U. & C. / (916) 651-4107
6/3/15 9:48:54
**** END ****
SB 765
Page 4
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 765
Amended: 6/2/15
SENATE ENERGY, U. & C. COMMITTEE: 8-2, 4/21/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk
NOES: Cannella, Morrell
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Net energy metering: eligible customer generators
SOURCE: The Utility Reform Network
DIGEST: This bill requires the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator (CalMTA), to coordinate the state’s energy efficiency market-transformation activities.
ANALYSIS: Existing law requires the CPUC to identify all potentially achievable cost-effective electricity and natural gas efficiency savings and to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. (Public Utilities Code §§ 454.55 and 454.56.)
This bill:
Defines “market transformation” as a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
Requires the CPUC, by July 1, 2017, to contract with an independent entity to serve as the CalMTA, pursuant to a contract of at least five years, to coordinate planning and execution of the state’s energy efficiency efforts through long-term market transformation strategies.
Sets the budget for market transformation activities – including CalMTA’s budget and the CPUC’s costs to manage the contract with CalMTA – at no more than 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs.
Requires CalMTA to meet interim and long-term targets set by the CPUC and to submit quarterly expense reports and annual progress reports.
Directs CalMTA to work with the California Energy Commission to encourage local publicly-owned electric utilities to participate in the CalMTA’s planning efforts and provide funding and support for CalMTA’s market transformation initiatives.
Requires the CPUC to consider whether energy savings expected to be delivered through CalMTA market transformation initiatives should be excluded from the targets established by the CPUC for investor-owned utilities (IOUs).
Background
Energy Efficiency Programs. California’s IOUs administer energy efficiency programs with ratepayer funds approved by the CPUC. Currently funded at about $1 billion per year, the programs include a portfolio of financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, HVAC [heating, ventilation, and air conditioning] systems, whole-house retrofits, and specialized programs aimed at a variety of sectors.
This bill follows a white paper by consultants to the Energy Division of the CPUC on energy efficiency market transformation. [Building a Policy Framework to Support Energy Efficiency Market Transformation in California, Ralph Prahl and Ken Keating, December 2014.] That work notes that CPUC energy efficiency programs oftentimes have as an end goal “market transformation,” meaning long-lasting, sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where continuation of the same publicly-funded intervention is no longer appropriate in that specific market. The paper notes that energy efficiency programs often pursue the end goal of market transformation through the use of resource acquisition, such as the offering of rebates.
However, the paper contends that resource acquisition and market transformation are oftentimes incompatible. This is because resource acquisition programs tend to focus on relatively certain near-term savings, whereas market transformation is risky and slow to be realized. Bureaucratic and market incentives therefore too often focus on resource acquisition to the detriment of market transformation.
The paper recasts market transformation from an end goal to a tool or strategy, rather than simply an end goal. The concept behind SB 765, and most of its particulars, flows directly from the white paper.
Recent Amendments. The Senate Appropriations Committee amended this bill to change the funding parameters of the CalMTA program. Previously, this bill directed CPUC to fund the program at between five percent and 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs. The amendments, in contrast, direct the CPUC to fund the program at no more than 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
Annual costs of up to $730,000 to the Public Utilities Reimbursement Account (special) for additional workload at the CPUC to oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy Resources Program Account (General Fund) to coordinate with the CPUC on market transformation activities.
The Utility Reform Network (source)
Center for Sustainable Energy
Office of Ratepayer Advocates
Sierra Club California
The Greenlining Institute
OPPOSITION: (Verified 5/29/15)
Pacific Gas and Electric Company
San Diego Gas and Electric
Sempra Energy
Southern California Edison
Southern California Gas Company
ARGUMENTS IN SUPPORT: According to the author, market transformation and resource acquisition are two separate energy efficiency tools with differing applicability. The energy efficiency programs overseen by the CPUC should be administered accordingly. Further, the most-successful models of energy efficiency programs that distinguish between market transformation and resource acquisition rely on third-party market transformation administrators. The CPUC should follow this successful model.
ARGUMENTS IN OPPOSITION: The IOUs (opponents) argue that establishing a third party to implement energy efficiency market transformation adds unneeded bureaucratic costs that take funding from other energy efficiency programs and, in its establishment, distracts from those programs; and ignores the momentum and market knowledge of the IOUs. The IOUs contend that they are best positioned to implement a program focused on market transformation, should the CPUC wish to require an energy efficiency program distinct from resource acquisition programs.
Prepared by: Jay Dickenson / E., U., & C. / (916) 651-4107
6/2/15 22:38:26
**** END ****
SB 765 (Wolk) Page 3 of 3
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 765 (Wolk) - Net energy metering: eligible customer generators
|
|
Version: April 6, 2015 |
Policy Vote: E., U., & C. 8 - 2 |
Urgency: No |
Mandate: Yes |
Hearing Date: May 28, 2015 |
Consultant: Marie Liu |
SUSPENSE FILE. AS AMENDED.
Bill Summary:
SB 765 would require the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator or CalMTA, to coordinate the state’s energy efficiency market-transformation activities.
Fiscal Impact (as approved on May 28, 2015):
Annual costs of up to $730,000 to the Public Utilities Reimbursement Account (special) for additional workload at the CPUC to oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy Resources Program Account (General Fund) to coordinate with the CPUC on market transformation activities.
Background:
Existing law requires the CPUC to identify all potentially-achievable and cost-effective electricity and natural gas efficiency savings in order to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. The responsibility to meeting this target is distributed proportionately amongst the state’s investor-owned utilities (IOUs), who administer the energy efficiency programs. These programs are paid by ratepayer funds that are approved by the CPUC. Currently, the IOUs are collectively approved to collect approximately $1 billion for various energy efficiency measures programs including financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, HVAC systems, whole-house retrofits, and specialized programs aimed at a variety of sectors.
These energy efficiency efforts can broadly be divided as two types- market transformation and resource acquisition. Resource acquisition activities result in near-term energy savings, usually through customer participation, such as LED and compact fluorescent light bulb subsidies. Market transformation activities on the other hand aim to create structural changes in the market leading to long-term savings. Energy savings from these activities are usually planned over a 5-10 year time frame, though when the savings are achieved depends on the market. Once the market transformation is achieved, publically-funded intervention is no longer appropriate. A white paper commissioned by the CPUC on market transformation noted that the CPUC’s existing energy efficiency programs often have market transformation as an end goal, but don’t use market transformation as a tool or strategy in it itself.
Proposed Law:
This bill would require the CPUC to contract with an independent entity by July 1, 2017 for at least five years to serve as the California Market Transformation Administrator, which is defined in the bill as “CalMTA,” to coordinate the planning and execution of the state’s efforts to advance energy efficiency through market transformation strategies. Specifically, the bill would require the CalMTA to:
Advise and assist the CPUC with the coordination of demand-side energy management programs;
Perform its marketing, education, and outreach under the Energy Upgrade California brand name;
Create market conditions that will accelerate and sustain the market adoption of energy efficiency products, services, and practices in California;
Meet interim and long-term targets adopted by the CPUC;
Report to the CPUC quarterly on expenditures and annually on progress towards CPUC-established interim and long-term targets;
Coordinate market transformation initiatives with utility energy efficiency activities under the CPUC’s jurisdiction; and
Work with the California Energy Commission (CEC) to encourage participation by publically owned electric utilities in the CalMTA’s planning efforts.
The CPUC would be required to provide oversight over the CalMTA’s activities to protect ratepayers from performance risk. Specifically, the CPUC would be required to conduct, or require the CalMTA to conduct, a “rigorous” upfront vetting process for program concepts.
The budget for market transformation initiatives would also be initially limited to 5-10% of the total budget for energy efficiency activities to ensure a balance between market transformation initiatives against resources acquisition initiatives. The CPUC would be authorized to adjust the funding level as it deems appropriate.
The CPUC would also be required to consult with the CEC in order to coordinate activities of the CalMTA with energy efficiency activities of the CEC. Additionally, the CPCU would be required to consult with the CEC to determine how to reflect energy savings from market transformation initiatives.
Staff Comments:
CPUC costs - This bill requires that the budget for CalMTA be initially set at a level between 5 and 10 percent of the total energy efficiency budget overseen by the CPUC, which translates to approximately $50 to $100 million. This bill specifies that this amount is to include administrative costs for CalMTA as well as the CPUC’s costs to oversee the contract. Based off the state’s experience with the contract for Energy Upgrade California and considering the Northwest Energy Efficiency Alliance Program as a model, the CPUC estimates that approximately 7-10% of the contract will be used for CalMTA’s administrative costs. Theoretically, these administrative costs could represent some savings to the total energy efficiency budget as it would consolidate activities currently conducted at the separate IOUs into one program. However it is unclear whether these savings can be quantified at a level that would result ratepayer savings. Staff notes that the IOU programs are not part of the state’s budget and are overseen by the CPUC.
According to the CPUC, CPUC costs to oversee the CalMTA contract are also estimated at 7-10% of the contract costs, or in this case $3.5 million to $5 million, based on the state’s experience with Energy Upgrade California and the Northwest Energy Efficiency Alliance Program. Oversight costs include setting targets to guide the activities of the CalMTA and integrating the initiatives of the CalMTA with IOU requirements for energy efficiency. Staff notes that the CPUC currently has five positions that oversee the IOUs’ market transformation programs that could be shifted to oversee the CalMTA contact. Staff notes that these costs are new in the sense that there would be additional spending from the Public Utilities Reimbursement Account but there wouldn’t necessarily be increased ratepayer surcharges so long as the bill is redirecting existing ratepayer funds collected by the IOUs, which is consistent with the author’s intent. Staff notes that such a redirection is not explicitly required in the bill.
Staff notes that the bill is not clear on the governance of CalMTA and whether it has decision-making authority independent of the CPUC. How the contract establishes decision making authority could influence CPUC’s administrative costs.
Staff notes that the bill only requires that the “initial” CalMTA budget be set at a level between 5 and 10 percent of the total energy efficiency budget. After the undefined initial period, the CPUC would then have the authority to adjust the budget as it deems appropriate. Future state costs may vary with the size of the contract.
CEC costs - The CEC, which conducts and oversees a number of energy efficiency initiatives itself, would incur costs as a result of this bill to coordinate its activities with CalMTA and to support the CPUC in assessing market transformation efforts.
Committee amendments (as adopted on May 28, 2015): Amend to limit the initial CalMTA contract to no more than 10% of the existing energy efficiency budget.
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SB 765 (Wolk) Page 3 of 3
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 765 (Wolk) - Net energy metering: eligible customer generators
|
|
Version: April 6, 2015 |
Policy Vote: E., U., & C. 8 - 2 |
Urgency: No |
Mandate: Yes |
Hearing Date: May 4, 2015 |
Consultant: Marie Liu |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
SB 765 would require the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator or CalMTA, to coordinate the state’s energy efficiency market-transformation activities.
Fiscal Impact:
Uncertain additional ongoing administrative costs, potentially up to $10 million, from the Public Utilities Reimbursement Account (special) for additional workload at the CPUC to oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy Resources Program Account (General Fund) to coordinate with the CPUC on market transformation activities.
Background:
Existing law requires the CPUC to identify all potentially-achievable and cost-effective electricity and natural gas efficiency savings in order to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. The responsibility to meeting this target is distributed proportionately amongst the state’s investor-owned utilities (IOUs), who administer the energy efficiency programs. These programs are paid by ratepayer funds that are approved by the CPUC. Currently, the IOUs are collectively approved to collect approximately $1 billion for various energy efficiency measures programs including financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, HVAC systems, whole-house retrofits, and specialized programs aimed at a variety of sectors.
These energy efficiency efforts can broadly be divided as two types- market transformation and resource acquisition. Resource acquisition activities result in near-term energy savings, usually through customer participation, such as LED and compact fluorescent light bulb subsidies. Market transformation activities on the other hand aim to create structural changes in the market leading to long-term savings. Energy savings from these activities are usually planned over a 5-10 year time frame, though when the savings are achieved depends on the market. Once the market transformation is achieved, publically-funded intervention is no longer appropriate. A white paper commissioned by the CPUC on market transformation noted that the CPUC’s existing energy efficiency programs often have market transformation as an end goal, but don’t use market transformation as a tool or strategy in it itself.
Proposed Law:
This bill would require the CPUC to contract with an independent entity by July 1, 2017 for at least five years to serve as the California Market Transformation Administrator, which is defined in the bill as “CalMTA,” to coordinate the planning and execution of the state’s efforts to advance energy efficiency through market transformation strategies. Specifically, the bill would require the CalMTA to:
Advise and assist the CPUC with the coordination of demand-side energy management programs;
Perform its marketing, education, and outreach under the Energy Upgrade California brand name;
Create market conditions that will accelerate and sustain the market adoption of energy efficiency products, services, and practices in California;
Meet interim and long-term targets adopted by the CPUC;
Report to the CPUC quarterly on expenditures and annually on progress towards CPUC-established interim and long-term targets;
Coordinate market transformation initiatives with utility energy efficiency activities under the CPUC’s jurisdiction; and
Work with the California Energy Commission (CEC) to encourage participation by publically owned electric utilities in the CalMTA’s planning efforts.
The CPUC would be required to provide oversight over the CalMTA’s activities to protect ratepayers from performance risk. Specifically, the CPUC would be required to conduct, or require the CalMTA to conduct, a “rigorous” upfront vetting process for program concepts.
The budget for market transformation initiatives would also be initially limited to 5-10% of the total budget for energy efficiency activities to ensure a balance between market transformation initiatives against resources acquisition initiatives. The CPUC would be authorized to adjust the funding level as it deems appropriate.
The CPUC would also be required to consult with the CEC in order to coordinate activities of the CalMTA with energy efficiency activities of the CEC. Additionally, the CPCU would be required to consult with the CEC to determine how to reflect energy savings from market transformation initiatives.
Staff Comments:
CPUC costs - This bill requires that the budget for CalMTA be initially set at a level between 5 and 10 percent of the total energy efficiency budget overseen by the CPUC, which translates to approximately $50 to $100 million. This bill specifies that this amount is to include administrative costs for CalMTA as well as the CPUC’s costs to oversee the contract. Based off the state’s experience with the contract for Energy Upgrade California and considering the Northwest Energy Efficiency Alliance Program as a model, the CPUC estimates that approximately 7-10% of the contract will be used for CalMTA’s administrative costs. Theoretically, these administrative costs could represent some savings to the total energy efficiency budget as it would consolidate activities currently conducted at the separate IOUs into one program. However it is unclear whether these savings can be quantified at a level that would result ratepayer savings. Staff notes that the IOU programs are not part of the state’s budget and are overseen by the CPUC.
According to the CPUC, CPUC costs to oversee the CalMTA contract are also estimated at 7-10% of the contract costs, or in this case $3.5 million to $5 million, based on the state’s experience with Energy Upgrade California and the Northwest Energy Efficiency Alliance Program. Oversight costs include setting targets to guide the activities of the CalMTA and integrating the initiatives of the CalMTA with IOU requirements for energy efficiency. Staff notes that the CPUC currently has five positions that oversee the IOUs’ market transformation programs that could be shifted to oversee the CalMTA contact. Staff notes that these costs are new in the sense that there would be additional spending from the Public Utilities Reimbursement Account but there wouldn’t necessarily be increased ratepayer surcharges so long as the bill is redirecting existing ratepayer funds collected by the IOUs, which is consistent with the author’s intent. Staff notes that such a redirection is not explicitly required in the bill.
Staff notes that the bill is not clear on the governance of CalMTA and whether it has decision-making authority independent of the CPUC. How the contract establishes decision making authority could influence CPUC’s administrative costs.
Staff notes that the bill only requires that the “initial” CalMTA budget be set at a level between 5 and 10 percent of the total energy efficiency budget. After the undefined initial period, the CPUC would then have the authority to adjust the budget as it deems appropriate. Future state costs may vary with the size of the contract.
CEC costs - The CEC, which conducts and oversees a number of energy efficiency initiatives itself, would incur costs as a result of this bill to coordinate its activities with CalMTA and to support the CPUC in assessing market transformation efforts.
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SB 765 (Wolk) Page 6 of 6
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 765 Hearing Date: 4/21/2015
Author: |
Wolk |
||
Version: |
4/6/2015 As Amended |
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Urgency: |
No |
Fiscal: |
Yes |
Consultant: |
Jay Dickenson |
||
SUBJECT: Net energy metering: eligible customer generators
DIGEST: This bill requires the California Public Utilities Commission (CPUC) to contract with an independent entity, to be known as the California Market Transformation Administrator (CalMTA), to coordinate the state’s energy efficiency market-transformation activities.
ANALYSIS:
Existing law requires the CPUC to identify all potentially achievable cost-effective electricity and natural gas efficiency savings and to establish energy efficiency procurement targets and ratepayer-funded programs for electrical and gas corporations. (Public Utilities Code §§ 454.55 and 454.56.)
This bill:
Defines “market transformation” as a strategic process to intervene in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice.
Requires the CPUC, by July 1, 2017, to contract with an independent entity to serve as the CalMTA, pursuant to a contract of at least five years, to coordinate planning and execution of the state’s energy efficiency efforts through long-term market transformation strategies.
Sets the budget for market transformation activities – including CalMTA’s budget and the CPUC’s costs to manage the contract with CalMTA – at between 5 percent and 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs.
Requires CalMTA to meet interim and long-term targets set by the CPUC and to submit quarterly expense reports and annual progress reports.
Directs CalMTA to work with the California Energy Commission (CEC) to encourage local publicly-owned electric utilities (POUs) to participate in the CalMTA’s planning efforts and provide funding and support for CalMTA’s market transformation initiatives.
Requires the CPUC to consider whether energy savings expected to be delivered through CalMTA market transformation initiatives should be excluded from the targets established by the CPUC for investor-owned utilities (IOUs).
Background
Energy Efficiency Sits Atop California Energy Policy. The “loading order” guides the state’s energy policies and decisions according to the following priority: (1) decreasing electricity demand by increasing energy efficiency; (2) responding to energy demand by reducing energy usage during peak hours; (3) meeting new energy generation needs with renewable resources; and (4) meeting new energy generation needs with clean fossil-fueled generation. This policy has been adopted by the energy agencies – CEC and CPUC – and its principles guide all energy programs.
California’s IOUs administer energy efficiency programs with ratepayer funds approved by the CPUC. Currently funded at about $1 billion per year, the programs include a portfolio of financial incentives, loans, and rebates for installing energy efficient appliances, lighting, windows, HVAC systems, whole-house retrofits, and specialized programs aimed at a variety of sectors.
Market-Transformation vs. Resource Acquisition. This bill follows a white paper by consultants to the Energy Division of the CPUC on energy efficiency market transformation.1 That work notes that CPUC energy efficiency programs oftentimes have as an end goal “market transformation,” meaning long-lasting, sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where continuation of the same publicly-funded intervention is no longer appropriate in that specific market. The paper notes that energy efficiency programs often pursue the end goal of market transformation through the use of resource acquisition, such as the offering of rebates.
However, the paper contends that resource acquisition and market transformation are oftentimes incompatible. This is because resource acquisition programs tend to focus on relatively certain near-term savings, whereas market transformation is risky and slow to be realized. Bureaucratic and market incentives therefore too often focus on resource acquisition to the detriment of market transformation.
The paper recasts market transformation from an end goal to a tool or strategy, rather than simply an end goal. The paper contends that only certain markets are susceptible to market transformation. The paper then recommends a complimentary energy efficiency portfolio consisting of (1) resources acquisition programs and (2) market transformation programs targeted to those markets most susceptible to it. The paper provides a chart to illustrate the distinction it makes between market transformation and resource acquisition:
|
Resource Acquisition |
Market Transformation |
Scale |
Program |
Entire defined market |
Target |
Participants |
All consumers |
Goal |
Near-term savings |
Structural changes in the market leading to long term savings |
Approach |
Save energy through customer participation |
Save energy through mobilizing the market |
Scope of Effort |
Usually from a single program |
Results from effects of multiple programs or interventions |
Amount of Program Administrator's control |
PAs can control the pace, scale, geographic location, and can identify participants in general |
Markets are very dynamic, and the PAs are only one set of actors. If, how, where, and when the impacts occur are usually beyond the control of the program administrators. |
What is tracked, measured, and evaluated |
Energy use and savings, participants, and free-ridership |
Interim and long term indicators of market penetration and structural changes, attribution to the program, and cumulative energy impacts. |
Timeframe for cost-effectiveness |
Usually based on 1st year or cycle savings |
Is usually planned over a 5 -10 year timeframe |
|
|
|
The paper further contends that the IOUs, which administer most of the $1billion in CPUC-approved energy efficiency programs, are predisposed to focus on resource acquisition, often at the expense of market transformation. This is because, according to the paper:
The IOUs are customer-service organizations. Delivering energy efficiency services to electricity or natural gas customers comes somewhat naturally to the IOUs. Fleet-footed entrepreneurial market engagement does not.
The IOUs face pressure from shareholders to produce profits in the short term, which is often incompatible with long-term market transformation.
As regulated entities, the IOUs are risk averse, which makes them unsuited to inherently risky and fast-moving innovative markets.
For these reasons, the paper recommends the CPUC follow the lead of the “most successful” market-transformation initiative elsewhere in the country2 and select an independent, non-IOU entity to manage the market-transformation projects in the energy efficiency portfolio.
The paper acknowledges that market transformation programs are risky. The authors list a number of measures to minimize and manage that risk, among them:
Limiting the investment in market-transformation programs to roughly 10 percent of the overall energy efficiency portfolio.
Vetting rigorously, upfront, program concepts.
Evaluating market-transformation initiatives continuously.
Collaborating with other jurisdictions and entities to spread risk.
Allocating risk across stakeholders, rather than forcing the IOUs to shoulder all the risk.
The concept behind SB 765, and most of its particulars, flows directly from the white paper.
Limits on Uses of Ratepayer Monies. The bill declares that creation of an entity, such as CalMTA, to conduct statewide energy efficiency market transformation initiatives would assist the state in advancing its energy efficiency and greenhouse gas reduction goals. The bill directs the CPUC to set the initial budget for the market transformation programs at a level between 5 percent and 10 percent of the total budget for energy efficiency activities overseen by the CPUC, excluding low-income energy efficiency programs.
The monies the CPUC authorizes the IOUs to collect from ratepayers are to pay for provision of service. While the CPUC has very broad discretion over allowable uses of such monies, those funds are not the proceeds of taxes and may not be used to provide general benefits to the people of California. Rather, the monies paid by the ratepayers of an IOU must be used to directly benefit those same ratepayers.
The CPUC requires the implementation of a number of programs funded by ratepayers that provide general benefits, in addition to particular benefits enjoyed by the ratepayers. Such programs include Energy Upgrade California – in part, a marketing campaign promoting energy efficiency statewide – and the Electric Program Investment Charge (EPIC) – a program that funds clean energy research, demonstration and deployment projects. This analysis assumes the CPUC will implement CalMTA program in a way consistent with legal requirements regarding ratepayer funds.
The CPUC Could Address Market Transformation on Its Own. The CPUC oversees an energy efficiency portfolio of approximately $1 billion annually. As part of that oversight, the CPUC makes numerous requirements of the IOUs, including specifying how they will manage their energy efficiency program monies. The CPUC has very broad discretion under its general authority to regulate the rates paid by the customers of the IOUs. Presumably, the CPUC could create the CalMTA, or a similar entity, to administer an energy efficiency market transformation program. The author’s office agrees; however, the author notes that the CPUC is not formally considering the creation of such a program, despite the CPUC-developed white paper that is the basis of this bill. If the Legislature wants the CPUC to institute a third-party administered energy efficiency market transformation program, it might need to require the CPUC to do so.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT:
Center for Sustainable Energy
Office of Ratepayer Advocates
Sierra Club California
The Greenlining Institute
The Utility Reform Network (Sponsor)
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Market transformation and resource acquisition are two separate energy efficiency tools with differing applicability. The energy efficiency programs overseen by the CPUC should be administered accordingly. Further, the most-successful models of energy efficiency programs that distinguish between market transformation and resource acquisition rely on third-party market transformation administrators. The CPUC should follow this successful model.
ARGUMENTS IN OPPOSITION: The IOUs argue that establishing a third party to implement energy efficiency market transformation adds unneeded bureaucratic costs that take funding from other energy efficiency programs and, in its establishment, distracts from those programs; and ignores the momentum and market knowledge of the IOUs. The IOUs contend that they are best positioned to implement a program focused on market transformation, should the CPUC wish to require an energy efficiency program distinct from resource acquisition programs.
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1 Building a Policy Framework to Support Energy Efficiency Market Transformation in California, Ralph Prahl and Ken Keating, December 2014.
2 The authors note as particularly successful market-transformation initiatives the Northwest Energy Efficiency Alliance (NEEA); the Northeast Energy Efficiency Partnership (NEEP); the New York State Energy Research and Development Authority (NYSERDA); and Efficiency Vermont (EVT).
Discussed in Hearing
18MIN
Assembly Standing Committee on Housing and Community Development
8MIN
Assembly Standing Committee on Local Government
21MIN
Assembly Standing Committee on Utilities and Commerce
3MIN
Senate Floor
14MIN
Senate Standing Committee on Energy, Utilities and Communications
Bill Author
Bill Co-Author(s):