Bill Text: CA AB2667 | 2021-2022 | Regular Session | Amended

California Assembly Bill 2667 (Prior Session Legislation)

Bill Title: Distributed energy resources: incentives.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2022-08-30 - Read third time. Refused passage. (Ayes 16. Noes 10.). [AB2667 Detail]

Download: California-2021-AB2667-Amended.html

Amended IN Senate August 24, 2022

Amended IN Senate August 11, 2022

Amended IN Senate June 30, 2022

Amended IN Senate June 13, 2022

Amended IN Assembly April 27, 2022

Amended IN Assembly March 15, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 2667

Introduced by Assembly Member Friedman

February 18, 2022

An act to add Chapter 5.4 (commencing with Section 25440) to Division 15 of the Public Resources Code, relating to electricity.

LEGISLATIVE COUNSEL'S DIGEST

AB 2667, as amended, Friedman. Distributed energy resources: incentives.

Existing law requires the Public Utilities Commission to require the administration, until January 1, 2026, of a self-generation incentive program to increase the development of distributed generation resources and energy storage technologies. In administering the program, existing law requires the commission to provide an additional incentive of 20% from existing program funds for the installation of eligible distributed generation resources manufactured in California.

Existing law establishes the State Energy Resources Conservation and Development Commission (Energy Commission) with various responsibilities with respect to developing and implementing the state’s energy policies.

This bill would require the Energy Commission to use funds appropriated by the Legislature to provide incentives to eligible customers who install behind-the-meter energy storage systems, or self-generation systems paired with energy storage systems, to support statewide customer adoption of clean distributed energy resources, as specified. The bill would require the Energy Commission to establish a system to equitably award incentives and set incentive levels, as specified, and to prioritize certain resources. The bill would authorize the Energy Commission to authorize incentives for different technology types to be combined within this program and with other state-mandated programs, as provided, and would require the Energy Commission to adopt equipment inspection, operation, and verification procedures, and applicable performance criteria for eligible resources, as specified.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

(a) The Legislature finds and declares all the following:

(1) Extreme weather events, natural disasters, and cyber incursions will require new approaches to increase resiliency from power system interruptions by using clean distributed energy resources to maintain continuity of critical services and minimize customer impact from outages.

(2) Diversifying customer choice in clean distributed energy resources empowers each customer to make decarbonization investments based on the customer’s needs and circumstances.

(3) A statewide distributed energy resources incentive program will increase customer adoption of clean distributed energy resources, support decarbonization of California’s economy, and increase individual customer resilience to power system interruptions.

(4) Local air pollution from medium- and heavy-duty vehicles disproportionately impacts California’s most vulnerable populations, and investments in clean distributed energy resources to facilitate charging at locations including, but not limited to, ports, warehouses, and transit corridors could potentially have a positive impact on reducing local pollution.

(5) The Public Utilities Commission regulates public utilities, including electrical corporations. Section 218 of the Public Utilities Code (Section 218) defines an electrical corporation as a corporation or person owning, controlling, operating, or managing any electric plant for compensation within California, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others.

(6) Regulation by the Public Utilities Commission of electrical corporations as defined in Section 218 protects public and worker safety and ensures reliable electricity for all customers.

(7) Pointing to 100-year-old case law, some have argued that under the California Constitution, third-party owned and operated distributed energy resources that deliver electricity to neighbors are not governed by Section 218 because the distributed energy resources have not been dedicated to public use. They argue that resources must be dedicated to public use before being subject to public utility regulation by the Public Utilities Commission. However, Section 218 was enacted 30 years later to give the Public Utilities Commission broader responsibility to regulate public utilities than does the California Constitution.

(8) After Section 218 was enacted to cover a broader range of activities, California courts and the Public Utilities Commission have explained that the public dedication doctrine has little remaining applicability. In addition, subsequent amendments to Section 218 show that the Legislature understands that the scope of Section 218 is broader than that of the California Constitution. Those amendments show that the Legislature knows how to enact exemptions from Section 218 such as for direct transactions and sales into the wholesale electricity market.

(9) Because Section 218 has a broader scope than the California Constitution, under Section 218, the constitutional requirement of “dedication to the public” is not required. Instead, an entity distributing electricity to the public, whether or not the electric plant is dedicated to serving the general public, other than the electricity producer or its tenants is an electrical corporation subject to the jurisdiction of the Public Utilities Commission. The Public Utilities Commission is responsible for ensuring that all activities falling within the scope of Section 218 are regulated, including to protect public safety and electrical system reliability.

(b) It is the intent of the Legislature to support the statewide deployment of clean distributed energy resources, including customer-sited clean energy generation and storage that enables clean backup power, demand management, and managed charging of electric vehicles, to support the decarbonization of California’s economy.

(c) It is not the intent of the Legislature to alter or otherwise affect any statutory or regulatory exemption from the Public Utilities Commission’s regulation of public utilities applicable to the ownership, control, operation, or management of facilities that supply electricity to the public only for use to charge electric vehicles.

SEC. 2.

Chapter 5.4 (commencing with Section 25440) is added to Division 15 of the Public Resources Code, to read:

CHAPTER 5.4. Distributed Energy Resources

25440.

(a) The commission shall use funds appropriated by the Legislature to provide incentives to eligible customers who install behind-the-meter energy storage systems, or self-generation systems paired with energy storage systems, to support statewide customer adoption of clean distributed energy resources across the industrial, commercial, and residential sectors as an integrated approach to reduce emissions of greenhouse gases and localized air pollution, the electrical grid’s net peak demand, and electric ratepayer costs.

(b) (1) Resources eligible for incentives under this section shall include mobile and nonmobile energy storage and onsite renewable or zero-carbon energy generation that enables customer demand management, managed charging of electric vehicles, and clean backup power.

(2) To receive an incentive under this section, any resource that generates electricity, or stores electricity from the electrical grid or another generation resource, shall meet one of the following conditions:

(A) Be a “renewable electrical generation facility” as defined in Section 25741.

(B) Be a “zero-carbon resource” pursuant to Section 454.53 of the Public Utilities Code.

(C) Be a mobile energy storage device that emits no air pollution or greenhouse gases when used to displace use of fossil-fueled portable generators.

(c) The commission shall establish a system to equitably award incentives to support adoption of commercially available distributed energy resources by eligible customers. In establishing the system, the commission shall set incentive levels and require the resource to do one or more of the following:

(1) Support electrical grid reliability through managed operation of the distributed energy resource to meet distribution and transmission system needs.

(2) Reduce the electrical grid’s net peak load by shifting onsite energy use to off-peak time periods or reduce demand from the electrical grid by offsetting some or all of the customer’s peak electric load through customer participation in a demand reduction program provided by the customer’s load serving entity.

(3) Support resiliency during periods of power system disruptions via self-islanding with clean onsite generation or backup power technology, with an emphasis on critical facilities such as public schools, community centers, clinics, and municipal water service, and providing critical services by emergency management officials during times of disaster.

(d) The commission shall prioritize resources that do both of the following:

(1) Reduce environmental pollution in disadvantaged communities or provide clean resiliency benefits to vulnerable communities, including income-qualified renters, tribal entities, and the access and functional needs population, as defined in Section 8593.3 of the Government Code.

(2) Facilitate all types of clean vehicle charging with an emphasis on medium- and heavy-duty vehicles colocated at ports, warehouses, and in transit corridors.

(e) The commission may allow incentives for different technology types to be combined within this program and with other state-mandated programs, provided that incentive payments from multiple funding sources, such as through the self-generation incentive program or a similar incentive program for distributed energy resources, shall not be applied to the same technology device or equipment, and shall not result in combined incentive payments greater than the total costs of the distributed energy resource.

(f) The commission shall adopt equipment inspection, operation, and verification procedures, and applicable performance criteria for eligible resources to achieve the intended air quality improvement, greenhouse gas reduction, and clean resiliency goals under this section.

(g) Except for the installation of residential generation of less than 15 kilowatts, all construction paid for, in part or in whole, with funds provided under this section shall be considered public works pursuant to Section 1720 of the Labor Code.

(h) Customers eligible to receive incentives under this section shall include distribution service customers of an electrical corporation and customers of a local publicly owned electric utility.