Amended  IN  Senate  May 01, 2019
Amended  IN  Senate  April 08, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill No. 774

Introduced by Senator Stern

February 22, 2019

An act to amend Section 8386 of, and to add Section 8373 to, the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 774, as amended, Stern. Electricity: microgrids.
Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission PUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. Existing law requires the PUC, in consultation with the State Energy Resources Conservation and Development Commission and the Independent System Operator, to take specified actions by December 1, 2020, to facilitate the commercialization of microgrids for distribution customers of large electrical corporations.
This bill would require each electrical corporation to collaborate with the Office of Emergency Services, and local governments and other interested parties in its service territory territory, to identify locations where microgrids sources of back-up electricity may provide increased electrical distribution grid resiliency. The bill would authorize electrical corporations to file applications with the commission to invest in, and deploy, microgrids to increase that resiliency, require the and would prohibit the PUC to approve, or modify and approve, certain from approving microgrid applications that use a cost-recovery mechanism that recovers costs from all ratepayers in proportion to the benefits they receive, and require that an electrical corporation’s microgrid investments earn a reasonable rate of return. of an electrical corporation’s ratepayers unless certain requirements are met. The bill would require electrical corporations to be exclusively responsible for planning for, making investments in, and operating certain energy resources that provide electrical distribution grid operations or services on an electrical corporation’s side of the meter.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because the provisions of this bill may require an order or other action of the PUC to implement, and a violation of that order or action would be a crime, this bill would impose a state-mandated local program.
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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Electrical corporations are obligated to provide safe and reliable electrical distribution services to their customers and are required to own, operate, and manage their distribution infrastructure in furtherance of that obligation.
(b) Electrical resiliency is essential to public health and safety and to maintaining public order in the face of natural threats or other interruptions in the supply of electricity. Public facilities, critical infrastructure, and other critical circuits are vital public resources that serve important functions in situations requiring rapid emergency response and asset deployment.
(c) The Office of Emergency Services’s State of California Threat and Hazard Identification and Risk Assessment outlines capability targets for infrastructure systems during defined threats and hazards. Those infrastructure system capability targets include stabilizing critical infrastructure functions, including energy, transportation, telecommunications, water, and wastewater services, and public health and medical systems, within the first 72 hours after an incident.
(d) Microgrids and other distributed energy resources can be utilized as potential sources of backup generation and electrical resiliency to support and aid in the stabilization of those critical infrastructure functions during emergencies or disruptions in the supply of electricity. In nonemergencies, backup systems, including microgrids, can enhance electrical distribution grid reliability, provide economic benefits, and help the state meet its clean energy and greenhouse gas emissions reduction goals.
(e) The Legislature recently enacted SB 901 (Chapter 626 of the Statutes of 2018) to address the catastrophic wildfire risk Californians have endured and continue to face.

SEC. 2.

 Section 8373 is added to the Public Utilities Code, to read:

8373.
 (a) For purposes of this section, “resiliency” means the ability of the electrical distribution grid to adapt to planned outages, changing weather, or other grid conditions, and to withstand or rapidly recover from service disruptions including, but not limited to, those caused by emergencies, natural disasters, planned outages, unplanned outages, or other events.
(b) Each electrical corporation shall collaborate with the Office of Emergency Services, and local governments and other interested parties in its service territory territory, to identify locations where microgrids sources of back-up electricity may provide increased resiliency. The electrical corporation shall include these locations in its wildfire mitigation plan pursuant to paragraph (12) (7) of subdivision (c) of Section 8386. 8386 to enable each local government to better prepare the electrical corporation’s customers in these locations and to better inform those customers of their potential need for sources of back-up electricity and of relevant public-assistance programs.
(c) (1) An electrical corporation may file an application with the commission to invest in, and deploy, microgrids to increase resiliency. the resiliency of the electrical distribution grid.
(2) The commission shall approve, or modify and approve, or deny a microgrid application. The commission shall not approve a microgrid application that uses a cost recovery mechanism that recovers costs from all of the electrical corporation’s ratepayers in proportion to the benefits received if unless all of the following requirements are met:
(A) The microgrid will be sited at a location identified in collaboration with affected local governments pursuant to subdivision (b).
(B) The microgrid will demonstrably increase resiliency, the resiliency of the electrical distribution grid, support electrical distribution grid operations and services, and provide wholesale electricity market services when applicable and not in use for increasing resiliency.
(C) The deployment of the microgrid is in the interests of ratepayers as defined in Section 740.8. will not result in cost-shifting to ratepayers whose electrical service, as determined by the commission, will not be made more resilient by the microgrid.
(d) (1) Notwithstanding any other provision of law, an energy resource that provides electrical distribution grid operations or services on the electrical corporation’s side of the meter, meter pursuant to this section, including, but not limited to, a distributed energy resource on the electrical corporation’s side of the meter, is a part of the electrical distribution grid and, as such, the electrical corporation shall be exclusively responsible for planning for, making investments in, and operating the energy resource.
(2) The electrical corporation’s responsibility includes, but is not limited to, owning, controlling, managing, maintaining, engineering, designing, and constructing the energy resource. The electrical corporation may, at its option, contract with a third party for these activities.

(e)An electrical corporation’s microgrid investments shall earn a reasonable rate of return consistent with other traditional capital infrastructure investments.

SEC. 3.

 Section 8386 of the Public Utilities Code is amended to read:

8386.
 (a) Each electrical corporation shall construct, maintain, and operate its electrical lines and equipment in a manner that will minimize the risk of catastrophic wildfire posed by those electrical lines and equipment.
(b) Each electrical corporation shall annually prepare and submit a wildfire mitigation plan to the commission for review and approval, according to a schedule established by the commission, which may allow for the staggering of compliance periods for each electrical corporation. The Department of Forestry and Fire Protection shall consult with the commission on the review of each wildfire mitigation plan. Prior to Before approval, the commission may require modifications of the plans. Following approval, the commission shall oversee compliance with the plans pursuant to subdivision (h).
(c) The wildfire mitigation plan shall include all of the following:
(1) An accounting of the responsibilities of persons responsible for executing the plan.
(2) The objectives of the plan.
(3) A description of the preventive strategies and programs to be adopted by the electrical corporation to minimize the risk of its electrical lines and equipment causing catastrophic wildfires, including consideration of dynamic climate change risks.
(4) A description of the metrics the electrical corporation plans to use to evaluate the plan’s performance and the assumptions that underlie the use of those metrics.
(5) A discussion of how the application of previously identified metrics to previous plan performances has informed the plan.
(6) Protocols for disabling reclosers and deenergizing portions of the electrical distribution system that consider the associated impacts on public safety, as well as protocols related to mitigating the public safety impacts of those protocols, including impacts on critical first responders and on health and communication infrastructure.
(7) Appropriate and feasible procedures for notifying a customer who may be impacted by the deenergizing of electrical lines. The procedures shall consider th the need the to notify, as a priority, critical first responders, health care facilities, and operators of telecommunications infrastructure.
(8) Plans for vegetation management.
(9) Plans for inspections of the electrical corporation’s electrical infrastructure.
(10) A list that identifies, describes, and prioritizes all wildfire risks, and drivers for those risks, throughout the electrical corporation’s service territory, including all relevant wildfire risk and risk mitigation information that is part of Safety Model Assessment Proceeding and Risk Assessment Mitigation Phase filings. The list shall include, but not be limited to, both of the following:
(A) Risks and risk drivers associated with design, construction, operations, and maintenance of the electrical corporation’s equipment and facilities.
(B) Particular risks and risk drivers associated with topographic and climatological risk factors throughout the different parts of the electrical corporation’s service territory.
(11) A description of how the plan accounts for the wildfire risk identified in the electrical corporation’s Risk Assessment Mitigation Phase filing.
(12) A description of the actions the electrical corporation will take to ensure its system will achieve the highest level of safety, reliability, and resiliency, and to ensure that its system is prepared for a major event, including hardening and modernizing its infrastructure with improved engineering, system design, standards, equipment, and facilities, such as undergrounding, insulation of distribution wires, pole replacement, and microgrid and distributed energy resource deployment where the commission has approved an application for that deployment pursuant to Section 8373.
(13) A showing that the electrical corporation has an adequately sized and trained workforce to promptly restore service after a major event, taking into account employees of other utilities pursuant to mutual aid agreements and employees of entities that have entered into contracts with the electrical corporation.
(14) Identification of any geographic area in the electrical corporation’s service territory that is a higher wildfire threat than is currently identified in a commission fire threat map, and where the commission should consider expanding the high fire threat district based on new information or changes in the environment.
(15) A methodology for identifying and presenting enterprise-wide safety risk and wildfire-related risk that is consistent with the methodology used by other electrical corporations unless the commission determines otherwise.
(16) A description of how the plan is consistent with the electrical corporation’s disaster and emergency preparedness plan prepared pursuant to Section 768.6, including both of the following:
(A) Plans to prepare for, and to restore service after, a wildfire, including workforce mobilization and prepositioning equipment and employees.
(B) Plans for community outreach and public awareness before, during, and after a wildfire, including language notification in English, Spanish, and the top three primary languages used in the state other than English or Spanish, as determined by the commission based on the United States Census data.
(17) A statement of how the electrical corporation will restore service after a wildfire.
(18) Protocols for compliance with requirements adopted by the commission regarding activities to support customers during and after a wildfire, outage reporting, support for low-income customers, billing adjustments, deposit waivers, extended payment plans, suspension of disconnection and nonpayment fees, repair processing and timing, access to electrical corporation representatives, and emergency communications.
(19) A description of the processes and procedures the electrical corporation will use to do all of the following:
(A) Monitor and audit the implementation of the plan.
(B) Identify any deficiencies in the plan or the plan’s implementation and correct those deficiencies.
(C) Monitor and audit the effectiveness of electrical line and equipment inspections, including inspections performed by contractors, carried out under the plan and other applicable statutes and commission rules.
(20) Any other information that the commission may require.
(d) The commission shall accept comments on each plan from the public, other local and state agencies, and interested parties, and verify that the plan complies with all applicable rules, regulations, and standards, as appropriate.
(e) The commission shall approve each plan within three months of its submission, unless the commission makes a written determination, including reasons supporting the determination, that the three-month deadline cannot be met and issues an order extending the deadline. Each electrical corporation’s approved plan shall remain in effect until the commission approves the electrical corporation’s subsequent plan. At the time it approves each plan, the commission shall authorize the electrical corporation to establish a memorandum account to track costs incurred to implement the plan.
(f) The commission’s approval of a plan does not establish a defense to any enforcement action for a violation of a commission decision, order, or rule.
(g) The commission shall consider whether the cost of implementing each electrical corporation’s plan is just and reasonable in its general rate case application. Nothing in this section shall be interpreted as a restriction or limitation on Article 1 (commencing with Section 451) of Chapter 3 of Part 1 of Division 1.
(h) The commission shall conduct an annual review of each electrical corporation’s compliance with its plan as follows:
(1) Three months after the end of an electrical corporation’s initial compliance period as established by the commission pursuant to subdivision (b), and annually thereafter, each electrical corporation shall file with the commission a report addressing its compliance with the plan during the prior calendar year.
(2) (A) Before March 1, 2021, and before each March 1 thereafter, the commission, in consultation with the Department of Forestry and Fire Protection, shall make available a list of qualified independent evaluators with experience in assessing the safe operation of electrical infrastructure.
(B) (i) Each electrical corporation shall engage an independent evaluator listed pursuant to subparagraph (A) to review and assess the electrical corporation’s compliance with its plan. The engaged independent evaluator shall consult with, and operate under the direction of, the Safety and Enforcement Division of the commission. The independent evaluator shall issue a report on July 1 of each year in which a report required by paragraph (1) is filed. As a part of the independent evaluator’s report, the independent evaluator shall determine whether the electrical corporation failed to fund any activities included in its plan.
(ii) The commission shall consider the independent evaluator’s findings, but the independent evaluator’s findings are not binding on the commission, except as otherwise specified.
(iii) The independent evaluator’s findings shall be used by the commission to carry out its obligations under Article 1 (commencing with Section 451) of Chapter 3 of Part 1 of Division 1.
(iv) The independent evaluator’s findings shall not apply to events that occurred before the initial plan is approved for the electrical corporation.
(3) The commission shall authorize the electrical corporation to recover in rates the costs of the independent evaluator.
(4) The commission shall complete its compliance review within 18 months after the submission of the electrical corporation’s compliance report.
(i) An electrical corporation shall not divert revenues authorized to implement the plan to any activities or investments outside of the plan.
(j) Each electrical corporation shall establish a memorandum account to track costs incurred for fire risk mitigation that are not otherwise covered in the electrical corporation’s revenue requirements. The commission shall review the costs in the memorandum accounts and disallow recovery of those costs the commission deems unreasonable.

SEC. 4.

  No reimbursement is required by this act pursuant to Section 6 of Article XIII B 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 XIII B of the California Constitution.