Energy Law Alert: California Public Utilities Commission Holds Workshop on Energy Storage Legislation

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On Wednesday, March 9, the California Public Utilities Commission ("CPUC") held a workshop on its implementation of California's recent energy storage bill, Assembly Bill (AB) 2514, signed by Governor Schwarzenegger on September 29, 2010.

AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. By October 1, 2013, the CPUC must (1) determine whether a procurement target for energy storage is appropriate and, if so, (2) adopt a procurement target for each load-serving entity under its jurisdiction to be achieved by December 31, 2015 and a second target to be achieved by December 31, 2020. Municipal utilities have an additional year to meet these requirements.

Rather than delay implementation of AB 2514, the CPUC moved rapidly to initiate the required proceeding. In December of last year, the CPUC opened Rulemaking 10-12-007 both to implement AB 2514 and "on [the CPUC's] own motion to initiate policy for California utilities to consider the procurement of viable and cost-effective energy storage systems." Order Instituting Rulemaking ("OIR") at 1, R.10-12-007. The benefits of energy storage noted in both the legislation and the OIR include optimizing the use of intermittent and off-peak renewable generation and providing ancillary services currently provided by gas-fired peakers and other fossil fuel generation.

The OIR did not set out the scope of the proceeding. Rather, the CPUC requested that parties including Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric file comments by January 21, 2011 on the factual and legal issues to be addressed in the proceeding and directed CPUC staff to hold a workshop to address the potential scope of the proceeding during the first quarter of 2011. Twenty-one parties filed comments by the January 21 deadline, and the workshop was scheduled for March 9.

The workshop was very well attended, with over 100 people participating in person and another 50 participating by phone. The workshop included discussions of current and emerging energy storage technologies, the goals and applications of energy storage, existing barriers to storage implementation, and whether a unified storage policy would work or whether the policy should be written to address specific barriers to entry. The workshop also considered how the CPUC could and should work with other agencies addressing energy storage or related issues, including the California Energy Commission, the California Independent System Operator, and the Federal Energy Regulatory Commission.

The CPUC will use the information gathered from both comments and the workshop to prepare a scoping memo for the proceeding, setting out the issues to be covered in the proceeding and establishing a procedural schedule. Prior to issuing the final scoping memo, the CPUC will hold a prehearing conference, likely sometime in mid-April, to address scoping and scheduling issues.

Stoel Rives participated in the March 9 workshop, and our attorneys have been closely tracking AB 2514 in California as well as electric energy storage ("EES") developments in other states around the country. If you have any questions about the CPUC's implementation of AB 2514 or how other developments in EES may impact your business, please contact a key contributor.

Key Contributors

Brian J. Nese
Seth D. Hilton
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