SACRAMENTO – AB 1584, authored by Assemblymember Bill Quirk (D-Hayward), to ensure that energy procurement is purchased equitably has been signed into law. Governor Newsom signed this bill as part of the package of bills that cover various recommendations issued in the Governor’s Strike Report that was published in June.
Several types of entities provide electricity service in California. Historically, the main distinction between electricity providers has been whether they are a municipal utility, rural cooperative, or an investor-owned utility (IOU). Who provides service to your home or businesses largely depends on the location of the home or business.
In more recent years, there has been a growth in additional electricity providers within the service territory of the IOU. These entities are referred to in statute as Load Serving Entities (LSEs) and also provide electric service within the service territory of the IOU, although the IOU continues to provide distribution, transmission, and billing services to all customers in their service territory
“AB 1584 will require LSEs to pay for the indirect costs that their portfolios impose on the electric system to serve their customer’s energy needs. Currently, the way in which LSEs plan for, and integrate into the electric system is fragmented and will not help us to meet our energy reduction goals” explained Assemblymember Quirk.
By 2021, all LSEs must have 65% of their renewable resources under long-term contract. Portfolios that are not carefully balanced will impose indirect costs on the shared electrical system.
LSEs may not match their energy purchases to their customer load profiles, leaving the California Independent System Operator with the responsibility of ensuring that sufficient system resources are available to serve load.
To the extent that the California Public Utilities Commission (CPUC) does not, or is not, able to require all LSE portfolios to conform to a system-wide optimal portfolio, California could end up with a combination of resource portfolios that will drive up system operation costs, which will ultimately be charged to customers. In addition, to the extent that system balancing resources are gas-fired, they will increase California’s greenhouse gas (GHG) emissions.
“AB 1584 will provide cost signals to utilities and other load-serving entities that will reduce total electric system costs while improving system reliability as we strive to achieve our SB 100 goal of eliminating carbon emissions in the electricity supply by 2045,” said Nancy Rader, Executive Director with the California Wind Energy Association.
“I thank Governor Newsom for signing this important measure to ensure that LSEs don’t drive up energy costs to California residents as we continue to mandate and achieve renewable energy and emission reduction goals” concluded Assemblymember Quirk upon learning that his measure had been signed.
AB 1584 will go into effect January 1, 2020.