Article 15. Reliable Electric Service Investments Act of California Public Utilities Code >> Division 1. >> Part 1. >> Chapter 2.3. >> Article 15.
(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
(d) It is the intent of the Legislature to reaffirm, without
requiring revision, California's 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
(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
(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 California's
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 California's electricity
consumption, including, but not limited to, degradation of the state'
s air, water, and land resources.
(4) California's in-state renewable energy resources help
alleviate supply deficits that could threaten electric system
reliability, reduce environmental costs associated with California's
electricity consumption, and increase the diversity of the
electricity system's fuel mix, reducing electricity users' exposure
to fossil-fuel price volatility.
(5) California's 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 1995-96 Regular
Session of the Legislature) and Chapter 905 of the Statutes of 1997
(Senate Bill 90 of the 1997-98 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.
(a) (1) It is the policy of this state, and the intent of
the Legislature, to reaffirm that each electrical corporation shall
continue to operate its electric distribution grid in its service
territory and shall do so in a safe, reliable, efficient, and
(2) In furtherance of this policy, it is the intent of the
Legislature that each electrical corporation shall continue to be
responsible for operating its own electric distribution grid
including, but not limited to, owning, controlling, operating,
managing, maintaining, planning, engineering, designing, and
constructing its own electric distribution grid, emergency response
and restoration, service connections, service turnons and turnoffs,
and service inquiries relating to the operation of its electric
distribution grid, subject to the commission's authority.
(b) In order to ensure the continued efficient use, and
cost-effective, safe, and reliable operation of the electric
distribution grid, each electrical corporation shall continue to
operate its electric distribution grid in its service territory
consistent with Section 330.
(c) In carrying out the purposes of this section, each electrical
corporation shall continue to make reasonable investments in its
electric distribution grid. Each electrical corporation shall
continue to have a reasonable opportunity to fully recover from all
customers of the electrical corporation, in a manner determined by
the commission pursuant to this code, all of the following:
(1) Reasonable investments in its electric distribution grid.
(2) A reasonable return on the investments in its electric
(3) Reasonable costs to operate its electric distribution grid.
(d) For purposes of this section, the term "electric distribution
grid" means those facilities owned or operated by an electrical
corporation that are not under the control of the Independent System
Operator and that are used to transmit, deliver, or furnish
electricity for light, heat, or power.
(e) Nothing in this section shall be construed to alter or to
affect any of the following:
(1) Section 216, 218, or 2827.
(2) The authority of the commission to establish and enforce
standards and tariff conditions for the interconnection of
customer-owned facilities to the electric distribution grid.
(3) The ratemaking authority of the commission under this code.
(4) The authority of the commission to establish rules governing
the extension of service to new customers.
(f) Nothing in this section shall be construed to alter or affect
any authority or lack of authority of the commission regarding the
ownership and operation of new electric generation used in whole, or
in part, for the purpose of maintaining or enhancing the reliability
of the electric distribution grid.
(g) Nothing in this section diminishes or expands any existing
authority of a local governmental entity.
(h) The commission shall require every electrical corporation
operating an electric distribution grid to inform all customers who
request residential service connections via telephone of the
availability of the California Alternative Rates for Energy (CARE)
program and how they may qualify for and obtain these services and
shall accept applications for the CARE program according to
procedures specified by the commission. Electrical corporations shall
recover the reasonable costs of implementing this subdivision.
(a) Notwithstanding Sections 1001 to 1013, inclusive, an
application of an electrical corporation for a certificate
authorizing the construction of new transmission facilities is
necessary to the provision of electric service if the commission
finds that the new facility is necessary to facilitate achievement of
the renewables portfolio standard established in Article 16
(commencing with Section 399.11).
(b) With respect to a transmission facility described in
subdivision (a), the commission shall take all feasible actions to
ensure that the transmission rates established by the Federal Energy
Regulatory Commission are fully reflected in any retail rates
established by the commission. These actions shall include all of the
(1) Making findings, where supported by an evidentiary record,
that those transmission facilities provide benefit to the
transmission network and are necessary to facilitate the achievement
of the renewables portfolio standard established in Article 16
(commencing with Section 399.11).
(2) Directing the utility to which the generator will be
interconnected, where the direction is not preempted by federal law,
to seek the recovery through general transmission rates of the costs
associated with the transmission facilities.
(3) Asserting the positions described in paragraphs (1) and (2) to
the Federal Energy Regulatory Commission in appropriate proceedings.
(4) Allowing recovery in retail rates of any increase in
transmission costs incurred by an electrical corporation resulting
from the construction of the transmission facilities that are not
approved for recovery in transmission rates by the Federal Energy
Regulatory Commission after the commission determines that the costs
were prudently incurred.
(c) (1) The commission, prior to making a finding pursuant to
subdivision (a), may approve an advice letter from an electrical
corporation seeking, for a specific transmission project, a finding
of eligibility for cost recovery pursuant to paragraph (4) of
subdivision (b), if the electrical corporation certifies in the
advice letter, in a form prescribed by the commission, that it
expects that the facility will be necessary to facilitate achievement
of the renewables portfolio standard established pursuant to Article
16 (commencing with Section 399.11). The electrical corporation's
ultimate recovery of construction costs shall be contingent upon the
commission finding, pursuant to subdivision (a), that the facility is
necessary to facilitate achievement of the renewables portfolio
standard and that the costs were prudently incurred.
(2) Prior to making a finding pursuant to subdivision (a), the
commission may approve an advice letter from an electrical
corporation requesting retail rate cost recovery for costs incurred
prior to permitting or certification for potential transmission
facilities if the electrical corporation certifies in the advice
letter, in a form prescribed by the commission, that it expects that
the facility will be necessary to facilitate achievement of the
renewables portfolio standard established pursuant to Article 16
(commencing with Section 399.11). The electrical corporation's
ultimate recovery of costs incurred prior to permitting or
certification shall be contingent upon the commission finding that
the electrical corporation administered the approved costs reasonably
(3) Any commission determination pursuant to this subdivision is
not binding upon the commission when determining the need for the
transmission facilities pursuant to Chapter 5 (commencing with
Section 1001) or Article 16 (commencing with Section 399.11).
(d) Any cost recovery pursuant to subdivision (b) or (c) shall be
limited to costs that are not approved for recovery in transmission
rates by the Federal Energy Regulatory Commission.
Nothing in Section 399.2 shall be construed to preclude any
of California's local publicly owned electric utilities from
exercising authority to operate their electric distribution grid as
provided under law.
(a) (1) In order to ensure that prudent investments in
energy efficiency continue to be made that produce cost-effective
energy savings, reduce customer demand, and contribute to the safe
and reliable operation of the electric distribution grid, it is the
policy of this state and the intent of the Legislature that the
commission shall continue to administer cost-effective energy
efficiency programs authorized pursuant to existing statutory
(2) As used in this section, the term "energy efficiency"
includes, but is not limited to, cost-effective activities to achieve
peak load reduction that improve end-use efficiency, lower customers'
bills, and reduce system needs.
(b) (1) Any rebates or incentives offered by a public utility for
an energy efficiency improvement or installation of energy efficient
components, equipment, or appliances in buildings shall be provided
only if the recipient of the rebate or incentive certifies that the
improvement or installation has complied with any applicable
permitting requirements and, if a contractor performed the
installation or improvement, that the contractor holds the
appropriate license for the work performed.
(2) This subdivision does not imply or create authority or
responsibility, or expand existing authority or responsibility, of a
public utility for the enforcement of the building energy and water
efficiency standards adopted pursuant to subdivision (a) or (b) of
Section 25402 of the Public Resources Code, or appliance efficiency
standards and certification requirements adopted pursuant to
subdivision (c) of Section 25402 of the Public Resources Code.
(c) The commission, in evaluating energy efficiency investments
under its existing statutory authority, shall also 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.
(d) The commission, in a new or existing proceeding, shall review
and update its policies governing energy efficiency programs funded
by utility customers to facilitate achieving the targets established
pursuant to subdivision (c) of Section 25310 of the Public Resources
Code. In updating its policies, the commission shall, at a minimum,
do all of the following:
(1) Authorize market transformation programs with appropriate
levels of funding to achieve deeper energy efficiency savings.
(2) Authorize pay for performance programs that link incentives
directly to measured energy savings. As part of pay for performance
programs authorized by the commission, customers should be reasonably
compensated for developing and implementing an energy efficiency
plan, with a portion of their incentive reserved pending post project
(3) Authorize programs to achieve deeper savings through
operational, behavioral, and retrocommissioning activities.
(4) Ensure that customers have certainty in the values and
methodology used to determine energy efficiency incentives by basing
the amount of any incentives provided by gas and electrical
corporations on the values and methodology contained in the executed
customer agreement. Incentive payments shall be based on measured
(a) In order to ensure that the citizens of this state
continue to receive safe, reliable, affordable, and environmentally
sustainable electric service, it is the policy of this state and the
intent of the Legislature that prudent investments in energy
efficiency, renewable energy, and research, development and
demonstration shall continue to be made.
(b) (1) Every customer of an electrical corporation shall pay a
nonbypassable system benefits charge authorized pursuant to this
article. The system benefits charge shall fund energy efficiency,
renewable energy, and research, development and demonstration.
(2) Local publicly owned electric utilities shall continue to
collect and administer system benefits charges pursuant to Section
(c) (1) The commission shall require each electrical corporation
to identify a separate rate component to collect revenues to fund
energy efficiency, renewable energy, and research, development and
demonstration programs authorized pursuant to this section beginning
January 1, 2002, and ending January 1, 2012. The rate component shall
be a nonbypassable element of the local distribution service and
collected on the basis of usage.
(2) This rate component may not exceed, for any tariff schedule,
the level of the rate component that was used to recover funds
authorized pursuant to Section 381 on January 1, 2000. If the amounts
specified in paragraph (1) of subdivision (d) are not recovered
fully in any year, the commission shall reset the rate component to
restore the unrecovered balance, provided that the rate component may
not exceed, for any tariff schedule, the level of the rate component
that was used to recover funds authorized pursuant to Section 381 on
January 1, 2000. Pending restoration, any annual shortfalls shall be
allocated pro rata among the three funding categories in the
proportions established in paragraph (1) of subdivision (d).
(d) The commission shall order San Diego Gas and Electric Company,
Southern California Edison Company, and Pacific Gas and Electric
Company to collect these funds commencing on January 1, 2002, as
(1) Two hundred twenty-eight million dollars ($228,000,000) per
year in total for energy efficiency and conservation activities,
sixty-five million five hundred thousand dollars ($65,500,000) in
total per year for renewable energy, and sixty-two million five
hundred thousand dollars ($62,500,000) in total per year for
research, development and demonstration. The funds for energy
efficiency and conservation activities shall continue to be allocated
in proportions established for the year 2000 as set forth in
paragraph (1) of subdivision (c) of Section 381.
(2) The amounts shall be adjusted annually at a rate equal to the
lesser of the annual growth in electric commodity sales or inflation,
as defined by the gross domestic product deflator.
(e) The commission shall ensure that each electrical corporation
allocates funds transferred by the Energy Commission pursuant to
subdivision (b) of Section 25743 in a manner that maximizes the
economic benefit to all customer classes that funded the New
Renewable Resources Account.
(f) The commission and the Energy Commission shall retain and
continue their oversight responsibilities as set forth in Sections
381 and 383, and Chapter 7.1 (commencing with Section 25620) and
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code.
(g) An applicant for the Large Nonresidential Standard Performance
Contract Program funded pursuant to paragraph (1) of subdivision (b)
and an electrical corporation shall promptly attempt to resolve
disputes that arise related to the program's guidelines and
parameters prior to entering into a program agreement. The applicant
shall provide the electrical corporation with written notice of any
dispute. Within 10 business days after receipt of the notice, the
parties shall meet to resolve the dispute. If the dispute is not
resolved within 10 business days after the date of the meeting, the
electrical corporation shall notify the applicant of his or her right
to file a complaint with the commission, which complaint shall
describe the grounds for the complaint, injury, and relief sought.
The commission shall issue its findings in response to a filed
complaint within 30 business days of the date of receipt of the
complaint. Prior to issuance of its findings, the commission shall
provide a copy of the complaint to the electrical corporation, which
shall provide a response to the complaint to the commission within
five business days of the date of receipt. During the dispute period,
the amount of estimated financial incentives shall be held in
reserve until the dispute is resolved.
(a) No part of this article shall be construed to alter or
affect the low-income funding provisions set forth in Section 382.
Programs provided to low-income electricity customers, including but
not limited to, targeted energy efficiency services and the
California Alternative Rates for Energy Program shall continue to be
funded as set forth in Section 382.
(b) Nothing in this article shall be construed to affect the
jurisdiction of the commission over electric distribution service.