|Budget Issue:||April Finance Letter: Advanced energy storage|
|Program:||Public Utilities Commission|
|Finding or Recommendation:||Approve Governor's April Finance Letter to increase the Public Utilities Commission Utilities Reimbursement Account by $452,000 and redirect four positions from the workforce cap reduction to evaluate the cost-effective use of advanced energy storage.|
Governor’s January Budget Proposal. The Governor’s 2011-12 January budget requested authority for an increase of two positions and $229,000 from the Public Utilities Commission Utilities Reimbursement Account for the California Public Utilities Commission (CPUC) to develop and implement advanced energy storage (AES) policies.
What Is AES? Energy storage refers to technological devices and systems which have the capacity to hold some form of energy which can be put to use at a later time. A primary example of energy storage currently in use is pumped hydroelectric storage which stores energy in the form of water, pumped from a lower elevation reservoir to a higher elevation. In contrast, new emerging forms of energy storage such as compressed air energy storage, batteries, and flywheels are referred to as “advanced energy storage.”
The U.S. Department of Energy (DOE) has stated that developing technology to store electricity that can be available to meet demand whenever needed would represent a major breakthrough in electricity distribution. The DOE reports that fundamental research gaps exist and technological breakthroughs are necessary in order to make AES a commercially viable option in the future.
2010-11 Budget. Last year, the Governor requested three positions for workload associated with AES. The Legislature instead approved one two-year limited term position.
AES Legislation Was Enacted in 2010. Subsequent to the Legislature's evaluation of the CPUC's 2010-11 budget request related to AES, Chapter 469, Statutes of 2010 (AB 2514, Skinner), was enacted to provide Legislature's policy direction in the area of AES. Commonly referred to as AB 2514, the legislation authorized the CPUC to determine by October 2013 what (if any) are the appropriate energy storage capacity targets for Investor Owned Utilities (IOUs). IOUs are then required to meet those targets by 2015 and 2020.
January Budget Request Failed to Account for Legislative Policy Direction. The budget proposal submitted for legislative review in January did not include a workload analysis associated with the implementation of AB 2514 and, in fact, was totally silent regarding AB 2514. Instead, the Governor’s budget proposal cited 2007 federal energy legislation as the driving force behind its request to increase staffing capacity for AES-related work, but did not explain how, if at all, this legislation created additional staffing requirements at CPUC. In fact, CPUC staff had indicated that the state is currently in compliance with the 2007 federal mandate. Having failed to evaluate how recent policy direction has impacted their current workload, the CPUC needed to provide adequate analysis and justification to merit approval of the request.
LAO January Recommendation. In January, we recommended that the Legislature deny the CPUC’s budget request until such time as the administration provides adequate analysis of its AES workload in a manner that clearly lays out work done to date as well as justification of needs going forward, accounting for legislative policy direction in AB 2514. The Legislature adopted our recommendation and denied without prejudice the Governor's January proposal and asked the Administration to provide greater justification for the request based on current workload analysis.
April Finance Letter. The Governor has submitted an April Finance Letter which requests an increase of $452,000 from the Public Utilities Commission Utilities Reimbursement Account and to redirect four positions from the workforce cap reduction to comply with statutory requirements provided by AB 2514 which requires CPUC to evaluate the cost-effective use of advanced energy storage.
Updated LAO Recommendation. The Governor's April Finance Letter justifies the request with appropriate workload analysis as requested by the Legislature. As such, we recommend the Legislature approve the Governor's April Finance Letter.