BILL NUMBER: SB 107 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 19, 2005
INTRODUCED BY Senators Simitian and Perata
JANUARY 20, 2005
An act to amend Sections 25740, 25741, 25743, and 25744
of, to add Section 25752 to, and to repeal Sections 25745
and 25749 of, the Public Resources Code, and to amend Sections 387,
399.11, 399.12, 399.13, 399.14, 399.15, and 399.16 of, to add Section
399.17 to, and to add Article 9 (commencing with Section 635) to
Chapter 3 of Part 1 of Division 1 of, the Public Utilities Code,
relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 107, as amended, Simitian. Renewable energy.
(1) Existing law expresses the intent of the Legislature, in
establishing the Renewable Energy Resources Program, to increase the
amount of renewable electricity generated per year, so that it equals
at least 17% of the total electricity generated for consumption in
California per year by 2006.
This bill would revise and recast that intent language so that the
amount of electricity generated per year from renewable energy
resources is increased to an amount that equals at least 20% of the
total electricity sold to retail customers in California per year by
December 31, 2010. The bill would make conforming changes related to
this provision.
(2) The Public Utilities Act imposes various duties and
responsibilities on the California Public Utilities
Commission (CPUC) with respect to the purchase of electricity and
requires the CPUC to review and adopt a procurement plan and a
renewable energy procurement plan for each electrical corporation
pursuant to the California Renewables Portfolio Standard Program. The
program requires that a retail seller of electricity, including
electrical corporations, community choice aggregators, and electric
service providers, but not including local publicly owned electric
utilities, purchase a specified minimum percentage of electricity
generated by eligible renewable energy resources, as defined, in any
given year as a specified percentage of total kilowatthours sold to
retail end-use customers each calendar year (renewables portfolio
standard). The renewables portfolio standard requires each electrical
corporation to increase its total procurement of eligible renewable
energy resources by at least an additional 1% of retail sales per
year so that 20% of its retail sales are procured from eligible
renewable energy resources no later than December 31, 2017.
This bill would instead require that each retail seller, as
defined, increase its total procurement of eligible renewable energy
resources by at least an additional 1% of retail sales per year so
that 20% of its retail sales are procured from eligible renewable
energy resources no later than December 31, 2010.
(3) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to certify eligible
renewable energy resources, to design and implement an accounting
system to verify compliance with the renewables portfolio standard by
retail sellers, and to allocate and award supplemental energy
payments to cover above-market costs of renewable energy.
This bill would require the Energy Commission to establish a
renewable energy credit, as defined, trading program and to develop
tracking, accounting, verification, and enforcement mechanisms for
the program. The bill would prohibit the Energy Commission from
certifying or awarding tradeable renewable energy credits for
electricity generated pursuant to any electricity purchase contract
with a retail seller executed before January 1, 2005, that does not
contain explicit terms and conditions specifying the ownership or
disposition of those credits. The bill would prohibit the Energy
Commission from certifying or awarding tradeable renewable energy
credits for electricity generated pursuant to any purchase contract
executed after January 1, 2005, pursuant to a prescribed federal act.
The bill would provide for the tracking of deliveries under these
purchase contracts through a prescribed accounting system. The bill
would additionally require the Energy Commission to require any
retail seller of electricity that does not meet the requirements of
the renewables portfolio standard by directly owning or purchasing
electricity generated from eligible renewable energy resources, to
purchase renewable energy credits for a quantity of electricity
produced from eligible renewable energy resources, that is sufficient
to make up the shortfall. The bill would require the CPUC to
establish rules authorizing electrical corporations to meet the
renewables portfolio standard requirements using renewable energy
credits. The bill would require the rules to prohibit an electrical
corporation from selling renewable energy credits associated with
eligible renewable energy resources included in the corporation's
baseline quantity on January 1, 2004. The bill would require the
Energy Commission to certify, and would specify criteria for, the
eligibility of renewable energy credits associated with electricity
delivered to a local publicly owned electric utility by an eligible
renewable energy resource, for purposes of compliance with the
renewables portfolio standard by a retail seller. The bill would make
other technical and conforming changes.
This bill would require the Energy Commission to review the
feasibility of increasing the target for the amount of electricity to
be procured from eligible renewable energy resources to 33% by the
year 2020, and to report the results of the review to the Governor
and Legislature by July 1, 2007.
(4) Under existing law, the governing board of a local publicly
owned electric utility is responsible for implementing and enforcing
a renewables portfolio standard that recognizes the intent of the
Legislature to encourage renewable energy resources, while taking
into consideration the effect of the standard on rates, reliability,
and financial resources and the goal of environmental improvement.
Existing law requires the governing board of a local publicly owned
electric utility to annually report certain information relative to
renewable energy resources to its customers.
This bill would additionally require that the governing board of a
local publicly owned electric utility annually report the utility's
status in implementing a renewables portfolio standard and progress
toward attaining the standard to its customers and to report to the
Energy Commission the information that the governing board is
required to annually report to their customers. These additional
reporting requirements would thereby impose a state-mandated local
program. The bill would require the Energy Commission to report to
the Governor and Legislature no later than January 1, 2007, with
recommendations for how to incentivize each local publicly owned
electric utility to implement and enforce a renewables portfolio
standard program consistent with the renewables portfolio standard
program requirements applicable to a retail seller of electricity.
(5) Under the Public Utilities Act, the CPUC requires electrical
corporations to identify a separate rate component to fund programs
that enhance system reliability and provide in-state benefits. This
rate component is a nonbypassable element of local distribution and
collected on the basis of usage. The funds are collected to support
cost-effective energy efficiency and conservation activities, public
interest research and development not adequately provided by
competitive and regulated markets, and renewable energy resources
(renewable energy public goods charge). Under existing law, 51.5% of
the money collected as part of the renewable energy public goods
charge is required to be used for programs designed to foster the
development of new in-state renewable electricity generation
facilities, and to secure for the state the environmental, economic,
and reliability benefits that operation of those facilities will
provide. Existing law also provides that any of those funds used for
new in-state renewable electricity generation facilities are required
to be expended in accordance with a specified report of the Energy
Commission to the Legislature, subject to certain requirements,
including the awarding of supplemental energy payments.
This bill would require that these funds be awarded only to a
project that is selected by an electrical corporation pursuant to a
competitive solicitation procedure found by the CPUC to comply with
the California Renewables Portfolio Standard Program and
that the project participant has entered into an electricity purchase
agreement resulting from that solicitation that is approved by the
CPUC. The bill would authorize certain projects supplying
electricity to retail sellers, as defined, to the extent
the retail seller is servicing load that is within the distribution
area of an electrical corporation and subject to the renewable energy
public goods charge, to receive supplemental energy payments
under certain circumstances. The bill would prohibit the Energy
Commission from awarding supplemental energy payments for the sale or
purchase of renewable energy credits or to service load that is not
subject to the renewable energy public goods charge. The bill
would revise existing criteria for Energy Commission consideration of
an out-of-state electrical generation facility as an eligible
renewable energy resource.
(6) Existing law requires that 17.5% of the money collected under
the renewable energy public goods charge be used for a multiyear,
consumer-based program to foster the development of emerging
renewable technologies in distributed generation applications, and
that certain funds be expended in accordance with the above-described
report, subject to, among other things, the requirement that funding
for emerging technologies be provided through a competitive,
market-based process.
This bill would make technical and nonsubstantive changes to these
provisions.
(7) Existing law requires that 10% of the money collected under
the renewable energy public goods charge be used for customer credits
to customers that entered into a direct transaction on or before
September 20, 2001, for purchases of electricity produced by
registered in-state renewable electricity generating facilities.
This bill would delete this provision.
(8) Existing law requires the use of standard terms and conditions
by all electrical corporations in contracting for eligible renewable
energy resources.
This bill would require that those terms and conditions include
the requirement that, no later than 6 months after the CPUC's
approval of an electricity purchase agreement, the following
information about the agreement be disclosed by the CPUC: party
names, resource type, project location, and project capacity.
(9) This bill would require an electrical corporation or local
publicly owned electric utility to adopt certain strategies in a
long-term plan or a procurement plan, as applicable, to achieve
efficiency in the use of fossil fuels and to address carbon
emissions, as specified.
(10) This bill would delete certain obsolete and duplicative
provisions and make technical and conforming changes.
(11) Existing law makes a violation of the Public Utilities Act or
a violation of an order of the CPUC a crime.
Because certain of the provisions of this bill are a part of
the act and an order of the CPUC would be required to
implement these provisions, and a violation of the provisions
of the bill that are part of the act or of any CPUC order
implementing these provisions would be a crime, this bill would
impose a state-mandated local program by creating new crimes.
(12) 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 with regard to certain mandates no
reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
Vote: 2/3 majority . Appropriation:
yes no . Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25740 of the Public Resources Code is amended
to read:
25740. It is the intent of the Legislature in establishing this
program, to increase the amount of electricity generated from
renewable energy resources per year, so that it equals at least 20
percent of total retail sales of electricity in California per year
by December 31, 2010.
SEC. 2. Section 25741 of the Public Resources Code
is amended to read:
25741. As used in this chapter, the following terms have the
following meaning:
(a) "In-state renewable electricity generation facility" means a
facility that meets all of the following criteria:
(1) The facility uses biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small hydroelectric
generation of 30 megawatts or less, digester gas, municipal solid
waste conversion, landfill gas, ocean wave, ocean thermal, or tidal
current, and any additions or enhancements to the facility using that
technology.
(2) The facility is located in the state or near the border of the
state with the first point of connection to the Western Electricity
Coordinating Council (WECC) transmission system located within this
state.
(3) For the purposes of this subdivision, "solid waste conversion"
means a technology that uses a noncombustion thermal process to
convert solid waste to a clean-burning fuel for the purpose of
generating electricity, and that meets all of the following criteria:
(A) The technology does not use air or oxygen in the conversion
process, except ambient air to maintain temperature control.
(B) The technology produces no discharges of air contaminants or
emissions, including greenhouse gases as defined in Section 42801.1
of the Health and Safety Code.
(C) The technology produces no discharges to surface or
groundwaters of the state.
(D) The technology produces no hazardous wastes.
(E) To the maximum extent feasible, the technology removes all
recyclable materials and marketable green waste compostable materials
from the solid waste stream prior to the conversion process and the
owner or operator of the facility certifies that those materials will
be recycled or composted.
(F) The facility at which the technology is used is in compliance
with all applicable laws, regulations, and ordinances.
(G) The technology meets any other conditions established by the
commission.
(H) The facility certifies that any local agency sending solid
waste to the facility diverted at least 30 percent of all solid waste
it collects through solid waste reduction, recycling, and
composting. For purposes of this paragraph "local agency" means any
city, county, or special district, or subdivision thereof, which is
authorized to provide solid waste handling services.
(b) "Renewable energy public goods charge" means that portion of
the nonbypassable system benefits charge authorized to be collected
and to be transferred to the Renewable Resource Trust Fund pursuant
to the Reliable Electric Service Investments Act (Article 15
(commencing with Section 399) of Chapter 2.3 of Part 1 of Division 1
of the Public Utilities Code).
(c) "Report" means the report entitled "Investing in Renewable
Electricity Generation in California" (June 2001, Publication Number
P500-00-022) submitted to the Governor and the Legislature by the
commission.
(d) (1) "Retail seller" means an entity engaged in the retail sale
of electricity to end-use customers, including any of the following:
(A) An electrical corporation, as defined in Section 218 of the
Public Utilities Code, the load of which is subject to the renewable
energy public goods charge.
(B) A community choice aggregator that provides electricity within
the distribution territory of an electrical corporation subject to
the renewable energy public goods charge.
(C) An electric service provider, as defined in Section 218.3 of
the Public Utilities Code, to the extent the electric service
provider provides electricity within the distribution territory of an
electrical corporation and to the extent the load of the electric
service provider is subject to the renewable energy public goods
charge.
(2) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power consistent with subdivision (b) of Section 218 of the
Public Utilities Code.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electrical utility as defined in
subdivision (d) of Section 9604 of the Public Utilities Code.
SEC. 2.
SEC. 3. Section 25743 of the Public Resources Code is
amended to read:
25743. (a) Fifty-one and one-half percent of the money collected
pursuant to the renewable energy public goods charge shall be used
for programs designed to foster the development of new in-state
renewable electricity generation facilities, and to secure for the
state the environmental, economic, and reliability benefits that
operation of those facilities will provide.
(b) Any funds used for new in-state renewable electricity
generation facilities pursuant to this section shall be expended in
accordance with the report, subject to all of the following
requirements:
(1) In order to cover the above market costs of eligible renewable
energy resources as approved by the Public Utilities Commission and
selected by retail sellers to fulfill their obligations under Article
16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of
Division 1 of the Public Utilities Code, the commission shall award
funds in the form of supplemental energy payments, subject to the
following criteria:
(A) The commission may establish caps on supplemental energy
payments. The caps shall be designed to provide for a viable energy
market capable of achieving the goals of Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of
the Public Utilities Code. The commission may waive application of
the caps to accommodate a facility if it is demonstrated to the
satisfaction of the commission that operation of the facility would
provide substantial economic and environmental benefits to end-use
customers subject to the funding requirements of the renewable energy
public goods charge.
(B) Supplemental energy payments shall be awarded only to
facilities that are eligible for funding under this subdivision.
(C) Supplemental energy payments awarded to facilities selected by
an electrical corporation pursuant to Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public
Utilities Code shall be paid for no longer than 10 years, but shall,
subject to the payment caps in subparagraph (A), be equal
to the cumulative above-market costs relative to the applicable
market price referent at the time of initial contracting, over the
duration of the contract with the electrical corporation.
(D) The commission shall reduce or terminate supplemental energy
payments for projects that fail either to commence and maintain
operations consistent with the contractual obligations to an
electrical corporation, or that fail to meet eligibility
requirements.
(E) Funds shall be managed in an equitable manner in order for
retail sellers to meet their obligation under Article 16 (commencing
with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the
Public Utilities Code.
(F) A project may receive funds pursuant to this section only if
it is selected by an electrical corporation pursuant to a competitive
solicitation that is found by the Public Utilities Commission to
comply with the California Renewables Portfolio Standard Program
under Article 16 (commencing with Section 399.11) of Chapter 2.3 of
Part 1 of Division 1 of the Public Utilities Code, and that has
entered into an electricity purchase agreement resulting from that
solicitation, that is approved by the Public Utilities Commission. A
project selected for an electricity purchase agreement by another
retail seller may receive supplemental energy payments if the retail
seller demonstrates to the Public Utilities Commission that the
selection of the project is consistent with the results of a
least-cost and best-fit process, and the supplemental energy payments
are reasonable in comparison to those paid under similar contracts
with other retail sellers. The commission may not award supplemental
energy payments for the sale or purchase of renewable energy credits
or to service load that is not subject to the renewable energy
public goods charge .
(2) The commission may determine as part of a solicitation, that a
facility that does not meet the definition of an "in-state renewable
electricity generation technology" facility solely because it is
located outside the state, is eligible for funding under this
subdivision if it meets all of the following requirements:
(A) It is or will be connected to the Western Electricity
Coordinating Council (WECC) transmission system.
(B) It commences initial commercial operation after January 1,
2005.
(C) It has a contract with a retail seller or another entity to
supply electricity to end-use customers subject to the renewable
energy public goods charge for a period of time at least equal to the
duration of incentive payments provided pursuant to this
subdivision.
(D) It demonstrates delivery of the electricity under contract to
the retail seller serving end-use customers subject to the renewable
energy public goods charge.
(E) It will not cause or contribute to any violation of a
California environmental quality standard or requirement.
(F) If the facility is outside of the United States, it is
developed and operated in a manner that is as protective of the
environment as a similar facility located in the state.
(G) It meets any other condition established by the commission.
(3) Facilities that are eligible to receive funding pursuant to
this subdivision shall be registered in accordance with criteria
developed by the commission and those facilities may not receive
payments for any electricity produced that has any of the following
characteristics:
(A) Is sold under an existing long-term contract with an existing
in-state electrical corporation if the contract includes fixed energy
or capacity payments, except for that electricity that satisfies
subparagraph (C) of paragraph (1) of subdivision (c) of Section 399.6
of the Public Utilities Code.
(B) Is used onsite or is sold to customers in a manner that
excludes competitive transition charge payments, or is otherwise
excluded from competitive transition charge payments.
(C) Is produced by a facility that is owned by an electrical
corporation or a local publicly owned electric utility as defined in
subdivision (d) of Section 9604 of the Public Utilities Code.
(D) Is a hydroelectric generation project that will require a new
or increased appropriation of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(E) Is a solid waste conversion facility, unless the facility
meets the criteria established in paragraph (3) of subdivision (a) of
Section 25741 and the facility certifies that any local agency
sending solid waste to the facility is in compliance with Division 30
(commencing with Section 40000), has reduced, recycled, or composted
solid waste to the maximum extent feasible, and shall have been
found by the California Integrated Waste Management Board to have
diverted at least 30 percent of all solid waste through source
reduction, recycling, and composting.
(4) Eligibility to compete for funds or to receive funds shall be
contingent upon having to sell the output of
electricity generated by the renewable electricity generation
facility to customers subject to the funding requirements of the
renewable energy public goods charge.
(5) The commission may require applicants competing for funding to
post a forfeitable bid bond or other financial guaranty as an
assurance of the applicant's intent to move forward expeditiously
with the project proposed. The amount of any bid bond or financial
guaranty may not exceed 10 percent of the total amount of the funding
requested by the applicant.
(6) In awarding funding, the commission may provide preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(c) Repowered existing facilities shall be eligible for funding
under this subdivision if the capital investment to repower the
existing facility equals at least 80 percent of the value of the
repowered facility.
(d) Facilities engaging in the direct combustion of municipal
solid waste or tires are not eligible for funding under this
subdivision.
(e) Production incentives awarded under this subdivision prior to
January 1, 2002, shall commence on the date that a project begins
electricity production, provided that the project was operational
prior to January 1, 2002, unless the commission finds that the
project will not be operational prior to January 1, 2002, due to
circumstances beyond the control of the developer. Upon making a
finding that the project will not be operational due to circumstances
beyond the control of the developer, the commission shall pay
production incentives over a five-year period, commencing on the date
of operation, provided that the date that a project begins
electricity production may not extend beyond January 1, 2007.
(f) Facilities generating electricity from biomass energy shall be
considered an in-state renewable electricity generation technology
facility to the extent that they report to the commission the types
and quantities of biomass fuels used and certify to the satisfaction
of the commission that fuel utilization is limited to the following:
(1) Agricultural crops and agricultural wastes and residues.
(2) Solid waste materials such as waste pallets, crates, dunnage,
manufacturing, and construction wood wastes, landscape or
right-of-way tree trimmings, mill residues that are directly the
result of the milling of lumber, and rangeland maintenance residues.
(3) Wood and wood wastes that meet all of the following
requirements:
(A) Have been harvested pursuant to an approved timber harvest
plan prepared in accordance with the Z'berg-Nejedly Forest Practice
Act of 1973 (Chapter 8 (commencing with Section 4511) of Part 2 of
Division 4).
(B) Have been harvested for the purpose of forest fire fuel
reduction or forest stand improvement.
(C) Do not transport or cause the transportation of species known
to harbor insect or disease nests outside zones of infestation or
current quarantine zones, as identified by the Department of Food and
Agriculture or the Department of Forestry and Fire Protection,
unless approved by the Department of Food and Agriculture and the
Department of Forestry and Fire Protection.
SEC. 3. Section 25744 of the Public Resources Code is amended to
read:
25744. (a) Seventeen and one-half percent of the money collected
pursuant to the renewable energy public goods charge shall be used
for a multiyear, consumer-based program to foster the development of
emerging renewable technologies in distributed generation
applications.
(b) Any funds used for emerging technologies pursuant to this
section shall be expended in accordance with the report, subject to
all of the following requirements:
(1) Funding for emerging technologies shall be provided through a
competitive, market-based process that is in place for a period of
not less than five years, and is structured to allow eligible
emerging technology manufacturers and suppliers to anticipate and
plan for increased sale and installation volumes over the life of the
program.
(2) The program shall provide monetary rebates, buydowns, or
equivalent incentives, subject to paragraph (3), to purchasers,
lessees, lessors, or sellers of eligible electricity generating
systems. Incentives shall benefit the end-use consumer of renewable
generation by directly and exclusively reducing the purchase or lease
cost of the eligible system, or the cost of electricity produced by
the eligible system. Incentives shall be issued on the basis of the
rated electrical generating capacity of the system measured in watts,
or the amount of electricity production of the system, measured in
kilowatthours. Incentives shall be limited to a maximum percentage of
the system price, as determined by the commission.
(3) Eligible distributed emerging technologies are photovoltaic,
solar thermal electric, fuel cell technologies that utilize renewable
fuels, and wind turbines of not more than 50 kilowatts rated
electrical generating capacity per customer site, and other
distributed renewable emerging technologies that meet the emerging
technology eligibility criteria established by the commission.
Eligible electricity generating systems are intended primarily to
offset part or all of the consumer's own electricity demand, and
shall not be owned by local publicly owned electric utilities, nor be
located at a customer site that is not receiving distribution
service from an electrical corporation that is subject to the
renewable energy public goods charge and contributing funds to
support programs under this chapter. All eligible electricity
generating system components shall be new and unused, shall not have
been previously placed in service in any other location or for any
other application, and shall have a warranty of not less than five
years to protect against defects and undue degradation of electrical
generation output. Systems and their fuel resources shall be located
on the same premises of the end-use consumer where the consumer's own
electricity demand is located, and all eligible electricity
generating systems shall be connected to the utility grid in
California. The commission may require eligible electricity
generating systems to have meters in place to monitor and measure a
system's performance and generation. Only systems that will be
operated in compliance with applicable law and the rules of the
Public Utilities Commission shall be eligible for funding.
(4) The commission shall limit the amount of funds available for
any system or project of multiple systems and reduce the level of
funding for any system or project of multiple systems that has
received, or may be eligible to receive, any government or utility
funds, incentives, or credit.
(5) In awarding funding, the commission may provide preference to
systems that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(6) In awarding funding, the commission shall develop and
implement eligibility criteria and a system that provides preference
to systems based upon system performance, taking into account
factors, including shading, insulation levels, and installation
orientation.
(7) At least once annually, the commission shall publish and make
available to the public the balance of funds available for emerging
renewable energy resources for rebates, buydowns, and other
incentives for the purchase of these resources.
(c) Notwithstanding Section 399.6 of the Public Utilities Code,
the commission may expend, until December 31, 2008, up to sixty
million dollars ($60,000,000) of the funding allocated to the
Renewable Resources Trust Fund for the program established in this
section, subject to the repayment requirements of subdivision (f) of
Section 25751.
SEC. 4. Section 25744 of the Public Resources Code
is amended to read:
25744. (a) Seventeen and one-half percent of the money collected
pursuant to the renewable energy public goods charge shall be used
for a multiyear, consumer-based program to foster the development of
emerging renewable technologies in distributed generation
applications.
(b) Any funds used for emerging technologies pursuant to this
section shall be expended in accordance with the report, subject to
all of the following requirements:
(1) Funding for emerging technologies shall be provided through a
competitive, market-based process that shall be
is in place for a period of not less than five years, and
shall be is structured so as
to allow eligible emerging technology manufacturers and
suppliers to anticipate and plan for increased sale and installation
volumes over the life of the program.
(2) The program shall provide monetary rebates, buydowns, or
equivalent incentives, subject to subparagraph (C)
paragraph (3) , to purchasers, lessees, lessors, or
sellers of eligible electricity generating systems. Incentives shall
benefit the end-use consumer of renewable generation by directly and
exclusively reducing the purchase or lease cost of the eligible
system, or the cost of electricity produced by the eligible system.
Incentives shall be issued on the basis of the rated electrical
generating capacity of the system measured in watts, or the amount of
electricity production of the system, measured in kilowatthours.
Incentives shall be limited to a maximum percentage of the system
price, as determined by the commission.
(3) Eligible distributed emerging technologies are photovoltaic,
solar thermal electric, fuel cell technologies that utilize renewable
fuels, and wind turbines of not more than 50 kilowatts rated
electrical generating capacity per customer site, and other
distributed renewable emerging technologies that meet the emerging
technology eligibility criteria established by the commission.
Eligible electricity generating systems are intended primarily to
offset part or all of the consumer's own electricity demand, and
shall not be owned by local publicly owned electric utilities, nor be
located at a customer site that is not receiving distribution
service from an electrical corporation that is subject to the
renewable energy public goods charge and contributing funds to
support programs under this chapter. All eligible electricity
generating system components shall be new and unused, shall not have
been previously placed in service in any other location or for any
other application, and shall have a warranty of not less than five
years to protect against defects and undue degradation of electrical
generation output. Systems and their fuel resources shall be located
on the same premises of the end-use consumer where the consumer's own
electricity demand is located, and all eligible electricity
generating systems shall be connected to the utility grid in
California. The commission may require eligible electricity
generating systems to have meters in place to monitor and measure a
system's performance and generation. Only systems that will be
operated in compliance with applicable law and the rules of the
Public Utilities Commission shall be eligible for funding.
(4) The commission shall limit the amount of funds available for
any system or project of multiple systems and reduce the level of
funding for any system or project of multiple systems that has
received, or may be eligible to receive, any government or utility
funds, incentives, or credit.
(5) In awarding funding, the commission may provide preference to
systems that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(6) In awarding funding, the commission shall develop and
implement eligibility criteria and a system that provides preference
to systems based upon system performance, taking into account
factors, including , but not limited to, shading,
insulation levels, and installation orientation.
(7) At least once annually, the commission shall publish and make
available to the public the balance of funds available for emerging
renewable energy resources for rebates, buydowns, and other
incentives for the purchase of these resources.
(c) Notwithstanding Section 399.6 of the Public Utilities Code,
the commission may expend, until December 31, 2008, up to sixty
million dollars ($60,000,000) of the funding allocated to the
Renewable Resources Trust Fund for the program established in this
section, subject to the repayment requirements of subdivision (f) of
Section 25751.
SEC. 4.
SEC. 5. Section 25745 of the Public Resources Code is
repealed.
SEC. 5.
SEC. 6. Section 25749 of the Public Resources Code is
repealed.
SEC. 7. Section 25752 is added to the Public
Resources Code , to read:
25752. The commission shall review the feasibility of increasing
the target for electricity to be procured from eligible renewable
energy resources to 33 percent by the year 2020, and to report to the
Governor and the Legislature by July 1, 2007, with the results of
the review. The review shall consider and report on all of the
following:
(a) Deliverability of electricity from eligible renewable energy
resources to end users and any needed additions or upgrades to the
transmission grid system.
(b) Potential impacts upon the rates of electrical corporations
and whether or not a renewable energy public goods charge is
necessary to fund the above-market costs of electricity generated
from eligible renewable energy resources.
(c) The progress made by electrical corporations toward meeting
the goal of procuring from renewaable energy resources 20 percent of
the electricity sold to retail customers per year by December 31,
2010.
(d) The
progress made by all other retail sellers and local publicly owned
electric utilities as defined in subdivision (d) of Section 9604 of
the Public Utilities Code, toward meeting the goal of procuring from
renewable energy resources 20 percent of the electricity sold to
retail customers per year by December 31, 2010.
SEC. 6.
SEC. 8. Section 387 of the Public Utilities Code is
amended to read:
387. (a) Each governing body of a local publicly owned electric
utility, as defined in Section 9604, shall be responsible for
implementing and enforcing a renewables portfolio standard that
recognizes the intent of the Legislature to encourage renewable
resources, while taking into consideration the effect of the standard
on rates, reliability, and financial resources and the goal of
environmental improvement.
(b) Each local publicly owned electric utility shall report, on an
annual basis, to its customers and to the State Energy Resources
Conservation and Development Commission, the following:
(1) Expenditures of public goods funds collected pursuant to
Section 385 for renewable energy resource development. Reports shall
contain a description of programs, expenditures, and expected or
actual results.
(2) The resource mix used to serve its customers by fuel type.
Reports shall contain the contribution of each type of renewable
energy resource with separate categories for those fuels considered
eligible renewable energy resources as defined by Section 399.12.
(3) The utility's status in implementing a renewables portfolio
standard pursuant to subdivision (a) and the utility's progress
toward attaining the standard following implementation.
SEC. 7. Section 399.11 of the Public Utilities Code is amended to
read:
399.11. The Legislature finds and declares all of the following:
(a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from renewable energy
resources by December 31, 2010, and for the purposes of increasing
the diversity, reliability, public health and environmental benefits
of the energy mix, it is the intent of the Legislature that the
California Public Utilities Commission and the State Energy Resources
Conservation and Development Commission implement the California
Renewables Portfolio Standard Program described in this article.
(b) Increasing California's reliance on renewable energy resources
may promote stable electricity prices, protect public health,
improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce reliance
on imported fuels.
(c) The development of renewable energy resources and the delivery
of the electricity generated by those resources to customers in
California may ameliorate air quality problems throughout the state
and improve public health by reducing the burning of fossil fuels and
the associated environmental impacts and by reducing in-state fossil
fuel extraction.
(d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the State Energy Resources Conservation and
Development Commission and established pursuant to Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code.
(e) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets. In order to attain a target of generating 20
percent of total retail sales of electricity in California from
renewable energy resources by December 31, 2010, the state must
expedite regulatory proceedings related to the addition or
modification of electric transmission by fast-tracking the processing
of transmission permit requests needed to facilitate the development
or delivery of renewable generation. It is the intent of the
Legislature that the commission report to the Legislature annually,
consistent with its reporting obligations under Section 1701.6, the
actions it has taken to fast-track completion of proceedings related
to the addition or modification of electric transmission needed to
access renewable energy resources, and the results of those actions.
SEC. 8. Section 399.12 of the Public Utilities Code is amended to
read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) "Eligible renewable energy resource" means an electric
generating facility that meets the definition of "in-state renewable
electricity generation facility" in Section 25741 of the Public
Resources Code, subject to the following limitations:
(1) A geothermal generation facility originally commencing
operation prior to September 26, 1996, shall be eligible for purposes
of adjusting a retail seller's baseline quantity of eligible
renewable energy resources except for electricity certified as
incremental geothermal production by the Energy Commission, provided
that the incremental electricity was not sold to an electrical
corporation under contract entered into prior to September 26, 1996.
For each facility seeking certification, the Energy Commission shall
determine historical production trends and establish criteria for
measuring incremental geothermal production that recognizes the
declining geothermal output of existing steamfields and the
contribution of capital investments in the facility or wellfield.
This paragraph shall remain operative only until January 1, 2010.
(2) (A)An existing small hydroelectric generation facility of 30
megawatts or less shall be eligible only if a retail seller owned or
procured the electricity from the facility as of December 31, 2003,
and that electricity shall be eligible only for purposes of
establishing the baseline. A new hydroelectric facility is not an
eligible renewable energy resource if it will require a new or
increased appropriation or diversion of water under Part 2
(commencing with Section 1200) of Division 2 of the Water Code.
(B) Notwithstanding subparagraph (A), an existing conduit
hydroelectric facility, as defined by Section 823a of Title 16 of the
United States Code, of 30 megawatts or less, shall be eligible for
the purposes of satisfying a retail seller's baseline quantity of
eligible renewable energy resources. A new conduit hydroelectric
facility, as defined by Section 823a of Title 16 of the United States
Code, of 30 megawatts or less, shall be an eligible renewable energy
resource so long as it does not require a new or increased
appropriation or diversion of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(3) A facility engaged in the combustion of municipal solid waste
shall not be considered an eligible renewable resource unless it is
located in Stanislaus County and was operational prior to September
26, 1996. Electricity generated by a facility meeting these
requirements shall be eligible only for the purpose of adjusting a
retail seller's baseline quantity of eligible renewable energy
resources.
(4) Notwithstanding paragraph (1), any geothermal electricity
included in the baseline of a retail seller from a facility under a
long-term contract executed before January 1, 2004, shall be eligible
to satisfy the annual procurement targets of any retail seller upon
the expiration of that contract.
(b) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(c) "Retail seller" means an entity engaged in the retail sale of
electricity to end-use customers located within the state, including
any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
subject to the same terms and conditions applicable to an electrical
corporation.
(3) An electric service provider, as defined in Section 218.3,
subject to the following conditions:
(A) An electric service provider shall be considered a retail
seller under this article for sales to any customer acquiring service
after January 1, 2003.
(B) An electric service provider shall be considered a retail
seller under this article for sales to all its customers beginning on
the earlier of January 1, 2006, or the date on which a contract
between an electric service provider and a retail customer expires.
Nothing on this subdivision may require an electric service provider
to disclose the terms of the contract to the commission.
(C) The commission shall institute a rulemaking to determine the
manner in which electric service providers will participate in the
renewables portfolio standard program. The electric service provider
shall be subject to the same terms and conditions applicable to an
electrical corporation pursuant to this article. Nothing in this
paragraph shall impair a contract entered into between an electric
service provider and a retail customer prior to the suspension of
direct access by the commission pursuant to Section 80110 of the
Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing electricity consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electric utility as defined in
subdivision (d) of Section 9604.
(d) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller is required to procure pursuant to Sections 399.13
and 399.15.
(e) "Renewable energy credit" means a certificate of proof, issued
through the accounting system established by the Energy Commission
pursuant to Section 399.13, that one unit of electricity was
generated by an eligible renewable energy resource and delivered to a
retail seller, the Independent System Operator, or a local publicly
owned electric utility subject to the requirements of subdivision (e)
of Section 399.13. The Energy Commission shall ensure that the
renewable energy credit includes all renewable and environmental
attributes associated with the production of electricity from the
eligible renewable energy resource, and shall rely on the definition
of "renewable energy credit" adopted as a standard term by the
commission. Any electricity generated by an eligible renewable energy
resource attributable to the use of nonrenewable fuels, beyond a de
minimus quantity, as determined by the Energy Commission, shall not
result in the creation of any renewable energy credits.
SEC. 9. Section 399.13 of the Public Utilities Code is amended to
read:
399.13. The Energy Commission shall do all of the following:
(a) Certify eligible renewable energy resources that it determines
meet the criteria described in subdivision (a) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that electricity generated by an eligible renewable energy resource
is counted only once for the purpose of meeting the renewables
portfolio standard of this state or any other state, to certify
renewable energy credits produced by eligible renewable energy
resources, and to verify retail product claims in this state or any
other state. In establishing the guidelines governing this accounting
system, the Energy Commission shall collect data from electricity
market participants that it deems necessary to verify compliance of
retail sellers, in accordance with the requirements of this article
and the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). In
seeking data from electrical corporations, the Energy Commission
shall request data from the commission. The commission shall collect
data from electrical corporations and remit the data to the Energy
Commission within 90 days of the request.
(c) Establish a system for tracking and verifying renewable energy
credits. The Energy Commission shall consult with other states in
the Western Electricity Coordinating Council transmission system to
develop consistent mechanisms and protocols for verifying renewable
energy credits and to prevent double counting of the electricity
generated from any eligible renewable energy resource.
(d) Allocate and award supplemental energy payments pursuant to
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code, to eligible renewable energy resources to
cover above-market costs of renewable energy. A project may receive
supplemental energy payments only if it is selected by an electrical
corporation pursuant to a competitive solicitation that is found by
the commission to comply with the California Renewables Portfolio
Standard Program under this article and that has entered into an
electricity purchase agreement resulting from that solicitation that
is approved by the commission. A project selected for an electricity
purchase agreement by another retail seller may receive supplemental
energy payments if the retail seller demonstrates to the commission
that the selection of the project is consistent with the results of a
least-cost and best-fit process, and that the supplemental energy
payments are reasonable in comparison to those paid under similar
contracts with other retail sellers. The Energy Commission shall not
award supplemental energy payments for the sale or purchase of
renewable energy credits.
(e) Certify, for purposes of compliance with the renewables
portfolio standard by a retail seller, the eligibility of renewable
energy credits associated with deliveries of electricity by an
eligible renewable energy resource to a local publicly owned electric
utility if the Energy Commission determines that the following
conditions have been satisfied:
(1) The local publicly owned electric utility procuring the
electricity complies with the requirements of this article.
(2) The local publicly owned electric utility has established
annual procurement targets comparable to those applicable to an
electrical corporation, is procuring sufficient eligible renewable
energy resources to satisfy the targets, and will not fail to satisfy
the targets in the event that the renewable energy credit is sold to
another retail seller.
(f) The Energy Commission shall not certify or award tradeable
renewable energy credits for electricity generated pursuant to any
electricity purchase contract with a retail seller executed before
January 1, 2005, unless the contract contains explicit terms and
conditions specifying the ownership or disposition of those credits.
Deliveries under those contracts shall be tracked through the
accounting system described in subdivision (b) and included in the
baseline quantity of eligible renewable energy resources of the
purchasing retail seller pursuant to Section 399.15.
(g) The Energy Commission shall not certify or award tradeable
renewable energy credits for electricity generated under any
electricity purchase contract executed after January 1, 2005,
pursuant to the federal Public Utility Regulatory Policies Act of
1978 (16 U.S.C. Sec. 2601 et seq.). Deliveries under the electricity
purchase contracts shall be tracked through the accounting system
described in subdivision (b) and count towards the renewables
portfolio standard obligations of the purchasing retail seller.
SEC. 10. Section 399.14 of the Public Utilities Code is amended to
read:
399.14. (a) The commission shall direct each electrical
corporation to prepare a renewable energy procurement plan as
described in paragraph (3) to satisfy its obligations under the
renewables portfolio standard. To the extent feasible, this
procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary.
(1) (A) The commission shall not require an electrical corporation
to conduct procurement to fulfill the renewables portfolio standard
until the commission determines either of the following:
(i) The electrical corporation has attained an investment grade
credit rating as determined by at least two major rating agencies.
(ii) The electrical corporation is able to procure eligible
renewable energy resources on reasonable terms, those resources can
be financed if necessary, and the procurement will not impair the
restoration of an electrical corporation's creditworthiness. This
provision shall not apply before April 1, 2004, for any electrical
corporation that on June 30, 2003, is in federal court under Chapter
11 of the federal Bankruptcy Code (11 U.S.C. Sec. 1101 et seq.).
(B) Within 90 days of the commission's determination as provided
in subparagraph (A), an electrical corporation shall conduct
solicitations to implement a renewable energy procurement plan. The
determination required by this paragraph shall apply only to the
requirements established pursuant to this article. The requirements
established for an electrical corporation pursuant to Section 454.5
shall be governed by that section.
(2) The commission shall adopt, by rule, for all electrical
corporations, all of the following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make specific
determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources. In order to ensure that the
market price established by the commission pursuant to subdivision
(c) of Section 399.15 does not influence the amount of a bid
submitted through the competitive solicitation in a manner that would
increase the amount ratepayers are obligated to pay for electricity
generated by eligible renewable energy resources, and in order to
ensure that the bid price does not influence the establishment of the
market price, the electrical corporation shall not transmit or share
the results of any competitive solicitation for eligible renewable
energy resources until the commission has established market prices
pursuant to subdivision (c) of Section 399.15.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable energy
resources to comply with the annual California Renewables Portfolio
Standard Program obligations on a total cost basis. This process
shall consider estimates of indirect costs associated with needed
transmission investments and ongoing utility expenses resulting from
integrating and operating eligible renewable energy resources.
(C) Flexible rules for compliance, including both of the
following:
(i) Rules permitting electrical corporations to apply excess
procurement in one year to subsequent years or inadequate procurement
in one year to no more than the following three years.
(ii) Rules permitting electrical corporations to purchase
renewable energy credits from an eligible renewable energy resource
pursuant to a contract of at least 10 years duration, under the
condition that the electricity generated by the eligible renewable
energy resource is sold into the California electricity market and no
feasible or cost-effective transmission facilities exist to deliver
the electricity to the electrical corporation's service territory.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall include the renewable energy credits
associated with all electricity generation specified under the
contract. The standard terms and conditions shall include the
requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of renewable generation resources
with deliverability characteristics that may include peaking,
dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for renewable
generation of each deliverability characteristic, required online
dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration. Any bid solicitation or contract of
less than 10 years in duration shall be considered nonconforming.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of renewable procurement pursuant to this article by
the electrical corporation.
(c) The commission shall review the results of a renewable energy
resources solicitation submitted for approval by an electrical
corporation and accept or reject proposed contracts with eligible
renewable energy resources based on consistency with the approved
renewable energy procurement plan. If the commission determines that
the bid prices are elevated due to a lack of effective competition
amongst the bidders, the commission shall direct the electrical
corporation to renegotiate the contracts or conduct a new
solicitation.
(d) If an electrical corporation fails to comply with a commission
order adopting a renewable energy procurement plan, the commission
shall exercise its authority pursuant to Section 2113 to require
compliance. The commission shall enforce comparable penalties on any
other retail seller that fails to meet annual procurement targets
established pursuant to Section 399.15.
(e) Upon application by a retail seller, the commission may
authorize a procurement entity to enter into contracts on behalf of
customers of the retail seller for deliveries of eligible renewable
energy resources to satisfy the annual renewables portfolio standard
obligations, subject to similar terms and conditions applicable to a
retail seller. The commission shall allow the procurement entity to
recover reasonable costs through retail rates subject to review and
approval.
(f) Procurement and administrative costs
associated with long-term contracts entered into by an electrical
corporation for eligible renewable energy resources pursuant to this
article, at or below the market price determined by the commission
pursuant to subdivision (c) of Section 399.15, shall be deemed
reasonable per se, and shall be recoverable in rates.
(g) For purposes of this article, "procure" means that a retail
seller may acquire the electricity generated by an eligible renewable
energy resource that it owns or for which it has contracted. Nothing
in this article is intended to imply that the purchase of
electricity from third parties in a wholesale transaction is the
preferred method of fulfilling a retail seller's obligation to comply
with this article.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives or supplemental energy payments pursuant to
Section 25742 or 25743 of the Public Resources Code, including work
performed to qualify, receive, or maintain production incentives or
supplemental energy payments is "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
SEC. 11. Section 399.15 of the Public Utilities Code is amended to
read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of electricity generated by eligible renewable energy resources, or
an equivalent quantity of renewable energy credits, as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year, if sufficient funds are made available
pursuant to paragraph (2), and Section 399.6 and Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code, to cover the above-market costs of eligible
renewables.
(b) The commission shall implement annual procurement targets for
each retail seller as follows:
(1) Beginning on January 1, 2003, each retail seller shall,
pursuant to subdivision (a), increase its total procurement of
eligible renewable energy resources by at least an additional 1
percent of retail sales per year so that 20 percent of its retail
sales are procured from eligible renewable energy resources no later
than December 31, 2010.
(2) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and, to the extent
applicable, adjusted going forward pursuant to subdivision (a) of
Section 399.12. The commission shall establish baselines and set
annual procurement targets for other retail sellers that ensure that
the departure of customer loads from bundled service by an electrical
corporation do not cause any reduction in the quantity of eligible
renewable energy resources that would have otherwise been procured by
the electrical corporation to serve those customers.
(3) Only for purposes of establishing these targets, the
commission shall include all electricity sold to retail customers by
the Department of Water Resources pursuant to Section 80100 of the
Water Code in the calculation of retail sales by an electrical
corporation.
(4) In the event that a retail seller fails to procure sufficient
eligible renewable energy resources in a given year to meet any
annual target established pursuant to this subdivision, the retail
seller shall procure additional eligible renewable energy resources
in subsequent years to compensate for the shortfall if sufficient
funds are made available pursuant to paragraph (2) of subdivision
(a), Section 399.6, and Chapter 8.6 (commencing with Section 25740)
of Division 15 of the Public Resources Code, to cover the
above-market costs of eligible renewable energy resources.
(5) If supplemental energy payments from the Energy Commission, in
combination with the market prices approved by the commission, are
insufficient to cover the above-market costs of eligible renewable
energy resources, the commission shall allow a retail seller to limit
its annual procurement obligation to the quantity of eligible
renewable energy resources that can be procured with available
supplemental energy payments. A retail seller shall not be required
to enter into long-term contracts with operators of eligible
renewable energy resources that exceed the market prices established
pursuant to subdivision (c).
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with renewable generators, in consideration of the
following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to the electrical corporation's
general procurement activities as authorized by the commission.
(2) The long-term ownership, operating, and fixed price fuel costs
associated with fixed price electricity from new generating
facilities.
(3) The value of different products including baseload, peaking,
and as-available electricity.
(d) The Energy Commission shall provide supplemental energy
payments from funds in the New Renewable Resources Account of the
Renewable Resource Trust Fund to eligible renewable energy resources
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, consistent with this article, for
above-market costs. Indirect costs associated with the purchase of
eligible renewable energy resources by an electrical corporation,
including imbalance energy charges, sale of excess energy, decreased
generation from existing resources, or transmission upgrades, shall
not be eligible for supplemental energy payments, but are recoverable
in rates, as authorized by the commission.
(e) The establishment of a renewables portfolio standard shall not
constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
(f) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.
(g) The commission shall establish rules that authorize the use of
renewable energy credits to satisfy annual procurement targets. At a
minimum, the rules shall do all of the following:
(1) Prohibit a renewable energy credit from being counted more
than once by any retail seller for compliance with the renewables
portfolio standard of this state or any other state, or for verifying
retail product claims in this state or any other state.
(2) Ensure that any revenues received by an electrical corporation
for the sale of renewable energy credits are credited to ratepayers.
(3) Limit the quantity of renewable energy credits that can be
procured unbundled from electricity generation to meet the annual
procurement targets of a retail seller.
(4) Require every retail seller to demonstrate that all purchased
renewable energy credits are certified by the Energy Commission and
comply with the requirements of this article.
(5) Ensure that no retail seller shall be obligated to procure
renewable energy credits to satisfy annual procurement targets in the
event that supplemental energy payments, in combination with the
market prices approved by the commission, are insufficient to cover
the above-market costs of long-term contracts with eligible renewable
energy resources.
(6) Prohibit an electrical corporation from selling renewable
energy credits associated with eligible renewable energy resources
included in that electrical corporation's baseline quantity on
January 1, 2004.
(7) Prohibit sales of renewable energy credits by an electrical
corporation during any year in which the electrical corporation
utilizes flexible compliance rules to permit inadequate procurement
pursuant to subparagraph (C) of paragraph (2) of subdivision (a) of
Section 399.14.
SEC. 12. Section 399.16 of the Public Utilities Code is amended to
read:
399.16. The Energy Commission may consider an electric generating
facility that is located outside the state to be an eligible
renewable energy resource if the facility meets the criteria
described in Section 399.12 and all of the following requirements:
(a) It is connected to the Western Electricity Coordinating
Council (WECC) transmission system.
(b) It commences initial commercial operation after January 1,
2006, supplies electricity under a guaranteed contract with a retail
seller, and demonstrates delivery of the contracted amount of
electricity to that retail seller.
(c) It participates in the accounting system to verify compliance
with the renewables portfolio standard by retail sellers, once
established by the Energy Commission pursuant to subdivision (b) of
Section 399.13.
SEC. 9. Section 399.11 of the Public Utilities
Code is amended to read:
399.11. The Legislature finds and declares all of the following:
(a) In order to attain a target of generating 20
percent of total retail sales of electricity in California from
renewable energy for the State of California
resources by December 31, 2010, and for the purposes of
increasing the diversity, reliability, public health and
environmental benefits of the energy mix, it is the intent of the
Legislature that the California Public Utilities Commission and the
State Energy Resources Conservation and Development Commission
implement the California Renewables Portfolio Standard Program
described in this article.
(b) Increasing California's reliance on renewable energy resources
may promote stable electricity prices, protect public health,
improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce reliance
on imported fuels.
(c) The development of renewable energy resources and the
delivery of the electricity generated by those resources to customers
in California may ameliorate air quality problems throughout
the state and improve public health by reducing the burning of fossil
fuels and the associated environmental impacts and by reducing
in-state fossil fuel extraction .
(d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources
Program administered by the State Energy Resources Conservation and
Development Commission and established pursuant to Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code.
(e) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.
SEC. 10. Section 399.12 of the Public Utilities
Code is amended to read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) "Eligible renewable energy resource" means an electric
generating facility that is one of the following
meets the definition of "in-state renewable electricity
generation facility" in Section 25741 of the Public Resources Code,
subject to the following limitations :
(1) The facility meets the definition of "in-state renewable
electricity generation facility" in Section 25741 of the Public
Resources Code.
(2)
(1) A geothermal generation facility originally
commencing operation prior to September 26, 1996, shall be eligible
for purposes of adjusting a retail seller's baseline quantity of
eligible renewable energy resources except for output
electricity certified as incremental geothermal
production by the Energy Commission, provided that the incremental
output electricity was not sold to an
electrical corporation under contract entered into prior to September
26, 1996. For each facility seeking certification, the Energy
Commission shall determine historical production trends and establish
criteria for measuring incremental geothermal production that
recognizes the declining geothermal output of existing
steamfields and the contribution of capital investments in the
facility or wellfield. This paragraph shall remain operative
only until January 1, 2010.
(3) The output of a
(2) (A) An existing small
hydroelectric generation facility of 30 megawatts or less
procured or owned by an electrical corporation as of the date of
enactment of this article shall be eligible only if a
retail seller owned or procured the electricity from the facility as
of December 31, 2003, and that electricity shall be eligible
only for purposes of establishing the baseline of an
electrical corporation pursuant to paragraph (3) of subdivision (a)
of Section 399.15 . A new hydroelectric facility is not an
eligible renewable energy resource if it will require a new or
increased appropriation or diversion of water under Part 2
(commencing with Section 1200) of Division 2 of the Water Code.
(B) Notwithstanding subparagraph (A), an existing conduit
hydroelectric facility, as defined by Section 823a of Title 16 of the
United States Code, of 30 megawatts or less, shall be eligible for
the purposes of satisfying a retail seller's baseline quantity of
eligible renewable energy resources. A new conduit hydroelectric
facility, as defined by Section 823a of Title 16 of the United States
Code, of 30 megawatts or less, shall be an eligible renewable energy
resource so long as it does not require a new or increased
appropriation or diversion of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(4)
(3) A facility engaged in the combustion of municipal
solid waste shall not be considered an eligible renewable resource
unless it is located in Stanislaus County and was operational prior
to September 26, 1996. Output from such facilities
Electricity generated by a facility meeting these requirements
shall be eligible only for the purpose of adjusting a retail
seller's baseline quantity of eligible renewable energy resources.
(4) Notwithstanding paragraph (1), any geothermal electricity
included in the baseline of a retail seller from a facility under a
long-term contract executed before January 1, 2004, shall be eligible
to satisfy the annual procurement targets of any retail seller upon
the expiration of that contract. This paragraph shall become
inoperative on January 1, 2010, unless a later enacted statute
deletes or extends that date.
(b) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(c) "Retail seller" means an entity engaged in the retail sale of
electricity to end-use customers located within the state
, including any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
subject to the same terms and conditions applicable to an electrical
corporation.
(3) An electric service provider, as defined in Section 218.3
subject to the following conditions:
(A) An electric service provider shall be considered a retail
seller under this article for sales to any customer acquiring service
after January 1, 2003.
(B) An electric service provider shall be considered a retail
seller under this article for sales to all its customers beginning on
the earlier of January 1, 2006, or the date on which a contract
between an electric service provider and a retail customer expires.
Nothing in this subdivision may require an electric service provider
to disclose the terms of the contract to the commission.
(C) The commission shall institute a rulemaking to determine the
manner in which electric service providers will participate in the
renewables portfolio standard program . The electric
service provider shall be subject to the same terms and conditions
applicable to an electrical corporation pursuant to this article.
Nothing in this paragraph shall impair a contract entered into
between an electric service provider and a retail customer prior to
the suspension of direct access by the commission pursuant to Section
80110 of the Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power electricity consistent
with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electrical
electric utility as defined in subdivision (d) of Section 9604.
(d) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller is required to procure pursuant to Sections
399.13 and 399.15 this article .
(e) (1) "Renewable energy credit" means a certificate of proof,
issued through the accounting system established by the Energy
Commission pursuant to Section 399.13, that one unit of electricity
was generated by an eligible renewable energy resource.
(2) "Renewable energy credit" includes all renewable and
environmental attributes associated with the production of
electricity from the eligible renewable energy resource, except for
an emissions reduction credit issued pursuant to Section 40709 of the
Health and Safety Code.
(3) No electricity generated by an eligible renewable energy
resource attributable to the use of nonrenewable fuels, beyond a de
minimus quantity, as determined by the Energy Commission, shall
result in the creation of a renewable energy credit.
(4) A renewable energy credit shall not be eligible to satisfy
annual procurement targets established pursuant to this article,
unless the original unit of electricity was delivered to a retail
seller, the Independent System Operator, or to a local publicly owned
electric utility in compliance with subdivision (e) of Section
399.13.
SEC. 11. Section 399.13 of the Public Utilities
Code is amended to read:
399.13. The Energy Commission shall do all of the following:
(a) Certify eligible renewable energy resources that it determines
meet the criteria described in subdivision (a) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that electricity generated by an eligible renewable energy
output resource is counted only once
for the purpose of meeting the renewables portfolio standard of this
state or any other state, and for verifying
to certify renewable energy credits produced by eligible renewable
energy resources, and to verify retail product claims in this
state or any other state. In establishing the guidelines governing
this accounting system, the Energy Commission shall
collect data from electricity market participants that it deems
necessary to verify compliance of retail sellers, in accordance with
the requirements of this article and the California Public Records
Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code). In seeking data from electrical
corporations, the Energy Commission shall request data from the
commission. The commission shall collect data from electrical
corporations and remit the data to the Energy Commission within 90
days of the request.
(c) Establish a system for tracking and verifying renewable energy
credits that, through the use of independently audited data,
verifies the generation of electricity associated with each renewable
energy credit and protects against multiple counting of the same
renewable energy credit. The Energy Commission shall consult with
other western states and with the Western Electricity Coordinating
Council in the development of this system.
(c)
(d) Allocate and award supplemental energy payments
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, to eligible renewable energy
resources to cover above-market costs of renewable energy. A
project may receive supplemental energy payments only if it is
selected by an electrical corporation pursuant to a competitive
solicitation that is found by the commission to comply with the
California Renewables Portfolio Standard Program under this article
and that has entered into an electricity purchase agreement resulting
from that solicitation that is approved by the commission. A project
selected for an electricity purchase agreement by another retail
seller may receive supplemental energy payments if the retail
seller demonstrates to the commission that the selection of the
project is consistent with the results of a least-cost and best-fit
process, and that the supplemental energy payments are reasonable in
comparison to those paid under similar contracts with other retail
sellers. The Energy Commission shall not award supplemental energy
payments for the sale or purchase of renewable energy credits.
(e) Certify, for purposes of compliance with the renewables
portfolio standard by a retail seller, the eligibility of renewable
energy credits associated with deliveries of electricity by an
eligible renewable energy resource to a local publicly owned electric
utility if the Energy Commission determines that the following
conditions have been satisfied:
(1) The local publicly owned electric utility procuring the
electricity complies with the requirements of Section 387.
(2) The local publicly owned electric utility has established
annual procurement targets comparable to those applicable to an
electrical corporation, is procuring sufficient eligible renewable
energy resources to satisfy the targets, and will not fail to satisfy
the targets in the event that the renewable energy credit is sold to
another retail seller.
(f) The Energy Commission shall not certify or award tradeable
renewable energy credits for electricity generated pursuant to any
electricity purchase contract with a retail seller executed before
January 1, 2005, unless the contract contains explicit terms and
conditions specifying the ownership or disposition of those credits.
Deliveries under those contracts shall be tracked through the
accounting system described in subdivision (b) and included in the
baseline quantity of eligible renewable energy resources of the
purchasing retail seller pursuant to Section 399.15.
(g) The Energy Commission shall not certify or award tradeable
renewable energy credits for electricity generated under any
electricity purchase contract executed after January 1, 2005,
pursuant to the federal Public Utility Regulatory Policies Act of
1978 (16 U.S.C. Sec. 2601 et seq.). Deliveries under the electricity
purchase contracts shall be tracked through the accounting system
described in subdivision (b) and count towards the renewables
portfolio standard obligations of the purchasing retail seller.
SEC. 12. Section 399.14 of the Public Utilities
Code is amended to read:
399.14. (a) (1) The commission shall direct each
electrical corporation to prepare a renewable energy
procurement plans plan as described in
paragraph (3) to satisfy its obligations under the renewables
portfolio standard. To the extent feasible, this procurement plan
shall be proposed, reviewed, and adopted by the commission as part
of, and pursuant to, a general procurement plan process. The
commission shall require each electrical corporation to review and
update its renewable energy procurement plan as it determines to be
necessary.
(1) (A) The commission shall not require an electrical corporation
to conduct procurement to fulfill the renewables portfolio standard
until the commission determines either of the following:
(i) The electrical corporation has attained an investment grade
credit rating as determined by at least two major rating agencies.
(ii) The electrical corporation is able to procure eligible
renewable energy resources on reasonable terms, those resources can
be financed if necessary, and the procurement will not impair the
restoration of an electrical corporation's creditworthiness. This
provision shall not apply before April 1, 2004, for any electrical
corporation that on June 30, 2003, is in federal court under Chapter
11 of the federal bankruptcy law.
(B) Within 90 days of the commission's determination as provided
in subparagraph (A), an electrical corporation shall conduct
solicitations to implement a renewable energy procurement plan. The
determination required by this paragraph shall apply only to the
requirements established pursuant to this article. The requirements
established for an electrical corporation pursuant to Section 454.5
shall be governed by that section.
(2) Not later than six months after the effective date of
this section, the The commission shall adopt,
by rule, for all electrical corporations, all of the following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make specific
determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources. In order to ensure that the
market price established by the commission pursuant to subdivision
(c) of Section 399.15 does not influence the amount of a bid
submitted through the competitive solicitation in a manner that would
increase the amount ratepayers are obligated to pay for
electricity generated by eligible renewable energy
resources , and in order to ensure that the bid price does not
influence the establishment of the market price, the electrical
corporation shall not transmit or share the results of any
competitive solicitation for eligible renewable energy resources
until the commission has established market prices pursuant to
subdivision (c) of Section 399.15.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable
energy resources to comply with the annual California
Renewables Portfolio Standard Program obligations on a total cost
basis. This process shall consider estimates of indirect costs
associated with needed transmission investments and ongoing utility
expenses resulting from integrating and operating eligible renewable
energy resources.
(C) Flexible rules for complianceincluding
compliance, including , but not limited to,
both of the following:
(i) Rules permitting electrical
corporations to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years.
(ii) Rules permitting electrical corporations to purchase
renewable energy credits from an eligible renewable energy resource
pursuant to a contract of at least 10 years duration, under the
condition that the electricity generated by the eligible renewable
energy resource is sold into the California electricity market and no
feasible or cost-effective transmission facilities exist to deliver
the electricity to the electrical corporation's service territory.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall include the renewable energy credits
associated with all electrici ty generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
, but is not limited to, all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of renewable generation resources
with deliverability characteristics that may include peaking,
dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for renewable
generation of each deliverability characteristic, required online
dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration. Any bid solicitation or contract
of less than 10 years in duration shall be considered nonconforming.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement
plan 90 days prior to the commencement of
renewable procurement pursuant to this article by the electrical
corporation.
(c) The commission shall review the results of a renewable energy
resources solicitation submitted for approval by an electrical
corporation and accept or reject proposed contracts with eligible
renewable energy resources based on consistency with the approved
renewable energy procurement plan. If the commission
determines that the bid prices are elevated due to a lack of
effective competition amongst the bidders, the commission shall
direct the electrical corporation to renegotiate such
the contracts or conduct a new solicitation.
(d) If an electrical corporation fails to comply with a commission
order adopting a renewable energy procurement plan, the
commission shall exercise its authority pursuant to Section 2113 to
require compliance. The commission shall enforce comparable
penalties on any other retail seller that fails to meet annual
procurement targets established pursuant to Section 399.15.
(e) Upon application by an electrical corporation
a retail seller , the commission may authorize
another a procurement entity to enter
into contracts on behalf of customers of the electrical
corporation retail seller for deliveries of
eligible renewable energy resources to satisfy the annual
renewables portfolio standard obligations, subject to similar
terms and conditions applicable to an electrical corporation
a retail seller . The commission shall allow
the procurement entity to recover reasonable costs through retail
rates subject to review and approval.
(f) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article, at or below the
market price determined by the commission pursuant to subdivision (c)
of Section 399.15, shall be deemed reasonable per se, and shall be
recoverable in rates.
(g) The commission shall prohibit a retail seller from using
renewable energy credits to satisfy annual renewable energy
procurement targets until the Energy Commission certifies that the
tracking and verification system established pursuant to subdivision
(c) of Section 399.13 is in operation and capable of tracking
renewable energy credits.
(g)
(h) For purposes of this article, "procure"
means that a utility retail seller may
acquire the renewable output of electric generation
facilities electricity generated by an eligible
renewable energy resource that it owns or for which it has
contracted. Nothing in this article is intended to imply that the
purchase of electricity from third parties in a wholesale transaction
is the preferred method of fulfilling a retail seller's obligation
to comply with this article.
(h)
(i) Construction, alteration, demolition,
installation, and repair work on an eligible renewable energy
resource that receives production incentives or supplemental energy
payments pursuant to Sections 25742 and 25743 of the Public Resources
Code, including , but not limited to, work
performed to qualify, receive, or maintain production incentives or
supplemental energy payments is "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
SEC. 13. Section 399.15 of the Public Utilities
Code is amended to read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of output from electricity generated by
eligible renewable energy resources , or an equivalent quantity
of renewable energy credits, as a specified percentage of
total kilowatthours sold to their retail end-use customers each
calendar year, if sufficient funds are made available pursuant to
paragraph (2), and Section 399.6 and Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code, to cover the above-market costs of eligible
renewables , and subject to all of the following:
.
(1) An electric corporation shall not be required to enter into
long-term contracts with eligible renewable energy resources that
exceed the market prices established pursuant to subdivision (c) of
this section.
(2) The Energy Commission shall provide supplemental energy
payments from funds in the New Renewable Resources Account in the
Renewable Resource Trust Fund to eligible renewable energy resources
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, consistent with this article, for
above-market costs. Indirect costs associated with the purchase of
eligible renewable energy resources, such as imbalance energy
charges, sale of excess energy, decreased generation from existing
resources, or transmission upgrades shall not be eligible for
supplemental energy payments, but shall be recoverable by an
electrical corporation in rates, as authorized by the commission.
(3) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and, to the extent
applicable, adjusted going forward pursuant to subdivision (a) of
Section 399.12.
(b) The commission shall implement annual procurement targets for
each electrical corporation retail seller
as follows:
(1) Beginning on January 1, 2003, each electrical
corporation retail seller shall, pursuant to
subdivision (a), increase its total procurement of eligible renewable
energy resources by at least an additional 1 percent of retail sales
per year so that 20 percent of its retail sales are procured from
eligible renewable energy resources no later than December 31,
2017. An electrical corporation with 20 percent of retail
sales procured from eligible renewable energy resources in any year
shall not be required to increase its procurement of such resources
in the following year 2010 .
(2) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and, to the extent
applicable, adjusted going forward pursuant to subdivision (a) of
Section 399.12. The commission shall establish baselines
and set annual procurement targets for other retail sellers that
ensure that the departure of customer loads from bundled service by
an electrical corporation do not cause any reduction in the quantity
of eligible renewable energy resources that would have otherwise been
procured by the electrical corporation to serve those customers.
(3) Only for purposes of establishing these
targets, the commission shall include all power
electricity sold to retail customers by the Department of
Water Resources pursuant to Section 80100 of the Water Code in the
calculation of retail sales by an electrical corporation.
(3)
(4) In the event that an electrical
corporation a retail seller fails to procure
sufficient eligible renewable energy resources in a given year to
meet any annual target established pursuant to this subdivision, the
electrical corporation retail seller
shall procure additional eligible renewable energy resources in
subsequent years to compensate for the shortfall if sufficient funds
are made available pursuant to paragraph (2), and
Section 399.6 and Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code, to cover the above-market
costs of eligible renewables renewable energy
resources .
(4)
(5) If supplemental energy payments from the
Energy Commission, in combination with the market prices approved by
the commission, are insufficient to cover the above-market costs of
eligible renewable energy resources, the commission shall allow
an electrical corporation a retail seller
to limit its annual procurement obligation to the quantity of
eligible renewable energy resources that can be procured with
available supplemental energy payments. A retail seller shall
not be required to enter into long-term contracts with operators of
eligible renewable energy resources that exceed the market prices
established pursuant to subdivision (c).
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with renewable generators, in consideration of the
following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to the electrical corporation's
general procurement activities as authorized by the commission.
(2) The long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities.
(3) The value of different products including baseload, peaking,
and as-available output electricity .
(d) The Energy Commission shall provide supplemental energy
payments from funds in the New Renewable Resources Account of the
Renewable Resource Trust Fund to eligible renewable energy resources
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, consistent with this
article, for above-market costs. Indirect costs associated with the
purchase of eligible renewable energy resources by an electrical
corporation, including imbalance e nergy charges, sale of
excess energy, decreased generation from existing resources, or
transmission upgrades, shall not be eligible for supplemental energy
payments, but are recoverable in rates, as authorized by the
commission. The Energy Commission shall not award supplemental energy
payments for the sale or purchase of renewable energy credits or to
service load that is not subject to the renewable energy public goods
charge.
(e) The establishment of a renewables
portfolio standard shall not constitute implementation by the
commission of the federal Public Utility Regulatory Policies Act of
1978 (Public Law 95-617).
(e)
(f) The commission shall consult with the
Energy Commission in calculating market prices under subdivision (c)
and establishing other renewables portfolio standard policies.
(g) The commission shall establish rules that authorize the use of
renewable energy credits to satisfy annual procurement targets. At a
minimum, the rules shall do all of the following:
(1) Prohibit a renewable energy credit from being counted more
than once by any retail seller for compliance with the renewables
portfolio standard of this state or any other state, or for verifying
retail product claims in this state or any other state.
(2) Ensure that any revenues received by an electrical corporation
for the sale of renewable energy credits are credited to ratepayers.
(3) Limit the quantity of renewable energy credits that can be
procured unbundled from electricity generation to meet the annual
procurement targets of a retail seller.
(4) Require every retail seller to demonstrate that all purchased
renewable energy credits are certified by the Energy Commission and
comply with the requirements of this article.
(5) Ensure that no retail seller shall be obligated to procure
renewable energy credits to satisfy annual procurement targets in the
event that supplemental energy payments, in combination with the
market prices approved by the commission, are insufficient to cover
the above-market costs of long-term contracts with eligible renewable
energy resources.
(6) Prohibit an electrical corporation from selling renewable
energy credits associated with eligible renewable energy resources
included in that electrical corporation's baseline quantity on
January 1, 2004.
(7) Prohibit sales of renewable energy credits by an electrical
corporation during any year in which the electrical corporation
utilizes flexible compliance rules to permit inadequate procurement
pursuant to subparagraph (C) of paragraph (2) of subdivision (a) of
Section 399.14.
SEC. 14. Section 399.16 of the Public Utilities
Code is amended to read:
399.16. The Energy Commission may consider an electric generating
facility that is located outside the state to be an eligible
renewable energy resource if it the facility
meets the criteria described in Section 399.12 and all of the
following requirements:
(a) It is located so that it is, or will be,
connected to the transmission network within the Western
Electricity Coordinating Council (WECC) transmission system
service territory .
(b) It is developed with guaranteed contracts to sell its
generation commences initial commercial operation
after January 1, 2005, supplies electricity under a guaranteed
contract with a retail seller , and demonstrates delivery of
energy, to a the contracted amount of
electricity to that retail seller or the Independent
System Operator .
(c) It participates in the accounting system to verify compliance
with the renewables portfolio standard by retail sellers, once
established by the Energy Commission pursuant to subdivision (b) of
Section 399.13.
SEC. 13.
SEC. 15. Section 399.17 is added to the Public
Utilities Code, to read:
399.17. (a) Subject to the provisions of this section, the
requirements of this article apply to an electrical corporation with
60,000 or fewer customer accounts in California that serves retail
end-use customers outside California.
(b) For an electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, an eligible renewable energy resource includes a facility
that is located outside California, if the facility is connected to
the Western Electricity Coordinating Council (WECC) transmission
system, provided all of the following conditions are met:
(1) The electricity generated by the facility is procured by the
electrical corporation on behalf of its California customers, and is
not used to fulfill renewable energy procurement requirements in
other states.
(2) The electrical corporation participates in, and complies with,
the accounting system administered by the Energy Commission pursuant
to subdivision (b) of Section 399.13.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the annual procurement targets of
this article.
(c) The commission shall determine the annual procurement targets
for an electrical corporation with 60,000 or fewer customer accounts
in California that serves retail end-use customers outside
California, as a specified percentage of total kilowatthours sold by
the electrical corporation to its retail end-use customers in
California in a calendar year.
(d) An electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, may use an integrated resource plan prepared in
compliance with the requirements of another state utility regulatory
commission, to fulfill the requirement to prepare a renewable energy
procurement plan pursuant to this article, provided the plan meets
the requirements of Sections 399.11, 399.12, 399.13, and 399.14, as
modified by this section.
(e) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation with 60,000 or
fewer customer accounts in California that serves retail end-use
customers outside California, for eligible renewable energy resources
pursuant to this article, at or below the market price determined by
the commission pursuant to subdivision (c) of Section 399.15, shall
be deemed reasonable per se, and shall be recoverable in rates of the
electrical corporation's California customers, provided the costs
are not recoverable in rates in other states served by the electrical
corporation.
SEC. 14.
SEC. 16. Article 9 (commencing with Section 635) is
added to Chapter 3 of Part 1 of Division 1 of the Public Utilities
Code, to read:
Article 9. Long-Term Plans and Procurement Plans
635. In a long-term plan adopted by an electrical corporation or
in a procurement plan implemented by a local publicly owned electric
utility, the electrical corporation or local publicly owned electric
utility shall adopt a strategy applicable both to newly constructed
or repowered generation owned and procured by the electrical
corporation or local publicly owned electric utility to achieve
efficiency in the use of fossil fuels and to address carbon emissions
consistent with the loading order approved by the commission, or for
a local publicly owned electric utility, a functionally equivalent
order by its governing body, the State Energy Resources Conservation
and Development Commission, and the California Consumer Power and
Conservation Financing Authority.
SEC. 15. SEC. 17. The State Energy
Resources Conservation and Development Commission shall, on or
before January 1, 2007, report to the Governor and the Legislature
with recommendations for how to incentivize each local publicly owned
electric utility, as defined in Section 9604 of the Public Utilities
Code, to implement and enforce a renewables portfolio standard
program meeting the requirements of Section 399.15 of the Public
Utilities Code, utilizing eligible renewable energy resources, as
defined in Section 399.12. The commission may include the report as a
component of the 2005 Integrated Energy Policy or the next renewable
energy report required pursuant to Section 25758 of the Public
Resources Code. The commission shall use existing resources to comply
with this section.
SEC. 16. SEC. 18. No reimbursement
is required by this act pursuant to Section 6 of Article XIII B of
the California Constitution for certain costs that may be incurred by
a local agency or school district because, in that regard, 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.
However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.