BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Carole Migden, Chair 107 (Simitian) Hearing Date: 5/26/05 Amended: 5/4/05 Consultant: Lisa Matocq Policy Vote: E, U & C 7-3 _________________________________________________________________ ____ BILL SUMMARY: SB 107 accelerates the Renewables Portfolio Standard (RPS) requirement, from 2017 to 2010. The RPS is a program that requires investor-owned utilities (IOUs) to, among other things, achieve a 20% renewable electricity portfolio. The bill also makes several other changes. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2005-06 2006-07 2007-08 Fund PUC $ 279 $ 558 $ 558 Special* Costs should be offset by fee revenues. CEC $ 42 $ 84 $ 84 Special** *Public Utilities' Reimbursement Account (PURA) **Energy Resources Programs Account (ERPA) _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. Current law establishes the RPS program, administered by the Public Utilities Commission (PUC), which requires IOUs to, among other things, achieve a 20% renewable electricity portfolio by 2017. The Energy Action Plan, adopted by the state's energy agencies, proposes to accelerate the RPS 20% goal to 2010. This bill accelerates the deadline to 2010. It also requires the California Energy Commission (CEC) to review the feasibility of increasing the RPS target to 33 percent by 2020. Under current law, local publicly-owned electric utilities are not subject to the same RPS standards and process as the IOUs, but are required to implement and enforce their own RPS programs. This bill requires the CEC to, using existing resources, recommend ways to encourage local publicly-owned electric utilities to implement RPS programs that meet certain criteria. Under existing law, IOUs must purchase renewable electricity from eligible resources in order to satisfy their RPS obligations (they may not purchase unbundled renewable energy credits to meet their obligations). This bill requires the CEC to establish a system for tracking renewable energy credits. This generally codifies current practice. Current law also establishes the public goods charge (PGC), which is a surcharge imposed on electricity bills to fund various programs, including the Renewable Energy Program (REP). $135 million is collected annually, of which 10%, or $13.5 million, is SB 107 Page Two required to be used for credits to customers that entered into a direct transaction, by a specified date, for the purchase of renewable electricity. In 2003, the CEC suspended the customer credits program and reallocated the funds to other programs. This bill repeals the direct access customer credits program. The bill also makes a number of other changes. STAFF NOTES that Engrossing and Enrolling recommends a number of technical amendments. Increased costs to the PUC are estimated at $558,000 annually for four personnel years (1 PURA V at $104,070 per year, 2 PURA IVs at $189,480 per year, 1 PU Counsel II at $130,000 per year, and 1 Administrative Law Judge at $134, 580 per year). PURA revenues are derived from an annual fee imposed on utilities. Therefore, any increased costs should be recovered from fee revenues. ERPA revenues are derived from a surcharge on electricity bills. It is the primary funding source of the CEC's contract and operating expenses. AB 1362 (Levine), pending in the Assembly, permits unlimited renewable energy credit trading for RPS compliance. AB 1585 (Blakeslee), pending in the Assembly, requires the CEC to study the feasibility of attaining a 33% RPS standard. SB 1478 (Sher) of 2004 was similar to this bill and was vetoed by Governor Schwarzenegger. In his veto message, the Governor stated, among other things, that he appreciated the effort to attempt to codify his goal of accelerating the renewable energy portfolio standard however, the bill contained an onerous provision related to energy credit trading. This bill does not limit the number of energy credit trades.