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
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          ____
          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)
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          ____

          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.