BILL NUMBER: SB 411	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 17, 2007
	AMENDED IN SENATE  APRIL 18, 2007

INTRODUCED BY   Senators Simitian and Perata
    (   Principal coauthor:   Assembly Member
 Levine   ) 

                        FEBRUARY 21, 2007

   An act to amend Section 399.15 of the Public Utilities Code,
relating to energy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 411, as amended, Simitian. Energy: renewable energy resources.
   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, as defined, of electricity, 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 retail seller 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, 2010. Existing law prohibits the CPUC from
requiring a retail seller with 20% of retail sales procured from
eligible renewable energy resources in any year to increase its
procurement of renewable energy resources in the following year.

   The existing California Global Warming Solutions Act of 2006
requires the State Air Resources Board to adopt regulations to
require the reporting and verification of emissions of greenhouse
gases and to monitor and enforce compliance with the reporting and
verification program, and requires the state board to adopt a
statewide greenhouse gas emissions limit equivalent to the statewide
greenhouse gas emissions levels in 1990 to be achieved by 2020.

   This bill would require a retail seller  ,   subject
to certain conditions,  to increase its total procurement of
eligible renewable  energy  resources so that at least 33%
of its retail sales are procured from eligible renewable energy
resources no later than December 31, 2020  , in furtherance
of achieving the greenhouse gas emissions limit adopted pursuant to
the California Global Warming Solutions Act of 2006  . 
   This bill would incorporate additional changes to Section 399.15
of the Public Utilities Code proposed by SB 1036, to be operative
only if SB 1036 and this bill are enacted, both bills amend this
section, and this bill is enacted after SB 1036. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  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 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 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.
   (b) The commission shall implement annual procurement targets for
each retail seller as follows:
   (1) 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  , and at
least 33 percent of its retail sales are procured from eligible
renewable energy resources no later than December 31, 2020, in
furtherance of achieving the greenhouse gas emissions reductions
required pursuant to Part 3 (commencing with Section 38550) of
Division 25.5 of the Health and Safety Code  . 
   (2) (A) Subject to the ratepayer protections provided pursuant to
this article and subparagraph (B), each retail seller shall increase
its total procurement of eligible renewable energy resources so that
at least 33 percent of its retail sales are procured from eligible
renewable energy resources no later than December 31, 2020. 

   (B) If supplemental energy payments provided pursuant to Chapter
8.6 (commencing with Section 25740) of Division 15 of the Public
Resources Code, in combination with the market prices approved by the
commission, are insufficient to cover any above-market costs of
electricity procured from eligible renewable energy resources through
an electricity purchase agreement of at least 10 years' duration,
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) For purposes of implementing this paragraph, the commission
may authorize a retail seller to procure less than one additional
percent per year of eligible renewable energy resources, if the
commission determines that the retail seller is making reasonable and
feasible progress towards meeting the 33 percent procurement
requirement and remains on course to meet that requirement. 

   (2) 
    (3)  For purposes of setting annual procurement targets,
the commission shall establish an initial baseline for each retail
seller 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 Section 399.12.

   (3) 
    (4)  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) 
    (5)  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 Section 399.6 and
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code, to cover any above-market costs of eligible
renewable energy resources. 
   (5) 
    (6)  If supplemental energy payments from the Energy
Commission, in combination with the market prices approved by the
commission, are insufficient to cover any above-market costs of
electricity procured from eligible renewable energy resources through
an electricity purchase agreement of at least 10 years' duration,
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 eligible renewable energy resources, in consideration
of the following:
   (1) The long-term market price of electricity for fixed price
contracts, determined pursuant to an 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
any 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. The Energy Commission
shall not award supplemental energy payments 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).
   (f) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.
   SEC. 2.    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 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 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   subject to limits on the total
amount of costs expended above the market prices  
determined in subdivision (c), to achieve the targets established
under this article  .
   (b) The commission shall implement annual procurement targets for
each retail seller as follows:
   (1) 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.  A retail
seller with 20 percent of retail sales procured from eligible
renewable energy resources in any year shall not be required to
increase its procurement of renewable energy resources in the
following year.  
   (2) (A) Subject to the ratepayer protections provided pursuant to
this article, each retail seller shall increase its total procurement
of eligible renewable energy resources so that at least 33 percent
of its retail sales are procured from eligible renewable energy
resources no later than December 31, 2020.  
   (B) For purposes of implementing this paragraph, the commission
may authorize a retail seller to procure less than one additional
percent per year of eligible renewable energy resources, if the
commission determines that the retail seller is making reasonable and
feasible progress towards meeting the 33 percent procurement
requirement and remains on course to meet that requirement. 

   (2) 
    (3)    For purposes of setting annual
procurement targets, the commission shall establish an initial
baseline for each retail seller 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 Section 399.12. 
   (3) 
    (4)    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) 
    (5)    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
Section 399.6 and Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code, to cover any above-market
costs of eligible renewable energy resources   , subject
to the limitation on costs for electrical corporations established
pursuant to subdivision (d)  . 
   (5) If supplemental energy payments from the Energy Commission, in
combination with the market prices approved by the commission, are
insufficient to cover any above-market costs of electricity procured
from eligible renewable energy resources through an electricity
purchase agreement of at least 10 years' duration, 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 eligible renewable energy resources, in consideration
of the following:
   (1) The long-term market price of electricity for fixed price
contracts, determined pursuant to an 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
any 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. The Energy Commission
shall not award supplemental energy payments to service load that is
not subject to the renewable energy public goods charge. 

   (d) The commission shall establish, for each electrical
corporation, a limitation on the total costs expended above the
market prices determined in subdivision (c) for the procurement of
eligible renewable energy resources to achieve the annual procurement
targets established under this article.  
   (1) The cost limitation shall be equal to the amount of funds
transferred to each electrical corporation by the Energy Commission
pursuant to subdivision (b) of Section 25743 of the Public Resources
Code and the 51.5 percent of the funds which would have been
collected through January 1, 2012, from the customers of the
electrical corporation based on the renewable energy public goods
charge in effect as of January 1, 2007.  
   (2) The above-market costs of a contract selected by an electrical
corporation may be counted toward the cost limitation if all of the
following conditions are satisfied:  
   (A) The contract has been approved by the commission and was
selected through a competitive solicitation pursuant to the
requirements of subdivision (d) of Section 399.14.  
   (B) The contract covers a duration of no less than 10 years. 

   (C) The contracted project is a new or repowered facility
commencing commercial operations on or after January 1, 2005. 

   (D) No purchases of renewable energy credits may be eligible for
consideration as an above-market cost.  
   (E) The above-market costs of a contract do not include any
indirect expenses including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, or transmission
upgrades.  
   (3) If the cost limitation for an electrical corporation is
insufficient to support the total costs expended above the market
prices determined in subdivision (c) for the procurement of eligible
renewable energy resources satisfying the conditions of paragraph
(2), the commission shall allow the electrical corporation to limit
its procurement to the quantity of eligible renewable energy
resources that can be procured at or below the market prices
established in subdivision (c).  
   (4) Nothing in this section prevents an electrical corporation
from voluntarily proposing to procure eligible renewable energy
resources at above-market prices that are not counted toward the cost
limitation. Any voluntary procurement involving above-market costs
shall be subject to commission approval prior to the expense being
recovered in rates. 
   (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.
   SEC. 3.    This act does not affect the powers and
duties established in the California Emergency Services Act (Chapter
7 (commencing with Section 8550) of Division 1 of Title 2 of the
Government Code). 
   SEC. 4.    Section 2 of this bill incorporates
amendments to Section 399.15 of the Public Utilities Code proposed by
both this bill and SB 1036. It shall only become operative if (1)
both bills are enacted and become effective on or before January 1,
2008, (2) each bill amends Section 399.15 of the Public Utilities
Code, and (3) this bill is enacted after SB 1036, in which case
Section 1 of this bill shall not become operative.