BILL NUMBER: AB 21	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 12, 2009
	PASSED THE ASSEMBLY  SEPTEMBER 12, 2009
	AMENDED IN SENATE  SEPTEMBER 12, 2009
	AMENDED IN SENATE  SEPTEMBER 4, 2009
	AMENDED IN ASSEMBLY  APRIL 2, 2009
	AMENDED IN ASSEMBLY  MARCH 18, 2009
	AMENDED IN ASSEMBLY  FEBRUARY 18, 2009

INTRODUCED BY   Assembly Member Krekorian
   (Coauthor: Senator Simitian)

                        DECEMBER 1, 2008

   An act to amend Section 399.12 of, and repeal and add Section
399.15 of the Public Utilities Code, relating to energy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 21, Krekorian. Renewable energy resources.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. The Public Utilities Act imposes various
duties and responsibilities on the PUC with respect to the purchase
of electricity and requires the PUC to review and approve a renewable
energy procurement plan for each electrical corporation pursuant to
the California Renewables Portfolio Standard Program (RPS program).
The RPS program requires that a retail seller of electricity,
including electrical corporations, community choice aggregators, and
electric service providers, 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.
The RPS program requires the PUC to implement annual procurement
targets for each retail seller to increase its total procurement of
electricity generated by eligible renewable energy resources by at
least an additional 1% of retail sales per year so that 20% of its
retail sales of electricity are procured from eligible renewable
energy resources no later than December 31, 2010. Existing law
requires the PUC to make a determination of the existing market cost
for electricity, which PUC decisions call the market price referent,
and to limit an electrical corporation's obligation to procure
electricity from eligible renewable energy resources, that exceeds
the market price referent, by a specified amount.
   This bill would instead require the PUC to require that a retail
seller procure the following percentages of electricity from eligible
renewable energy resources by the following dates: (A) Until
December 31, 2012, the same percentage as actually achieved by the
retail seller during 2009; (B) 20% by December 31, 2013; (C) 25% by
December 31, 2016; and (D) 33% by December 31, 2020. The bill would
authorize the PUC to permit a retail seller to delay compliance with
(B) or (C) procurement levels when specified circumstances are
present, but would not authorize the PUC to permit a retail seller to
delay compliance with the (D) procurement level. The bill would
delete the existing market price referent provisions and instead
require the PUC to 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, and reflecting, certain matters. The bill would require the PUC
to establish a limitation on the annual expenditures made above the
market price, by an electrical corporation, in order to achieve the
procurement levels established by the PUC. The bill would require the
PUC to permit an electrical corporation to limit its procurement of
electricity from eligible renewable energy resources to that quantity
that can be procured at or below the market prices established by
the PUC, up to the limitation. The bill would delete an existing
requirement that the PUC adopt flexible rules for compliance for
retail sellers. The bill would revise the definitions of certain
terms for purposes of the RPS program.
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the PUC
is a crime.
   Because the provisions of this bill are within the act and require
action by the PUC to implement its requirements, a violation of
these provisions would impose a state-mandated local program by
expanding the definition of a crime.
   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 no reimbursement is required by this
act for a specified reason.


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

  SECTION 1.  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) "Conduit hydroelectric facility" means a facility for the
generation of electricity that uses only the hydroelectric potential
of an existing pipe, ditch, flume, siphon, tunnel, canal, or other
manmade conduit that is operated to distribute water for a beneficial
use.
   (b) (1) "Delivered" and "delivery," with respect to electricity,
means that the electricity is used to serve end-use retail customers
or energy storage facilities located within the state, and meets
either of the following conditions:
   (A) The electricity is generated at a location within the state.
   (B) The electricity is generated at a location outside the state
and scheduled for consumption by California end-use retail customers
or energy storage facilities located within the state. Compliance
with this requirement is demonstrated by one of the following means:
   (i) Showing that the generator's first point of interconnection is
with facilities of a Transmission Service Provider, as that term is
defined by North American Electric Reliability Corporation primarily
located in this state.
   (ii) Showing that the 24-hour metered output of the generator
matches the import schedules of electricity flow from the generator,
through the balancing authority area in which the generator is
located, through any intermediate balancing authorities, to the
balancing authority area of the end-use retail customers or energy
storage facility located in this state.
   (2) Notwithstanding clause (ii) of subparagraph (B) of paragraph
(1), electricity is not delivered to the extent that either of the
following occurs:
   (A) The physical delivery of electricity is scheduled from a
source other than a renewable electrical generation facility, as
defined in Section 27541 of the Public Resources Code.
   (B) The electricity output is scheduled for delivery to customers
in a different 24-hour period from the time of generation by the
renewable electrical generation facility.
   (3) Consistent with subparagraph (A) of paragraph (2), the
physical delivery of electricity from a renewable electrical
generation facility may be accompanied by electricity provided by
another source for purposes of facilitating scheduling. For purposes
of this article, only the portion of electricity provided directly
from the renewable electrical generation facility shall count toward
meeting the renewables portfolio standard procurement requirements of
this article.
   (4) For purposes of determining compliance by an intermittent
resource located outside California with the delivery requirements of
this subdivision, any positive imbalance energy provided under
applicable tariffs by the balancing authority in which the facility
is located shall, in an amount not exceeding any negative imbalance
energy provided by the intermittent resource, be included in the
24-hour metered output and considered generated by the eligible
renewable energy resource.
   (c) "Eligible renewable energy resource" means an electrical
generating facility that meets the definition of a "renewable
electrical generation facility" in Section 25741 of the Public
Resources Code subject to the following:
   (1) (A) An existing small hydroelectric generation facility of 30
megawatts or less shall be eligible only if a retail seller or local
publicly owned electric utility owned or procured the electricity
from the facility as of December 31, 2005. A small hydroelectric
generation unit with a nameplate capacity not exceeding 40 megawatts
that is operated as part of a water supply or conveyance system
serving the jurisdiction of a local publicly owned electric utility
is an eligible renewable energy resource if the local publicly owned
electric utility owned or procured the electricity from the facility
as of December 31, 2005. A new hydroelectric facility is not an
eligible renewable energy resource if it will cause an adverse impact
on instream beneficial uses or cause a change in the volume or
timing of streamflow.
   (B) Notwithstanding subparagraph (A), a conduit hydroelectric
facility of 30 megawatts or less that commenced operation before
January 1, 2006, is an eligible renewable energy resource. A conduit
hydroelectric facility of 30 megawatts or less that commences
operation after December 31, 2005, is an eligible renewable energy
resource so long as it does not cause an adverse impact on instream
beneficial uses or cause a change in the volume or timing of
streamflow.
   (2) 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.
   (d) "Procure" means to acquire through ownership or contract. For
purposes of meeting the renewables portfolio standard procurement
requirements, a retail seller or local publicly owned electric
utility may procure either delivered electricity generated by an
eligible renewable energy resource or renewable energy credits
associated with electricity generated, but not necessarily delivered
by, an eligible renewable energy resource. 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
or the obligation of a local publicly owned electric utility to meet
its renewables portfolio standard implemented pursuant to Section
399.30.
   (e) (1) "Renewable energy credit" means a certificate of proof
associated with the generation of electricity from an eligible
renewable energy resource, issued through the accounting system
established by the Energy Commission pursuant to Section 399.25, 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 and any credits or payments associated with
the reduction of solid waste and treatment benefits created by the
utilization of biomass or biogas fuels.
   (3) (A) No electricity generated by an eligible renewable energy
resource attributable to the use of nonrenewable fuels, beyond a de
minimis quantity, as determined by the Energy Commission for each
renewable energy technology, shall result in the creation of a
renewable energy credit.
   (B) No electricity generated by a small hydroelectric generation
facility shall result in the creation of a renewable energy credit
unless the facility meets the requirements of subparagraph (A) of
paragraph (1) of subdivision (c).
   (C) No electricity generated by a conduit hydroelectric generation
facility shall result in the creation of a renewable energy credit
unless the facility meets the requirements of subparagraph (B) of
paragraph (1) of subdivision (c).
   (D) No electricity generated by a facility engaged in the
combustion of municipal solid waste shall result in the creation of a
renewable energy credit unless the facility meets the requirements
of paragraph (2) of subdivision (c).
   (f) "Renewable energy public goods charge" means that portion of
the nonbypassable system benefits charge required to be collected to
fund renewable energy pursuant to the Reliable Electric Service
Investments Act (Article 15 (commencing with Section 399) of Chapter
2.3 of Part 1 of Division 1, for an electrical corporation, and
pursuant to Section 385 for a local publicly owned electric utility.
   (g) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller or a local publicly owned electric utility is
required to procure pursuant to this article.
   (h) "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
program subject to the same terms and conditions applicable to an
electrical corporation.
   (3) An electric service provider, as defined in Section 218.3, for
all sales of electricity to customers beginning January 1, 2006. 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.
  SEC. 2.  Section 399.15 of the Public Utilities Code is repealed.
  SEC. 3.  Section 399.15 is added to the Public Utilities Code, to
read:
   399.15.  (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all retail sellers 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 compliance period to achieve the targets
established under this article.
   (b) The commission shall implement renewables portfolio standard
procurement requirements only as follows:
   (1) Each retail seller shall procure the following minimum
percentages of eligible renewable energy resources in the following
years, and continue to procure at least those percentages in
subsequent years:
   (A) Until December 31, 2012, the same percentage as actually
achieved by the retail seller during 2009.
   (B) Twenty percent by December 31, 2013.
   (C) Twenty-five percent by December 31, 2016.
   (D) Thirty-three percent by December 31, 2020.
   (2) A retail seller with 33 percent of its retail sales of
electricity procured from eligible renewable energy resources in any
year shall not be required to increase its procurement of renewable
energy resources, except to the extent required to maintain a 33
percent renewables portfolio standard. A retail seller may
voluntarily increase its procurement of eligible renewable energy
resources beyond the renewables portfolio standard procurement
requirements.
   (3) Only for purposes of establishing the renewables portfolio
standard procurement requirements of paragraph (1), 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) The commission may only allow a retail seller for a maximum of
two years per request to delay compliance with a renewables
portfolio standard procurement requirement established pursuant to
subparagraph (B) or (C) of paragraph (1), if it finds that the retail
seller has demonstrated that either of the following conditions will
prevent timely compliance:
   (A) There is inadequate transmission capacity to allow for
sufficient electricity to be delivered from proposed eligible
renewable energy resource projects using the current operational
protocols of the Independent System Operator (ISO). The commission
shall consult with the ISO in making its findings relative to the
existence of this condition. In making its findings relative to the
existence of this condition with respect to a retail seller that owns
transmission lines, the commission shall consider both of the
following:
   (i) Whether the retail seller has undertaken all reasonable
measures to develop and construct new transmission lines or upgrades
to existing lines in a timely fashion.
   (ii) Whether the retail seller has taken all reasonable
operational measures, as verified by the ISO, to maximize deliveries
of electricity from eligible renewable energy resources in advance of
transmission availability.
   (B) Unanticipated permitting, interconnection, or other delays for
procured eligible renewable energy resource projects, or there is an
insufficient supply of delivered electricity from eligible renewable
energy resources available to the retail seller. In making this
finding, the commission shall consider whether the retail seller has
prudently managed portfolio risks, relied on sufficient viable
projects, sought to develop its own eligible renewable energy
resources, and procured an appropriate minimum margin of procurement
above the minimum procurement level necessary to comply with the
renewables portfolio standard to compensate for foreseeable delays or
insufficient supply.
   (5) Prior to granting a delay pursuant to paragraph (4), the
commission shall require a retail seller to demonstrate that it has
presented evidence that it has made material progress in reducing its
compliance deficit and has taken all reasonable measures consistent
with this article to procure cost-effective distributed generation
and renewable energy credits consistent with the restrictions in
paragraph (6) of subdivision (a) of Section 399.21.
   (6) The commission may not approve any request to delay a
compliance obligation for which it has already granted a delay unless
a retail seller presents evidence that it has made material progress
in reducing its compliance deficiency and has identified and taken
all reasonable actions under its control to pursue additional options
to comply with the delayed interim procurement obligation and remove
impediments that are related to its delay.
   (7) The commission may not authorize any delay in achieving the 33
percent by December 31, 2020, renewables portfolio standard
procurement requirement of subparagraph (D) of paragraph (1).
   (8) If a retail seller fails to procure sufficient eligible
renewable energy resources to comply with a renewables portfolio
standard procurement requirement and fails to obtain an order from
the commission authorizing a compliance delay pursuant to paragraph
(4), the commission shall exercise its authority pursuant to Section
2113.
   (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 long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities. The methodology shall reflect all of the following:
   (1) The value of different products including baseload, peaking,
and as-available electricity.
   (2) All current and anticipated environmental compliance costs,
including mitigation of emissions of greenhouse gases and air
pollution offsets associated with the operation of new generating
facilities.
   (d) (1) The commission shall establish a limitation for each
electrical corporation on the expenditures above the market costs
determined in subdivision (c) for the procurement of all eligible
renewable energy resources that are used to comply with the
electrical corporation's renewables portfolio standard. The cost
limitation shall equal 6 percent of the total bundled electric
revenues recorded by the electrical corporation in 2008 multiplied by
the number of years remaining until 2020. Total bundled electric
revenues shall include revenues collected by the electrical
corporation on behalf of the Department of Water Resources for
procurement activities conducted pursuant to Division 27 (commencing
with Section 80000) of the Water Code.
   (2) The calculation of the above-market costs shall include all
procurement of eligible renewable energy resources that are used to
comply with the electrical corporation's renewables portfolio
standard that are submitted for approval to the commission after
January 1, 2010.
   (3) The above-market costs of procurement do not include any
indirect expenses, including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, or
transmission upgrades.
   (4) Calculations of the above-market costs shall include, as a
reduction to the total above-market costs, procurement from eligible
renewable energy resources that are used to meet the renewables
portfolio standard procurement requirements established pursuant to
paragraph (1) of subdivision (b) that are below the market prices
determined in subdivision (c) for each year.
   (5) In calculating the limit on above-market costs established in
paragraph (1), the commission shall account for the potential that
some procured resources may be delayed or canceled.
   (e) If the cost limitation for an electrical corporation is
insufficient to support the projected net above-market costs
identified in subdivision (d), the commission shall allow the
electrical corporation to refrain from entering into new contracts or
to construct facilities for that future year beyond the quantity of
eligible renewable energy resources that can be procured at or below
the market prices established in subdivision (c).
   (f) Notwithstanding subdivision (e), if an electrical corporation'
s net annual above-market costs for a future year exceed the
electrical corporation's cost limitation, the electrical corporation
may voluntarily propose to procure eligible renewable energy
resources at above-market prices. Any voluntary procurement under
this paragraph shall be subject to commission approval prior to the
expense being recovered in rates.
   (g) (1) The commission shall monitor the status of the cost
limitation for each electrical corporation in order to ensure
compliance with this article.
   (2) If the commission determines that an electrical corporation
may exceed its cost limitation prior to achieving the renewables
portfolio standard procurement requirements, the commission shall do
all of the following within 60 days of making that determination:
   (A) Investigate and identify the reasons why the electrical
corporation may exceed its annual cost limitation.
   (B) Identify those actions that can be taken to ensure that the
electrical corporation continues to comply with its renewables
portfolio standard procurement requirements.
   (C) Notify the appropriate policy and fiscal committees of the
Legislature that the electrical corporation may exceed its cost
limitation, the reasons why the electrical corporation may exceed its
cost limitation, and those actions that may be taken by the
electrical corporation to comply with the renewables portfolio
standard procurement requirements.
   (3) The commission shall examine mechanisms for mitigating the
potential impact of low fossil fuel prices on the cost limitation of
each electrical corporation and make recommendations to the
Legislature on any changes in law it identifies to mitigate those
impacts.
   (h) The commission shall examine and adopt mechanisms to limit the
potential influence of the market prices established in subdivision
(c) on seller pricing and buyer contract selection.
   (i) 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).
   (j) The commission shall consult with the Energy Commission in
establishing renewables portfolio standard policies.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because 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.
  SEC. 5.  This bill shall only become operative if this bill,
Assembly Bill 64, and Senate Bill 14 are all enacted and become
effective on or before January 1, 2010.