BILL NUMBER: AB 1106	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 25, 2009
	AMENDED IN ASSEMBLY  MAY 6, 2009

INTRODUCED BY   Assembly Members Fuentes and Ruskin

                        FEBRUARY 27, 2009

   An act to  add Section 399.21 to   amend
Section 399.20 of, and to add Section 399.21 to,  the Public
Utilities Code, relating to energy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1106, as amended, Fuentes. Renewable electric generation
facilities: feed-in tariffs.
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
as defined. The Public Utilities Act imposes various duties and
responsibilities on the commission with respect to the purchase of
electricity by electrical corporations and requires the commission 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 (RPS program). The
 RPS  program requires that a retail seller of electricity,
including electrical corporations, 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).
   Existing law requires every electrical corporation to file with
the commission a standard tariff for electricity generated by an
electric generation facility, as defined, that is owned and operated
by a retail customer of the electrical corporation. Existing law
requires that the electric generation facility: (1) have an effective
capacity of not more than 1.5 megawatts and be located on property
owned or under the control of the customer, (2) be interconnected and
operate in parallel with the electric transmission and distribution
grid, (3) be strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers, and (4) meet
the definition of an eligible renewable energy resource under the RPS
program. Existing law requires that the tariff provide for payment
for every kilowatthour of electricity generated by an electric
generation facility at a market price referent established by the
commission pursuant to the program. Existing law requires the
electrical corporation to make this tariff available to customers
that own and operate an electric generation facility within the
service territory of the electrical corporation, upon request, on a
first-come-first-served basis, until the combined statewide
cumulative rated generating capacity of those electric generation
facilities equals 500 megawatts, or the electrical corporation meets
its proportionate share of the 500 megawatt limit based upon the
ratio of its peak demand to total statewide peak demand of all
electrical corporations. Existing law authorizes the commission to
modify or adjust the above-described requirements for any electrical
corporation with less than 100,000 service connections, as individual
circumstances merit. Existing law provides that the electricity
generated by an electric generation facility counts toward the
electrical corporation's renewables portfolio standard and provides
that the physical generating capacity counts toward meeting the
electrical corporation's resource adequacy requirements. 
Existing decisions of the commission refer to this tariff as a
feed-in tariff.  
   This bill would require every electrical corporation to file with
the commission a standard feed-in tariff for the electricity
generated by a renewable electric generation facility, as defined,
that is an eligible renewable energy resource and meets other size,
deliverability, and interconnection requirements. The bill would
require the commission to consult with the Energy Commission and the
Independent System Operator in approving feed-in tariffs and rules
for interconnection to the electrical grid. The bill would require
the electrical corporation to make the feed-in tariff available to
any customer of the electrical corporation, upon request, on a
first-come-first-served basis, until the electrical corporation meets
its renewables portfolio standard. The bill would require the
commission to ensure that a customer's eligibility to receive service
pursuant to the feed-in tariff is determined in advance so that a
customer can invest in a renewable electric generation facility
knowing that the customer will be eligible to receive service
pursuant to the feed-in tariff and the market price that will be
applicable to that customer. The bill would authorize the commission
to place time limitations upon a customer for completion of the
renewable electric generation facility to remain eligible for the
feed-in tariff at the applicable market price and to establish
reasonable operation and reliability standards for a renewable
electric generation facility to remain eligible for the feed-in
tariff at the applicable market price. The bill would provide that
the electricity generated by the renewable electric generation
facility, including generation used to offset the customer's own
usage of electricity, counts toward the electrical corporation's
renewables portfolio standard and resource adequacy requirements. The
bill would authorize a customer receiving electrical service
pursuant to an alternative net metering program, as defined, to elect
to receive service pursuant to the feed-in tariff filed by an
electrical corporation pursuant to the bill's requirements and would
provide that a customer electing to receive service pursuant to the
feed-in tariff waives any right the customer otherwise has to
thereafter receive service pursuant to an alternative net metering
program.  
   This bill would require the commission, in consultation with the
Independent System Operator, to establish tariff provisions that
facilitate both the RPS program and the reliable operation of the
electrical grid.  
   This bill would make the existing feed-in tariff statute
applicable to an electric generation facility that interconnects to
the grid and commences initial operation on or before June 30, 2011.
The bill would require an electrical corporation with 100,000 or more
service connections to develop, and upon approval by the commission,
implement a standard-offer contract and feed-in tariff, as defined,
that requires payment for every kilowatthour of electricity delivered
to the grid generated by a tariff-eligible generation facility, as
defined. The bill would require that an electrical corporation obtain
commission approval of the standard-offer contract and feed-in
tariff by June 1, 2011, and to implement the contract and tariff by
July 1, 2011. The bill would have different requirements for two
separate tiers, as specified, of tariff-eligible generation
facilities. For a tier one tariff-eligible generation facility with a
nameplate capacity of not more than 5 megawatts, the price paid by
the electrical corporation for electricity delivered to the grid
would be based on the reasonable cost of production for specified
technologies as determined by the commission, plus a reasonable
profit commensurate to that authorized by the commission for the
electrical corporation. For a tier 2 tariff-eligible generation
facility with a nameplate capacity of more than 5 megawatts and not
more than 10 megawatts, the price to be paid by the electrical
corporation for electricity delivered to the grid would be the total
benefit of the electricity to ratepayers as determined by the
commission. The bill would require the commission to establish the
price to reflect the value of every kilowatthour of electricity
generated on a time-of-delivery basis and any other attributes of
renewable generation. The bill would require an electrical
corporation to make the standard-offer contract and feed-in tariff
available to the owner or operator of a tariff-eligible generation
facility upon request. The bill would require the commission to
establish performance standards for tier 2 tariff-eligible generation
facilities to ensure that the facilities are constructed, operated,
and maintained to generate the expected annual net production of
electricity and do not impact system reliability. The bill would
authorize the commission to modify these requirements for an
electrical corporation with less than 100,000 service connections in
the state based upon the individual circumstances of that electrical
corporation. The bill would provide that the electricity generated by
a tariff-eligible generation facility counts toward the electrical
corporation's renewables portfolio standard and that the purchase of
electricity includes the purchase of all renewable and environmental
attributes associated with the production of electricity by the
tariff-eligible generation facility. 
   Under existing law, a violation of the Public Utilities Act or an
order or direction of the commission is a crime. Because this bill
would require an order or other action of the commission to implement
its provisions and a violation of that order or action would be a
crime, the bill would impose a state-mandated local program by
creating a new 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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

   SECTION 1.    Section 399.20 of the   Public
Utilities Code   is amended to read: 
   399.20.  (a) It is the policy of this state and the intent of the
Legislature to encourage energy production from renewable energy
resources.
   (b) As used in this section, "electric generation facility" means
an electric generation facility, owned and operated by a retail
customer of an electrical corporation, and that meets all of the
following criteria:
   (1) Has an effective capacity of not more than one and one-half
megawatts and is located on property owned or under the control of
the customer.
   (2) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
   (3) Is strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers.
   (4) Is an eligible renewable energy resource, as defined in
Section 399.12.
   (c) Every electrical corporation shall file with the commission a
standard tariff for electricity generated by an electric generation
facility.
   (d) The tariff shall provide for payment for every kilowatthour of
electricity generated by an electric generation facility at the
market price as determined by the commission pursuant to Section
399.15 for a period of 10, 15, or 20 years, as authorized by the
commission.
   (e) Every electrical corporation shall make this tariff available
to customers that own and operate an electric generation facility
within the service territory of the electrical corporation, upon
request, on a first-come-first-served basis, until the combined
statewide cumulative rated generating capacity of those electric
generation facilities equals 500 megawatts. An electrical corporation
may make the terms of the tariff available to customers in the form
of a standard contract subject to commission approval. Each
electrical corporation shall only be required to offer service or
contracts under this section until that electrical corporation meets
its proportionate share of the 500 megawatts based on the ratio of
its peak demand to the total statewide peak demand of all electrical
corporations.
   (f) Every kilowatthour of electricity generated by the electric
generation facility shall count toward the electrical corporation's
renewables portfolio standard annual procurement targets for purposes
of paragraph (1) of subdivision (b) of Section 399.15.
   (g) The physical generating capacity of an electric generation
facility shall count toward the electrical corporation's resource
adequacy requirement for purposes of Section 380.
   (h) The commission may modify or adjust the requirements of this
section for any electrical corporation with less than 100,000 service
connections, as individual circumstances merit. 
   (i) The commission shall only enforce the requirements of this
section with respect to an electric generation facility that
interconnects to the grid and commences initial operation on or
before June 30, 2011, and shall continue to enforce the requirements
of this section until the 10-,15-, or 20-year term of the tariff is
completed. Upon completion of the 10-,15-, or 20-year term of the
tariff pursuant to this section, an electric generation facility that
is a tariff-eligible generation facility pursuant to Section 399.21,
may receive service pursuant to that section. The commission shall
enforce the requirements of Section 399.21 with respect to an
electric generation facility that is a tariff-eligible generation
facility that interconnects to the grid or commences initial
operation on or after July 1, 2011. 
   SEC. 2.    Section 399.21 is added to the  
Public Utilities Code   , to read:  
   399.21.  (a) For purposes of this section, the following terms
have the following meanings:
   (1) "Alternative net metering program" means any program that
requires an electrical corporation to purchase or credit electricity
generated by a subscriber pursuant to Article 3 (commencing with
Section 2821) of Chapter 7 of Part 2.
   (2) "Feed-in tariff" means a schedule detailing the rates, rules,
and terms of service that is filed by an electrical corporation and
approved by the commission that governs the electrical corporation's
purchase of electricity delivered to the grid that is generated by a
tariff-eligible generation facility.
   (3) "Tariff-eligible generation facility" means a facility for the
generation of electricity that meets all of the following criteria:
   (A) Has a nameplate capacity that falls within either of the
following two tiers:
   (i) Tier one has a nameplate capacity of not more than 5
megawatts.
   (ii) Tier two has a nameplate capacity of more than 5 megawatts
and not more than 10 megawatts.
   (B) Is an eligible renewable energy resource.
   (C) Is interconnected to the electrical corporation's transmission
or distribution grid and meets the requirements for parallel
operation established by the commission for distributed generation.
This subparagraph does not limit the ability of a tariff-eligible
generation facility to interconnect to the transmission grid pursuant
to the Small Generator Interconnection Protocol of the Independent
System Operator and approved by the Federal Energy Regulatory
Commission.
   (D) Is located within the service territory of the electrical
corporation.
   (b) On or before July 1, 2011, the commission shall implement the
requirements of this section for each electrical corporation with
100,000 or more service connections in the state. The commission may
modify the requirements of this section for an electrical corporation
with less than 100,000 service connections in the state based upon
the individual circumstances of that electrical corporation.
   (c) (1) An electrical corporation shall develop and, upon approval
by the commission, implement a standard-offer contract and a feed-in
tariff that requires payment for every kilowatthour of electricity
generated and delivered to the grid by a tier one or tier two
tariff-eligible generation facility pursuant to the requirements of
this section.
   (2) The commission shall approve the standard-offer contract and
feed-in tariff at rates and upon those terms that the commission
determines are reasonable, subject to the requirements of subdivision
(d) for a tier one tariff-eligible generation facility and
subdivision (e) for a tier two tariff-eligible generation facility.
   (3) An electrical corporation shall obtain commission approval of
a standard-offer contract and feed-in tariff by June 1, 2011, and the
standard-offer contract and feed-in tariff shall be implemented by
July 1, 2011.
   (d) (1) For tier one tariff-eligible generation facilities,
separate tariff prices shall be established for each of the following
technologies:
   (A) Thin-film solar photovoltaic.
   (B) Solar photovoltaic technologies other than thin-film solar
photovoltaics.
   (C) Solar thermal electric.
   (D) Wind.
   (E) Biogas, digester gas, and landfill gas.
   (F) Biomass and municipal solid waste conversion.
   (G) Geothermal.
   (H) Small hydroelectric.
   (I) Any additional technology that the commission determines is an
eligible renewable energy resource and that holds promise to
contribute toward meeting the renewables portfolio standard
procurement requirements.
   (2) The feed-in tariff and standard-offer contract for a tier one
tariff-eligible generation facility shall include both of the
following:
   (A) A price to be paid by the electrical corporation for
electricity delivered to the grid for each technology specified in
paragraph (3) of subdivision (c), that is based on the reasonable
cost of production for that technology, as determined by the
commission, plus a reasonable profit commensurate to that authorized
by the commission as a reasonable rate of return for the electrical
corporation. On or before January 1, 2011, and by January 1 of each
odd-numbered year thereafter, the commission shall separately
determine the reasonable cost to generate electricity from a tier one
tariff-eligible generation facility for each technology specified in
paragraph (1). In determining the reasonable cost of production for
each technology, the commission shall consider the availability of
federal and state credits or incentives. The maximum price paid by an
electrical corporation pursuant to this paragraph shall not exceed
thirty dollars ($30) per kilowatthour or ____ percent above the
average cost of electricity generated by eligible renewable energy
resources, whichever is lower.
   (B) A contract term and fixed purchase price of a duration of not
less than 25 years. The purchase price shall not, during the term of
the contract, be subject to adjustment pursuant to paragraph (3).
   (3) The price to be paid by the electrical corporation for
electricity delivered to the grid pursuant to the standard-offer
contract and feed-in tariff shall be reviewed and, if needed,
prospectively adjusted downward on a biennial basis to reflect
changing costs of production as determined by the commission. The
adjusted purchase price is applicable to a tier one tariff-eligible
generation facility that interconnects to the grid or commences
initial operation subsequent to the operative date of the revised
feed-in tariff.
   (4) An electrical corporation shall make the standard-offer
contract and feed-in tariff available to the owner or operator of a
tier one tariff-eligible generation facility upon request.
   (5) The owner or operator of a tier one tariff-eligible generation
facility may elect to instead receive service pursuant to an
alternative net metering program.
   (e) (1) The feed-in tariff and standard-offer contract for a tier
two tariff-eligible generation facility shall include both of the
following:
   (A) A price to be paid by the electrical corporation for
electricity delivered to the grid that is the total benefit of the
electricity to ratepayers. The commission shall establish the price
to reflect the value of every kilowatthour of electricity generated
on a time-of-delivery basis and any other attributes of renewable
generation.
   (B) A contract term and fixed purchase price for a period of 10,
15, and 20 years, at the option of the owner or developer of the tier
two tariff-eligible generation facility. The purchase price shall
not, during the term of the contract, be subject to adjustment
pursuant to paragraph (2).
   (2) The price to be paid by the electrical corporation for
electricity delivered to the grid pursuant to the standard-offer
contract and feed-in tariff shall be reviewed and, if needed,
prospectively adjusted downward on a biennial basis. The adjusted
purchase price is applicable to a tier two tariff-eligible generation
facility that interconnects to the grid or commences initial
operation subsequent to the operative date of the revised feed-in
tariff.
   (3) An electrical corporation shall make the standard-offer
contract and feed-in tariff available to the owner or operator of a
tier two tariff-eligible generation facility upon request.
   (4) An owner or operator of a tier two tariff-eligible generation
facility that elects to receive electrical service pursuant to the
feed-in tariff or standard-offer contract filed by an electrical
corporation waives any right that they may have as a customer of the
electrical corporation to thereafter receive service pursuant to an
alternative net metering program.
   (5) The commission shall establish performance standards for tier
two tariff-eligible generation facilities to ensure that the
facilities are constructed, operated, and maintained to generate the
expected annual net production of electricity and do not impact
system reliability.
   (f) Every kilowatthour of electricity generated by a
tariff-eligible generation facility purchased by the electrical
corporation pursuant to this section shall count toward the
electrical corporation's renewables portfolio standard annual
procurement targets for purposes of paragraph (1) of subdivision (b)
of Section 399.15. The purchase of electricity by an electrical
corporation pursuant to this section includes the purchase of all
renewable and environmental attributes associated with the production
of electricity by the tariff-eligible generation facility.
   (g) Every kilowatthour of electricity generated by a
tariff-eligible generation facility purchased by the electrical
corporation pursuant to this section shall count toward any renewable
energy procurement requirement imposed pursuant to the California
Global Warming Solutions Act of 2006 (Division 25.5 (commencing with
Section 38500) of the Health and Safety Code).
   (h) Expenses incurred by an electrical corporation for purchases
of electricity under a commission approved standard-offer contract or
feed-in tariff shall be fully recoverable by the electrical
corporation in rates.
   (i) This section does not limit the authority of an electrical
corporation to enter into bilateral contracts for the purchase of
electricity to meet its renewables portfolio standard procurement
requirements pursuant to this chapter or its resource adequacy
requirements pursuant to Section 454.5.
   (j) The commission shall, in consultation with the Energy
Commission, monitor the ongoing impacts of the feed-in tariff and
standard-offer contract on grid reliability and reducing transmission
congestion costs. The commission may reduce the upper capacity
limitation of any tier if the commission finds that a reduced
capacity limitation is necessary to maintain system reliability
within that electrical corporation's service territory. 

  SECTION 1.    Section 399.21 is added to the
Public Utilities Code, to read:
   399.21.  (a) It is the policy of this state and the intent of the
Legislature to encourage energy production from renewable resources
in an amount commensurate with electricity demand.
   (b) As used in this section the following terms have the following
meanings:
   (1) "Alternative net metering program" means any program that
requires an electrical corporation to purchase or credit electricity
generated by a subscriber pursuant to Article 3 (commencing with
Section 2821) of Chapter 7 of Part 2.
   (2) "Renewable electric generation facility" means a facility for
the generation of electricity that is owned and operated by a
customer of an electrical corporation and that meets all of the
following criteria:
   (A) Has an effective generating capacity of not more than 20
megawatts and is located on property owned or under the control of
the customer.
   (B) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
   (C) Is strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers.
   (D) Is an eligible renewable energy resource pursuant to this
article.
   (c) Every electrical corporation shall file with the commission a
standard feed-in tariff for the electricity generated by a renewable
electric generation facility. The commission shall consult with the
Energy Commission and the Independent System Operator in approving
feed-in tariffs and rules for interconnection.
   (d) The feed-in tariff shall provide for payment for every
kilowatthour of electricity generated at a renewable electric
generation facility at the market price as determined by the
commission pursuant to Section 399.15 for a period of 10, 15, or 20
years, as authorized by the commission.
   (e) Every electrical corporation shall make the feed-in tariff
available to customers that own and operate a renewable electric
generation facility within the service territory of the electrical
corporation, upon request, on a first-come-first-served basis, until
the electrical corporation meets its renewables portfolio standard.
An electrical corporation may make the terms of the feed-in tariff
available to customers in the form of a standard contract subject to
commission approval. An electrical corporation shall only be required
to offer service or contracts under this section until that
electrical corporation meets its renewables portfolio standard, as
determined by the commission.
   (f) The commission shall ensure that a customer's eligibility to
receive service pursuant to the feed-in tariff is determined in
advance so that a customer can invest in a renewable electric
generation facility knowing that the customer will be eligible to
receive service pursuant to the feed-in tariff and the market price
that will be applicable to that customer. The commission may place
time limitations upon a customer for completion of the renewable
electric generation facility to remain eligible for the feed-in
tariff at the applicable market price. The commission may establish
reasonable operation and reliability standards for a renewable
electric generation facility to remain eligible for the feed-in
tariff at the applicable market price.
   (g) Every kilowatthour of the electricity generated by the
renewable electric generation facility, including generation used to
offset the customer's own usage of electricity, shall count toward
the electrical corporation's renewables portfolio standard annual
procurement targets for purposes of paragraph (1) of subdivision (b)
of Section 399.15.
   (h) The physical generating capacity of a renewable electric
generation facility shall count toward the electrical corporation's
resource adequacy requirement for purposes of Section 380.
   (i) (1) A customer receiving electrical service pursuant to an
alternative net metering program may elect to receive service
pursuant to the feed-in tariff filed by an electrical corporation
pursuant to this section.
   (2) A customer that elects to receive electrical service pursuant
to the feed-in tariff filed by an electrical corporation pursuant to
this section waives any right that the customer otherwise has to
thereafter receive service pursuant to an alternative net metering
program.
   (j) The commission shall, in consultation with the Independent
System Operator, establish tariff provisions that facilitate both the
provisions of this section and the reliable operation of the grid.

   SEC. 2.   SEC. 3.   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.