BILL NUMBER: AB 1954	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 12, 2010

INTRODUCED BY   Assembly Members Skinner and V. Manuel Perez

                        FEBRUARY 17, 2010

   An act to amend Sections 399.2.5 and 399.12 of the Public
Utilities Code, relating to electricity.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1954, as amended, Skinner. Electrical transmission: renewable
energy resources.
   Under existing law, the Public Utilities Commission (CPUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. Existing law, the Public Utilities Act,
prohibits any electrical corporation from beginning the construction
of, among other things, a line, plant, or system, or of any extension
thereof, without having first obtained from the CPUC a certificate
that the present or future public convenience and necessity require
or will require that construction (certificate of public convenience
and necessity). Existing law requires the CPUC, in acting upon an
application by an electrical corporation for a certificate of public
convenience and necessity, to deem new transmission facilities
necessary to the provision of electric service if the CPUC finds that
new transmission facilities are necessary to facilitate achievement
of the renewable power goals established under the renewables
portfolio standard. That law additionally requires the CPUC, upon
finding that new transmission facilities are necessary to facilitate
achievement of the renewable power goals established under the
renewables portfolio standard, to take all feasible actions to ensure
that the transmission rates established by the Federal Energy
Regulatory Commission are fully reflected in any retail rates
established by the commission.
   This bill would  require the CPUC, in acting upon
  provide that  an application by an electrical
corporation for a certificate of public convenience and necessity
 , to deem   for  new transmission
facilities  is  necessary to the provision of electric
service if the CPUC finds that new transmission facilities 
are reasonably necessary or appropriate to  facilitate
achievement of the renewables portfolio standard. The bill would
 require the CPUC to provide assurance of the eligibility for
recovery in retail rates of any increase in transmission costs
incurred by an electrical corporation resulting from the construction
of transmission facilities in certain circumstances and to allow
recovery in retail rates of any increase in transmission costs if not
approved by the Federal Energy Regulatory Commission if the CPUC
determines the costs were prudently incurred pursuant to a specified
law   authorize the CPUC to approve the recovery in
retail rates by an electrical corporation of certain costs for
transmission facilities that are incurred in certain circumstances if
not approved for recovery in transmission rates by the Federal
Energy Regulatory Commission  .
   This bill would revise and recast certain of the definitions
applicable to the California Renewables Portfolio Standard Program.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 399.2.5 of the Public Utilities Code is amended
to read:
   399.2.5.  (a) Notwithstanding Sections 1001 to 1013, inclusive, an
application of an electrical corporation for a certificate
authorizing the construction of new transmission facilities is
necessary to the provision of electric service  for purposes
of Section 1003  if the commission finds that the new
facility  is reasonably necessary or appropriate to
facilitate   facilitates  achievement of the
renewables portfolio standard established in Article 16 (commencing
with Section 399.11).
   (b) With respect to a transmission facility described in
subdivision (a), the commission shall take all feasible actions to
ensure that the transmission rates established by the Federal Energy
Regulatory Commission are fully reflected in any retail rates
established by the commission. These actions shall include all of the
following:
   (1) Making findings, where supported by an evidentiary record,
that those transmission facilities provide benefit to the
transmission network and  are reasonably necessary or
appropriate to  facilitate the achievement of the renewables
portfolio standard established in Article 16 (commencing with
Section 399.11).
   (2) Directing the utility to which the generator will be
interconnected, where the direction is not preempted by federal law,
to seek the recovery through general transmission rates of the costs
associated with the transmission facilities.
   (3) Asserting the positions described in paragraphs (1) and (2) to
the Federal Energy Regulatory Commission in appropriate proceedings.

   (4) Providing assurance, prior to a determination of rate recovery
by the Federal Energy Regulatory Commission (FERC) of those costs
that are subject to FERC jurisdiction, of the eligibility for
recovery in retail rates of any increase in transmission costs
incurred by an electrical corporation resulting from the construction
of the transmission facilities. This assurance shall be conditioned
upon the commission's subsequent determination that the requirements
of paragraph (5) have been met.  
   (5) Allowing recovery in retail rates of any increase in
transmission costs if the FERC does not approve recovery of those
costs in the rates that are subject to FERC jurisdiction after the
commission determines that the costs were prudently incurred in
accordance with subdivision (a) of Section 454.  
   (c) (1) The commission shall approve an advice letter seeking
assurance of cost recovery pursuant to paragraph (4) of subdivision
(b), if either of the following is true:  
   (A) The new transmission line or facility will primarily deliver
electricity generated within a competitive renewable energy zone
identified in the public collaborative stakeholder planning process
known as the Renewable Energy Transmission Initiative (RETI).
 
   (B) The new transmission line or facility is needed to deliver
electricity to load that is to be generated by generation facilities
for which the electrical corporation has received interconnection
requests if not less that 50 percent of the capacity is for delivery
of electricity generated by eligible renewable energy resources and
all of the interconnection requests are for generation facilities
that are designed to comply with the greenhouse gases emission
performance standard established by the commission pursuant to
Chapter 3 (commencing with Section 8340) of Division 4.1. 

   (2) Approval of an advice letter pursuant to paragraph (1) is not
binding upon the commission in making its determination whether or
not to approve an application for a certificate of public convenience
and necessity pursuant to Chapter 5 (commencing with Section 1001).
 
   (4) Allowing recovery in retail rates of any increase in
transmission costs incurred by an electrical corporation resulting
from the construction of the transmission facilities that are not
approved for recovery in transmission rates by the Federal Energy
Regulatory Commission after the commission determines that the costs
were prudently incurred in accordance with subdivision (a) of Section
454.  
   (c) (1) The commission, prior to making a finding pursuant to
subdivision (a), may approve an advice letter from an electrical
corporation seeking, for a specific transmission project, a finding
of eligibility for cost recovery pursuant to paragraph (4) of
subdivision (b). Ultimate recovery of construction costs shall be
contingent upon the commission finding, pursuant to subdivision (a),
that the facility facilitates achievement of the renewables portfolio
standard established pursuant to Article 16 (commencing with Section
399.11), and upon a determination by the commission that the costs
were prudently incurred pursuant to subdivision (a) of Section 454.
 
   (2) (A) The commission may approve cost recovery, in retail rates,
for preconstruction costs if requested in an application of an
electrical corporation for a certificate authorizing the construction
of new transmission facilities if the commission finds that the new
facility facilitates achievement of the renewables portfolio standard
established in Article 16 (commencing with Section 399.11). 

   (B) The commission may approve cost recovery, in retail rates, for
preconstruction costs if requested in an application or advice
letter of an electrical corporation that seeks approval for
preconstruction costs for a potential transmission facility if the
utility certifies, at the time of filing the application, that it
expects that the facility will facilitate achievement of the
renewables portfolio standard established in Article 16 (commencing
with Section 399.11). If the request for recovery of preconstruction
costs is made in an application that the commission finds contains an
adequate showing that the costs to be incurred are reasonable, the
commission may approve recovery in retail rates without a subsequent
reasonableness review. If the request for recovery of preconstruction
costs is made in an advice letter, retail rate recovery is
contingent upon a subsequent reasonableness review, unless otherwise
ordered by the commission.  
   (3) The commission's determination that transmission facilities
are eligible for cost recovery pursuant to paragraph (1) or (2) is
not binding upon the commission when determining the need for the
transmission facilities pursuant to Chapter 5 (commencing with
Section 1001) or upon the commission's determination whether the
facility will facilitate achievement of the renewables portfolio
standard established in Article 16 (commencing with Section 399.11).
 
   (d) Any cost recovery pursuant to subdivision (b) or (c) shall be
limited to costs that are not approved for recovery in transmission
rates by the Federal Energy Regulatory Commission. 
  SEC. 2.  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) "Delivered" and "delivery" have the same meaning as provided
in subdivision (a) of Section 25741 of the Public Resources Code.
   (c) "Eligible renewable energy resource" means an electrical
generating facility that meets the definition of an "in-state
renewable electricity generation facility" in Section 25741 of the
Public Resources Code, subject to the following limitations:
   (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 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 that it owns or for which it has
entered into an electricity purchase agreement. 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
387.
   (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 399.13, that
one unit of electricity was generated and delivered 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) 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, to optimize reliable
integration and efficiency of electrical production from eligible
renewable energy resources, shall result in the creation of a
renewable energy credit.   used to generate electricity
in the same process through which the facility converts renewable
fuel to electricity, shall result in the creation of a renewable
energy credit. The Energy Commission shall set the de minimis
quantity   of nonrenewable fuels for each renewable energy
technology at a level of no more than 2 percent of the total quantity
of fuel used by the technology to generate electricity. If, however,
a specific facility demonstrates that a higher de minimis quantity
will permit it to significantly increase its utilization of renewable
fuel and reduce the variability of its electrical output, the Energy
Commission may set the de minimis quantity for that facility at a
level of no more than 10 percent of the total quantity of energy used
by the facility to generate electricity. 
   (f) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller is required to procure pursuant to this article or
the obligation of a local publicly owned electric utility to meet its
renewables portfolio standard implemented pursuant to Section 387.
   (g) "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.