BILL NUMBER: AB 1954	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 17, 2010
	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 provide that an application by an electrical
corporation for a certificate of public convenience and necessity for
new transmission facilities is necessary to the provision of
electric service if the CPUC finds that new transmission facilities
facilitate achievement of the renewables portfolio standard. The bill
would 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
 and would revise certain requirements applicable to the State
Energy Resources Conservation and Development Commission for
certifying when an eligible renewable energy resource may earn a
renewable energy credit  .
   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 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) 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 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) 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.   reasonably and prudently incurred,
subject to any rule adopted by the commission pursuant to subdivision
(b) of Section 454, concerning the showing to be made in support of
proposed rate changes. 
   (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.   reasonably and prudently incurred,
subject to any rule adopted by the commission pursuant to subdivision
(b) of Section 454, concerning the showing to be made in support of
proposed rate changes. 
   (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)  and
that the costs were reasonably and prudently incurred, subject to any
rule adopted by the commission pursuant to subdivision (b) 
 of   Section 454, concerning the showing to be made in
support of proposed rate changes  .
   (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 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.   The Energy Commission may
adjust the de minimis quantity for an individual facility, up to a
maximum of 5 percent, if it finds that both of the following
conditions are met: 
    (A) The facility demonstrates that the higher quantity of
nonrenewable fuel will lead to a meaningful increase in generation
from the eligible renewable energy facility that is greater than
generation from the nonrenewable fuel alone. 
    (B) The facility demonstrates that the higher quantity of
nonrenewable fuels will reduce the variability of its electrical
output in a manner that results in net environmental benefits to the
state. 
   (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.