BILL NUMBER: AB 1954	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 15, 2010
	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  the  new
transmission  facilities facilitate   facility
is necessary to 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. 
   The provisions of the bill would only become operative if the bill
and SB 722 of the 2009-10 Regular Session are both enacted and
become effective on or before January 1, 2011. 
   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   is
necessary to facilitate  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 necessary 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) 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  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.   prudently incurred. 
   (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 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   (b), if
the electrical corporation certifies in the advice letter, in a form
prescribed by the commission, that it expects that the facility will
be necessary to facilitate achievement of the renewables portfolio
standard established pursuant to Article 16 (commencing with Section
399.11). The electrical corporation's ultimate recovery of
construction costs shall be contingent upon the commission finding,
pursuant to subdivision (a), that the facility is necessary to
facilitate achievement of the renewables portfolio standard and that
the costs were prudently incurred. 
    (2) Prior to making a finding pursuant to subdivision (a),
the commission may approve an advice letter from an electrical
corporation requesting retail rate cost recovery for costs incurred
prior to permitting or certification for potential transmission
facilities if the electrical corporation certifies in the advice
letter, in a form prescribed by the commission, that it expects that
the facility will be necessary to facilitate achievement of the
renewables portfolio standard established pursuant to Article 16
(commencing with Section 399.11). The electrical corporation's
ultimate recovery of costs incurred prior to permitting or
certification shall be contingent upon the commission finding that
the electrical corporation administered the approved costs reasonably
and prudently. 
    (3)     Any commission determination
pursuant to this subdivision 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  energy 
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. 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   all  of the
following conditions are met:
   (A) The facility demonstrates that the higher quantity of
nonrenewable fuel will lead to  a meaningful  
an  increase in generation from the eligible renewable energy
facility that is  significantly  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.
   SEC. 3.    The amendment of Section 399.2.5 of the
Public Utilities Code made by this act does not constitute a change
in, but is declaratory of, existing law and is intended by the
Legislature to clarify the language of that section to conform to the
construction and application of that section by the Public Utilities
Commission in Decision 07-03-012. 
   SEC. 4.    This bill shall only become operative if
this bill and SB 722 are both enacted and become effective on or
before January 1, 2011.