BILL NUMBER: AB 1954 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 24, 2010
PASSED THE ASSEMBLY AUGUST 27, 2010
AMENDED IN SENATE AUGUST 20, 2010
AMENDED IN SENATE AUGUST 4, 2010
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, 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 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.
This bill would incorporate additional changes to Section 399.12
of the Public Utilities Code, proposed by SB 722, to be operative
only if SB 722 and this bill are both chaptered and become effective
on or before January 1, 2011, and this bill is chaptered last.
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 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 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), 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 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 all of the following conditions are met:
(A) The facility demonstrates that the higher quantity of
nonrenewable fuel will lead to 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.
(C) The higher quantity of nonrenewable fuel is limited to either
natural gas or hydrogen derived by reformation of a fossil fuel.
(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. 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) "Balancing authority" means the responsible entity that
integrates resource plans ahead of time, maintains load-interchange
generation balance within a balancing authority area, and supports
interconnection frequency in real time.
(c) "Balancing authority area" means the collection of generation,
transmission, and loads within the metered boundaries of the area
within which the balancing authority maintains the electrical
load-resource balance.
(d) "California balancing authority" is a balancing authority with
control over a balancing authority area primarily located in this
state and operating for retail sellers and local publicly owned
electric utilities subject to the requirements of this article and
includes the Independent System Operator (ISO) and a local publicly
owned electric utility operating a transmission grid that is not
under the operational control of the ISO. A California balancing
authority is responsible for the operation of the transmission grid
within its metered boundaries which may not be limited by the
political boundaries of the State of California.
(e) "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 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 is an
eligible renewable energy resource if the retail seller or local
publicly owned electric utility procured the electricity from the
facility as of December 31, 2005. A new hydroelectric facility that
commences generation of electricity after December 31, 2005, 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.
(C) A facility approved by the governing board of a local publicly
owned electric utility prior to June 1, 2010, for procurement to
satisfy renewable energy procurement obligations adopted pursuant to
former Section 387, shall be certified as an eligible renewable
energy resource by the Energy Commission pursuant to this article, if
the facility is a "renewable electrical generation facility" as
defined in Section 25741 of the Public Resources Code.
(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.
(f) "Procure" means to acquire through ownership or contract.
(g) "Procurement entity" means any person or corporation
authorized by the commission to enter into contracts to procure
eligible renewable energy resources on behalf of customers of a
retail seller pursuant to subdivision (g) of Section 399.13.
(h) (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) 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 all of the following conditions are met:
(A) The facility demonstrates that the higher quantity of
nonrenewable fuel will lead to 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.
(C) The higher quantity of nonrenewable fuel is limited to either
natural gas or hydrogen derived by reformation of a fossil fuel.
(4) (A) 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 (e).
(B) 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 (e).
(5) 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 (e).
(i) "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.
(j) "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.
(k) "WECC" means the Western Electricity Coordinating Council of
the North American Electric Reliability Corporation, or a successor
to either corporation.
SEC. 4. 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. 5. Section 3 of this bill incorporates amendments to Section
399.12 of the Public Utilities Code proposed by both this bill and SB
722. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2011, (2) each bill
amends Section 399.12 of the Public Utilities Code, and (3) this bill
is enacted after SB 722, in which case Section 2 of this bill shall
not become operative.