BILL ANALYSIS 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 14 - Simitian, Kehoe, Padilla, Steinberg Hearing
Date: March 3, 2009 S
As Amended: February 17, 2009 FISCAL B
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BACKGROUND
This committee conducted a thorough hearing on this bill on
February 10. This analysis applies only to the amendments made
to the bill on February 17. A copy of the committees February
10 comprehensive analysis is attached for reference.
COMMENTS
1. Effective Date - Current law requires that
investor-owned utilities (IOUs) procure 20% of their
generation from renewable resources by December 31, 2010.
According to the CPUC no IOU will achieve this goal but
they anticipate that it will be reached in 2013. As part
of the expansion of the RPS goal to 33% the author makes
several program changes, particularly impacting contract
and procurement policies. It was not clear in the prior
bill however, whether the contracting and procurement
changes should apply to the attainment of the 20% mandate
or whether the IOUs should continue current practice until
they reach the goal which would then trigger new policies
associated with the attainment of the 33% goal. The
February 17 amendments take the latter approach. Current
law relating to the market price referent, a cost cap,
flexible compliance including a mandatory transmission
offramp would continue to be in effect until the time an
IOU reaches the 20% mandate. At that time those elements
would sunset and the CPUC would continue its prudency
review of contracts but also consider the cost impact of
procuring renewable resources as part of the IOU
procurement process, the rate impacts, effects on system
reliability and the environment and economic benefits of
renewable procurement.
2. Unmet Need - Current law requires the IOUs to procure
renewable resources "in order to fulfill unmet long-term
resource needs." This language was included in the bill
for publicly-owned utilities but was deleted for the IOUs.
The February 17 amendments reinstate the unmet need
provisions for IOUs. Its inclusion would ensure that an
IOU is not obligated to procure renewable resources beyond
its retail electricity needs. So if a utility has no load
growth or expiring contracts in its portfolio, compliance
with the RPS would not be required.
3. Above and Beyond 33% - Some municipal utilities have
reported that their current portfolio takes them far beyond
the 33% mandate. They are concerned that the bill could be
read to preclude them from going beyond the 33% mandate.
The February 17 amendments clarify that the 33% mandate is
a floor, not a ceiling, for POUs and that an IOU can
voluntarily choose to exceed the 33% mandate.
4. Transmission - California has two largely separate
transmission systems. One is controlled and operated by
the Independent System Operator (ISO) and the other is
owned and controlled by POUs (although some smaller POUs
operate under the ISO system). The need for new
transmission will proportionally increase as the utilities
develop more renewable resources, most of which will be
sited in remote locations. There is great concern that the
separation of transmission systems between the ISO and POUs
will result in duplication of transmission lines in
different areas of the state. The author intends to ensure
that the responsible agencies pursue new transmission in a
manner that will minimize the aggregate cost and amount of
new transmission. The February 17 amendments strike
reference to "joint operation" and "seams agreements" which
have since been discovered not to be technically achievable
or necessary to achieve the goal.
5. Siting of Generation and Transmission - The greatest
challenge to bringing more renewable resources online are
intensive and delicate processes of siting generation and
transmission in remote areas of the state. Most of these
regions have sensitive habitats and myriad restrictions
imposed by myriad controlling parties including the Bureau
of Land Management, U.S. Department of Forestry, military
installations, federal and state parks and Native American
tribes.
To ensure that the lands are used in the most efficient
manner possible, the February 17 amendments require the
California Energy Commission (CEC) to develop a concurrent
application review process with the Department of Fish and
Game (DFG) to identify renewable energy development areas
and develop a best management practices manual with the
goal of reducing the application time by half. The DFG is
also directed to initiate Natural Communities Conservation
Plans for the Mojave and Colorado Desert regions. The
author has also recognized the ongoing work of the Regional
Energy Transmission Initiative (RETI) requires that the
CPUC, CEC and ISO consider the recommendations of the RETI
in the siting of new generation and transmission.
These provisions represent elements of an executive order
issued by Governor Schwarzenegger in November 2008.
6. CPUC President - Under current law each CPUC
commissioner is appointed by the Governor and confirmed by
the Senate. The Governor then designates the president of
the commission. This bill proposed to require Senate
confirmation of the president. The final issue addressed
by the February 17 amendments is to revert to current law.
7. Double Referral - This bill has been double referred to
the Senate Rules Committee.
POSITIONS
Refer to February 10 analysis, copy attached.
Kellie Smith and Randy Chinn
SB 14 Analysis
Hearing Date: March 3, 2009