BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 14
Author: Simitian (D), et al
Amended: 9/10/09
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-3, 3/3/09
AYES: Padilla, Corbett, Kehoe, Lowenthal, Simitian,
Wiggins
NOES: Benoit, Cox, Wright
NO VOTE RECORDED: Calderon, Strickland
SENATE APPROPRIATIONS COMMITTEE : 7-5, 3/23/09
AYES: Kehoe, Corbett, DeSaulnier, Hancock, Leno, Wolk, Yee
NOES: Cox, Denham, Runner, Walters, Wyland
NO VOTE RECORDED: Oropeza
SENATE FLOOR : 21-16, 3/31/09
AYES: Alquist, Calderon, Cedillo, Corbett, DeSaulnier,
Ducheny, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal,
Oropeza, Padilla, Pavley, Romero, Simitian, Steinberg,
Wiggins, Wolk, Yee
NOES: Aanestad, Ashburn, Benoit, Cogdill, Correa, Cox,
Denham, Dutton, Harman, Hollingsworth, Huff, Maldonado,
Runner, Walters, Wright, Wyland
NO VOTE RECORDED: Negrete McLeod, Strickland
ASSEMBLY FLOOR : Not available
SUBJECT : Utilities: renewable energy resources
SOURCE : Author
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DIGEST : This bill increases Californias Renewables
Portfolio Standard (RPS), to require all retail sellers of
electricity and all publicly owned utilities (POUs) to
procure at least 33 percent of electricity delivered to
their retail customers from renewable resources by 2020, as
specified. This bill is contingent on the passage an
enactment of AB 64 (Krekorian) which makes changes to the
programmatic parts of the RPS law.
Assembly Amendments (1) deleted portions of provisions in
this bill into AB 64, (2) requires the Energy Commission by
May 31, 2010, to report to the Legislature whether
out-of-state, run-of-river hydroelectric generating
facilities shall be considered renewal electric generating
facilities, (3) makes a clarifying change to the Energy
Commission's regulatory enforcement of RPS, and (4)
appropriates $322,000 from the Public Utilities Commission
(PUC) Reimbursement Account to the PUC for additional
staffing to identify, review, and approve transmission
lines reasonable necessary or appropriate to facilitate
achievement of the renewables portfolio standard.
ANALYSIS : Under existing law, the PUC has regulatory
authority over public utilities, including electrical
corporations, as defined. Existing law requires the PUC to
require the state's 3 largest electrical corporations,
Pacific Gas and Electric Company, San Diego Gas and
Electric, and Southern California Edison, to identify a
separate electrical rate component to fund programs that
enhance system reliability and provide in-state benefits.
This rate component is a nonbypassable element of local
distribution and collected on the basis of usage. Existing
PUC resolutions refer to the nonbypassable rate component
as a "public goods charge." The public goods charge moneys
are collected to support cost-effective energy efficiency
and conservation activities, public interest research and
development not adequately provided by competitive and
regulated markets, and renewable energy resources.
The existing Warren-Alquist State Energy Resources
Conservation and Development Act establishes the State
Energy Resources Conservation and Development Commission
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(Energy Commission). Existing law establishes the Renewable
Resource Trust Fund as a fund that is continuously
appropriated, with certain exceptions for administrative
expenses, in the State Treasury and requires that certain
moneys collected to support renewable energy resources
through the public goods charge are deposited into the fund
and authorizes the Energy Commission to expend the moneys
pursuant to the Renewable Energy Resources Program. The
program states the intent of the Legislature to increase
the amount of electricity generated from eligible renewable
energy resources per year so that amount equals at least
20% of total retail sales of electricity in California per
year by December 31, 2010.
The bill revises certain terms used in the program and
revises certain eligibility criteria for a renewable
electrical generation facility, as defined, pursuant to the
program. The bill requires the Energy Commission, by May
31, 2010, to report to the Legislature whether
out-of-state, run-of-river hydroelectric generating
facilities should be considered renewable electric
generating facilities, as defined.
Existing law expresses the intent of the Legislature, in
establishing the California Renewables Portfolio Standard
Program (RPS program), to increase the amount of
electricity generated per year from eligible renewable
energy resources, as defined, to an amount that equals at
least 20% of the total electricity sold to retail customers
in California per year by December 31, 2010.
This bill expresses the intent that the amount of
electricity generated per year from eligible renewable
energy resources be increased to an amount that equals at
least 20% of the total electricity sold to retail customers
in California per year by December 31, 2013, and 33% by
December 31, 2020.
The Public Utilities Act imposes various duties and
responsibilities on the PUC with respect to the purchase of
electricity and requires the PUC to review and adopt a
procurement plan and a renewable energy procurement plan
for each electrical corporation, as defined, pursuant to
the RPS program. The RPS program requires that a retail
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seller of electricity, including electrical corporations,
community choice aggregators, and electric service
providers, but not including local publicly owned electric
utilities, purchase a specified minimum percentage of
electricity generated by eligible renewable energy
resources in any given year as a specified percentage of
total kilowatthours sold to retail end-use customers each
calendar year. The RPS program requires the PUC to
implement annual procurement targets for each retail seller
to increase its total procurement of electricity generated
by eligible renewable energy resources by at least an
additional 1% of retail sales per year so that 20% of its
retail sales of electricity are procured from eligible
renewable energy resources no later than December 31, 2010.
Existing law requires the PUC to make a determination of
the existing market cost for electricity, which PUC
decisions call the market price referent, and to limit an
electrical corporation's obligation to procure electricity
from eligible renewable energy resources, that exceeds the
market price referent, to an amount collected through the
renewable energy public goods charge.
This bill instead requires the PUC to require that a retail
seller procure the following percentages of electricity
from eligible renewable energy resources by the following
dates: (A) Until December 31, 2012, the same percentage as
actually achieved by the retail seller during 2009; (B) 20%
by December 31, 2013; (C) 25% by December 31, 2016; and (D)
33% by December 31, 2020. The bill authorizes the PUC to
permit a retail seller to delay compliance with (B) or (C)
procurement levels when specified circumstances are
present, but would not authorize the PUC to permit a retail
seller to delay compliance with the (D) procurement level.
The bill deletes the existing market price referent
provisions and instead requires the PUC to establish a
methodology to determine the market price of electricity
for terms corresponding to the length of contracts with
eligible renewable energy resources, in consideration of,
and reflecting, certain matters. The bill requires the PUC
to establish a limitation on the annual expenditures made
above the market price, by an electrical corporation, in
order to achieve the procurement levels established by the
PUC. The bill requires the PUC to permit an electrical
corporation to limit its procurement of electricity from
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eligible renewable energy resources to that quantity that
can be procured at or below the market prices established
by the PUC, up to the limitation. The bill deletes an
existing requirement that the PUC adopt flexible rules for
compliance for retail sellers.
Under existing law, a violation of the Public Utilities Act
or any order, decision, rule, direction, demand, or
requirement of the PUC is a crime.
Because the provisions of this bill are within the act and
require action by the PUC to implement its requirements, a
violation of these provisions would impose a state-mandated
local program by expanding the definition of a crime.
Under existing law, the governing board of a local publicly
owned electric utility is responsible for implementing and
enforcing a renewables portfolio standard for the utility
that recognizes the intent of the Legislature to encourage
renewable resources, while taking into consideration the
effect of the standard on rates, reliability, and financial
resources and the goal of environmental improvement.
This bill repeals this provision and instead make certain
of the requirements of the RPS program, as discussed below,
applicable to local publicly owned electric utilities. By
placing additional requirements upon local publicly owned
electric utilities, the bill imposes a state-mandated local
program.
Existing law requires the Energy Commission to certify
eligible renewable energy resources, to design and
implement an accounting system to verify compliance with
the RPS requirements by retail sellers, and to develop
tracking, accounting, verification, and enforcement
mechanisms for renewable energy credits, as defined.
This bill requires the Energy Commission to design and
implement an accounting system to verify compliance with
the RPS requirements by retail sellers and local publicly
owned electric utilities. The bill requires the Energy
Commission, among other things, to adopt regulations
specifying procedures for enforcement of the RPS
requirements that include a public process under which the
Energy Commission is authorized to issue a notice of
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violation and correction with respect to a local publicly
owned electric utility and for referral to the State Air
Resources Board for penalties imposed pursuant to the
California Global Warming Solutions Act of 2006. The bill
requires that the RPS established for a local publicly
owned electric utility require it to procure the following
percentages of electricity from eligible renewable energy
resources by the following dates: (A) Until December 31,
2012, the same percentage as actually achieved by the
utility during 2009; (B) 20% by December 31, 2013; (C) 25%
by December 31, 2016; and (D) 33% by December 31, 2020.
The bill provides that the local publicly owned electric
utility retains discretion with respect to certain matters
in complying with the RPS, would require that certain
notices be given by the utility when adopting and
periodically revising its procurement plan, and would
require the utility to report certain information relative
to RPS compliance to the Energy Commission and its
customers.
Existing law requires the PUC to prepare and submit to the
Governor and the Legislature a written report annually
before February 1 of each year on the costs of programs and
activities conducted by an electrical corporation or gas
corporation that have more than a specified number of
customers in California.
The bill requires the PUC to prepare and submit to the
policy and fiscal committees of the Legislature, annually
before February 1 of each year, a report on (A) all
electrical corporation revenue requirement increases
associated with meeting the renewables portfolio standard,
(B) all cost savings experienced, or costs avoided, by
electrical corporations as a result of meeting the
renewables portfolio standard, (C) all costs incurred by
electrical corporations for incentives for distributed and
renewable generation, (D) all cost savings experienced, or
costs avoided, by electrical corporations as a result of
incentives for distributed generation and renewable
generation, (E) specified costs for which an electrical
corporation is seeking recovery in rates that are pending
determination or approval by the PUC, (F) the decision
number of each PUC decision in the prior year authorizing
an electrical corporation to recover costs incurred in
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rates, and (G) any changes in the prior year in load
serviced by an electrical corporation.
This bill appropriates $322,000 from the Public Utilities
Commission Utilities Reimbursement Account to the PUC for
additional staffing to identify, review, and approve
transmission lines reasonably necessary or appropriate to
facilitate achievement of the renewables portfolio
standard.
Background
Chapter 516 of 2002 (SB 1078, Sher) and Chapter 464 of 2006
(SB 107, Simitian) established and revised the RPS program
which requires IOUs to increase procurement from eligible
renewable energy resources by at least one percent of
retail sales annually, until they reach 20 percent by 2010.
The 20 percent threshold in Chapter 516 was accelerated
from 2017 to 2010 by Chapter 464.
Executive Order S-14-08 ordered that all retail sellers of
electricity shall serve 33 percent of their load with
renewable energy by 2020. The order directed state
agencies to take all appropriate actions to implement this
target in all regulatory proceedings, inlcuding siting,
permitting, and procurement for renewable energy power
plants and transmission lines.
PUC
The PUC's RPS program responsibilities include:
1.Determining annual procurement targets and enforcing
compliance.
2.Reviewing and approving IOU renewable energy procurement
plans.
3.Reviewing IOU contracts for RPS-eligible energy.
4.Establishing the standard terms and conditions used by
IOUs in their contracts for eligible renewable energy.
5.Calculating market price referents for non-renewable
energy that serve as benchmarks for the price of
renewable energy.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
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SUPPORT : (Verified 9/11/09)
Bright Source
California State Association of Electrical Workers
California State Pipes Trades Council
CalWEA
City of Los Angeles
Coalition of California Utility Employees
First Solar
Los Angeles Department of Water and Power
Natural Resources Defense Council
Pacific Gas and Electric
Sempra
Sierra Club
Solar Alliance
State Building Construction and Trades Council
TURN
Union of Concerned Scientists
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 9/11/09)
California Biomass Energy Producers
California Cattlemen's Association
California Farm Bureau Federation
California Independent System Operator
California Manufacturing and Technology Association
California Municipal Utility Association
California Public Utilities Commission
Dairy Institute
Imperial Irrigation District
Independent Energy Producers
Modesto Irrigation District
Northern California Power Association
Power and Water Resources Pooling Authority
Sacramento Municipal Utility District
Southern California Edison
Southern California Public Power Authority
ARGUMENTS IN SUPPORT : Supporters state the following:
1. "Would like to see a 'real and enforceable' RPS of 33
percent, not one that comes about only if PUC determines
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that achieving this target is just and reasonable.
2. Maintains California's position as leader in renewable
energy, while creating those jobs in California.
3. Ensure that renewable power paid by Californians is
delivered to California.
4. Job creation in the state, because the generation is in
California.
5. Goal of 33 percent is achievable.
6. Likes the CPUC reforms.
7. Achieves the goals of AB 32 and will clean the air.
8. Generates clean energy at home (as opposed to foreign
dirty energy).
9. Represents a substantial investment in state's
infrastructure.
10. Drops MPR, which though nice in theory hasn't
worked; complicates bidding; becomes the assumed price
target; does not lead to the successful development of
new renewable projects.
11. Deletes 'least-cost, best fit' which will
encourage retail providers to select bids based on
overall retail-provider needs and considerations.
Hopefully the resource selection process will become
more open and transparent, with benefits for generators,
retail providers and consumers.
12. Reducing fossil fuel generation will reduce NOx
emissions.
13. Tremendous opportunity to create green collar
jobs and address emissions.
14. Achieves goals of AB 32.
15. One of the best ways the state can maximize
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renewable energy resources while bringing about numerous
environmental and public health benefits.
16. Creates green jobs.
17. Brings about greater energy independence, energy
security and price stability.
18. Important to reduce GHG emissions."
ARGUMENTS IN OPPOSITION : The Imperial Irrigation
District and the Modesto Irrigation District as of
September 8, 2009, were concerned with the provisions in
the bill that would, in effect, prohibit utilities from
meeting the 33% RPS objective by disqualifying many of the
out-of-state renewable resources that are in existence or
under contract. Adopting such an artificial limitation on
current and future sources would place additional,
anti-competitive burdens on the overall economy and
wholesale markets resulting in increased prices for
renewable, slower development of new renewable resource,
and reduced reliability of the electric grid. The
definitions of renewable resource and renewable energy
credits that are eligible to be counted toward an RPS goal
must be broad enough to ensure that subject utilities are
able to comply with the mandated goals. They oppose any
numeric limit on the use of RECs and believe that
eligibility should not be limited to post-2005 resources.
They oppose any expansion of the CEC's siting authority to
include renewable energy resources and related
transmission. This process would inhibit existing local
authority to undertake projects and slowdown the
development of new renewable resources.
DLW:nl 9/12/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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