BILL NUMBER: SB 32 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Negrete McLeod
DECEMBER 2, 2008
An act to amend Section 399.20 of, and to add Section 387.6 to,
the Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 32, as introduced, Negrete McLeod. Renewable electric
generation facilities.
Under existing law, the Public Utilities Commission is vested with
regulatory authority over public utilities, including electrical
corporations. The Public Utilities Act imposes various duties and
responsibilities on the commission with respect to the purchase of
electricity by electrical corporations and requires the commission to
review and adopt a procurement plan and a renewable energy
procurement plan for each electrical corporation pursuant to the
California Renewables Portfolio Standard Program. The program
requires that a retail seller of electricity, including electrical
corporations, purchase a specified minimum percentage of electricity
generated by eligible renewable energy resources, as defined, in any
given year as a specified percentage of total kilowatthours sold to
retail end-use customers each calendar year (renewables portfolio
standard). 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.
Existing law requires every electrical corporation to file with
the commission a standard tariff for electricity generated by an
electric generation facility, as defined, that is owned and operated
by a retail customer of the electrical corporation. Existing law
requires that the electric generation facility: (1) have an effective
capacity of not more than 1.5 megawatts and be located on property
owned or under the control of the customer, (2) be interconnected and
operate in parallel with the electric transmission and distribution
grid, (3) be strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers, and (4) meet
the definition of an eligible renewable energy resource under the
renewables portfolio standard program. Existing law requires that the
tariff provide for payment for every kilowatthour of electricity
generated by an electric generation facility at a market price
referent established by the commission pursuant to the renewables
portfolio standard program. Existing law requires the electrical
corporation to make this tariff available to customers that own and
operate an electric generation facility within the service territory
of the electrical corporation, upon request, on a
first-come-first-served basis, until the combined statewide
cumulative rated generating capacity of those electric generation
facilities equals 500 megawatts, or the electrical corporation meets
its proportionate share of the 500 megawatt limit based upon the
ratio of its peak demand to total statewide peak demand of all
electrical corporations. Existing law authorizes the commission to
modify or adjust the above-described requirements for any electrical
corporation with less than 100,000 service connections, as individual
circumstances merit. Existing law provides that the electricity
generated by an electric generation facility counts toward the
electrical corporation's renewables portfolio standard and provides
that the physical generating capacity counts toward meeting the
electrical corporation's resource adequacy requirements.
This bill would require an electrical corporation to file with the
commission a standard tariff for the electricity purchased from an
electric generation facility that is owned, leased, or rented by a
retail customer of the electrical corporation. The bill would revise
the first requirement, discussed above, to instead require that the
electric generation facility have an effective capacity of not more
than 3 megawatts, subject to the authority of the commission to
reduce this megawatt limitation, discussed below. The bill would
revise the third requirement, discussed above, to require that the
electric generation facility be strategically located and
interconnected to the electric grid in a manner that is considered
deliverable to load, pursuant to the deliverability assessments of
the Independent System Operator (ISO). The bill would require that
the tariff provide for a base payment rate for every kilowatthour of
electricity purchased from an electric generation facility at the
market price referent established by the commission pursuant to the
renewables portfolio standard program, for a period of 10, 15, or 20
years, as authorized by the commission. The bill would authorize the
commission to adjust the payment rate to reflect the value of the
electricity on a time-of-delivery basis and any other attributes of
renewable generation and require, with respect to rates and charges,
that ratepayers that do not receive service pursuant to the tariff
are indifferent to whether other ratepayers receive service pursuant
to the tariff. The bill would require the electrical corporation to
make the tariff available to any customer that owns, leases, or rents
an electric generation facility within the service territory of the
electrical corporation, upon request, on a first-come-first-served
basis, until the combined statewide cumulative rated generating
capacity of those electric generation facilities subject to tariffs
with electrical corporations reaches 500 megawatts, or its
proportionate share of that limit. The bill would provide that the
electricity purchased from an electric generation facility counts
toward meeting the electrical corporation's renewables portfolio
standard and that electricity generated by the electric generation
facility counts toward meeting the electrical corporation's resource
adequacy requirements. The bill would require the commission, in
consultation with the ISO, to monitor and examine the impact on the
transmission and distribution grid and any effects upon ratepayers
resulting from electric generation facilities operating pursuant to
the bill's provisions, would require the commission to establish
performance standards for any electric generation facility that has a
capacity greater than one megawatt to ensure that those facilities
are constructed, operated, and maintained to generate the expected
annual net production of electricity and do not impact system
reliability, and would authorize the commission to reduce the 3
megawatt capacity limitation if the commission finds that a reduced
capacity limitation is necessary to maintain system reliability
within that electrical corporation's service territory. The bill
would recast the existing authority of the commission to modify or
adjust the above-described requirements for any electrical
corporation with less than 100,000 service connections, as individual
circumstances merit.
This bill would provide that a customer that receives service
pursuant to a tariff adopted by an electrical corporation pursuant to
the above-described provisions is not eligible to participate in any
net metering program. Under the bill, a customer that elects to
receive electrical service pursuant to a tariff filed by an
electrical corporation pursuant to the bill is eligible to receive
ratepayer-funded incentives in accordance with the self-generation
incentive program or the California Solar Initiative for the capacity
needed to offset part or all of the electrical demand of the
customer.
This bill would require a local publicly owned electric utility
that sells electricity at retail to 75,000 or more customers to adopt
and implement a tariff for electricity purchased from an electric
generation facility meeting certain size, deliverability, and
interconnection requirements and to consider certain factors. The
bill would require the local publicly owned electric utility to make
the tariff available to customers that own and operate an electric
generation facility within the service territory of the utility, upon
request, on a first-come-first-served basis, until the combined
statewide cumulative rated generating capacity of those electric
generation facilities subject to tariffs with local publicly owned
electric utilities reaches 250 megawatts. The bill would provide that
the electricity purchased from an electric generation facility
counts towards meeting the local publicly owned electric utility's
renewables portfolio standard annual procurement targets.
Under existing law, a violation of the Public Utilities Act or an
order or direction of the commission is a crime. Because this bill
would require an order or other action of the commission to implement
its provisions, and a violation of that order or action would be a
crime, the bill would impose a state-mandated local program by
creating a new crime. By placing additional requirements upon local
publicly owned electric utilities, which are entities of local
government, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for specified reasons.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The state should encourage the reduction of electricity demand
at customer sites and increase generating capacity in order to meet
the demand for electricity.
(b) Some tariff structures and regulatory structures are
presenting a barrier to meeting the requirements and goals of the
California Renewables Portfolio Standard Program (Section 387 of, and
Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1
of Division 1 of, the Public Utilities Code).
(c) Small projects of less than three megawatts that are otherwise
eligible renewable energy resources may face difficulties in
participating in competitive solicitations under the renewables
portfolio standard program.
(d) A tariff that allows customers of electrical corporations and
local publicly owned electric utilities to sell electricity generated
by renewable technologies would address these barriers and could
assist in the achievement of the renewables portfolio standard and
the state's goals for reducing emissions of greenhouse gases pursuant
to the California Global Warming Solutions Act of 2006.
(e) A tariff for electricity generated by renewable technologies
should recognize the environmental attributes of the renewable
technology, the characteristics that contribute to peak electricity
demand reduction, reduced transmission congestion, avoided
transmission and distribution improvements, and in a manner that
accelerates the deployment of renewable energy resources.
(f) It is the policy of this state and the intent of the
Legislature to encourage the generation of electricity from eligible
renewable energy resources at the sites where the electricity will be
utilized.
SEC. 2. Section 387.6 is added to the Public Utilities Code, to
read:
387.6. (a) It is the policy of the state and the intent of the
Legislature to encourage electrical generation from eligible
renewable energy resources.
(b) As used in this section, "electric generation facility" means
an electric generation facility, owned, leased, or rented by a retail
customer of a local publicly owned electric utility, and that meets
all of the following criteria:
(1) Has an effective capacity of not more than three megawatts and
is located on property owned or under the control of the customer.
Premises that are leased by the customer are under the control of the
customer for purposes of this paragraph. The customer is not
required to own the electric generation facility.
(2) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
(3) Is strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers.
(4) Is an eligible renewable energy resource, as defined in
Section 399.12.
(c) A local publicly owned electric utility that sells electricity
at retail to 75,000 or more customers shall adopt a standard tariff
for electricity purchased from an electric generation facility.
(d) The governing board of the local publicly owned electric
utility shall ensure that the tariff adopted pursuant to subdivision
(c) reflects the value of every kilowatthour of electricity generated
on a time-of-delivery basis. The governing board may adjust this
value based on the other attributes of renewable generation. The
governing board shall ensure, with respect to rates and charges, that
ratepayers that do not receive service pursuant to the tariff are
indifferent to whether a ratepayer with an electric generation
facility receives service pursuant to the tariff.
(e) A local publicly owned electric utility that sells electricity
at retail to 75,000 or more customers shall make the tariff
available to customers that own, lease, or rent an electric
generation facility within the service territory of the utility, upon
request, on a first-come-first-served basis, until the combined
statewide cumulative rated generating capacity of those electric
generation facilities reaches 250 megawatts. A local publicly owned
electric utility may make the terms of the tariff available to
customers in the form of a standard contract. A local publicly owned
electric utility is only required to offer service or contracts under
this section until the utility meets its proportionate share of the
250 megawatts based on the ratio of its peak demand to the total
statewide peak demand.
(f) Every kilowatthour of electricity purchased from an electric
generation facility shall count toward meeting the local publicly
owned electric utility's renewables portfolio standard annual
procurement targets for purposes of Section 387.
(g) (1) A local publicly owned electric utility may establish
performance standards for any electric generation facility that has a
capacity greater than one megawatt to ensure that those facilities
are constructed, operated, and maintained to generate the expected
annual net production of electricity and do not impact system
reliability.
(2) A local publicly owned electric utility may reduce the three
megawatt capacity limitation of paragraph (1) of subdivision (b) if
the utility finds that a reduced capacity limitation is necessary.
SEC. 3. Section 399.20 of the Public Utilities Code is amended to
read:
399.20. (a) It is the policy of this state and the intent of the
Legislature to encourage energy production
electrical generation from eligible renewable energy
resources.
(b) As used in this section, "electric generation facility" means
an electric generation facility, owned and operated by
owned, leased, or rented by a retail customer of
an electrical corporation , and that meets all of
the following criteria:
(1) Has an effective capacity of not more than one and
one-half three megawatts and is located on
property owned or under the control of the customer. Premises
that are leased or rented by the customer are under the control of
the customer for purposes of this paragraph. The retail customer is
not required to own the electric generation facility.
(2) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
(3) Is strategically located and interconnected to the electric
transmission system grid in a manner
that optimizes the deliverability of electricity generated
at the facility to load centers is considered
deliverable to load, pursuant to the Independent System Operator
deliverability assessments .
(4) Is an eligible renewable energy resource, as defined in
Section 399.12.
(c) Every electrical corporation shall file with the commission a
standard tariff for electricity generated by
purchased from an electric generation facility. The
commission may modify or adjust the requirements of this section for
any electrical corporation with less than 100,000 service
connections, as individual circumstances merit.
(d) The tariff shall provide for a base payment
rate for every kilowatthour of electricity generated
by purchased from an electric generation
facility at the market price as determined by the commission pursuant
to Section 399.15 for a period of 10, 15, or 20 years, as authorized
by the commission. The commission may adjust the payment rate
to reflect the value of every kilowatthour of electricity
generated on a time-of-delivery basis and any other attributes of
renewable generation. The commission shall ensure, with respect to
rates and charges, that ratepayers that do not receive service
pursuant to the tariff are indifferent to whether a ratepayer with an
electric generation facility receives service pursuant to the
tariff.
(e) Every electrical corporation shall make this tariff available
to customers that own and operate own, lease,
or rent an electric generation facility within the service
territory of the electrical corporation, upon request, on a
first-come-first-served basis, until the combined statewide
cumulative rated generating capacity of those electric generation
facilities equals reaches 500
megawatts. An electrical corporation may make the terms of the tariff
available to customers in the form of a standard contract subject to
commission approval. Each electrical corporation shall only be
required to offer service or contracts under this section until that
electrical corporation meets its proportionate share of the 500
megawatts based on the ratio of its peak demand to the total
statewide peak demand of all electrical corporations
.
(f) Every kilowatthour of electricity generated by the
purchased from an electric generation facility
shall count toward meeting the electrical corporation's
renewables portfolio standard annual procurement targets for purposes
of paragraph (1) of subdivision (b) of Section 399.15.
(g) The physical generating capacity of
electricity generated by an electric generation facility ,
consistent with Section 380, shall count toward the electrical
corporation's resource adequacy requirement for purposes of
Section 380 .
(h) The commission may modify or adjust the requirements of this
section for any electrical corporation with less than 100,000 service
connections, as individual circumstances merit.
(h) (1) The commission, in consultation with the Independent
System Operator, shall monitor and examine the impact on the
transmission and distribution grid and any effects upon ratepayers
resulting from electric generation facilities operating pursuant to a
tariff or contract approved by the commission pursuant to this
section.
(2) The commission shall establish performance standards for any
electric generation facility that has a capacity greater than one
megawatt to ensure that those facilities are constructed, operated,
and maintained to generate the expected annual net production of
electricity and do not impact system reliability.
(3) The commission may reduce the three megawatt capacity
limitation of paragraph (1) of subdivision (b) if the commission
finds that a reduced capacity limitation is necessary to maintain
system reliability within that electrical corporation's service
territory.
(i) (1) A customer that elects to receive electrical service
pursuant to a tariff filed by an electrical corporation pursuant to
this section is eligible to receive ratepayer-funded incentives in
accordance with Section 25782 of the Public Resources Code, or with
Section 379.6, for the capacity needed to offset part or all of the
electrical demand of the customer. For the purpose of determining the
capacity needed to offset part or all of the electrical demand of an
agricultural customer, the electrical corporation shall aggregate
the electrical load of the agricultural customer under the same
ownership located on property adjacent or contiguous to the
agricultural customer's electric generation facility.
(2) A customer that receives service under a tariff or contract
approved by the commission pursuant to this section is not eligible
to participate in any net metering program.
(j) (1) A customer electing to receive service under a tariff or
contract approved by the commission shall continue to receive service
under the tariff or contract until either of the following occurs:
(A) The customer no longer meets the eligibility requirements for
receiving service pursuant to the tariff or contract.
(B) The period of service established by the commission pursuant
to subdivision (d) is completed.
(2) Upon completion of the period of service established by the
commission pursuant to subdivision (d), the customer may elect to
renew receiving service pursuant to the tariff or contract approved
by the commission for the period of time then established by the
commission, or may elect to receive service under another then
applicable tariff.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
certain costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
With respect to certain other costs, no reimbursement is required
by this act pursuant to Section 6 of Article XIII B of the California
Constitution because a local agency or school district has the
authority to levy service charges, fees, or assessments sufficient to
pay for the program or level of service mandated by this act, within
the meaning of Section 17556 of the Government Code.