BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 581|
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                                 THIRD READING


          Bill No:  SB 581
          Author:   Leno (D)
          Amended:  5/14/09
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  7-3, 5/5/09
          AYES:  Padilla, Corbett, Kehoe, Lowenthal, Simitian,  
            Wiggins, Wright
          NOES:  Benoit, Cox, Strickland
          NO VOTE RECORDED:  Calderon


           SUBJECT  :    Hetch Hetchy Water and Power: renewable  
          generation

           SOURCE  :     San Francisco Public Utilities Commission


           DIGEST  :    This bill expands a state statute relating to  
          San Francisco which limits their ability for having  
          electrical energy projects limited only to photovoltaic  
          solar, by giving them the ability to have more of a variety  
          of renewable energy projects such as ocean power, in-line  
          hydro, small urban wind, geothermal, and large and small  
          scale solar projects.

           ANALYSIS  :    Existing law requires PG&E to credit the City  
          and County of San Francisco (City) for any excess  
          electricity exported to the PG&E grid from up to 15  
          megawatts of solar generation facilities owned by the City  
          that would serve its municipal facilities.  The required  
          credit is equivalent to the generation component of the  
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          appropriate time-of-use rate for the electricity.   
          Facilities must be located within 20 miles of the Hetch  
          Hetchy Water and Power electric generation facility or in,  
          or within 20 miles of, the City which operates as the San  
          Francisco Public Utilities Commission (SFPUC).

           Background
           
          For nearly 100 years federal law (The Raker Act of 1913)  
          has granted the City water and power resource rights-of-way  
          in Yosemite National Park and Stanislaus National Forest  
          and permitted the City to generate hydroelectric power  
          through the Hetch Hetchy system.  The City is also required  
          to sell excess Hetch Hetchy power at cost, when available  
          above the City's own municipal needs, to Modesto and  
          Turlock Irrigation Districts for agricultural pumping and  
          municipal needs.  The SFPUC sells Hetch Hetchy power, in  
          excess of its Raker Act obligation to Modesto and Turlock  
          Irrigation Districts and its own municipal needs, to public  
          agencies and/or private commercial users.

          The power system delivers an average of 1.7 billion  
          kilowatt hours of electricity annually to the City and  
          County of San Francisco, the Modesto and Turlock Irrigation  
          Districts and tenants at the San Francisco International  
          Airport.

          As a result of legislation in 2004 and 2006 the SFPUC has  
          been authorized under state law to build solar generation  
          at remote sites, deliver the power to PG&E, and net that  
          generation out against its municipal load at a generation  
          rate.  The result is a surrogate net metering program  
          designed only for San Francisco's municipal load in which  
          the generation from City owned solar facilities is credited  
          for excess electricity production under a limited form of  
          net-metering, in which PG&E pays for excess electricity at  
          the time-of-use generation rate, rather than the full  
          retail rate.

          Because of AB 2573 (Leno), Chapter 786, Statutes of 2006,  
          the SFPUC and PG&E were finally able to resolve years of  
          heated negotiations concerning the interconnection of solar  
          facilities and related costs and obligations.  The 184 page  
          agreement was finalized in October 2007 and remains in  







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          effect until July 1, 2015.  According to the parties, this  
          bill does not directly affect any provision of that  
          agreement.  It could however result in pressures to reopen  
          the negotiations.

          This bill requires PG&E to accept any electricity from any  
          renewable resource owned, leased, or under contract with  
          the San Francisco Public Utilities Commission that is  
          located within the electric service territory of PG&E.  It  
          specifies that a renewable electricity generation facility  
          as used in the bill meet the requirements for in-state  
          renewable electricity generation facilities for the state's  
          Renewable Portfolio Standard in the Public Resources Code  
          Section 25741 (b) and located under the electric service  
          territory of PG&E.

           FISCAL EFFECT :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  5/14/09)

          San Francisco Public Utilities Commission (source) 
          American Federation of State, County and Municipal  
          Employees, AFL-CIO
          Association of California Water Agencies
          The Solar Alliance 
          Vote Solar Initiative

           OPPOSITION  :    (Verified  5/14/09)

          Pacific Gas & Electric

           ARGUMENTS IN SUPPORT  :    San Francisco is aggressively  
          pursuing a variety of renewable energy projects including  
          ocean power, in-line hydro, small urban wind, geothermal,  
          and large and small scale solar projects.  The San  
          Francisco Public Utilities Commission would like to expand  
          a San Francisco specific statue, limited only to  
          photovoltaic solar, to include all types of renewable  
          distributed generation.  The bill will update state law to  
          reflect the fact that renewable generation takes many forms  
          and the mechanisms available to provide clean energy to  
          serve San Francisco's municipal load should endorse all  
          renewables not just photovoltaic solar.







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          There will be no impact to PG&E and its ratepayers.  The  
          current statute prohibits the shifting costs to PG&E's  
          bundling service customers and requires San Francisco to  
          pay PG&E for use of its transmission and distribution  
          facilities.  Renewable energy generation projects  
          authorized under this bill would be subject to Federal  
          Energy Regulatory Commission and California Public  
          Utilities Commission regulations and San Francisco would  
          compensate PG&E for any impacts from interconnection or  
          distributions. 


          DLW:nl  5/15/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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