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 : According to the San Francisco
Public Utilities Commission, then Assembly Member Leno
successfully authored district bill in 2004 (AB 594) and
2006 (AB 2573) that have enabled SFPUC to develop solar
photovoltaic power in order to help meet its Renewable
Portfolio Standard (RPS) requirements. This bill builds on
those two bills. The primary objective of this bill is to
enable SFPUC to develop other forms of renewable energy
that meet RPS standards, and to develop renewable energy on
property owned by San Francisco outside the City's
boundaries. SFPUC generates its own energy for municipal
load, such as energy for City Hall and San Francisco
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International Airport, but SFPUC is not permitted to serve
retail load. PG&E provides energy for retail load and,
consequently, owns the distribution system in San
Francisco. No other local publicly owned electric utility
finds itself in this situation. Therefore, much of the law
that enables local publicly owned utilities to develop
renewable energy does not apply to SFPUC. This bill will
enable SFPUC to develop more RPS compliant renewable
energy. This bill only applies to projects that serve San
Francisco's municipal load, such as City Hall or San
Francisco International Airport.
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.
ARGUMENTS IN OPPOSITION : PG&E opposes this bill because
they believe it reopens discussions on the 2007 negotiated
interconnection agreement dealing with the location of
renewable generating facilities owned or under lease or
contract to the City and County of San Francisco.
PG&E states that, "While SB 581 has been amended to address
some of our concerns, there is still a provision that is in
conflict with the negotiated interconnection agreement
dealing with the location of renewable generating
facilities owned or lease or contract to the CCSF [City and
County of San Francisco]. AB 2573 (Chapter 786, Statutes
of 2006), and the amended interconnection agreement
implementing that bill, limited location of renewable
facilities to locations within 20 miles of the City and
County of San Francisco or their load centers. The
transmission rates negotiated as part of the
interconnection agreement were based on the limitation and
as such provided a rate discount of .8cents/kWh.
Elimination of the 20-mile restriction, which was agreed to
by all parties on October 25, 2007, would allow the CCSF to
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operate facilities anywhere in the PG&E service territory
and not in their own backyard. Given the difficulties in
siting transmission facilities, in part due to NIMBY
concerns, we cannot support elimination of the 20-mile
restriction especially given the rates negotiated for
service to the CCSF. In addition, allowing the CCSF to
locate facilities anywhere within the PG&E service
territory could allow them to increase the existing subsidy
that results from their ability to bank additional
resources during spring runoff when the value of energy is
low and withdraw the same energy during summer and fall
when the value of energy is high, increasing CCSF's
benefits due to the arbitrage potential built in the
banking arrangement."
DLW:nl 5/15/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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