BILL ANALYSIS
SB 581
Page 1
SENATE THIRD READING
SB 581 (Leno)
As Amended June 25, 2009
Majority vote
SENATE VOTE :25-14
UTILITIES & COMMERCE 13-0 NATURAL
RESOURCES 9-0
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|Ayes:|Fuentes, Tom Berryhill, |Ayes:|Skinner, Gilmore, |
| |Carter, Fong, Fuller, | |Brownley, Chesbro, De |
| |Furutani, Huffman, | |Leon, Hill, Huffman, |
| |Krekorian, Skinner, | |Knight, Logue |
| |Fletcher, Swanson, | | |
| |Torrico, Villines | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Allows the San Francisco Public Utilities Commission
(SFPUC) to designate all renewable electric generation
facilities to be eligible for a unique arrangement where Pacific
Gas and Electric Company (PG&E) is required to take electricity
from the generator and offset the City of San Francisco's (City)
municipal load. Specifically, this bill :
1)Expands the type of generation SFPUC can use to offset the
City's municipal load from only solar to all forms of
renewable energy.
2)Deletes the restriction that the designated generation
facility be Hetch Hetchy Water and Power (HHWP) generated and
owned by the City; and, allows the facility to be owned or
under lease or contract to the City for at least a five-year
term and for the full output of electricity from the facility.
3)Provides that the City shall own the environmental attributes
associated with the electricity delivered to the electric grid
by City-owned renewable generation facilities.
EXISTING LAW :
1)Requires PG&E to credit the City and County of San Francisco
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(City) for any excess electricity exported to PG&E grid from
City-owned solar generation facilities that serve its
municipal facilities.
2)Restricts the size of eligible solar generating facilities to
15 megawatts (MW).
3)Requires SFPUC-owned municipal facility to be located within
the City and County of San Francisco, or for sites outside of
the City, within 20 miles of the City or within 20 miles of a
City-owned remote solar generation facility.
4)Requires SFPUC to pay the reasonable costs of any improvements
required to facilitate interconnection between the solar
facility and PG&E.
5)Allows a city, county, city and county, special district,
school district, political subdivision, or other local public
agency to designate accounts controlled by the governmental
entity to receive bill credits for the electricity generated
by a renewable generating facility located within the
boundaries of the governmental entity and is on land owned or
controlled by the governmental entity.
FISCAL EFFECT : Unknown
COMMENTS : The City owns HHWP, which provides water from the
Tuolumne River to the City and its residents. The federal Raker
Act (1913) permitted the City to dam the Tuolumne River and
construct powerhouses and transmission lines below Hetch Hetchy
Reservoir for the generation, sale, and distribution of electric
energy. The Act established priorities for the use of Hetch
Hetchy hydropower: first to drive the system's waterworks, next
to supply the City's municipal government agencies, and then to
farmers and municipal governments within the Modesto and Turlock
irrigation districts. Any remaining hydropower could be sold to
the City's residential and business users but never to a
corporation, such as PG&E.
The City has a unique arrangement. PG&E continues to procure
generation and provide transmission and distribution services to
all bundled-service ratepayers such as residential, commercial,
and industrial customers within the City's boundaries. However,
the City owns the Hetch Hetchy power which requires the City to
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use it for its municipal load first.
Over the past few years, many bills have addressed a
municipality's desire to generate its own electricity to serve
its load. AB 1969 (Yee), Chapter 731, Statutes of 2006,
requires an electrical corporation to purchase electricity from
renewable electricity generation facilities that are owned and
operated by public wastewater agencies. AB 2466 (Laird),
Chapter 540, Statutes of 2008, allows a local government to
receive a bill credit against electricity it has consumed at one
or more sites for electricity it has generated and supplied to
the grid at one or more renewable generating facilities. SFPUC
cannot participate in this program because it is not a customer
of the utility and therefore does not receive a utility bill to
apply the bill credit.
Five years ago, the Legislature passed AB 594 (Leno), Chapter
790, Statutes of 2004, which enabled the City to install on-site
photovoltaic solar generation at its municipal sites and get
credit for excess electricity. Two years later, AB 2573 (Leno),
Chapter 786, Statutes of 2006, allowed the City to offset its
power generated by HHWP at one location, with power consumed by
the City municipal meters at a different location. This bill
expands the AB 2573 arrangement by applying to all renewable
generation.
In addition, this bill allows the City to engage in contractual
relationships with energy providers through power purchase
agreements (PPAs). PPAs can be used by public and private
entities to finance the construction of onsite renewable power
generation. Under a typical PPA, a private third party finances
the up-front costs of building the renewable energy generation
facility through a loan provided by a bank. The bank provides a
loan to cover the up-front financing for the project, and the
energy company will build, own, and operate the renewable
facility that provides electricity to the building owner. The
building owner, in turn, promises to make specified payments for
that power for a certain number of years which pays off the
loan, as well as creates a profit stream for the energy company.
This bill ensures that the PPA is under lease or contract to
the City for at least a five-year term and for the full output
of electricity from the facility.
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Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
FN: 0001799