BILL ANALYSIS
SB 722
Page 1
SENATE THIRD READING
SB 722 (Simitian)
As Amended August 16, 2010
Majority vote
SENATE VOTE :Vote not relevant
UTILITIES & COMMERCE 9-2 NATURAL
RESOURCES 5-3
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|Ayes:|Buchanan, Carter, Fong, |Ayes:|Chesbro, De Leon, Hill, |
| |Fuentes, Huffman, Ma, | |Huffman, Skinner |
| |Skinner, Swanson, | | |
| |Bradford | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Tran, Villines |Nays:|Gilmore, Knight, Logue |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Bradford, | | |
| |Huffman, Coto, Davis, De | | |
| |Leon, Gatto, Hall, | | |
| |Skinner, Solorio, | | |
| |Torlakson, Torrico | | |
| | | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Harkey, Miller, | | |
| |Nielsen, Norby | | |
| | | | |
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SUMMARY : Increases California's renewables portfolio standard
(RPS) to require all retail sellers of electricity and all
publicly owned utilities (POUs) to procure at least 33% of
electricity delivered to their retail customers from renewable
resources by 2020.
EXISTING LAW :
1)Requires investor-owned utilities (IOUs) and certain other
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retail sellers to achieve a 20% RPS by 2010 and establishes a
process and standards for renewable procurement.
2)Provides that POUs are not subject to the same procurement
process and standards as IOUs, but are required to implement
and enforce their own RPS programs.
3)Provides that eligible renewable resources that are located
outside of California may count toward the California RPS if
the generator commences operation after January 1, 2005, and
the facility is directly connected to California's
transmission grid or the associated electricity is delivered
to California.
FISCAL EFFECT :
1)California Public Utilities Commission (PUC):
a) Ongoing annual costs of approximately $650,000,
equivalent to 5.0 positions, to implement the RPS
provisions for IOUs, including developing new interim
goals, developing cost limitations on renewable electricity
procurement, communicating with IOUs regarding new
requirements, developing requirements for approval of
IOU-owned electricity generating facilities, and reporting
to the Legislature. (PUC Utilities Reimbursement Account
(PURA));
b) Ongoing annual costs of approximately $650,000,
equivalent to 5.0 positions, for transmission planning and
expedited review of applications to construct new
transmission lines. (PURA);
c) Ongoing annual costs of approximately $1 million for
contracts for program evaluation and technical assistance,
such as analysis of program implementation options.
(PURA);
d) Appropriation of $322,000 from PURA for additional staff
for transmission line applications that facilitate RPS
compliance; and,
e) Potential revenue of an unknown amount from fines levied
against IOUs that fail to meet RPS targets.
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2)California Energy Commission (CEC):
a) Ongoing annual costs of approximately $600,000,
equivalent to 4.0 positions, to the CEC to adopt
regulations and monitor RPS compliance among POUs. (ERPA);
b) One-time costs of approximately $300,000, equivalent to
1.0 position and contract expenses, to the Energy
Commission to update its studies on the capacity of the
electricity grid to carry wind and solar energy resources.
(ERPA);
c) Minor, absorbable costs to CEC to prepare, in
consultation with PUC, its biennial report to the
Legislature on progress toward meeting RPS. (ERPA);
3)California Department of Fish and Game, ongoing annual costs
of $350,000 to $600,000 to establish an internal division to
conduct planning and environmental compliance services.
(General Fund or Fish and Game Preservation Fund).
4)Air Resources Board (ARB):
a) Ongoing annual costs of approximately $340,000 for 2.0
positions to enforce POU compliance with RPS requirements.
(Air Pollution Control Fund (APCF)); and,
b) Potential revenue of an unknown amount from fines levied
against POUs that fail to meet RPS targets. (APCF)
COMMENTS : Over the past few years, there have been a few
attempts to increase RPS. The author and members of the
Assembly have convened numerous stakeholder meetings to try to
reconcile divergent concerns over some significant barriers.
Some of the most unsurpassable impediments have included cost
containment, transmission and siting constraints, in-state
versus out-of-state eligibility, and whether there will be equal
rules imposed on IOUs and POUs.
Last year, SB 14 (Simitian) and AB 64 (Krekorian) proposed to
increase the RPS to 33% by 2020. Each bill took a different
approach, but was similar in overarching goals. AB 64 was
dropped, and the Governor vetoed SB 14 and stated that, although
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he supports the intent of increasing RPS to 33% by 2020, he
directed ARB to try to impose a 33% RPS through uncodified
regulations.
SB 722 designates that not less than 75% of new renewable energy
resources products from June 1, 2010, going forward, must meet
the strongest reliability criteria and targets in-state
development. This category allows eligibility to products that
have a first point of interconnection with a California
balancing authority and prescribes the criteria to be used to
determine compliance.
SB 722 restricts the ability for utilities to use out-of-state
renewable energy credits (RECs) to not more than 10% of its
procurement target. A REC represents the renewable attributes
of renewable generation. A REC can remain bundled with the
associated energy. In that case, the utility buys the renewable
electricity and uses RECs to meet its RPS obligation and uses
the associated electricity to meet its own load. RECs can also
be traded as a separate commodity from the underlying
electricity (tradable RECs or tRECs). In this case, one retail
seller purchases a tREC and applies it toward its RPS obligation
and another retail seller purchases the associated electricity
to meet its own load. The second retail seller cannot count
that electricity toward its own RPS obligations.
SB 722 permits PUC to allow a retail seller to delay compliance
with a RPS procurement requirement if it finds that the retail
seller has demonstrated that specific conditions have been
encountered that are beyond the control of the retail seller.
Some allowable delays include inadequate transmission capacity,
unanticipated permitting or interconnection delays, insufficient
supply of renewable electricity, or unanticipated curtailment of
renewable resources by the balancing authority. If a retail
seller fails to procure sufficient renewable resources to comply
with RPS and IOU has failed to obtain an order from PUC
authorizing a compliance delay, SB 722 requires PUC to exercise
its authority to punish the utility in the same manner and to
the same extent as contempt is punished by courts of record.
With regard to POUs, the bill requires that any penalties paid
by the POU be reinvested in its service territory.
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Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
FN: 0005928