BILL NUMBER: SB 805 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 14, 2009
INTRODUCED BY Senator Wright
( Coauthors: Senators
Calderon and Strickland )
FEBRUARY 27, 2009
An act to amend Sections 380, 399.12, 399.14, 454.6,
2842, and 8341 of, and to amend and renumber Sections 454.5, 454.55,
454.56, and 635 add Section 25741.5 to the Public
Resources Code, and to amend Sections 399.11, 399.13, 399.14, 399.15,
399.16, and 399.17 of, to add Sections 399.10, 399.15.5, and 399.19
to, to add the heading of Article 16 (commencing with Section 399.10)
to Chapter 2.3 of Part 1 of Division 1 of, to repeal the heading of
Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1
of Division 1 of, and to repeal and add Section 387 of, the
Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 805, as amended, Wright. Energy: renewable energy
resources: procurement.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations and gas corporations, as defined. The existing Public
Utilities Act requires the commission to review and adopt a
procurement plan for each electrical corporation in accordance with
specified elements, incentive mechanisms, and objectives. The
elements, among other things, require that the plan include a showing
that the electrical corporation will, in order to fulfill its unmet
resource needs, until a 20% renewable resources portfolio is
achieved, procure renewable energy resources with the goal of
ensuring that at least an additional 1% per year of the electricity
sold by the electrical corporation is generated from eligible
renewable energy resources, provided sufficient funds are made
available to cover certain above-market costs.
This bill would expand the definition of an in-state renewable
electricity generation facility to include small hydroelectric
generation of 50 megawatts or less if it is located outside the
United States and meets certain other requirements, including that it
has obtained the approvals required to demonstrate compliance with
the environmental and other land use regulations of the governing
jurisdiction.
This bill would move the requirements for the commission to review
and adopt a procurement plan for each electrical corporation from an
article concerning rates to an article concerning long-term plans
and procurement plans, and make conforming changes that reference
existing law. The bill would require that an electrical corporation's
proposed procurement plan include a showing that the electrical
corporation will, in order to fulfill its unmet resource needs,
procure resources from eligible renewable energy resources in an
amount sufficient to meet its procurement requirements pursuant to
the renewables portfolio standard established pursuant to the
California Renewables Portfolio Standard Program.
Existing law requires the commission, in consultation with the
State Energy Resources Conservation and Development Commission
(Energy Commission), to identify all potentially achievable
cost-effective electricity efficiency savings and to establish
efficiency targets for electrical corporations to achieve pursuant to
their procurement plan. Existing law requires the commission, in
consultation with the Energy Commission to identify all potentially
achievable cost-effective natural gas efficiency savings and to
establish efficiency targets for a gas corporation to achieve and
requires a gas corporation to first meet its unmet resource needs
through all available natural gas efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
This bill would move these requirements from an article concerning
rates to an article concerning long-term plans and procurement
plans.
(2)
(1) The California Renewables Portfolio Standard
Program (RPS program) requires that a retail seller of
electricity, including electrical corporations, community choice
aggregators, and electric service providers, but not including local
publicly owned electric utilities, in order to fulfill unmet
long-term resource needs, 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). The renewables portfolio
standard requires each retail seller to increase its total
procurement of eligible renewable energy resources by at least an
additional 1% of retail sales per year so that 20% of its retail
sales are procured from eligible renewable energy resources no later
than December 31, 2010. The RPS program requires the
commission Public Utilitie s
Commission (PUC) to review and adopt a renewable energy
procurement plan for each electrical corporation. The RPS
program requires the commission PUC ,
by rulemaking, to adopt a process that provides criteria for the rank
ordering and selection of least-cost and best-fit eligible renewable
energy resources to comply with the renewables portfolio standard on
a total cost basis.
This bill would additionally require that the process consider the
cost impacts of procuring the eligible renewable energy resources on
the electrical corporation's procurement plan, the effects upon
electrical system reliability, and the environmental and economic
benefits of procuring renewable energy.
This bill would revise the renewables portfolio standard to
require each retail seller, in order to fulfill the unmet long-term
resource needs of the retail seller, to increase its total
procurement of eligible renewable energy resources so that 20% of its
retail sales are procured from eligible renewable energy resources
no later than December 31, 2010, and 33% by December 31, 2020. The
bill would require that the procurement plan adopted for an
electrical corporation include a renewables portfolio standard
requiring the electrical corporation to procure a minimum quantity of
electricity generated by eligible renewable energy resources so that
33% of its retail sales are procured from eligible renewable energy
resources by December 31, 2020, and would delete the requirement that
the plan require the electrical corporation to increase its total
procurement of eligible renewable energy resources by at least an
additional 1% of retail sales per year until it reaches the
renewables portfolio standard.
Under existing law, 51.5% of the renewable energy public goods
charge is retained by the state's 3 largest electrical corporations
for use in paying the above-market costs of electricity from eligible
renewable energy resources procured pursuant to the RPS program.
Existing law authorizes the collection of the renewable energy public
goods charge until January 1, 2012. Existing law requires the PUC,
as part of the renewables portfolio standard procurement solicitation
process, to establish a methodology to determine the market price of
electricity for terms corresponding to the length of contracts with
eligible renewable energy resources, in consideration of certain
matters. Existing law requires the PUC to establish a limitation on
the total costs expended by electrical corporations above the market
price determined by the PUC pursuant to this methodology. The cost
limitation is required to be equal to the amount of renewable energy
public goods charge moneys retained by the state's 3 largest
electrical corporations.
This bill would require that, beginning January 1, 2012, the cost
limitation established by the PUC for electrical corporations be 3%
of the annual revenue requirement for the previous calendar year,
including all direct and indirect costs associated with achieving a
33% renewables portfolio standard.
The RPS program requires the commission
PUC , by rulemaking to adopt flexible rules for
compliance that apply to all years, including years before and after
the retail supplier procures at least 20% of total retail sales of
electricity from eligible renewable energy resources.
This bill would require the commission, by rulemaking ,
to adopt flexible rules for compliance that apply to all years
before and after a retail seller procures at least 20% by December
31, 2010, and 33% by December 31, 2020, of total retail sales of
electricity from eligible renewable energy resources. The bill
would require that if, despite good faith efforts to procure eligible
renewable energy resources, the procurement options available to
retail sellers are insufficient to meet targets due to insufficient
supply or uncompetitive prices, a retail seller will not be deemed
out of compliance by the PUC. The bill would require that the RPS
program allow electricity from eligible renewable energy resources
and unbundled renewable energy credits, as defined, from
eligible renewable energy resources located in states within the
WECC, as defined, to count towards the renewables portfolio standard
targets, provided that eligible renewable energy resources providing
benefits within the state, in accordance with certain purposes, be
preferred. The bill would authorize a retail seller to meet
up to no more than 25% of its
renewables portfolio standard procurement requirements with unbundled
renewable energy credits , as defined, from
eligible renewable energy resources located outside the state, b
ut within the region of the WECC , as
defined. The bill would require a retail seller to annually report
certain information to the commission relative to compliance with the
renewables portfolio standard .
Existing law requires the commission to review the results of an
eligible renewable energy resources solicitation submitted for
approval by an electrical corporation and to accept or reject
proposed contracts based on consistency with the approved plan.
This bill would require the commission to additionally establish
project development milestones to evaluate the potential for
compliance with the adopted plan and a set of actions that will occur
as a result of not meeting those milestones. The bill would require
the commission, in consultation with the Energy Commission, to adopt
rules for the enforcement of the program with respect to retail
sellers. The bill would provide that if the commission determines
that despite good faith best efforts by a retail seller to procure
eligible renewable energy resources, that there are insufficient
eligible renewable energy resources at competitive prices to enable
the retail seller to meet its renewables portfolio standard
procurement requirements, the retail seller is not out of compliance
with the renewables portfolio standard.
The existing RPS program includes provisions that are applicable
to an electrical corporation with 60,000 or fewer customer accounts
in California that serves retail end-use customers outside
California, and authorizes the commission to adopt procurement
requirements for the electrical corporation as a specified percentage
of total kilowatthours sold by the electrical corporation to its
retail end-use customers in California in a calendar year.
This bill would extend these provisions to an electrical
cooperative, as defined, that serves 25,000 or fewer customer
accounts in California that serves retail end-use customers outside
of California.
Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because certain of the provisions of this bill would be a part of
the act and because a violation of an order or decision of the
commission implementing its requirements would be a crime, the bill
would impose a state-mandated local program by creating a new crime.
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 a specified reason.
(2) 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 the governing board of a local
publicly owned electric utility to report certain information
relative to renewable energy resources to its customers.
This bill would require the governing board of a local publicly
owned electric utility, in order to meet long-term unmet resource
needs, to adopt and implement a renewables portfolio standard that
requires the utility to increase its procurement of eligible
renewable energy resources so that 33% of its retail sales are
procured from eligible renewable energy resources no later than
December 31, 2020. The bill would require the governing board to
formally adopt a renewables portfolio standard program meeting these
procurement requirements at a duly noticed public hearing on or
before January 31, 2011. The bill would require that the renewables
portfolio standard program of a local publicly owned electric utility
utilize the accounting system adopted by the State Energy Resources
Conservation and Development Commission (Energy Commission) for
retail sellers. The bill would authorize the renewables portfolio
standard program of a local publicly owned electric utility to use
renewable energy credits to the same extent authorized by the
commission for retail sellers. The bill would require a local
publicly owned electric utility to annually report to its customers
and the Energy Commission the utility's progress toward meeting the
33% renewables portfolio standard procurement requirement, including
information about the location and sources of electricity and use of
renewable energy credits. 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.
(3) The existing RPS program requires the Energy Commission to (1)
certify eligible renewable energy resources, (2) design and
implement an accounting system to verify compliance with the
renewables portfolio standard by retail sellers, (3) establish a
system for tracking and verifying renewable energy credits (RECs)
that verifies the generation and delivery of electricity associated
with RECs, and (4) certify, for purposes of compliance with the
renewables portfolio standard by a retail seller, the eligibility of
RECs associated with deliveries of electricity to a local publicly
owned electric utility. Existing law requires that for an REC to be
certified that is associated with deliveries of electricity to a
local publicly owned electric utility, the local publicly owned
electric utility must be in compliance with an RPS program adopted
for the utility by its governing board, and that the RPS program
adopted by the utility establishes an annual renewables portfolio
standard target comparable to those applicable to an electrical
corporation, is procuring sufficient eligible renewable energy
resources to satisfy the targets, and will not fail to satisfy the
targets in the event that the REC is sold to another retail seller.
This bill would require that for an REC to be certified that is
associated with deliveries of electricity to a local publicly owned
electric utility, the local publicly owned electric utility must be
in compliance with an RPS program adopted for the utility by its
governing board, and that the RPS program adopted by the utility
establishes a renewables portfolio standard target equivalent to
those applicable to an electrical corporation, is procuring
sufficient eligible renewable energy resources to meet the targets,
and will not fail to meet the targets in the event that the REC is
sold to a retail seller.
(4) 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 a specified reason.
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. Section 25741.5 is added to the
Public Resources Code , to read:
25741.5. For a local publicly owned utility that was in existence
on or before January 1, 2009, that provides retail electric service
to 15,000 or fewer customer accounts in California, and is
interconnected to a control area located outside this state within
the Western Electricity Coordinating Council (WECC) an eligible
renewable energy resource includes a facility that is located outside
California if the facility is connected to the WECC transmission
system, if all of the following conditions are met:
(a) The electricity generated by the facility is procured by the
local publicly owned utility and is not used to fulfill renewable
energy procurement requirements in other states.
(b) The local publicly owned utility participates in, and complies
with, the accounting system administered by the commission pursuant
to subdivision (b) of Section 399.13 of the Public Utilities Code.
(c) The commission verifies that the electricity generated by the
facility is eligible to meet procurement targets.
SEC. 2. Section 387 of the Public
Utilities Code is repealed.
387. (a) Each governing body of a local publicly owned electric
utility shall be responsible for implementing and enforcing a
renewables portfolio standard 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.
(b) Each local publicly owned electric utility shall report, on an
annual basis, to its customers and to the State Energy Resources
Conservation and Development Commission, the following:
(1) Expenditures of public goods funds collected pursuant to
Section 385 for eligible renewable energy resource development.
Reports shall contain a description of programs, expenditures, and
expected or actual results.
(2) The resource mix used to serve its customers by fuel type.
Reports shall contain the contribution of each type of renewable
energy resource with separate categories for those fuels that are
eligible renewable energy resources as defined in Section 399.12,
except that the electricity is delivered to the local publicly owned
electric utility and not a retail seller. Electricity shall be
reported as having been delivered to the local publicly owned
electric utility from an eligible renewable energy resource when the
electricity would qualify for compliance with the renewables
portfolio standard if it were delivered to a retail seller.
(3) The utility's status in implementing a renewables portfolio
standard pursuant to subdivision (a) and the utility's progress
toward attaining the standard following implementation.
SEC. 3. Section 387 is added to the
Public Utilities Code , to read:
387. (a) In order to meet long-term unmet resource needs, the
governing body of each local publicly owned electric utility shall
adopt and implement a renewables portfolio standard that requires the
utility to increase its procurement of eligible renewable energy
resources so that 33 percent of its retail sales are procured from
eligible renewable energy resources no later than December 31, 2020.
For purposes of this section, "eligible renewable energy resource,"
"procure," "renewables portfolio standard," and "renewable energy
credit" have the same meanings as defined in Article 16 (commencing
with Section 399.10).
(b) The governing body of each publicly owned electric utility
shall, on or before January 31, 2011, and at a duly noticed public
hearing, formally adopt a renewables portfolio standard program
meeting the procurement requirements of subdivision (a). Prior to
adoption of the program, the governing body of the local publicly
owned electric utility shall provide opportunities for public
participation.
(c) (1) The renewables portfolio standard program adopted by a
governing body of a local publicly owned utility may authorize the
use of renewable energy credits to the same extent authorized by the
commission pursuant to Section 399.16 for retail sellers.
(2) The renewables portfolio standard program adopted by a
governing body of a local publicly owned utility shall utilize the
accounting system adopted by the Energy Commission pursuant to
Section 399.13 for retail sellers.
(d) The governing board of each publicly owned electric utility
shall annually report to its customers and the Energy Commission on
the utility's progress toward meeting the 33 percent renewables
portfolio standard procurement requirement of subdivision (a),
including all of the following:
(1) The amount of electricity procured from eligible renewable
energy resources located in this state, by source.
(2) The amount of electricity procured from eligible renewable
energy resources located outside the state, generated within the
WECC, by source.
(3) The amount of renewable energy credits procured from eligible
renewable energy resources located in this state.
(4) The amount of renewable energy credits procured from eligible
renewable energy resources located outside this state, for
electricity generated within the WECC.
(e) Upon distribution of information related to its renewable
energy resource procurement status and future plans to its governing
body, for its consideration at a noticed public meeting, the local
publicly owned electric utility shall make that information available
to the public and shall provide the Energy Commission with an
electronic copy of the documents for posting on the Energy Commission'
s Internet Web site. This requirement is satisfied if the local
publicly owned electric utility provides the uniform resource locator
(URL) that links to the documents or information regarding other
manners of access to the documents.
SEC. 4. The heading of Article 16 (commencing with
Section 399.10) is added to Chapter 2.3 of Part 1 of Division 1 of
the Public Utilities Code , to read:
Article 16. California Renewables Portfolio Standard Program
SEC. 5. Section 399.10 is added to the
Public Utilities Code , to read:
399.10. The Legislature finds and declares all of the following:
(a) Reliable, reasonably priced, and environmentally responsible
electrical service is essential to the economic well-being of
California consumers and businesses.
(b) The State Air Resources Board has identified a statewide
target of generating 33 percent of the state's electricity from
renewable energy resources as a key measure to comply with the
requirements of the California Global Warming Solutions Act of 2006
to achieve cost-effective reductions in emissions of greenhouse gases
consistent with maintaining reliability of the electrical system.
(c) The State Air Resources Board has identified the need for
sufficient transmission and the ability to integrate large quantities
of intermittent renewable energy resources, such as wind and solar
generation, as a key prerequisite to reaching the target of
generating 33 percent of the state's electricity from renewable
energy resources, so that the state's electrical system continues to
operate in an efficient and reliable manner.
SEC. 6. The heading of Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the
Public Utilities Code is repealed.
Article 16. California Renewables Portfolio Standard Program
SEC. 7. Section 399.11 of the Public
Utilities Code is amended to read:
399.11. The Legislature finds and declares all of the following:
(a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from eligible renewable
energy resources by December 31, 2010, and 33 percent by
December 31, 2020, and for the purposes of increasing the
diversity, reliability, public health and environmental benefits of
the energy mix, reducing emissions of greenhouse gases, and
promoting economic development, it is the intent of the
Legislature that the commission and the State Energy
Resources Conservation and Development Energy
Commission implement the California Renewables Portfolio Standard
Program described in this article.
(b) Increasing California's reliance on eligible renewable energy
resources may promote stable electricity prices, protect public
health, improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce
reliance on imported fuels.
(c) The development of eligible renewable energy resources and the
delivery of the electricity generated by those resources to
customers in California may ameliorate air quality problems
throughout the state and improve public health by reducing the
burning of fossil fuels and the associated environmental impacts and
by reducing in-state fossil fuel consumption.
(d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the State Energy Resources Conservation and
Development Energy Commission and established
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code.
(e) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.
SEC. 8. Section 399.13 of the Public
Utilities Code is amended to read:
399.13. The Energy Commission shall do all of the following:
(a) Certify eligible renewable energy resources that it determines
meet the criteria described in subdivision (b) of Section 399.12
or Section 399.12.5 .
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that electricity generated by an eligible renewable energy resource
is counted only once for the purpose of meeting the renewables
portfolio standard of this state or any other state, to certify
renewable energy credits produced by eligible renewable energy
resources, and to verify retail product claims in this state or any
other state. In establishing the guidelines governing this accounting
system, the Energy Commission shall collect data from electricity
market participants that it deems necessary to verify compliance of
retail sellers, in accordance with the requirements of this article
and the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). In
seeking data from electrical corporations, the Energy Commission
shall request data from the commission. The commission shall collect
data from electrical corporations and remit the data to the Energy
Commission within 90 days of the request.
(c) Establish a system for tracking and verifying renewable energy
credits that, through the use of independently audited data,
verifies the generation and delivery of electricity associated with
each renewable energy credit and protects against multiple counting
of the same renewable energy credit. The Energy Commission shall
consult with other western states and with the Western
Electricity Coordinating Council WECC in the
development of this system.
(d) Certify, for purposes of compliance with the
renewable renewables portfolio standard
requirements by a retail seller, the eligibility of renewable energy
credits associated with deliveries of electricity by an eligible
renewable energy resource to a local publicly owned electric utility,
if the Energy Commission determines that the following conditions
have been satisfied:
(1) The local publicly owned electric utility that is procuring
the electricity is in compliance with the requirements of Section
387.
(2) The local publicly owned electric utility has established
an annual a renewables portfolio
standard target comparable equivalent
to those applicable to an electrical corporation, is procuring
sufficient eligible renewable energy resources to satisfy
meet the targets, and will not fail to
satisfy meet the targets in the event that the
renewable energy credit is sold to another a
retail seller.
SEC. 9. Section 399.14 of the Public
Utilities Code is amended to read:
399.14. (a) (1) The commission shall direct each electrical
corporation to prepare a renewable energy procurement plan that
includes the matter in paragraph (3), to satisfy its obligations
under the renewables portfolio standard. To the extent feasible, this
procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary.
(2) The commission shall adopt, by rulemaking, all of the
following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make specific
determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable energy
resources to comply with the annual California
Renewables Portfolio Standard Program obligations on a total cost
basis. This process shall consider estimates of indirect costs
associated with needed transmission investments and ongoing utility
expenses resulting from integrating and operating eligible renewable
energy resources.
(C) (i) Flexible rules for compliance, including rules permitting
retail sellers to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years. The flexible rules for compliance shall apply
to all years, including years before and after a retail seller
procures at least 20 percent , by December 31, 2010, and 33
percent, by December 31, 2020, of total retail sales of
electricity from eligible renewable energy resources. If,
despite good faith efforts to procure eligible renewable energy
resources, the procurement options in Section 399.15.5 are
insufficient to meet targets due to insufficient supply or
uncompetitive offers, a retail seller shall not be deemed out of
compliance.
(ii) The flexible rules for compliance shall address situations
where, as a result of insufficient transmission, a retail seller is
unable to procure eligible renewable energy resources sufficient to
satisfy the requirements of this article. Any rules addressing
insufficient transmission shall require a finding by the commission
that the retail seller has undertaken all reasonable efforts to do
all of the following:
(I) Utilize flexible delivery points.
(II) Ensure the availability of any needed transmission capacity.
(III) If the retail seller is an electric corporation, to
construct needed transmission facilities.
(IV) Nothing in this subparagraph shall be construed to revise any
portion of Section 454.5.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall, at a minimum, include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of eligible renewable energy
resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission may authorize a retail seller to enter into a
contract of less than 10 years' duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources to
be procured either through contracts of at least 10 years' duration
or from new facilities commencing commercial operations on or after
January 1, 2005.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of renewable procurement pursuant to this article by
an electrical corporation.
(d) The commission shall review the results of an eligible
renewable energy resources solicitation submitted for approval by an
electrical corporation and accept or reject proposed contracts with
eligible renewable energy resources based on consistency with the
approved renewable energy procurement plan. If the commission
determines that the bid prices are elevated due to a lack of
effective competition among the bidders, the commission shall direct
the electrical corporation to renegotiate the contracts or conduct a
new solicitation.
(e) If an electrical corporation fails to comply with a commission
order adopting a renewable energy procurement plan, the commission
shall exercise its authority pursuant to Section 2113 to require
compliance. The commission shall enforce comparable penalties on any
other retail seller that fails to meet annual
procurement targets established pursuant to Section 399.15.
(f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
deliveries of eligible renewable energy resources to satisfy
annual renewables portfolio standard obligations. The
commission may not require any person or corporation to act as a
procurement entity or require any party to purchase eligible
renewable energy resources from a procurement entity.
(2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
(g) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article and approved by
the commission shall be deemed reasonable per se, and shall be
recoverable in rates.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives is "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
SEC. 10. Section 399.15 of the Public
Utilities Code is amended to read:
399.15. (a) In order to fulfill the unmet long-term
resource needs of each retail seller , the commission
shall establish a renewables portfolio standard requiring all
electrical corporations to procure a minimum quantity of electricity
generated by eligible renewable energy resources as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year, subject to limits on the total amount
of costs expended above the market prices determined in subdivision
(c), to achieve the targets established under this article.
(b) The commission shall implement annual
procurement targets for each retail seller as follows:
(1) Each retail seller shall, pursuant to subdivision (a),
increase its total procurement of eligible renewable energy resources
by at least an additional 1 percent of retail sales per
year so that 20 33 percent of
its retail sales are procured from eligible renewable energy
resources no later than December 31, 2010
2020 . A retail seller with 20 33
percent of retail sales procured from eligible renewable energy
resources in any year shall not be required to increase its
procurement of renewable energy resources in the following year.
(2) For purposes of setting annual procurement
targets, the commission shall establish an initial baseline for each
retail seller based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and to the extent
applicable, adjusted going forward pursuant to Section 399.12.
(3) Only for purposes of establishing these targets, the
commission shall include all electricity sold to retail customers by
the Department of Water Resources pursuant to Section 80100 of the
Water Code in the calculation of retail sales by an electrical
corporation.
(4) In the event that a retail seller fails to procure sufficient
eligible renewable energy resources in a given year to meet any
annual target established pursuant to this subdivision, the retail
seller shall procure additional eligible renewable energy resources
in subsequent years to compensate for the shortfall, subject to the
limitation on costs for electrical corporations established pursuant
to subdivision (d).
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with eligible renewable energy resources, in consideration
of the following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation's general
procurement activities as authorized by the commission.
(2) The long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities.
(3) The value of different products including baseload, peaking,
and as-available electricity.
(d) The commission shall establish, for each electrical
corporation, a limitation on the total costs expended above the
market prices determined in subdivision (c) for the procurement of
eligible renewable energy resources to achieve the annual
procurement targets established under this article.
(1) The cost limitation shall be equal to the amount of funds
transferred to each electrical corporation by the Energy Commission
pursuant to subdivision (b) of Section 25743 of the Public Resources
Code and the 51.5 percent of the funds which would have been
collected through January 1, 2012 December
31, 2011 , from the customers of the electrical corporation
based on the renewable energy public goods charge in effect as of
January 1, 2007. Commencing January 1, 2012, the cost limitation
shall be 3 percent of the annual revenue for the previous calendar
year, including all direct and indirect costs associated
with achieving a 33 percent renewables portfolio standard.
(2) The above-market costs of a contract selected by an electrical
corporation may be counted toward the cost limitation if all of the
following conditions are satisfied:
(A) The contract has been approved by the commission and
was or approved by the commission and selected
through a competitive solicitation pursuant to the requirements of
subdivision (d) of Section 399.14.
(B) The contract covers a duration of no less than 10 years.
(C) The contracted project is a new or repowered facility
commencing commercial operations on or after January 1, 2005.
(D) No purchases of renewable energy credits may be eligible for
consideration as an above-market cost.
(E) The above-market costs of a contract do not include any
indirect expenses including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, or transmission
upgrades.
(3) If the cost limitation for an electrical corporation is
insufficient to support the total costs expended above the market
prices determined in subdivision (c) for the procurement of eligible
renewable energy resources satisfying the conditions of paragraph
(2), the commission shall allow
the electrical corporation to limit its procurement to the
quantity of eligible renewable energy resources that can be procured
at or below the market prices established in subdivision (c).
(4) Nothing in this section prevents an electrical corporation
from voluntarily proposing to procure eligible renewable energy
resources at above-market prices that are not
counted toward the total cost limitation. Any voluntary
procurement involving above-market costs shall be subject to
commission approval prior to the expense being recovered in rates.
(e) The establishment of a renewables portfolio standard shall not
constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
(f) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.
SEC. 11. Section 399.15.5 is added to the
Public Utilities Code , to read:
399.15.5. (a) The renewables portfolio standard program
authorized pursuant to this article shall allow electricity from
eligible renewable energy resources and unbundled renewable energy
credits from eligible renewable energy resources located in states
within the WECC to count towards the renewables portfolio standards
targets. However, eligible renewable energy resources providing
benefits within this state in accordance with the purposes set forth
in subdivisions (a), (b), and (c) of Section 399.11 shall be
preferred. The preferred means of procuring eligible renewable
resources shall be to do any of the following:
(1) Procure electricity and associated renewable energy credits
from eligible renewable resources located in this state.
(2) Procure electricity and associated renewable energy credits
from eligible renewable energy resources located outside this state
and within the WECC.
(3) Procure unbundled renewable energy credits, provided, however,
that no more than 25 percent of a renewables portfolio standard
requirement shall be met with unbundled renewable energy credits from
eligible renewable resources located outside this state and within
the WECC.
(b) The commission may require an electrical corporation to own
and operate eligible renewable energy resources in furtherance of the
renewables portfolio standard program.
SEC. 12. Section 399.16 of the Public
Utilities Code is amended to read:
399.16. (a) The commission, by rule, may authorize the use of
renewable energy credits to satisfy the requirements of the
renewables portfolio standard established pursuant to this article,
subject to the following conditions:
(1) Prior to authorizing any renewable energy credit to be used
toward satisfying annual procurement targets, the
commission and the Energy Commission shall conclude that the tracking
system established pursuant to subdivision (c) of Section 399.13, is
operational, is capable of independently verifying the electricity
generated by an eligible renewable energy resource and delivered to
the retail seller, and can ensure that renewable energy credits shall
not be double counted by any seller of electricity within the
service territory of the Western Electricity Coordinating Council
(WECC).
(2) A renewable energy credit shall be counted only once for
compliance with the renewables portfolio standard of this state or
any other state, or for verifying retail product claims in this state
or any other state.
(3) The electricity is delivered to a retail seller, the
Independent System Operator, or a local publicly owned electric
utility.
(4) All revenues received by an electrical corporation for the
sale of a renewable energy credit shall be credited to the benefit of
ratepayers.
(5) No renewable energy credits shall be created for electricity
generated pursuant to any electricity purchase contract with a retail
seller or a local publicly owned electric utility executed before
January 1, 2005, unless the contract contains explicit terms and
conditions specifying the ownership or disposition of those credits.
Deliveries under those contracts shall be tracked through the
accounting system described in subdivision (b) of Section 399.13 and
included in the baseline quantity of eligible renewable energy
resources of the purchasing retail seller pursuant to Section 399.15.
(6) No renewable energy credits shall be created for electricity
generated under any electricity purchase contract executed after
January 1, 2005, pursuant to the federal Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. Sec. 2601 et seq.). Deliveries under
the electricity purchase contracts shall be tracked through the
accounting system described in subdivision (b) of Section 399.12 and
count toward the renewables portfolio standard obligations of the
purchasing retail seller.
(7) The commission may limit the quantity of renewable energy
credits that may be procured unbundled from electricity generation by
any retail seller, to meet the requirements of this article.
However, a retail seller shall be permitted to meet up to 25 percent
of its renewables portfolio standard procurement requirements with
unbundled renewable energy credits from eligible renewable energy
resources located outside the state, but within the WECC.
(8) No electrical corporation shall be obligated to procure
renewable energy credits to satisfy the requirements of this article
in the event that the total costs expended above the applicable
market prices for the procurement of eligible renewable energy
resources exceeds the cost limitation established pursuant to
subdivision (d) of Section 399.15.
(9) Any additional condition that the commission determines is
reasonable.
(b) The commission shall allow an electrical corporation to
recover the reasonable costs of purchasing renewable energy credits
in rates.
SEC. 13. Section 399.17 of the Public
Utilities Code is amended to read:
399.17. (a) Subject to the provisions of this section, the
requirements of this article apply to an electrical corporation with
60,000 or fewer customer accounts in California that serves retail
end-use customers outside California or an electrical
cooperative, as defined in Section 2776, serving 25,000 or fewer
customer accounts in California that serves retail end-use customers
outside of California .
(b) For an electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California or an electrical cooperative serving 25,000 or fewer
customer accounts in California that serves retail end-use customers
outside of California , an eligible renewable energy resource
includes a facility that is located outside California, if the
facility is connected to the Western Electricity
Coordinating Council (WECC) WECC transmission
system, provided all of the following conditions are met:
(1) The electricity generated by the facility is procured by the
electrical corporation or cooperative on behalf of its
California customers, and is not used to fulfill renewable energy
procurement requirements in other states.
(2) The electrical corporation or cooperative
participates in, and complies with, the accounting system
administered by the Energy Commission pursuant to subdivision (b) of
Section 399.13.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the annual
procurement targets of this article.
(c) The commission shall determine the annual
procurement targets for an electrical corporation with 60,000 or
fewer customer accounts in California that serves retail end-use
customers outside California or an electrical cooperative
serving 25,000 or fewer customer accounts in California that serves
retail end-use customers outside of California , as
a specified percentage of total kilowatthours sold by the electrical
corporation or cooperative to its retail end-use customers
in California in a calendar year .
(d) An electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California or an electrical cooperative serving 25,000 or fewer
customer accounts in California that serves retail end-use customers
outside of California , may use an integrated resource plan
prepared in compliance with the requirements of another state utility
regulatory commission, to fulfill the requirement to prepare a
renewable energy procurement plan pursuant to this article, provided
the plan meets the requirements of Sections 399.11, 399.12, 399.13,
and 399.14, as modified by this section.
(e) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation with 60,000 or
fewer customer accounts in California that serves retail end-use
customers outside California or an electrical cooperative
serving 25,000 or fewer customer accounts in California that serves
retail end-use customers outside of California , for eligible
renewable energy resources pursuant to this article, at or below the
market price determined by the commission pursuant to subdivision (c)
of Section 399.15, shall be deemed reasonable per se, and shall be
recoverable in rates of the electrical corporation's or
electrical cooperative's California customers, provided the
costs are not recoverable in rates in other states served by the
electrical corporation or cooperative .
SEC. 14. Section 399.19 is added to the
Public Utilities Code , to read:
399.19. (a) The commission, in consultation with the Energy
Commission and the Independent System Operator, shall report to the
Governor and the Legislature by January 1, 2012, and by January 1 of
each even year thereafter, on the state's progress toward achieving a
statewide 33 percent renewables portfolio standard. The report shall
include all of the following:
(1) The current status and progress made during the prior two
years toward procurement of eligible renewable energy resources
located in the state, including the status of siting and permitting
eligible renewable resources by federal, state, and local agencies,
procurement of eligible renewable energy resources located outside
the state and within the WECC, and procurement of unbundled renewable
energy credits.
(2) The current status and progress made during the prior two
years toward construction of, and upgrades to, transmission and
distribution facilities and other electrical system components to
interconnect eligible renewable energy resources and to deliver the
electricity generated by those resources to load, including the
status of planning, siting, and permitting transmission facilities by
federal, state, and local agencies.
(3) The current status and progress made during the prior two
years in integrating intermittent eligible renewable energy resources
into the total electricity supply mix, including frequency control,
balancing load and generation, ramping, utilization of smart grid and
storage technologies, and the status of siting and permitting load
following resources by federal, state, and local agencies.
(4) The total costs of achieving progress toward a statewide 33
percent renewables portfolio standard, including indirect costs,
including, but not limited to, integrating and delivering eligible
renewable resources, and the cost per ton of reductions in greenhouse
gas emissions and the amount and rate of reductions achieved.
(5) Recommendations to remove impediments to making progress
toward achieving a statewide 33 percent renewables portfolio
standard, including adjustments to total cost limitations;
recommendations to achieve greater cost-effective reductions in
emissions of greenhouse gases through energy efficiency and demand
response, including use of efficient combined heat and power systems,
or other strategies.
(b) The commission, consistent with the report prepared pursuant
to subdivision (a), shall revise the procurement targets established
for electrical corporations pursuant to Section 399.15, to reflect
the cost and implementation determinations identified in the
long-term procurement plan proceeding, as needed, to ensure that
California consumers and businesses continue to receive reliable,
reasonably priced electrical service.
SEC. 15. 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. All
matter omitted in this version of the bill appears in the bill as
introduced in the Senate, February 27, 2009 (JR11)