BILL ANALYSIS                                                                                                                                                                                                              1
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                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          


          SB 1247 -  Dutton                       Hearing Date:  June 15,  
          2010                       S
          As Amended:         May 25, 2010             FISCAL       B

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                                      DESCRIPTION

          
           Current law  requires investor-owned utilities (IOUs) and energy  
          service providers (ESPs) to increase existing purchases of  
          renewable energy by 1% of sales per year such that 20% of retail  
          sales, as measured by usage, are procured from eligible  
          renewable resources by December 31, 2010.  This is known as the  
          Renewable Portfolio Standard (RPS).  

           Current law  exempts publicly owned utilities (POUs) from the  
          state RPS program and instead requires these utilities to  
          implement and enforce their own renewable energy purchase  
          programs that recognize the intent of the Legislature to  
          encourage increasing use of renewable resources.

           Current law  defines as RPS eligible, electric generation  
          resources from biomass, solar thermal, photovoltaic, wind,  
          geothermal, fuel cells using renewable fuels, small  
          hydroelectric generation of 30 megawatts or less, digester gas,  
          landfill gas, ocean wave, ocean thermal, tidal current, and  
          municipal solid waste conversion that uses a noncombustion  
          thermal process to convert solid waste to a clean-burning fuel.

           This bill  expands the definition of eligible renewable resources  
          to include all hydroelectric generation of any size which  
          commences operation after January 1, 2006 as along as that  
          facility does not cause an adverse impact on instream beneficial  












          uses or cause a change in the volume or timing of streamflow.


           Current law  defines as RPS eligible any incremental generation  
          gained from efficiency improvements in hydroelectric facilities  
          of any size under specified conditions. 

           This bill  defines as RPS eligible incremental increases gained  
          from efficiency improvements at the Rock Creek Powerhouse as  
          long as the efficiency improvements receive approvals from the  
          State Water Resources Control Board (SWRCB).


                                           

                                     BACKGROUND
           
          RPS Progress - California's three large IOUs collectively served  
          15% of 2009 retail electricity sales with renewable power.  The  
          IOUs, which provide service to about three-fourths of California  
          utility customers, report the following individual RPS  
          percentages: 

                    Pacific Gas and Electric (PG&E)    14.4%
                    Southern California Edison (SCE)   17.4%
                    San Diego Gas & Electric (SDG&E)    10.5%

          In the last two years the RPS program started to show  
          significant gains.  In 2008 more renewable generation came on  
          line than in the entire 2003 - 2007 time period (692 MW).   
          Calendar year 2009 broke the 2008 record with more than 1,000 MW  
          coming on line.  Since the RPS statute took affect in 2003,  
          almost 1,600 MW of renewable capacity has come online. 

          The generation mix also improved in 2009.  New capacity in 2008  
          was almost entirely from wind and a good portion of that was  
          from out of state.  In 2009, 71% of new capacity was from  
          in-state sources and included a mix of biomass, biogas,  
          geothermal, solar PV, small hydro, and wind.

          Bids received by the IOUs for new generation also hit a record  
          in 2009 bringing in potential contracts for more than half of  
          the generation needed to meet a 33% target in 2020.  The IOUs  











          have now contracted for more than 12,000 MW of renewable  
          generation.  To put this in context the statewide demand in a  
          typical January is 25,000 to 30,000 MW.  A July heat storm would  
          drive that number up over 50,000 MW.

          The state's local publicly owned utilities report renewable  
          progress ranging from 1.7% to 61.2%.  Compliance data for 2009  
          recently submitted to the committee collectively shows:

               Northern California Power Authority20%
               Sacramento Municipal Utility District21%
               L.A. Department of Water & Power14%
               Southern California Power Authority2% - 20%

          Hydroelectric Power - Hydroelectric power is a major source of  
          California's electricity. In 2007, hydroelectric power plants  
          produced 43,625 gigawatt-hours of electricity, or 14.5 percent  
          of the total. Hydro facilities are broken down into two  
          categories larger than 30 megawatts capacity are called "large"  
          hydro. Smaller than 30 MW capacity is considered "small" hydro  
          and can be RPS eligible. The amount of hydroelectricity produced  
          varies each year. It is largely dependent on rainfall. 

          California has nearly 400 hydro plants, which are mostly located  
          in the eastern mountain ranges and have a total dependable  
          capacity of about 14,000 MW. The state also imports  
          hydro-generated electricity from the Pacific Northwest.  Two  
          types of conventional hydroelectric facilities are dams and  
          run-of-river. Dams raise the water level of a stream or river to  
          an elevation necessary to create a sufficient elevation  
          difference (water pressure, or head). Dams can be constructed of  
          earth, concrete, steel or a combination of such materials.   
          Run-of-river, or water diversion, facilities typically divert  
          water from its natural channel to run it through a turbine, and  
          then usually return the water to the channel downstream of the  
          turbine. 

          Although hydroelectric generation is emissions-free, it was  
          excluded from RPS eligibility because of other adverse  
          environmental impacts associated with conventional hydroelectric  
          power generation and typical on-stream pumped hydroelectric  
          storage facilities: 












                 Water resources impacts such as a change in stream  
               flows, reservoir surface area, the amount of groundwater  
               recharge, and water temperature, turbidity (the amount of  
               sediment in the water) and oxygen content;
                 Biological impacts such as the possible displacement of  
               terrestrial habitat with a new lake environment, alteration  
               of fish migration patterns, and other impacts on aquatic  
               life due to changes in water quality and quantity;
                 Possible damage to, or inundation of, archaeological,  
               cultural or historic sites (primarily if a reservoir is  
               created);
                 Changes in visual quality;
                 Possible loss of scenic or wilderness resources; and
                 Increase in potential for land-slides and erosion.

          Hydro Efficiency Improvements Do Count - Beginning in 2006 the  
          Legislature passed a series of bills that allow a utility to  
          implement efficiency improvements at a hydroelectric facility of  
          any size and count the gain in power toward the utility's RPS  
          requirements.  A typical improvement would be the installation  
          of new turbines that would increase output but not impact the  
          timing or volume of streamflow. 


                                       COMMENTS
           
              1)   Author's Purpose  .  The author's purpose is two-fold.   
               First he considers hydroelectric power as a low-cost, clean  
               energy resource which should be RPS eligible.  Second, the  
               bill addresses a unique permitting situation at the Rock  
               Creek Powerhouse hydroelectric facility which makes it  
               ineligible for RPS credit for efficiency improvements as  
               are other hydroelectric facilities.

              2)   Removing the Hydro Cap  .  The effect of this provision of  
               this bill is not clear.  The author's intent is to  
               encourage the development of new large hydroelectric  
               generation to help achieve compliance with the RPS program.  
               However, it is not clear whether any hydroelectric facility  
               could meet the requirement that the facility would not  
               create an adverse impact on instream beneficial uses or  
               cause a change in the volume or timing of streamflow.












              3)   Rock Creek Powerhouse  .  The 112 megawatt Rock Creek  
               Powerhouse hydroelectric plant is located on the North Fork  
               of the Feather River and is owned by PG&E.  Under current  
               law this entire facility and its impacts must be assessed  
               by the SWRCB periodically and a certification issued.  That  
               certification is one of the conditions of RPS eligibility  
               for efficiency improvements.  However, due to unique  
               circumstances this plant last received certification from  
               the Federal Energy Regulatory Commission.  


               Because the Rock Creek facility does not have a SWRCB  
               certification, efficiency improvements at Rock Creek are  
               not eligible renewable resources under existing law.  PG&E  
               reports that obtaining a SWRCB certification for the entire  
               Rock Creek hydroelectric generation facility at this time  
               is not practical or feasible, as it would involve years of  
               re-studying impacts that were already addressed in the FERC  
               license and which are not affected in any way by the  
               proposed efficiency improvements.  Consequently this bill  
               allows PG&E to secure and use a limited review and  
               certification by the SWRCB to achieve RPS eligibility for  
               its improvements.

               PG&E also reports that the efficiency improvements they are  
               considering will use the same amount of water that is  
               currently used thus there will be no changes in the timing  
               or volume of streamflow.  The $37 million upgrade will add  
               about 11 MW of capacity.  They estimate the rate for the  
               power generated through this efficiency gain to be about 8  
               cents per kWh.  The California Hydropower Reform Coalition  
               has no concerns with this provision of this bill.

              4)   Related Legislation  .  The following bills have been  
               introduced in 2010 which affect the RPS program: 

                     SB 722 (Simitian) increases the RPS mandate to 33%  
                 by 2020 and makes other program changes.  Status: Amended  
                 on Assembly Floor; pending re-referral to policy  
                 committee.  Status: Amended on Assembly Floor; pending  
                 re-referral to policy committee.
                     SB 1367 (Wyland) extends the RPS compliance timeline  
                 to 20% by 2020.  Status: Referred to but not heard in the  











                 Senate Committee on Energy, Utilities & Communications.   
                 Status: Dropped by author.
                     AB 1954 (Skinner) modifies the de minimus standard  
                 for the use of fossil fueled sources to assist RPS  
                 generation and addresses back-stop cost recovery of  
                 renewable transmission facilities.  Status: Referred to  
                 Senate Committee on Energy, Utilities & Communications;  
                 set for hearing June 29, 2010.
                     AB 2378 (Tran) expands the definition of eligible  
                 renewable resources to include any combination of the  
                 currently eligible renewable resource technologies.   
                 Status: Referred to Senate Committee on Energy, Utilities  
                 & Communications; set for hearing June 15, 2010.
                     AB 2514 (Skinner) requires the adoption of energy  
                 storage procurement targets.  Status: Referred to Senate  
                 Committee on Energy, Utilities & Communications; set for  
                 hearing June 29, 2010.






                                       POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
          Regional Council of Rural Counties

           Oppose:
           
          California Hydropower Reform Coalition
          Solar Alliance


          Kellie Smith 
          SB 1247 Analysis
          Hearing Date:  June 15, 2010