BILL ANALYSIS Ó AB 1771 Page 1 Date of Hearing: April 16, 2012 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair AB 1771 (Valadao) - As Amended: February 17, 2012 SUBJECT : Renewable Portfolio Standard: Hydroelectric Generation Eligibility SUMMARY : This bill removes the 30 megawatt or less criteria for eligibility as a renewable energy resource counted under the California Renewable Portfolio Standard (RPS) program. Specifically, this bill : revises the definition of an eligible hydroelectric renewable resource under the RPS program to include a hydroelectric generating facility of any size instead of just those 30 megawatts or less. EXISTING LAW 1)States the California's RPS program requires all investor owned utilities (IOUs), local publicly owned utilities (POUs) and energy service providers (ESPs) to increase purchases of renewable energy such that at least 33% of retail sales are procured from an eligible renewable energy resource by 2020. 2)Requires all retail sellers of electricity and all POUs to procure renewable energy resources using the following RPS eligibility targets: a) 20% by December 31, 2013; b) 25% by December 31, 2016; and, c) 33% by December 31, 2020, and each year thereafter. 1)States under the RPS program, an eligible renewable energy resource includes: a) An existing small hydroelectric generation facility of 30 megawatts or less if a retail seller or local POU procured the electricity from the facility as of December 31, 2005; b) A small hydroelectric generation unit with a nameplate capacity not exceeding 40 megawatts that is operated as part of a water supply or conveyance system if the retail seller or local POU procured the electricity from the facility as of December 31, 2005; and, c) A new hydroelectric facility that commences generation of electricity after December 31, 2005, provided it doesn't AB 1771 Page 2 cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow. 1)States under the RPS program, an eligible renewable energy resource shall include: a) A conduit hydroelectric facility of 30 megawatts or less that commenced operation before January 1, 2006; and, b) A conduit hydroelectric facility of 30 megawatts or less that commences operation after December 31, 2005, provided it does not cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow. 1)Requires California Energy Commission (CEC), by June 30, 2011, to study and provide a report to the Legislature that analyzes run-of-river hydroelectric generating facilities, as defined, in British Columbia, including whether these facilities are, or should be, included as renewable electrical generation facilities should be eligible renewable energy resources for purposes of the RPS program. 2)Deems eligible for the RPS those renewable projects that are located in California or near the border with a first point of interconnection to a California balancing authority area or have the first point of interconnection to the transmission system network outside the state, but within the Western Electricity Coordinating Council (WECC) service area. FISCAL EFFECT : Unknown COMMENTS : 1)Author's Statement : Assembly Member Valadao states, "AB 1771 would revise the definition of an eligible renewable energy source - hydroelectric - for the purposes of the California renewable portfolio standard program (RPS) to include a hydroelectric facility of any size. According to the PUC, California's three large investor-owned utilities collectively serve 17% of their 2010 retail electricity sales from renewable power - just over half of the 2020 required standard of 33%. PG&E alone provided 15.9% of their total energy production in eligible renewable resources (a portion of that is small hydroelectric power), however, they generated an additional 15.6% of their overall energy in large hydroelectric power, which is currently not eligible under the AB 1771 Page 3 RPS program. Allowing for large hydroelectric in the RPS program would clearly help California meet their renewable energy goals." 2)Background: California has a history of protecting the environment and striving for clean water, air and land. In the energy arena, this preference resulted in two prominent measures: AB 32 (Núñez) Chapter 488, Statutes of 2006, known as the California Global Warming Solutions Act of 2006 and the California Renewables Portfolio Standard (RPS) Program SB 1078 (Sher), Chapter 516, Statutes of 2002 which set the 20% by 2017 goal. So much progress was made towards the goal that it was accelerated four years later by SB 107 (Simitian), Chapter 464, Statutes of 2006, moving the 20% deadline to 2010. Then in April 2012, the California Legislature expanded and refined the RPS in SB 2 X1 (Simitian) Chapter 1, Statutes of 2011-12 First Extraordinary Session, which recasts the State's annual renewable energy goal from 20% to 33%. These accelerations of the goal have been realistic and possible in part due to rapid expansion of solar, wind, geothermal and biomass in-state. 3)2012 Report Card : San Diego Gas & Electric (SDG&E) reported to the California Public Utilities Commission (PUC) that 20.8% of the energy delivered to its retail customers in 2011 was provided by renewable energy sources, such as wind, geothermal, biomass, hydroelectric and solar facilities. This was up from renewable energy deliveries reported for 2010 at 12% of its retail sales. Almost 40% of the overall 20.8% is from geothermal, biomass, biogas, and solar projects and about 60% can be attributed to wind power. Pacific Gas and Electric Company (PG&E) also announced that it was making significant progress towards meeting the RPS goals and was on track to achieve the state's target of 33% percent by 2020. It estimated that 19.4% of the electricity it delivered to its customers in 2011 came from renewable resources up from 15.9% in 2010. 4)Small versus Large Hydro : SB 2 X1 was the culmination of many years of meetings, hearings, versions of draft language and negotiations. Fundamental precepts included saving and or AB 1771 Page 4 improving the environment as well as developing new renewable energy sources. While the legislation had to be limited to the borders of California, concern for damaging the environment outside California was also considered and weighed. Setting such standards for California to the detriment of others was not a preferred option. Many environmental groups expressed their concerns that states other than California did not have stringent laws on protecting river flow and that significant damage would be done to the region's rivers and watershed to maximize the amount of hydroelectricity that could be sold to California. These concerns in part led to the RPS language that electricity generated from hydropower would be limited to small (30 MW or less) hydro generators and to exclude large out of state hydropower where California had no control over the damage to the environment. 5)WECC regions. WECC is geographically the largest and most diverse of the eight Regional Entities that have Delegation Agreements with the North American Electric Reliability Corporation (NERC). WECC's service territory extends from Canada to Mexico. It includes the provinces of Alberta and British Columbia, the northern portion of Baja California, Mexico, and all or portions of the 14 Western states between. 6)Run-of-the-River Report. The statute requires the CEC to report to the Legislature on Run-of-the-River Hydro by June 2011. At the time this provision was enacted, in April 2011, the CEC expressed concern that it would not be able to meet the June 2011 deadline. The CEC now estimates that the report will be available by the summer of 2012. The CEC is working with their counterparts in British Columbia to understand the regulatory, permitting, and monitoring requirements for run-of-the-river hydroelectric projects. The CEC will be studying a variety of possible impacts: Construction impacts; Water levels/ water diversion impacts; Fish and wildlife habitat impacts; Fish migration impacts; and performing a Cumulative Effects Analysis. The author may wish to consider an amendment that would postpone eligibility until after the Legislature has determined that the findings of the CEC report have satisfied AB 1771 Page 5 the Legislature's concerns regarding the construction, water, fish and wildlife, and cumulative effects of hydroelectric facilities. REGISTERED SUPPORT / OPPOSITION : Support Association of California Water Agencies (ACWA) California Chamber of Commerce (CalChamber) Opposition American Rivers American Whitewater British Columbia Creeks Protection Society California Hydropower Reform Coalition California Outdoors California Sportfishing Protection Society California Trout California Wind Energy Association Environment California Foothills Conservancy Friends of Butte Inlet Friends of the River Large Scale Solar Association Natural Resources Defense Council Sierra Club South Yuba River Citizens League Trout Unlimited Union of Concerned Scientists Water and Power Law Group Western Canada Wilderness Committee Analysis Prepared by : Susan Kateley / U. & C. / (916) 319-2083