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