BILL ANALYSIS Ó
SB 2 X1
Page 1
SENATE THIRD READING
SB 2 X1 (Simitian, et al.)
As Introduced February 1, 2011
Majority vote
SENATE VOTE :26-11
UTILITES & COMMERCE 10-3 NATURAL
RESOURCES 6-3
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|Ayes:|Bradford, Buchanan, Fong, |Ayes:|Chesbro, Brownley, |
| |Fuentes, Furutani, Roger | |Dickinson, Huffman, |
| |Hernández, Huffman, Ma, | |Monning, Skinner |
| |Skinner, Swanson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Gorell, Knight, Valadao |Nays:|Knight, Grove, Halderman |
| | | | |
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APPROPRIATIONS 12-3
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, Nielsen | | |
| | | | |
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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.
Specifically, this bill :
1)Requires all retail sellers of electricity and all POUs to procure
renewable energy resources with the following targets:
a) 20% by December 31, 2013;
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b) 25% by December 31, 2016; and,
c) 33% by December 31, 2020, and each year thereafter.
2)Authorizes the California Public Utilities Commission (CPUC) to
waive enforcement and allow retail sellers to delay compliance
with the renewable procurement requirement if the retail seller
demonstrates that any of the following conditions are beyond its
control and will prevent timely compliance:
a) Inadequate transmission capacity for delivery of sufficient
renewable energy;
b) Unanticipated permitting, interconnection or other related
delays for renewable energy projects or an insufficient supply
of eligible renewable energy resources available to the retail
seller; or,
c) Unanticipated curtailment of renewable energy necessary to
address the needs of a balancing authority.
3)Revises eligibility conditions to allow various electricity
products from eligible renewable energy resources located within
the Western Electricity Coordinating Council transmission network
service territory and differentiates the products based on the
following three categories of renewable energy products:
a) Products that have the first point of interconnection with a
California balancing authority or other criteria primarily
scheduled to serve California load at not less than the
following procurement targets:
i) 50% by December 31, 2013;
ii) 65% by December 31, 2016; and,
iii) 75% thereafter.
b) Firmed and shaped renewable energy products providing
incremental electricity and scheduled into a California
balancing authority; or,
c) Renewable energy products that do not meet either condition
above, including unbundled renewable energy credits at not more
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than the following procurement targets:
i) 25% by December 31, 2013;
ii) 15% by December 31, 2016; and,
iii) 10% thereafter.
4)Requires CPUC to adopt a process for the rank ordering and
selection of least-cost and best-fit eligible renewable energy
resources.
5)Requires CPUC to adopt rules that permit retail sellers to
accumulate excess procurement of more-than-10-year contracts in
one compliance period to be applied to any subsequent compliance
period.
6)Sets aside 25% of the 33% renewable market for IOU-owned
generation by requiring CPUC to approve an application by an IOU
to construct, own and operate a renewable energy facility until
IOU-owned renewable facilities equal 8.25% of IOU's anticipated
2020 retail sales.
7)Requires CPUC to establish a cost limit for each IOU according to
specified criteria.
8)Prescribes factors that CPUC must consider when establishing a
feed-in tariff for electricity generated from a renewable
generating facility that is less than three megawatts (MW).
9)Requires CPUC to determine the effective load carrying capacity of
wind and solar energy resources on the grid and use those values
in establishing the contribution of wind and solar energy toward
meeting resource adequacy requirements.
10)Requires the California Energy Commission (CEC) to refer the
failure of a POU to comply with RPS to the Air Resources Board,
which may impose penalties and requires the penalties to be
expended for reducing emissions of air pollution or greenhouse
gases within the same geographic area as the local publicly owned
electric utility.
11)Appropriates $322,000 from CPUC Utilities Reimbursement Account
(PURA) to CPUC for additional staffing related to transmission
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lines.
EXISTING LAW requires IOUs and certain other retail sellers to
achieve a 20% RPS by 2010 and establishes a process and standards
for renewable procurement.
FISCAL EFFECT :
1)California Public Utilities Commission (CPUC)
a) Ongoing annual special fund costs of approximately $650,000,
equivalent to 5.0 positions, to implement RPS provisions for
retail sellers, including developing new interim goals,
developing cost limitations on renewable electricity
procurement, communicating with retail sellers regarding new
requirements, developing requirements for approval of IOU-owned
electricity generating facilities, and reporting to the
Legislature. (PURA)
b) Ongoing annual special fund 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 special fund 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.
e) Potential revenue from fines levied against retail sellers
that fail to meet RPS targets. (General Fund (GF))
2)California Energy Commission
Ongoing annual special fund costs in the range of $1 million to
$1.5 million, equivalent to no more than 9.0 positions, to CEC to
adopt regulations, assess and modify tracking systems and
programs, and monitor RPS compliance among POUs. (Energy
Resources Program Account (ERPA))
3)Department of Fish and Game
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Ongoing annual costs of $350,000 to $600,000 to the Department of
Fish and Game (DFG) to establish an internal division to conduct
planning and environmental compliance services. (GF or Fish and
Game Preservation Fund)
4)Air Resources Board
a) Ongoing annual special fund costs of approximately $290,000,
equivalent to 2.0 positions, to enforce renewable energy
resources procurement requirements on POUs. (Air Pollution
Control Fund (APCF))
b) Potential revenue from fines levied against retail sellers
that fail to meet RPS targets. (APCF)
5)Other Costs
According to a 2009 CPUC report, achievement of a 33% RPS by 2020
will have the following effect on capital costs and electricity
rates when compared to a baseline scenario in which the state
receives 20% of its electricity from renewable energy resources:
a) Tens of billions of dollars in one-time costs over the
period 2011-2020 to construct capital projects, such as
transmission lines and electricity generation facilities.
Presumably, those costs will be paid by the ratepayers and
customers of the state's IOUs, POUs and other providers of
electricity service.
b) A 7.1% increase in statewide electricity expenditures.
CPUC notes it has revised downward its projected energy demand for
2020. Accordingly, this downward projection should revise the cost
CPUC associates with a 33% RPS. While CPUC has yet to conduct an
analysis that would allow it to revise its project costs of a 33%
RPS, it contends the estimates from its 2009 report are "a useful
reference" nonetheless.
COMMENTS : Over the past few years, there have been a few attempts
to increase the RPS. The author and members of the Legislature have
convened numerous stakeholder meetings to try to reconcile divergent
concerns over some significant barriers. By the end of session last
year, stakeholders acquiesced and compromised on certain provisions
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in SB 722 (Simitian) that brought them to a tenuous détente. Some
of the compromises have included the use of in-state, out-of-state,
or renewable energy credits as procurement categories; the decline
of flexible compliance mechanisms in subsequent compliance periods;
and, the requirement for cost containment.
SB 722 passed both houses; however, due to the legislative calendar,
the Senate adjourned before it could vote on concurrence. This
year, SB 23 (Simitian) is virtually identical to SB 722 and was
introduced in the regular session. This bill also mirrors SB 722.
Although some stakeholders are concerned that this bill is not
"perfect," there is discussion of a "clean-up" RPS bill to address
some of the technical and outstanding issues. Some of the reports
and findings required by state agencies will need to be updated. In
addition, provisions may need clarity on how POU penalties will stay
in the service territory of POU to assist with it attaining its RPS
goals, how many state agencies will regulate compliance, how CPUC
will interpret resource adequacy metrics, and other unresolved
fixes.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
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