Amended in Assembly June 5, 2013

Amended in Assembly April 9, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 177

Introduced by Assembly begin delete Members end delete begin insert Member end insert V. Manuel Pérez begin delete and Bradford end delete

January 24, 2013

An act to amend Sections 345.5 and 454.55 of, and to add begin delete Section end delete begin insert Sections end insert 399.23 begin insert and 636 end insert to, the Public Utilities Code, relating to renewable energy resources.

LEGISLATIVE COUNSEL’S DIGEST

AB 177, as amended, V. Manuel Pérez. Renewable resources.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. The Public Utilities Act requires the Public Utilities Commission, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities, as defined, in accordance with specified objectives. The definition of a “load-serving entity” includes an electrical corporation. That law further requires each load-serving entity to maintain physical generating capacity adequate to meet its load requirements, including peak demand and planning and operating reserves, deliverable to locations and at times as may be necessary to provide reliable electric service.

The California Renewables Portfolio Standard Program, also known as the RPS program, requires a retail seller of electricity, as defined, and local publicly owned electric utilities to purchase specified minimum quantities of electricity products from eligible renewable energy resources, as defined, for specified compliance periods, sufficient to ensure that the procurement of electricity products from eligible renewable energy resources achieves 20% of retail sales for the period January 1, 2011, to December 31, 2013, inclusive, 25% of retail sales by December 31, 2016, and 33% of retail sales by December 31, 2020, and in all subsequent years. The RPS program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles, requires that all retail sellers procure a balanced portfolio of electricity products from eligible renewable energy resources, as specified, referred to as the portfolio content requirements. The RPS program requires the Public Utilities Commission to direct each electrical corporation, which are included within the definition of a retail seller, to annually prepare a renewable energy procurement plan containing specified matter and an annual compliance report. The RPS program requires the Public Utilities Commission to adopt, by rulemaking, a process that provides criteria for the rank ordering and selection of least-cost and best-fit eligible renewable energy resources by electrical corporations to comply with the RPS program procurement obligations, on a total cost basis, that take specified matter into account.

This bill would state the policy of the state to require all retail sellers of electricity, including investor-owned electrical corporations and local publicly owned electric utilities, to procure all available cost-effective energy efficiency, demand response, and renewable resources, so as to achieve renewable, reliability, and greenhouse gases emission reduction simultaneously, in the most cost-effective and affordable manner practicable. The bill would require that procurement not be limited by any targets established for these resources by statute or regulatory decision.

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The existing restructuring of the electrical industry within the Public Utilities Act provides for the establishment of an Independent System Operator as a nonprofit public benefit corporation. Existing law requires the Independent System Operator to manage the transmission grid and related energy markets in a manner that is consistent with (1) making the most efficient use of available energy resources, (2) reducing, to the extent possible, overall economic cost to the state’s consumers, (3) applicable state law intended to protect the public’s health and the environment, and (4) maximizing the availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.

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This bill would add a requirement that in managing the transmission grid and related energy markets, the Independent System Operator do so consistent with achieving a continuous reduction in emissions of greenhouse gases associated with California’s electrical system sufficient to achieve the state policy goal for 2050 adopted by the State Air Resources Board. The bill would revise the 4th requirement described above to require that in managing the transmission grid and related energy markets, the Independent System Operator do so consistent with maximizing utilization of existing electrical resources, including all cost-effective demand-side and clean renewable energy resources, that are connected to the distribution or transmission grid, as are necessary for reliable operation of the grid and sufficient to meet the needs of the state’s electricity consumers. The bill would require the Independent System Operator, in its annual transmission planning process, to identify the maximum amount of preferred resources capable, in conjunction with installation of nongenerating electrical equipment, of meeting local resource adequacy and system operating needs.

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The Public Utilities Act requires the Public Utilities Commission to review and adopt a procurement plan for each electrical corporation in accordance with specified elements, incentive mechanisms, and objectives. The act requires that an electrical corporation’s proposed procurement plan include certain elements, including a showing that the electrical corporation will first meet its unmet needs through all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible. The act requires the Public Utilities Commission, in consultation with the State Energy Resources Conservation and Development 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.

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Existing law requires that each local publicly owned electric utility, as defined, serving end-use customers prudently plan for and procure resources that are adequate to meet its planning reserve margin and peak demand and operating reserves, sufficient to provide reliable electric service to its customers. Existing law additionally requires the local publicly owned electric utility, upon request, to provide the State Energy Resources Conservation and Development Commission with any information the State Energy Resources Conservation and Development Commission determines is necessary to evaluate the progress made by the local publicly owned electric utility in meeting those planning requirements, and requires the State Energy Resources Conservation and Development Commission to report the progress made by each local publicly owned electric utility to the Legislature, to be included in an integrated energy policy report, as specified. Existing law requires an electrical corporation or local publicly owned electric utility, as defined, to adopt certain strategies in a long-term plan or a procurement plan, as applicable, to achieve efficiency in the use of fossil fuels and to address carbon emissions, as specified.

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This bill would require electrical corporations to procure all available cost-effective energy efficiency, demand response, and renewable energy resources so as to simultaneously achieve the goals of renewable resource development, reductions in emissions of greenhouse gases, and sustain system reliability in the most cost-effective and affordable manner and would provide that this procurement is not limited by any targets established for these resources by statute or regulatory decision. The bill would require the Public Utilities Commission to continue to establish efficiency targets for an electrical corporation pursuant to the utility’s procurement plan. begin insert The bill would require an electrical corporation, in a long-term plan, or local publicly owned electric utility, in a procurement plan, to adopt a long-term procurement strategy to achieve a target of procuring 51% of its electricity products from eligible renewable energy resources by December 31, 2030, and to achieve the 2050 goal for reducing emissions of greenhouse gases adopted by the State Air Resources Board, consistent with the potentially achievable cost-effective electricity efficiency savings and efficiency targets established for an electrical corporation by the Public Utilities Commission. The bill would require that each long-term plan adopted by an electrical corporation or procurement plan implemented by a local publicly owned electric utility be updated not less than every 3 years and released to the public, the Governor, and the Legislature and would require that each plan update include estimated emissions of greenhouse gases that are expected to result from implementation of the procurement plan for each 5-year period through December 31, 2050. end insert

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the Public Utilities Commission is a crime.

Because the provisions of this bill are within the act, a violation of above requirement would impose a state-mandated local program by expanding the definition of a 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.

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 345.5 of the Public Utilities Code is
amended to read:

345.5.  

(a) The Independent System Operator, as a nonprofit,
public benefit corporation, shall conduct its operations consistent
with applicable state and federal laws and consistent with the
interests of the people of the state.

(b) To ensure the reliability of electric service and the health
and safety of the public, the Independent System Operator shall
manage the transmission grid and related energy markets in a
manner that is consistent with all of the following:

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(1) Achieving a continuous reduction in emissions of greenhouse
gases associated with California’s electrical system sufficient to
achieve the state policy goal for 2050 adopted by the State Air
Resources Board.

end insert begin delete

(1)

end delete

begin insert (2) end insert  Making the most efficient use of available energy resources.
For purposes of this section, “available energy resources” include
energy begin insert efficiency savings end insert , capacity, ancillary services, and demand
begin insert response and flexibility services end insert bid into markets administered by
the Independent System Operator. “Available energy resources”
do not include a schedule submitted to the Independent System
Operator by an electrical corporation or a local publicly owned
electric utility to meet its own customer load.

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(2)

end delete

begin insert (3) end insert  Reducing, to the extent possible, overall economic cost to
the state’s consumers.

begin delete

(3)

end delete

begin insert (4) end insert  Applicable state law intended to protect the public’s health
and the environment.

begin delete

(4)

end delete

begin insert (5) end insert  Maximizing begin delete availability end delete begin insert utilization end insert of existing begin delete electric
generation end delete begin insert electrical end insert resources, including all begin delete available demand
side end delete begin insert cost-effective demand-side end insert and begin delete clean, eligible end delete begin insert clean end insert renewable
energy resources begin insert , that are connected to the distribution or
transmission grid, as are end insert necessary begin insert for reliable operation of the
grid and sufficient end insert to meet the needs of the state’s electricity
consumers.

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(5)

end delete

begin insert (6) end insert  Conducting internal operations in a manner that minimizes
cost impact on ratepayers to the extent practicable and consistent
with the provisions of this chapter.

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(6) Communicating

end delete

begin insert (7) end insert begin insert   end insert begin insert Coordinating operations and sharing operating data and
resources end insert with all balancing area authorities in California in a
manner that begin delete supports end delete begin insert reduces the cost of maintaining or improving end insert
electrical reliability.

(c) The Independent System Operator shall do all of the
following:

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(1) Consult and coordinate with appropriate state and local
agencies to ensure that the Independent System Operator operates
in furtherance of state law regarding consumer and environmental
protection.

end delete begin insert

(1) In its annual transmission planning process, identify the
maximum amount of preferred resources capable, in conjunction
with installation of nongenerating electrical equipment, of meeting
local resource adequacy and system operating needs. For these
purposes, “nongenerating electrical equipment” includes, but is
not limited to, synchronous condensers or similar devices and
transmission grid additions or upgrades, and “referred resources”
include, but are not limited to, location-specific energy efficiency,
demand resources, location-specific renewable generation, and
geographically dispersed generation. The Independent System
Operator shall publish and communicate these estimates to the
commission, the Energy Commission, and the State Air Resources
Board to facilitate joint consideration of amounts of preferred
resources available to be included in the commission’s
establishment of procurement targets.

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(2) Ensure that the purposes and functions of the Independent
System Operator are consistent with the purposes and functions
of nonprofit, public benefit corporations in the state, including
duties of care and conflict-of-interest standards for officers and
directors of a corporation.

(3) Maintain open meeting standards and meeting notice
requirements consistent with the general policies of the
Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of
the Government Code) and affording the public the greatest
possible access, consistent with other duties of the corporation.
The Independent System Operator’s Open Meeting Policy, as
adopted on April 23, 1998, and in effect as of May 1, 2002, meets
the requirements of this paragraph. The Independent System
Operator shall maintain a policy that is no less consistent with the
Bagley-Keene Open Meeting Act than its policy in effect as of
May 1, 2002.

(4) Provide public access to corporate records consistent with
the general policies of the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of
the Government Code) and affording the public the greatest
possible access, consistent with the other duties of the corporation.
The Independent System Operator’s Information Availability
Policy, as adopted on October 22, 1998, and in effect as of May
1, 2002, meets the requirements of this paragraph. The Independent
System Operator shall maintain a policy that is no less consistent
with the California Public Records Act than its policy in effect as
of May 1, 2002.

SEC. 2.  

Section 399.23 is added to the Public Utilities Code,
to read:

399.23.  

(a) The Legislature finds and declares all of the
following:

(1) There is increasing uncertainty with regard to the availability
of California’s fleet of older powerplants, creating the need for
increased reduction in demand for electricity through energy
efficiency, demand response, and adding new sources of clean
energy generation.

(2) It is in the best interest of the electricity consumers of this
state that sufficient clean energy generation supply and
demand-side resources are procured to meet electricity demand
that provide the highest value, including providing safe, reliable,
and affordable electricity supplies and minimizing air quality
impacts to consumers in the most cost-effective manner practicable.

(3) Clean energy generation with flexible delivery characteristics
are essential to maintaining reliable electricity deliveries.

(4) There are substantial high-quality renewable resources in
the County of Imperial near the Salton Sea, which can help provide
cost-effective renewable resources that can reduce greenhouse gas
emissions while simultaneously contributing to resources adequacy
and reliability needs and providing significant local and regional
environmental and economic development benefits.

(b) Consistent with the loading order adopted by the Energy
Commission and the commission which sets forth state policy for
preferred resources to meet electrical load needs, it is the intent of
the Legislature, and the policy of the state, that all retail sellers of
electricity, including investor-owned electrical corporations and
local publicly owned electric utilities, shall procure all available
cost-effective energy efficiency, demand response, and renewable
resources, so as to achieve renewable, reliability, and greenhouse
gases emission reduction simultaneously, in the most cost-effective
and affordable manner practicable. Procurement shall not be limited
by any targets established for these resources by statute or
regulatory decision.

SEC. 3.  

Section 454.55 of the Public Utilities Code is amended
to read:

454.55.  

Electrical corporations shall procure all available
cost-effective energy efficiency, demand response, and renewable
energy resources so as to simultaneously achieve the goals of
renewable resource development, reductions in emissions of
greenhouse gases, and sustain system reliability in the most
cost-effective and affordable manner. This procurement shall not
be limited by any targets established for these resources by statute
or regulatory decision. However, the commission shall continue
to establish efficiency targets for an electrical corporation to
achieve pursuant to Section 454.5.

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begin insert SEC. 4. end insert   

end insert

begin insert Section 636 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 636. end insert   

(a) In a long-term plan adopted by an electrical
corporation or in a procurement plan implemented by a local
publicly owned electric utility, the electrical corporation or local
publicly owned electric utility shall adopt a long-term procurement
strategy to achieve a target of procuring 51 percent of its electricity
products from eligible renewable energy resources by December
31, 2030, and to achieve the 2050 goal for reducing emissions of
greenhouse gases adopted by the State Air Resources Board,
consistent with Section 454.55.

(b) Each long-term plan adopted by an electrical corporation
or procurement plan implemented by a local publicly owned
electric utility shall be updated not less than every three years and
released to the public, the Governor, and the Legislature. Each
procurement plan update shall include estimated emissions of
greenhouse gases that are expected to result from implementation
of the procurement plan for each five-year period through
December 31, 2050.

end insert

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only 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.