Amended in Assembly January 8, 2014

Amended in Assembly January 6, 2014

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 Member V. Manuel Pérez

January 24, 2013

An act to amend Section 38550 of the Health and Safety Code, and begin delete to amend Section 345.5 of, end delete to add begin delete Sections 399.23 and 636 end delete begin insert Section 399.23 end insert to, and to repeal and add Section 454.55 of begin insert , end insert the Public Utilities Code, relating to public utilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 177, as amended, V. Manuel Pérez. Public utilities: greenhouse gas emissions reduction: renewable resources.

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, including electrical corporations, in accordance with specified objectives. 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 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 matters 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 begin insert , reliable, and feasible end insert energy efficiency, demand response, and renewable resources, so as to achieve grid reliability and greenhouse gases emission reductions 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.

begin delete

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.

end delete begin delete

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 greenhouse gas emissions reductions. 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 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.

end delete

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.

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.

This bill would require electrical corporations to procure all available cost-effective begin insert , reliable, and feasible end insert energy efficiency, demand response, and renewable energy resources, and to consider procuring available cost-effective energy storage technologies. 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 delete 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 the 2030 goal for reducing emissions of greenhouse gases to be adopted by the State Air Resources Board. 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 delete

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 Global Warming Solutions Act of 2006 requires the State Air Resources Board to adopt a statewide greenhouse gas emissions limit to be achieved by 2020.

This bill would require the state board, by January 1, 2016, to adopt a statewide greenhouse gas emissions limit for electrical corporations and local publicly owned electric utilities to be achieved by 2030.

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 38550 of the Health and Safety Code is
amended to read:

38550.  

(a) By January 1, 2008, the state board shall, after one
or more public workshops, with public notice, and an opportunity
for all interested parties to comment, determine what the statewide
greenhouse gas emissions level was in 1990, and approve in a
public hearing, a statewide greenhouse gas emissions limit that is
equivalent to that level, to be achieved by 2020. In order to ensure
the most accurate determination feasible, the state board shall
evaluate the best available scientific, technological, and economic
information on greenhouse gas emissions to determine the 1990
level of greenhouse gas emissions.

(b) By January 1, 2016, the state board, after conducting one or
more public workshops with public notice and an opportunity for
all interested parties to comment, and performing an analysis of
the progress being made to achieve the 2020 statewide greenhouse
gas emissions limit, shall adopt in a public hearing a statewide
greenhouse gas emissions limit for electrical corporations, as
defined in Section 218 of the Public Utilities Code, and local
publicly owned electric utilities, as defined in Section 224.3 of the
Public Utilities Code, to be achieved by 2030.

begin delete

SEC. 2.  

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:

(1) Achieving a continuous reduction in emissions of greenhouse
gases associated with California’s electrical system sufficient to
achieve the state policy goal for greenhouse gas emissions
reductions.

(2) Making the most efficient use of available energy resources.
For purposes of this section, “available energy resources” include
energy efficiency savings, capacity, ancillary services, and demand
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.

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

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

(5) Maximizing utilization of existing electrical resources,
including all cost-effective demand-side and 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.

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

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

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

(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.

(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.

end delete

begin delete SEC. 3. end delete
begin insert SEC. 2. end insert   

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, as well as the state’s
ability to reduce greenhouse gas emissions beyond the target
established for 2020, creating the need for both increased electrical
generation from renewable energy resources and reduced demand
through energy efficiency and demand response.

(2) It is in the best interest of the electricity consumers of this
state that sufficient renewable energy generation supply and
demand-side resources are procured to meet electricity demand,
and that this supply and these resources 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) Renewable energy generation from renewable energy
resources that qualify as local capacity resources are essential to
maintaining reliable electricity deliveries.

(4) There are substantial high-quality renewable energy
resources in the County of Imperial near the Salton Sea with the
ability to reduce greenhouse gas emissions that can generate
electricity in a manner that will simultaneously meet local capacity
requirements, maintain grid reliability, and provide significant
local and regional environmental and economic development
benefits.

(5) The commitment to a loading order of preferred resources
in the manner prescribed in Section 454.55 is necessary to the
continued health and safety of California electric consumers.

(b) Consistent with the loading order adopted by the Energy
Commission and the commission that 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 begin insert , reliable, and feasible end insert energy efficiency, demand
response, and renewable energy resources, so as to achieve grid
reliability and greenhouse gases emission reductions
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.

begin delete SEC. 4. end delete
begin insert SEC. 3. end insert   

Section 454.55 of the Public Utilities Code is repealed.

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

Section 454.55 is added to the Public Utilities Code,
to read:

454.55.  

Pursuant to a loading order of preferred resources to
meet electricity demand in a manner that improves the state’s air
quality, reduces greenhouse gas emissions, and preserves electric
grid reliability, electrical corporations shall procure all available
cost-effective begin insert , reliable, and feasible end insert energy efficiency, demand
response, and renewable energy resources, and shall consider
procuring available cost-effective energy storage technologies.
begin insert Procurement of conventional or gas-fired generation shall only
be undertaken to meet residual need forecasted for the long-term
planning period that is not otherwise met by preferred resources. end insert
In measuring the cost-effectiveness of the procurement of preferred
resources, the commission shall determine and include the value
of grid reliability, including the value of grid reliability of diversity
in renewable electric generation by resource type, size begin insert , end insert and
location, both alone and in combination with nontransmission
alternatives, and local environmental benefits provided by each
renewable energy resource type technology begin insert in disadvantaged
communities that have been identified by the California
Environmental Protection Agency pursuant to Section 39711 of
the Health and Safety Code end insert . 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.

begin delete

SEC. 6.  

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

636.  

(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 the 2030 goal for reducing emissions of
greenhouse gases adopted pursuant to subdivision (b) of Section
38550 of the Health and Safety Code.

(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 delete

begin delete SEC. 7. 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.