BILL ANALYSIS Ó
AB 177
Page 1
Date of Hearing: January 16, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 177 (V. Manuel Pérez) - As Amended: January 15, 2014
SUBJECT : Renewable resources: Salton Sea
SUMMARY : Requires the California Energy Commission (CEC) to
solicit and consider recommendations regarding development of
renewable energy sources in the Salton Sea area, and makes
related findings.
EXISTING LAW :
1)The Renewables Portfolio Standard (RPS) requires
investor-owned utilities, publicly-owned utilities, and
certain other retail sellers of electricity to procure
eligible renewable energy resources to meet the following
portfolio targets:
a) 20 percent on average from January 1, 2011 to December
31, 2013.
b) 25 percent by December 31, 2016.
c) 33 percent by December 31, 2020 and each year
thereafter.
2)Requires the CEC to assess electricity infrastructure trends
and issues facing California and develop and recommend energy
policies for the state to address and resolve such issues as
part of its biennial Integrated Energy Policy Report (IEPR).
The IEPR must contain an overview of major energy trends and
issues facing the state, including, but not limited to,
supply, demand, pricing, reliability, efficiency, and impacts
on public health and safety, the economy, resources, and the
environment.
THIS BILL :
1)States findings regarding renewable energy resources located
near the Salton Sea, as well as Northern California, and state
and local Salton Sea restoration efforts.
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2)Requires the CEC to convene a group of stakeholders to provide
advice regarding development of the Salton Sea renewable
energy resources, to hold workshops and public hearings to
consider the group's recommendations, and to include its
findings in the next IEPR. Requires the CEC and stakeholders
to:
a) Consider methods to expedite transmission line
development from the Imperial Irrigation District
Balancing Authority to utilities and regional Independent
System Operators.
b) Analyze whether state loan guarantees or state funds
could be made available to assist geothermal and other
renewable developers to access capital and long term
financing.
c) Identify permitting issues and responsible agencies.
d) Analyze the feasibility of granting blanket permits
to multiple geothermal project developments located near
or under the existing Salton Sea.
e) Analyze the effectiveness of the value used for
renewable integration and make recommendations on whether
other measures are appropriate to ensure that Salton Sea
renewable development occurs.
f) Analyze the costs and the value provided by base
load renewable energy projects at the Salton Sea.
g) Assist in the framing of a pilot project to evaluate
algae and solar energy facilities located on or near
Salton Sea playa areas.
h) Analyze the benefits and costs of rare earth
extraction in consultation with the relevant state and
federal agencies.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. The Salton Sea, located in the Imperial Valley
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and Coachella Valley of southern California, is California's
largest lake, covering 365 square miles, and it serves as an
important stop on the annual Pacific Flyway migratory route,
supporting over 400 species of birds and representing over
two-thirds of all birds in the continental United States.
Among other attributes, the area is rich in renewable energy
resources, including geothermal, solar and wind. These
resources have been developed for electricity generation
dating back to the 1980's, though significant energy potential
remains untapped. The existing resources are a significant
part of the local economy, providing jobs and tax revenues in
an area where unemployment and poverty are among the highest
in the state.
In 2003, the Legislature enacted statutes (Chapters 611, 612
and 613 of the Statutes of 2003) to facilitate the execution
and implementation of the Quantification Settlement Agreement
(QSA) and related agreements entered into by various parties
in 2003 to budget their portions of California's apportionment
of Colorado River water. The QSA provides a framework for
conservation measures and water transfers for a period of up
to 75 years, and provides for a framework to mitigate the
environmental impacts on the Salton Sea caused by the QSA
water transfer.
As part of the QSA statutes, the Legislature declared its
intent that the state undertake the restoration of the Salton
Sea ecosystem and the permanent protection of wildlife
dependent on the ecosystem. Implementation of the water
transfer will reduce agricultural drainage inflow to the
Salton Sea, reducing the sea's depth and result in the
exposure of currently submerged sea lakebed. The exposure of
previously submerged sea lakebed has the potential to
significantly increase fugitive dust emissions as winds blow
across fine-grained sediments and salts exposed by the dry
lake bed. At Owens Lake, a lake drained by the Los Angeles
Department of Water and Power, the cost of mitigation fugitive
dust emissions arising from the exposed lakebed has reached
$1.2 billion.
2)Is it appropriate to emphasize renewable energy development in
one resource area? As briefly noted above, there are many
factors that make the Salton Sea unique, but it is by no mean
the only area of the state with significant existing and
potential renewable energy, or with challenges to the
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maintenance and development of its resources. This bill's
focus on the Salton Sea, and implicitly, the geothermal
resource, has caused some parties to raise concerns. However,
as amended, the bill doesn't appear to provide any operative
advantage to the Salton Sea resources. Rather, it
contemplates a process led by the CEC to analyze issues
relevant to development of Salton Sea resources, which could
then serve as a basis for action by the Legislature.
3)What are renewable integration costs and should the CEC
analyze them? A particular subset of the concern discussed
above relates to the bill's provision requiring the CEC to
"(a)nalyze the effectiveness of the value used for renewable
integration and make recommendations on whether other measures
are appropriate to ensure that Salton Sea renewable
development occurs."
As explained in the Utilities and Commerce Committee analysis:
"Renewable integration costs" refers to the cost of
reliable operation of the electrical grid as California
moves toward a larger percentage of renewable generation in
utility portfolios.
The Public Utilities Commission (PUC) has indicated that
the addition of renewable energy to meet a 33% portfolio
may lead to "integration costs" to maintain California
electric system reliability. But, since 2004 the PUC has
mandated that integration costs be assumed to be zero.
In the PUC's proceeding to establish RPS procurement plans,
the PUC received comments suggesting a renewable
integration adder and asking that a process and timeline
for the development of a renewable integration cost adder
be established. The PUC decided (D.12-11-016, November
2012) that integration costs would remain set at zero until
more information and a public review had occurred. The PUC
invited comments on the integration cost adder in a
separate Long Term Procurement Planning (LTPP) proceeding,
R.12-03-014. This proceeding started in March 2012 and is
still underway.
By restricting integration costs to zero, utility
procurement assigns no value to renewable technologies with
different characteristics (intermittent, variable,
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dispatchable, baseload). This may be a contributing factor
to utility procurement shifting toward greater levels of
intermittent and variable renewable generation.
Because the question of integration costs for investor-owned
utility procurement is under the purview of the PUC, it may be
duplicative or inappropriate for the CEC to analyze the issue.
4)Double referral. This bill was approved by the Utilities and
Commerce Committee by a vote of 9-4 on January 13, 2014. The
committee's action recommended amendments now reflected in the
bill.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file for current version
Opposition
None on file for current version
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092