BILL ANALYSIS Ó
AB 177
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ASSEMBLY THIRD READING
AB 177 (V. Manuel Pérez)
As Amended January 27, 2014
Majority vote
UTILITIES & COMMERCE 9-4 NATURAL
RESOURCES 5-1
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|Ayes:|Bradford, Bonilla, |Ayes:|Chesbro, Garcia, |
| |Buchanan, Fong, Garcia, | |Muratsuchi, Stone, |
| |Roger Hernández, Mullin, | |Williams |
| |Rendon, Skinner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Patterson, Chávez, Beth |Nays:|Patterson |
| |Gaines, Jones | | |
| | | | |
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APPROPRIATIONS 11-0
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Holden, | | |
| |Pan, | | |
| |Ridley-Thomas, Weber | | |
| | | | |
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SUMMARY : This bill requires the California Energy Commission
(CEC), in consultation with the California Public Utilities
Commission (PUC), the Natural Resources Agency and the Salton
Sea Authority, to solicit and consider recommendations regarding
development of renewable energy resources in the Salton Sea
area. Specifically, this bill :
1)Requires the CEC to convene a group of stakeholders to provide
advice and to hold workshops and public hearings to consider
recommendations, and to include its findings in the next
Integrated Energy Policy Report (IEPR).
2)States findings regarding renewable energy resources located
near the Salton Sea and state and local Salton Sea restoration
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efforts.
3)Requires the California Public Utilities Commission to include
a value for renewable integration when authorizing electricity
procurement by electrical corporation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Increased costs over a two-year period to the CEC potentially
in the $500,000 to $1 million range to convene the stakeholder
group, workshops and public hearings, and perform the analysis
required by the bill (Energy Resources Programs Account.)
2)Unknown additional costs to the PUC to establish renewable
integration cost values.
COMMENTS :
1)Purpose . This bill provides a process led by the CEC to
analyze issues relevant to the development of Salton Sea
resources which may serve as a basis for future legislative
action and to require the California Public Utilities
Commission to include a value for renewable integration when
authorizing new electricity procurement by electrical
corporations.
2)Background . The Salton Sea, California's largest lake was
formed in 1905 when the Colorado River flooded its banks at a
faulty irrigation diversion site. Restoration is necessary to
protect fish and wildlife habitat, preserve endangered species
and remediate the salinity caused by agricultural runoff.
Restoring the sea will help prevent future significant air
quality problems resulting from the shrinking sea. The Salton
Sea is one of the most important wetland areas in the world
for shorebirds migrating along the Pacific Flyway.
The Quantification Settlement Agreement (QSA) was a negotiated
settlement among the Imperial Irrigation District, The
Metropolitan District of Southern California, the Coachella
Water District, the San Diego Water Authority and the state to
settle claims to Colorado River water. It provided a path for
the state to reduce its consumption of Colorado River water to
its 4.4 million acre foot entitlement. In 2003, the
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Legislature enacted a package of QSA implementing bills
including a requirement to restore the Salton Sea. Under the
QSA, the amount of water flowing into the Salton Sea will be
significantly reduced in 2017. Without restoration efforts,
the environmental consequences of the reduced flows will be
significant to fish, wildlife, habitat and air quality.
Subsequently, the County of Imperial and the Imperial
Irrigation District signed a Memorandum of Understanding
pledging mutual efforts to advance the development of
renewable resources and mineral extraction to provide a
funding source to assist the state in meeting its mitigation
and restoration obligations required by the QSA.
This bill requires the CEC to analyze the feasibility of
developing these resources and identify funding,
environmental, and other related issues.
3)The Duck Chart . In 2013, the California Independent System
Operator (CAISO) released a graphic that is now known as "the
Duck Chart." The Duck Chart provides an example of the
results of current policy direction and warns that California
may experience challenges with grid reliability due to a
convergence of policies that will result in closure of at
least some of the coastally-located gas power plants, the
closure of the San Onofre Nuclear Generation Station (SONGS),
the lack of transmission flexibility into the San Diego and
Southern Orange County regions, hourly demand forecasts, and
the performance characteristics of forecasted wind and solar
procurement facilities.
Because wind and solar facilities can produce large upward
ramps of output and large downward ramps of output, without
predictability or advance warning (when the wind starts and
stops and the sun is blocked by weather conditions), the Duck
Chart demonstrates that if current procurement trends
continue, there may be added cost burdens and perhaps
reliability challenges in order to maintain compliance with
federal reliability standards. Possible remedies include
paying renewable generators to curtail generation, pay natural
gas generators to stand by to respond to large ramps, or even
possibly pay other states to take excess generation. This
scenario might occur if nothing is done to reduce the size of
the ramps, such as but not limited to building more natural
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gas plants, modify renewable procurement practices within the
renewable portfolio, or increasing the size and effectiveness
of energy efficiency and demand response programs.
Geothermal and biopower have different characteristics and can
provide power output consistently over a 24 hour period.
These renewable technologies may be part of the mix of
possible policy actions to address the issues raised by the
Duck Chart.
4)Addressing Renewable Integration Costs . "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 in utility portfolios.
The PUC has indicated that the addition of renewable energy to
meet at 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 from Pacific Gas and Electric (PG&E)
suggesting a renewable integration adder. The Center for
Energy Efficiency and Renewable Technology (CEERT), California
Wind Energy Association and SCE filed comments 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, the PUC, utility
procurement provides no value to renewable technologies with
different characteristics (intermittent, variable,
dispatchable, baseload). This may be a contributing factor to
both the utility procurement shifting toward greater levels of
intermittent and variable renewable generation and also may be
one of the factors that created the Duck Chart.
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Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0003029