BILL ANALYSIS Ó
AB 1763
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Date of Hearing: April 21, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1763 (Perea) - As Amended: March 28, 2014
SUBJECT : State Energy Plan for 2030 and 2050
SUMMARY : This bill requires the California Energy Commission
(CEC) to prepare a report containing a state energy plan for
2030 and 2050. Specifically, this bill :
1)Requires the CEC to prepare a report to the Governor and
Legislature by January 1, 2016, in consultation with the
California Independent System Operator, other relevant state
and local agencies, and interested stakeholders, in an open
and public process, containing a state energy plan for 2030
and 2050 that promotes economic growth, ensures reliable and
affordable energy supplies, and positions the state as a
leader in the United States and world energy markets.
2)Requires the CEC to consider all of the following:
a) Energy forecasts based upon California's current and
future energy supply mix forecast to 2030 and 2050.
b) An analysis of California's energy infrastructure needs,
including a review of current and new infrastructure needed
for an evolving supply mix forecast to 2030 and 2050.
c) Recommendations on ensuring long-term energy supply
reliability and affordability through 2030 and 2050.
1)States that, for purposes of this report, "energy" means
electricity, natural gas, and transportation fuels that are
used for powering homes, businesses, motor vehicles, and
aircraft in the state.
2)States that the report is intended to assist in establishing
state policy and does not independently change any statute,
regulation, or regulatory decision.
3)Sunsets the statute on January 1, 2020.
EXISTING LAW
a)Requires the CEC to conduct assessments and forecasts of all
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aspects of energy industry supply, production, transportation,
delivery and distribution, demand, and prices at least every
two years. (Public Resources Code 25301)
b)Requires the CEC to adopt an integrated energy policy report
every odd-numbered year, including 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. (Public Resources Code 25302(a))
c)Requires the CEC to prepare an update to the integrated energy
policy report every even-numbered year. (Public Resources Code
25302(d))
d)Requires the CEC to conduct workshops, hearings, and other
forums to gain the perspectives of the public and market
participants for purposes of the integrated energy policy
report (Public Resources Code 25306)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement. "Over the last fifteen years we have seen
major changes to California's energy system. We have the most
progressive energy policies in the nation and have implemented
some of the most innovative environmental programs to help
curb carbon emissions and improve air quality.
"However, to stay on the forefront of energy policy, we must
have a focused energy plan to guide our policy-making moving
forward. AB 1763 would require the creation of a plan that
will consider California's current and future energy supply
mix, infrastructure needs, and include recommendations to
ensure long-term supply reliability and affordability through
2030 and 2050.
"Balancing our current policies with our long-term needs and
ensuring all Californians, especially those in our
disadvantaged communities, have access to an affordable and
reliable energy supply will be a key component of this plan.
AB 1763 would not change any existing policy or regulation
currently in place, but would build from our current
understanding of energy policy to create a strategic energy
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plan for the future."
2)State Lacks Overarching Energy Plan . In 2013, the Little
Hoover Commission issued a report titled: Rewiring California:
Integrating Agendas for Energy Reforms. The key findings of
the report are:
a) "In a short period, the state has adopted a series of
transformative policy initiatives, any of which taken
individually would take years of careful planning to
implement. The policies were adopted one at a time without
the benefit of a cohesive design. Now they are being
implemented simultaneously without an overarching plan."
b) "The state has not produced a comprehensive assessment
of the total cost of implementing this group of policies,
inhibiting consumers and businesses in their ability to
plan for this new future."
c) "The state lacks the ability to impose order on the
multitude of proceedings that determine how these policies
unfold, order which is essential to ensuring the state
maximizes progress toward each of its policies goals."
According to a recent report by the National Association of
State Energy Officials (NASEO)<1>
"Although statewide energy plans differ in everything from
their general format to their goals and recommendations,
they all serve as a roadmap for achieving a prosperous and
secure energy future. Achieving such a vision is beneficial
for both the public and private sectors.
"Though many states have tasked the State Energy Offices as
the lead organizing and authoring agencies, most state
energy plans are produced through extensive stakeholder
engagement processes involving other state agencies,
private sector interests, and input from the general
public. Also, although the emphasis on development of
energy resources within the state varies, the majority of
plans stress the development of a diversified energy
portfolio to meet the states' economic, environmental, and
security objectives. State energy plans provide an
assessment of current and future energy supply and demand,
examine existing energy policies, identify emerging energy
-------------------------
<1> An Overview of Statewide Comprehensive Energy Plans From
2002 to 2011, NASEO, July 2013
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challenges and opportunities, encourage economic
development, and promote the wise use of resources."
1)Recent Assessment for Californians for Affordable Energy
(CARE). An August 2013 study by Navigant Consulting,
commissioned by CARE, states that
"Regulatory requirements to lower the carbon intensity of
fuels in California will also introduce uncertainties
associated with additional costs in the production of
transportation fuels, as well as the associated costs of
infrastructure development and/or modifications needed for
compliance. Specifically, there are substantial levels of
uncertainties associated with:
The ability of industry to significantly reduce the
carbon intensity ("CI") values of alternative fuels, and to
produce, distribute, and dispense them at an adequate
retail scale to support compliance consistent with the
current Low Carbon Fuel Standard ("LCFS") compliance
schedule;
The ability of fuel providers to adapt to reduced demand
for gasoline and diesel fuels;
The pace at which California drivers will purchase and
use flexible-fuel vehicles, and the ability of industry to
manufacture and integrate the needed engine technologies
capable of running on alternative fuels;
The rate at which compliance credits associated with
alternative fuel consumption and sales can be generated to
offset the deficits that will be incurred when consuming
and selling (i.e. replacing) conventional gasoline and
diesel; and
Overall economic impacts to the fuels industry."
The report goes on to review its preliminary examination of
potential cost impacts:
"Our preliminary examination of potential cost impacts of
these regulations tell us the following:
The 33 percent RPS requirement will likely lead to
increased prices and rates as utilities attempt to
incrementally phase renewable energy into their portfolios.
These incremental adjustments have already created
challenges in the industry's ability to provide reliable
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electric service (e.g. integration; source-to-load
transmission connections; etc.).
Implementation has added to electricity prices
attributable to the "carbon component" of energy costs. The
California Independent System Operator ("CAISO") has
indicated that wholesale bids of gas-fired capacity in 2013
are reflecting the additional costs of carbon. At current
carbon prices, this can increase bids into the wholesale
market between $6 and $10/MWh, depending on the efficiency
of the plant. The impact that these carbon prices will have
on electricity bills will differ for end-use consumers due
to procedural rules regarding recycling of allowance
auction revenue.
The California Air Resources Board ("CARB") has assumed
that full and rapid compliance with the LCFS will result in
negligible increases in the price of gasoline and diesel.
However, there appears to be considerable uncertainty on
the eventual cost impacts as well as considerable
litigation to date regarding the legality of the rule. This
is compounded by uncertainty regarding the potential supply
of alternative fuels and associated infrastructure required
for compliance."
It is unclear whether this report has had any public or
independent review. It is also unclear whether this report has
been submitted to the CEC's IEPR proceeding so that it can be
reviewed and considered through the established IEPR process.
1)CEC Integrated Energy Policy Report (IEPR). The CEC's 2013
IEPR analyzes and makes recommendations on a wide range of
subjects, including energy efficiency, demand response,
renewables, electricity, natural gas, transportation, and
climate change. In preparation for the IEPR, the CEC conducts
assessments and forecasts of all aspects of energy industry
supply, production, transportation, delivery and distribution,
demand, and prices and uses this information to develop energy
policies that conserve resources, protect the environment,
ensure energy reliability, enhance the state's economy, and
protect public health and safety.
2)Not substantively different than the current IEPR? AB 1763
would require the CEC to prepare a report due on January 1,
2016, that is substantially similar to what the CEC is already
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required to do every other odd- numbered year. The major
differences between what the CEC is already required to do and
what AB 1763 directs the CEC to do are:
AB 1763:
Excludes industry and agriculture in its definition
of "energy"
Includes affordability of energy supplies (the
current CEC IEPR statute requires 'pricing' analysis)
Requires the new report to position California as a
leader in the United States and world energy markets.
It is unclear why industrial and agriculture sectors were not
included as they represent a significant and important part of
California's economy.
Since California is already considered a leader in the United
States and world energy markets and cited in many examples for
its leadership on energy efficiency, renewable energy, air
quality, and climate standards, as well as in other areas. It
is unclear how the new report can add to that status.
1)Related Legislation.
AB 1779 (Gaines, 2014) would require the CEC to prepare a
report that assesses the effect in the aggregate of specified
state policies on electricity reliability and rates and
whether these policies are achieving the stated environmental
and economic goals of these policies.
AB 1257 (Chapter 749, Statutes of 2013) which directed the CEC
to analyze natural gas use in the state. The legislation only
focused on natural gas use and was not directed at all energy
sources.
SB 1389 (Chapter 568, Statutes of 2002) by Senator Bowen and
Senator Sher consolidated and updated the CEC's reporting
requirements into one integrated report and requires the
reporting of the energy data from all entities that
participate in the state energy markets.
2)Support and opposition.
Supporters state that this bill will secure an energy future
that balances economic and environmental goals, state that
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energy costs will increase due new legislative and regulatory
proposes intended to further greenhouse gas reductions.
REGISTERED SUPPORT / OPPOSITION :
Support
California Business Roundtable
California Chamber of Commerce
California League of Food Processors
California Manufacturers & Technology Association
California Retailers Association
California Small Business Association
California Trucking Association
Dependable Companies
Inland Empire Economic Partnership
Los Angeles Area Chamber of Commerce
Montclair Chamber of Commerce
National Federation of Independent Business (NFIB)
San Gabriel Valley Economic Partnership
Valley Industry and Commerce Association (VICA)
Western States Petroleum Association (WSPA)
Opposition
Sierra Club California
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083