BILL ANALYSIS                                                                                                                                                                                                    Ó




                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 1763 -  Perea                                  Hearing Date:   
          June 17, 2014              A
          As Amended:         May 5, 2014              FISCAL       B

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                                      DESCRIPTION
           
           Current law  requires the California Energy Commission (CEC) to  
          develop, every two years, an integrated energy policy report  
          (IEPR) that assesses 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) and  
          presents policy recommendations based on assessments of the most  
          pressing energy trends and issues. (Public Resources Code §  
          25300 et seq.)

           This bill  directs the CEC, in consultation with the California  
          Independent System Operator (CAISO), other relevant state and  
          local agencies, and interested stakeholders to develop a "state  
          energy plan" for 2030 and 2050 as part of its 2015 IEPR. The  
          bill defines "energy" as electricity, natural gas, and  
          transportation fuels that are used in the state. The bill  
          directs the CEC to consider, when developing the plan, energy  
          forecasts; an analysis of California's current and future energy  
          infrastructure needs; and recommendations on ensuring long-term  
          energy resource reliability, sustainability, and affordability  
          through 2050. 

                                      BACKGROUND
           
          Function of State Energy Plans - A 2013 report<1> by the  
          National Association of State Energy Officials states the  
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          <1> An Overview of Statewide Comprehensive Energy Plans From  
          2002 to 2011,  NASEO, July, 2013;  
           http://www.naseo.org/Data/Sites/1/naseo_39_state_final_7-19-13.pd 
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          following:

               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 ? The  
               majority of plans stress the development of a  
               diversified energy portfolio to meet the states'  
               economic, environmental, and security objectives.

               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.

          Energy Action Plan - In 2003, the CEC, the California Public  
          Utilities Commission (CPUC), and the California Power Authority  
          (now defunct) adopted the Energy Action Plan, which articulated  
          a common, unified approach to meeting California's energy needs.  
          In 2005, the CEC and the CPUC adopted a second plan, Energy  
          Action Plan II, to reflect the policy changes and actions of the  
          ensuing two years. By 2008, the state's energy policies had -  
          and have since - been significantly influenced by the passage of  
          Assembly Bill 32, yet the agencies did not find it necessary or  
          productive to create a completely new plan. The 2008 Energy  
          Action Plan Update examined the state's energy-related actions  
          in light of its commitment to reducing greenhouse gas emissions.  
          No other plan has been written since the 2008 Update.

          CEC Integrated Energy Policy Report (IEPR) - The IEPR, which is  
          updated every two years,<2> presents in-depth assessments of  
          energy, supply, demand, pricing, reliability, efficiency, and  
          impacts on human and environmental health and safety. Each  
          assessment is based on a set of data and assumptions, which may  
          differ in their completeness and/or accuracy. The IEPR also  
          presents policy recommendations (based on the assessments)  
          intended to help decision-makers reach stated end goals:  
          conserve resources, protect the environment, ensure energy  
          reliability, enhance the state's economy, and protect public  
          health and safety. Importantly, the assessments and associated  
          policy recommendations are not mandates and, therefore, require  

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          <2> The next IEPR is due November 1, 2015.


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          action from the Governor, the Legislature, or other  
          decision-makers to have any effect.

                                       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, many of our policies have been adopted  
               independently of each other and implemented in a variety of  
               regulatory agency settings. There is currently no energy  
               plan that encompasses all of our existing energy policies  
               and provides a framework for our energy platform moving  
               forward. Having a state energy plan, forecasted out for the  
               next 35 years will allow the Legislature and Governor to  
               have a focused plan that can be used to inform future  
               policy and decision making."  

             2.   IEPR Duplication  ? This bill directs the CEC to develop a  
               state energy plan that promotes economic growth, ensures  
               energy resources, complements environmental goals, and  
               positions the state as a leader. This is different than the  
               state's IEPR, which presents multiple assessments and makes  
               policy recommendations based on those assessments but does  
               not direct the overall development of California's energy  
               future. The IEPR includes a broad, 10-year (volumetric)  
               forecast of demand for electricity. It does not forecast  
               energy infrastructure needs or any other dimension of the  
               state's energy economy.
           
             3.   Research and Analysis, Not Just Synthesis, Would be  
               Required  . The author states that the state energy plan  
               would require the synthesis and presentation of information  
               already available to the CEC. The CEC reports that this  
               information (used to write the IEPR) represents only a  
               portion of what would be required to develop the state  
               energy plan called for in this bill. For example, CEC staff  
               has neither data nor analytical capability regarding  
               population projections.  
           
               Moreover, forecasts post-2030 would be speculative because  
               current and mid-term conditions cannot accurately predict  



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               conditions that far into the future. As recent history  
               reflects, a prescriptive, one-time energy plan developed 35  
               years ago could not have foreseen or planned for the  
               impacts of innovative technology (relating to energy  
               efficiency, rooftop solar, fuel cells, etc.) on our current  
               energy and transportation sectors. Storage was not  
               considered an option years ago, but is quickly becoming  
               commercially viable.  
           
              4.   Overall, This Plan May Be Premature  . In Joint testimony  
               to the Little Hoover Commission on April 11, 2014, the  
               Governor's Office, CEC, CAISO, and CPUC stated that state  
               agencies are jointly conducting comprehensive data analyses  
               and modeling to determine a 2030 greenhouse gas reduction  
               target and developing an integrated, economy-wide plan for  
               achieving that target. The plan will consider the interplay  
               between diverse sectors,<3> cost impacts, and the proper  
               sequence for implementing various reduction strategies.

               The Administration anticipates completing the plan by the  
               end of 2014 and releasing it for public review and comment  
               as a supplement to the AB 32 Scoping Plan in early 2015.  
               Based on public and stakeholder input, the Administration  
               anticipates submitting a proposal to implement the plan to  
               the Legislature later in 2015. 

              5.   Related Legislation  . 

               AB 1257 (Bocanegra, Chapter 749, Statutes of 2013) required  
               the CEC, beginning November 1, 2015 and every four years  
               thereafter, to analyze natural gas use in the state and  
               identify strategies to maximize the benefits of natural  
               gas, as specified, in conjunction with the IEPR. The  
               legislation only focused on natural gas use and was not  
               directed at all energy sources.

               AB 1779 (Gaines) 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 environmental and  
               economic goals of these policies. Status: Failed passage in  
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          <3> The major sectors of the economy that contribute to GHG  
          emissions include energy, transportation, water, agriculture,  
          natural and working lands, waste management, etc.


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               the Assembly Committee on Natural Resources.

               SB 1125 (Pavley) would require the State Air Resources  
               Board (ARB) to develop greenhouse gas emissions targets for  
               2030 and report them to the Legislature.  Status: Held in  
               the Senate Committee on Appropriations.

               AB 2050 (Quirk) would require the ARB to include specified  
               items, a proposal for further reducing greenhouse gas  
               emissions by 2050, in the next AB 32 (Nunez, Chapter 488,  
               Statutes of 2006) Scoping Plan Update (2019) and to report  
               to the Legislature. The current proposed update arguably  
               already includes 2050 and intermediate goal "proposals,"  
               though it stops short of proposing or adopting specific  
               targets.  Status: Pending consideration in the Senate  
               Committee on Environmental Quality.

              6.   Double Referral  .  Should this bill be approved by the  
               committee, it will be re-referred to the Senate Committee  
               on Environmental Quality for its consideration.  

                                    ASSEMBLY VOTES
           
          Assembly Floor                     (70-3)                      
          Assembly Appropriations Committee  (16-0)
          Assembly Natural Resources         (8-0)
          Assembly Utilities and Commerce Committee                       
          (11-0)

                                       POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
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          |CA Asian Pacific Chamber of      |Inland Empire Economic          |
          |Commerce                         |Partnership                     |
          |California Business Roundtable   |Little Hoover Commission        |
          |California Chamber of Commerce   |Los Angeles Area Chamber of     |
          |California Grocers Association   |Commerce                        |
          |California League of Food        |Los Angeles County Business     |



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          |Processors                       |Federation                      |
          |CA Manufacturers and Technology  |National Federation of          |
          |Association                      |Independent Business            |
          |California Small Business        |Orange County Business Council  |
          |Association                      |San Diego Gas & Electric        |
          |City of Bell                     |Company                         |
          |City of Lynwood                  |San Diego Regional Chamber of   |
          |DeWitt Petroleum                 |Commerce                        |
          |Industrial Environmental         |San Gabriel Valley Economic     |
          |Association                      |Partnership                     |
          |                                 |Western States Petroleum        |
          |                                 |Association                     |
          |                                 |2 Individuals                   |
          |                                 |                                |
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           Oppose:
           
          American Lung Association in California
          Asian Pacific Environmental Network
          California League of Conservation Voters
          Clean Power Campaign
          Physicians for Social Responsibility - Los Angeles
          Sierra Club California


          

          Alexis Erwin
          AB 1763 Analysis
          Hearing Date:  June 17, 2014

















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