BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1779
                                                                  Page  1

          Date of Hearing:   April 7, 2014

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                    AB 1779 (Gaines) - As Amended:  March 20, 2014
           
          SUBJECT  :   Energy resources:  report

           SUMMARY  :   Requires the California Energy Commission (CEC) to  
          prepare a report on the effect of specified policies on  
          electricity reliability and rates.

           EXISTING LAW  :

          1)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).   
            [SB 1389 (Bowen), Chapter 568, Statutes of 2002].   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.

          2)The Renewables Portfolio Standard (RPS) requires  
            investor-owned utilities (IOUs), publicly-owned utilities  
            (POUs) and certain other retail sellers of electricity to  
            achieve the following renewable energy 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.

          3)The California Global Warming Solutions Act of 2006 (AB 32)  
            requires the Air Resources Board (ARB) to adopt a statewide  
            greenhouse gas (GHG) emissions limit equivalent to 1990 levels  
            by 2020 and adopt regulations to achieve maximum  
            technologically feasible and cost-effective GHG emission  
            reductions.









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          4)Pursuant to the federal Clean Water Act, in 2010 the State  
            Water Resources Control Board (SWRCB) adopted a Policy on the  
            Use of Coastal and Estuarine Waters for Power Plant Cooling.   
            The policy applies to the 19 existing power plants that  
            withdraw seawater using a single-pass system, also known as  
            once-through cooling (OTC).

           THIS BILL  requires the CEC to:

          1)Prepare a new, annual report to assess the effect in the  
            aggregate of specified policies on electricity reliability and  
            rates and whether these policies are achieving their stated  
            environmental and economic goals.  The specified policies are:

             a)   The California Renewable Energy Resources Act of 2011  
               (i.e., RPS), including renewable energy plant development  
               costs, transmission costs, and back-up generation costs  
               resulting from the implementation of the act.

             b)   AB 32.

             c)   The SWRCB's OTC Policy.

             d)   The Governor's goal to build 12,000 megawatts of  
               localized electricity generation as described in the  
               Governor's "Clean Energy Jobs Plan" issued in 2011.

             e)   Additional major policies that affect electricity  
               reliability and rates, including the SWRCB's new flow  
               criteria for the Sacramento-San Joaquin Delta ecosystem.

          1)Consult with the Public Utilities Commission, ARB, SWRCB, and  
            other appropriate executive branch organizations.

          2)Identify and quantify any trade-offs involved if an aspect of  
            one goal conflicts with an aspect of another goal.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Author's statement :

               In 2012, the Little Hoover Commission published a report  
               entitled "Rewiring California: Integrating Agendas for  








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               Energy Reform" that addressed, among other things, how  
               recently-enacted policies (RPS, energy efficiency, AB 32,  
               etc.) will affect electricity rates and reliability.  On  
               pages 61-65, the Commission put forth the recommendation of  
               legislation that requires the CEC, in consultation with  
               several energy-related agencies, to prepare a report that  
               addresses the question of how much, in the aggregate, will  
               recent major policies related to energy affect electricity  
               reliability and rates, and whether these policies are  
               achieving California's stated environmental and economic  
               goals. 

               According to the Commission's findings, "no expert, state  
               official or utility executive has been able to address the  
               cumulative costs and benefits of multiple, potentially  
               competing goals for reducing greenhouse gas emissions,  
               achieving the (RPS), implementing (OTC) regulations and  
               expanding distributed generation."

               Also according to the Commission, "?California regulators  
               and stakeholders are buried under a proliferation of new  
               policies.  The result may be greater costs and competing  
               policies that ultimately may thwart the state's efforts to  
               achieve its environmental policy goals."

           2)Lofty objective.  Can the CEC deliver  ?  The IEPR was enacted  
            in 2002 as part of an effort to restore the CEC's planning  
            functions in the wake of the energy crisis that followed  
            electric industry restructuring.  One of the IEPR's objectives  
            to was to update and consolidate the dozens of statutory  
            reports that had accumulated over the preceding 25 years of  
            the CEC's existence.  In the 11 years since the IEPR was  
            enacted, the Legislature has enacted additional reporting  
            requirements, but each time a report subject fits within the  
            broad scope of the IEPR, the Legislature has made the subject  
            part of the IEPR.  It's not clear why the report called for by  
            this bill should be an exception, or why it should be prepared  
            every year.  It's also not clear that the CEC is best suited  
            to evaluate rate impacts or the environmental and economic  
            performance of policies implemented by other agencies.

           3)Double referral  .  This bill is double-referred to the Assembly  
            Utilities and Commerce Committee.

           REGISTERED SUPPORT / OPPOSITION  :   








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           Support 
           
          None on file

           Opposition 
           
          None on file
           
          Analysis Prepared by  :    Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092