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. AB 1779 Page 2 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 AB 1779 Page 3 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 : AB 1779 Page 4 Support None on file Opposition None on file Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916) 319-2092