BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 591 - Cannella Hearing Date:
April 2, 2013 S
As Introduced: February 22, 2013 Non-FISCAL B
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DESCRIPTION
Current law requires investor-owned utilities, publicly owned
utilities (POUs), community choice aggregators, and energy
service providers to increase purchases of renewable energy such
that at least 33% of total retail sales are procured from
renewable energy resources by December 31, 2020. In the interim
each entity would be required to procure an average of 20% of
renewable energy for the period of January 1, 2011 through
December 31, 2013 and 25% by December 31, 2016. This is known
as the Renewables Portfolio Standard (RPS). (PUC 399.11 et seq)
Current law defines as RPS eligible, specified electric
generation resources including small hydroelectric generation of
30 megawatts (MWs) or less and hydroelectric generation units
sized below 40 MWs, if operated as part of a water supply or
conveyance system and operative prior to 2005. (PRC 25741)
Current law permits specified POUs that have ownership or
long-term contracts for generation from large hydroelectric
generation resources including Trinity and the San Francisco
Public Utilities Commission to meet only the electricity demands
unsatisfied by hydroelectric generation. (PUC 399.30)
This bill limits the RPS procurement obligation for a POU that
owns and operates a hydroelectric facility that came into
service in 1967, and for which the POU will take the generation
rights in 2014, to the electricity demands unsatisfied by that
hydroelectric generation.
BACKGROUND
The New Exchequer Dam - This bill would only apply to one POU,
Merced Irrigation District (MID), and one hydroelectric
facility, the New Exchequer Dam, which is part of the Merced
River Hydroelectric Project in Mariposa County, about 23 miles
northeast of the City of Merced. The dam and hydroelectric
facility were originally constructed in 1926, enlarged in the
mid-1960s, and put into service in 1967. The project is a water
supply/flood control/recreation/power project under the
jurisdiction of the Federal Energy Regulatory Commission and
occupies 2,942 acres of federal land under the jurisdiction of
the Bureau of Land Management. The plant capacity is 94.5
megawatts and produces approximately 250,000 megawatt hours of
electricity each year. Although the hydroelectric facility was
constructed by, and is owned and operated by the MID, PG&E has
had a contractual right to the generation since 1967 which
expires on July 1, 2014.
Proposed Regulations - On March 1st the California Energy
Commission (CEC) released proposed regulations for enforcement
rules and procedures for the RPS for POUs as required by SB x1 2
(Simitian, Stats. 2011, 1st Ex. Sess., ch. 1). The proposed
regulations establish the rules and procedures that the CEC will
use to assess a POU's procurement actions and determine
compliance with the RPS. If appropriate, the CEC will issue a
notice of violation and correction for a POU's failure to comply
and refer the violation to the State Air Resources Board for
potential penalties.
COMMENTS
1. Author's Purpose . Although the RPS statute specifies
that the renewable procurement obligation extends to
electricity demand not met by long-term resource needs, the
law does not provide a clear definition of unmet need. The
MID is in the unique position of having owned and operated
a 95 megawatt hydroelectric facility since the 1960s but
when the facility was built MID entered into a contract
with PG&E to sell it the electricity. That contract
terminates on July 1, 2014 at which time the electricity
supply will revert to MID. The author argues that MID
should only have to procure renewables for the generation
needs not met by the hydroelectric facility that it owns.
2. Unmet Need . Current law requires the utilities to
procure renewable resources "in order to fulfill unmet
long-term resource needs." This provision was intended to
ensure that a utility is not obligated to procure renewable
resources beyond its retail electricity needs and
generation contracted for or owned by a utility. In
application this would mean if a utility has no load growth
or expiring contracts in its portfolio, compliance with the
RPS would not be required or would be reduced.
3. CEC Implementation . The CEC's proposed regulations to
establish POU enforcement rules and procedures for the RPS
does not address the issue raised by this bill or unmet
need. The proposed regulations require renewable
procurement strictly based on total retail sales. The CEC
opines that the unmet need reference in statute conflicts
with several provisions that reference total retail sales
as part of the metric for determining procurement targets.
There are more than 45 POUs in the state and the impact of
the CEC's exclusion of the unmet need consideration is not
clear. The committee may wish to consider amendments to
require the CEC to consult with the POUs and determine
whether the regulations will result in surplus electricity
sales, under what circumstances that has or may occur, and
report back to the Legislature no later than July 1, 2014
on its findings.
4. Suggested Amendments . Should this measure be adopted by
the committee, clarifying amendments are suggested to
ensure that the hydroelectric facility to which the bill
applies is clear and also that the generation does not
absolve the utility from its RPS procurement requirement
for the compliance period ending prior to January 1, 2014.
a) Page 5, line 13, strike "50", strike lines 14-15,
and insert:
greater than 50 percent of its electricity sources
from hydroelectric generation that it owns and
operates, and that does not meet the definition of a
'renewable electrical generation facility' pursuant
to Section 25741 of the Public Resources Code"
b) Page 5, strike line 21, and insert:
generation" means electricity generated from a
hydroelectric facility that satisfies all"
c) Page 5, line 36, insert:
Nothing in this section is intended to reduce or
eliminate any renewable procurement requirement for
any compliance period ending prior to January 1,
2014.
POSITIONS
Sponsor:
Merced Irrigation District
Support:
None on file
Oppose:
California Wind Energy Association
Large-Scale Solar Association
Sierra Club California
The Utility Reform Network
Kellie Smith
SB 591 Analysis
Hearing Date: April 2, 2013