BILL ANALYSIS �
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THIRD READING
Bill No: SB 591
Author: Cannella (R), et al.
Amended: 4/10/13
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 8-1, 4/2/13
AYES: Padilla, Fuller, Cannella, Hill, Knight, Pavley, Wolk,
Wright
NOES: Corbett
NO VOTE RECORDED: De Le�n, DeSaulnier
SUBJECT : Renewable energy: publicly owned electric utility:
hydroelectric generation facility
SOURCE : Merced Irrigation District
DIGEST : This bill requires a local publicly owned electric
utility that receives greater than 50% 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 as specified, to meet only the electricity
demands unsatisfied by its hydroelectric generation in any given
year to satisfy its portfolio content requirements. Requires
that, on or before July 1, 2014, the Energy Commission report to
the Legislature on whether regulations it adopted pursuant to
existing law result in surplus electricity sales and the
circumstances under which surplus electricity sales have
occurred or may occur.
ANALYSIS :
CONTINUED
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Existing law:
1. 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). (Public
Utilities Code (PUC) Section 399.11 et seq)
2. 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. (Public
Resource Code Section 25741)
3. 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 Section
399.30)
This bill
1. 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.
2. Requires, on or before July 1, 2014, the Energy Commission,
in consultation with the local publicly owned electric
utilities, report to the Legislature on whether regulations
it adopted pursuant to existing law result in surplus
electricity sales and the circumstances under which surplus
electricity sales have occurred or may occur. Sunsets this
reporting requirements January 1, 2019.
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Background
The New Exchequer Dam . This bill only applies 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 MWs
and produces approximately 250,000 MW 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 2X1
(Simitian, Chapter 1, Statutes of 2011, First Extraordinary
Session). 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 Air
Resources Board for potential penalties.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 4/10/13)
Merced Irrigation District (source)
Modesto Irrigation District
OPPOSITION : (Verified 4/10/13)
California Wind Energy Association
Large-Scale Solar Association
Sierra Club California
The Utility Reform Network
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ARGUMENTS IN SUPPORT : According to the MID, this bill
recognizes the unique situation of the MID as the power
generated at New Exchequer Hydroelectric Project will begin to
benefit MID, starting in 2014, instead of benefitting PG&E as it
has done under contract since 1967. The greenhouse gas-free
power generated at the dam is forecasted to be enough in many
years to meet all of MID's energy customers' needs. However,
under existing law, it appears MID will be required to purchase
additional and unneeded power that is no friendlier to the
environment that what we will already be producing. This bill
allows the MID to save ratepayers significant money by granting
the same accommodations that were given to the San Francisco
Municipal Utilities District and the Trinity Public Utilities
District who found themselves in very similar situations.
ARGUMENTS IN OPPOSITION : According to The Utility Reform
Network (TURN), this bill significantly reduces the RPS program
obligations for any POU that receives at least 50% of its
"consumption load demand" from "hydroelectric generation and
other renewable energy resources." Other provisions in this
bill suggest that the sole beneficiary of this treatment would
be the MID.
As a long-standing supporter of board-based renewable energy
policies, TURN generally opposed special treatment for
individual load-serving entities and believes that all
utilities, whether public or private, should contribute equally
to meeting California's renewable energy goals. The RPS program
was enacted to address a variety of concerns including reducing
reliance on fossil fuels, minimizing local air pollution,
stabilizing electric rates, curtailing the impact of natural gas
price volatility and mitigating climate change. Since all
Californians are intended to benefit, TURN believes that the
Legislature should require all utilities to participate on equal
footing. Unfortunately, this bill allows MID to meet
significantly lower RPS targets without sufficient
justification.
JG:k 4/10/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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