BILL ANALYSIS Ó
SB 591
Page 1
Date of Hearing: July 1, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 591 (Cannella) - As Amended: June 25, 2013
SENATE VOTE : 39-0
SUBJECT : Renewable energy: publicly owned electric utility:
hydroelectric generation facility
SUMMARY : Limits the Merced Irrigation District's Renewables
Portfolio Standard (RPS) obligation to the electricity demands
that are unsatisfied by the New Exchequer Dam.
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 is 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
Renewable Portfolio Standard (RPS). (Public Utilities Code
§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
Resources Code §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. (Public Utilities
Code §399.30)
FISCAL EFFECT : Unknown.
COMMENTS :
SB 591
Page 2
1)Author's Statement. According to the author, "in an effort to
reduce the unintended economic impacts of the Renewable
Portfolio Standard (RPS) program on the customers of the
Merced Irrigation District (MID) this bill will allow the
greenhouse gas-free hydroelectric power produced at the
Exchequer Dam in excess of 67% of MID's total power needs to
be counted towards their RPS requirements. This will result in
significantly lower rate increases to MID customer with zero
negative effects to air quality.
2)Background . The Merced Irrigation District owns and operates
the Merced River Hydroelectric Project located in Mariposa
County. The New Exchequer Dam, which is part of the Merced
River Hydroelectric Project, is about 23 miles northeast of
the City of Merced. The dam and hydroelectric facility were
originally constructed in 1926, and began service in 1967.
The project is a water supply/flood control/recreation/power
project under the jurisdiction of the Federal Energy
Regulatory Commission (FERC) and occupies nearly 3,000 acres
of federal land under the jurisdiction of the Bureau of Land
Management. The project has a capacity of 95 megawatts and
supplies irrigation water to more than 2,000 independently
owned farms in the San Joaquin Valley. An existing contract
between MID and Pacific Gas & Electric (PG&E) Company allows
PG&E to receive the benefit of the electricity produced at the
project since 1967 which expires mid-2014. Upon expiration of
the contract MID will begin to receive the full benefit of
this electricity which could account for approximately 60% of
MIDs electricity demand.
MID expects its RPS purchase requirement to cost upward of $30
million. MID serves a region with an unemployment rate near
19%; with 26% of residents at or below the federal poverty
level; and household median incomes that are approximately
half the state average. Under MID's current RPS requirement,
the average family would see a 20% rate increase with electric
bills increasing from approximately $225 per month to $270.
MID argues that "businesses would be more significantly
affected by the RPS cost shifting thus causing further
stagnation of the local economy. Rates would remain more
affordable for MID customers under this bill while still
achieving carbon-emission-free energy.
3)CEC RPS rules . On March 1st the California Energy Commission
SB 591
Page 3
(CEC) released proposed Regulations for enforcement rules and
procedures for the RPS for POUs pursuant to SB 2 x1 (Simitian,
Chapter 1, Statutes of 2011/2012 First Extraordinary Session).
The proposed regulations establish the rules and procedures
that the CEC will use to assess a POUs procurement actions and
determine compliance with the RPS. The CEC also has the
authority to issue a notice of violation and correction for a
POUs failure to comply and refer the violation to the State
Air Resources Board for potential penalties. According to the
CEC if the bill were enacted, the proposed RPS regulations
would need to be updated. The CEC's proposed regulations do
not address the issues raised by this bill or unmet need. The
proposed regulations require renewable procurement strictly
based on total retail sales.
4)Unmet need provision in RPS . Existing law requires the
utilities to procure renewable resources "in order to fulfill
unmet long-term resource needs". The 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. SB 591 allows MID to
meet its electricity demands unsatisfied by hydroelectric
generation to satisfy RPS obligations.
5)Related legislation . AB 793 (Gray) allows RPS eligibility of a
legacy hydroelectric facility operated by Merced Irrigation
District without absolving the District of its obligation to
meet its June 2014 RPS compliance periods. This bill is
pending a hearing in Senate Energy, Utilities and
Communications Committee.
6)Technical amendment . AB 793 was recently amended to strike the
description of the specific facility. The author may wish to
amend the bill to include the description of the specific
facility to ensure that it is clear that this bill applies
only to that facility and is consistent with the provisions in
AB 793. Specifically:
399.30 Has a maximum penstock flow capacity of no more than
line 2 3,200 cubic feet per second and includes a regulating
reservoir line 3 with a small hydroelectric generation
SB 591
Page 4
facility producing fewer line 4 than 20 megawatts with a
maximum penstock flow capacity of no line 5 more than 3,000
cubic feet per second.
REGISTERED SUPPORT / OPPOSITION :
Support
California Farm Bureau Federation
Merced Irrigation District
Modesto Irrigation District
Opposition
California Wind Energy Association (CalWEA) (unless amended)
Large Scale Solar Association (LSA) (unless amended)
Sierra Club Calfornia
The Utility Reform Network (TURN)
Union of Concerned Scientists (UCS)
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083