BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 591
                                                                  Page 1

          Date of Hearing:  August 12, 2013

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                   SB 591 (Cannella) - As Amended:  August 6, 2013

           SENATE VOTE  :  39-0
           
          SUBJECT  :  Renewable energy resources:  publicly owned electric  
          utility:  hydroelectric generation facility

           SUMMARY  :  Limits the Renewables Portfolio Standard (RPS)  
          procurement obligations of the Merced Irrigation District (MID)  
          to the portion of MID's electricity demands unsatisfied by its  
          own hydroelectric generation.

           EXISTING LAW  :

          1)The RPS requires investor-owned utilities (IOUs),  
            publicly-owned utilities (POUs) and certain other retail  
            sellers of electricity, in order to fulfill unmet long-term  
            resource needs, to procure eligible renewable energy resources  
            to meet the following 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.

          2)Provides that eligible renewable generation facilities may  
            include small hydroelectric (generally 30 megawatts or less),  
            as well as biomass, solar thermal, photovoltaic, wind,  
            geothermal, renewable fuel cells, digester gas, limited  
            non-combustion municipal solid waste conversion, landfill gas,  
            ocean wave, ocean thermal or tidal current.

          3)Requires the California Energy Commission (CEC), in  
            consultation with the Air Resources Board (ARB), to adopt  
            regulations for enforcement of the RPS on POUs, including  
            providing for the imposition of penalties by ARB pursuant to  
            AB 32, upon referral by the CEC, for failure to comply with  
            the RPS.  Requires penalties imposed on POUs to be comparable  








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            to penalties imposed by the Public Utilities Commission (PUC)  
            on IOUs and other retail sellers.

          4)Excuses a POU from enforcement for failure to meet RPS targets  
            if the POU demonstrates that any of the following conditions  
            are beyond its control and will prevent compliance:

             a)   Inadequate transmission capacity for delivery of  
               sufficient renewable energy.

             b)   Permitting, interconnection or other delays for  
               renewable energy projects, or an insufficient supply of  
               available renewable energy.

             c)   Unanticipated curtailment of renewable energy necessary  
               to address the needs of a balancing authority.

          5)Requires the PUC to establish a cost limit for each IOU  
            according to specified criteria, requires the PUC to report to  
            the Legislature by 2016 regarding whether IOUs can achieve 33  
            percent within the adopted cost limit, authorizes the PUC to  
            revise the cost limit once after 2016 if necessary, and  
            authorizes IOUs to stop procuring renewable energy beyond the  
            cost limit, unless additional renewable energy can be procured  
            without exceeding a de minimis increase in rates.  Authorizes  
            POU governing boards to adopt consistent cost limits.

           THIS BILL  :

          1)Provides that a POU that receives greater than 50 percent of  
            its annual retail sales from its own non-eligible  
            hydroelectric generation is not required to procure eligible  
            renewable energy in excess of either (a) the portion of the  
            POU's retail sales not supplied by its own hydroelectric  
            generation or (b) its adopted RPS cost limit.

          2)Applies only to MID, through the definition of "hydroelectric  
            generation" that only MID's New Exchequer hydroelectric  
            facility meets.  (MID's own hydroelectric generation is not  
            RPS-eligible because the facility exceeds the RPS 30 megawatt  
            limit - New Exchequer's capacity is 95 megawatts.)

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, one-time costs of $75,000 to $150,000 from the Energy  
          Resources Programs Account (General Fund) to update regulations  








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          in FY 2013-14.

           COMMENTS  :

           1)Background.   This bill would only apply to 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.  

           2)Related legislation.   AB 793 (Gray) was approved with  
            amendments by this committee in May and is now pending in the  
            Senate Appropriations Committee.  SB 591 now reflects most of  
            the amendments to AB 793.   The author and the committee may  
            wish to consider  amending SB 591 to be consistent with AB 793  
            by adding the following amendments:

               On page 5, line 25, after "generation." insert:

               For these purposes, retail sales supplied by increased  
               hydroelectric generation resulting from an increase in the  
               amount of water stored by a dam because the dam is enlarged  
               or otherwise modified after December 31, 2012, shall not  
               count as being retail sales supplied by the utility's own  
               hydroelectric generation.

               On page 6, line 6, insert:

               (4) This subdivision does not require a local publicly  
               owned electric utility to purchase additional renewable  
               energy resources in excess of the renewable procurement  
               requirements set forth in subdivision (c).

           3)Double referral.   This bill was approved by the Assembly  
            Utilities and Commerce Committee on July 1 by a vote of 11-0.








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           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Farm Bureau Federation
          Merced Irrigation District
          Modesto Irrigation District
           
            Opposition 
           
          California Wind Energy Association (unless amended)
          Large-Scale Solar Association (unless amended)
          Sierra Club California  
          TURN
          Union of Concerned Scientists


           Analysis Prepared by :  Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092