BILL ANALYSIS Ó
SB 591
Page 1
ASSEMBLY THIRD READING
SB 591 (Cannella)
As Amended August 20, 2013
Majority vote
UTILITIES & COMMERCE 11-0 NATURAL
RESOURCES 8-0
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|Ayes:|Bradford, Patterson, |Ayes:|Chesbro, Grove, Bigelow, |
| |Bonilla, Buchanan, | |Garcia, Muratsuchi, |
| |Chávez, Beth Gaines, | |Patterson, Skinner, Stone |
| |Garcia, Gorell, Roger | | |
| |Hernández, Jones, Rendon | | |
| | | | |
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SUMMARY : Limits the Merced Irrigation District's Renewables
Portfolio Standard (RPS) obligation to the electricity demands
that are unsatisfied by the New Exchequer Dam.
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
in fiscal year (FY) 2013-14.
COMMENTS :
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, and
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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 1, the California Energy Commission
(CEC) released proposed Regulations for enforcement rules and
procedures for the RPS for POUs pursuant to SB 2 X1 (Simitian,
et al.), Chapter 1, Statutes of 2011-12 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
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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. This bill allows MID to
meet its electricity demands unsatisfied by hydroelectric
generation to satisfy RPS obligations.
5)Related legislation . AB 793 (Gray) currently in the Senate
Appropriations Committee, allows RPS eligibility of a legacy
hydroelectric facility operated by Merced Irrigation District
without absolving the MID of its obligation to meet its June
2014 RPS compliance periods. The language in this bill is
consistent with AB 793.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0001847