Amended in Assembly August 30, 2013

Amended in Assembly August 19, 2013

Amended in Assembly August 7, 2013

Amended in Senate May 20, 2013

Amended in Senate April 29, 2013

Amended in Senate April 1, 2013

Senate Bill No. 760

Introduced by Senator Wright

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(Principal coauthor: Assembly Member V. Manuel Pérez)

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February 22, 2013

An act to begin delete add Section 40709.8 to the Health and Safety Code, relating to nonvehicular air pollution end delete begin insert amend Sections 399.11, 399.13, 399.15, and 399.16 of the Public Utilities Code, relating to energy end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 760, as amended, Wright. begin delete Electrical generation facility: emission reduction credits. end delete begin insert California Renewables Portfolio Standard Program. end insert

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Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined, while local publicly owned electric utilities, as defined, are under the direction of their governing board. The Public Utilities Act imposes various duties and responsibilities on the Public Utilities Commission with respect to the purchase of electricity and requires the commission to review and adopt a procurement plan and a renewable energy procurement plan for each electrical corporation pursuant to the California Renewables Portfolio Standard Program. The California Renewables Portfolio Standard Program requires a retail seller, as defined, and local publicly owned electric utilities to purchase specified minimum quantities of electricity products from eligible renewable energy resources, as defined, for specified compliance periods, sufficient to ensure that the procurement of electricity products from eligible renewable energy resources achieves 20% of retail sales for the period January 1, 2011, to December 31, 2013, inclusive, 25% of retail sales by December 31, 2016, and 33% of retail sales by December 31, 2020, and in all subsequent years. The program requires the commission to direct each retail seller to prepare and submit an annual compliance report that includes specified matter.

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This bill would additionally require the commission to direct a retail seller to include in its annual compliance report the current status of the retail seller’s procurement to ensure a balanced mix of eligible renewable energy resources required to maintain the reliability of the electrical grid without increasing fossil fuel consumption.

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The program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles, requires that all retail sellers procure a balanced portfolio of electricity products from eligible renewable energy resources, as specified referred to as the portfolio content requirements. The program requires the commission to adopt, by rulemaking, a process that provides criteria for the rank ordering and selecting of least-cost and best-fit eligible renewable energy resources to comply with the program obligations on a total cost basis, taking into account specified matter.

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This bill would additionally require that the process providing criteria for the rank ordering and selecting of least-cost and best-fit eligible renewable energy resources to comply with the program obligations include procurement of specific types of eligible renewable energy resources necessary to maintain the reliability of the electrical grid to meet electrical demand on a 24-hour basis, consider the attributes of utilizing geothermal resources, as specified, and consider eligible renewable energy resources in the area of the Salton Sea that provide additional environmental benefits that should be encouraged to meet the state’s mitigation requirements for the region. The bill would revise the portfolio content requirements.

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Existing law requires that a renewable energy procurement plan submitted by an electrical corporation to the commission include specified matter, including an assessment of annual or multiyear portfolio supplies and demand to determine the optimal mix of eligible renewable energy resources with deliverability characteristics.

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This bill would additionally require that the renewable energy procurement plan submitted by an electrical corporation to the commission identify each source of supply by resource type and detail how the mix of resources will maintain reliability of the electrical grid throughout each 24-hour period. The bill would require each electrical corporation, in soliciting and procuring eligible renewable energy resources, to give preference to resource types that will contribute toward ensuring a balanced resource mix that maintains reliability of the electrical grid throughout each 24-hour period without increasing consumption of fossil fuels.

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Existing law authorizes the commission to waive compliance with the renewables portfolio standard for a retail seller if the commission finds that the retail seller has demonstrated specified conditions are beyond the control of the retail seller that will prevent compliance.

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This bill would revise certain criteria the commission considers when determining whether to waive compliance with the renewables portfolio standard.

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Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

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Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by expanding what is a crime.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Existing law requires every air pollution control and air quality management district board to establish a system by which all reductions in the emission of air contaminants that are to be used to offset certain future increases in the emission of air contaminants to be banked prior to use to offset future increases in emissions. Existing law designates the State Air Resources Board as the responsible agency for the preparation of the state implementation plan required by the federal Clean Air Act.

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This bill would prohibit every air pollution control and air quality management district that has established an emission reduction credit program, as specified, from imposing any conditions to physically destroy existing equipment that may be currently operating or not operating that is or will be retired at an electrical generation facility unless the owner or operator retires that equipment to provide emission reduction credits, emission offsets, or an offset exemption from the district or the new source review program of the federal Clean Air Act otherwise requires. By imposing new duties on air pollution control and air quality management districts, this bill would impose a state-mandated local program.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 399.11 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

399.11.  

The Legislature finds and declares all of the following:

(a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from eligible renewable
energy resources by December 31, 2013, and 33 percent by
December 31, 2020, it is the intent of the Legislature that the
commission and the Energy Commission implement the California
Renewables Portfolio Standard Program described in this article.

(b) Achieving the renewables portfolio standard through the
procurement of various electricity products begin delete from end delete begin insert representing a
balanced mix of end insert eligible renewable energy resources is intended
to provide unique benefits to California, including all of the
following, each of which independently justifies the program:

(1) Displacing fossil fuel consumption within the state.

(2) Adding new electrical generating facilities in the
transmission network within the Western Electricity Coordinating
Council service area.

(3) Reducing air pollution in the state.

(4) Meeting the state’s climate change goals by reducing
emissions of greenhouse gases associated with electrical generation.

(5) Promoting stable retail rates for electric service.

(6) Meeting the state’s need for a diversified and balanced
energy generation portfolio.

(7) Assistance with meeting the state’s resource adequacy
requirements begin insert in both the near and long term end insert .

(8) Contributing to the safe and reliable operation of the
electrical grid, including providing predictable electrical supply,
voltage support, lower line losses, and congestion relief begin insert , and
ensuring resource availability and characteristics that match the
demand for electricity end insert .

(9) Implementing the state’s transmission and land use planning
activities related to development of eligible renewable energy
resources.

(c) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the Energy Commission and established pursuant
to Chapter 8.6 (commencing with Section 25740) of Division 15
of the Public Resources Code.

(d) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.

(e) (1) Supplying electricity to California end-use customers
that is generated by eligible renewable energy resources is
necessary to improve California’s air quality and public health,
and the commission shall ensure rates are just and reasonable, and
are not significantly affected by the procurement requirements of
this article. This electricity may be generated anywhere in the
interconnected grid that includes many states, and areas of both
Canada and Mexico.

(2) This article requires generating resources located outside of
California that are able to supply that electricity to California
end-use customers to be treated identically to generating resources
located within the state, without discrimination.

(3) California electrical corporations have already executed,
and the commission has approved, power purchase agreements
with eligible renewable energy resources located outside of
California that will supply electricity to California end-use
customers. These resources will fully count toward meeting the
renewables portfolio standard procurement requirements. In
addition, there are nearly 7,000 megawatts of additional proposed
renewable energy resources located outside of California that are
awaiting interconnection approval from the Independent System
Operator. All of these resources, if procured, will count as eligible
renewable energy resources that satisfy the portfolio content
requirements of paragraph (1) of subdivision (c) of Section 399.16.

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begin insert SEC. 2. end insert   

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begin insert Section 399.13 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

399.13.  

(a) (1) The commission shall direct each electrical
corporation to annually prepare a renewable energy procurement
plan that includes the matter in paragraph (5), to satisfy its
obligations under the renewables portfolio standard. To the extent
feasible, this procurement plan shall be proposed, reviewed, and
adopted by the commission as part of, and pursuant to, a general
procurement plan process. The commission shall require each
electrical corporation to review and update its renewable energy
procurement plan as it determines to be necessary.

(2) Every electrical corporation that owns electrical transmission
facilities shall annually prepare, as part of the Federal Energy
Regulatory Commission Order 890 process, and submit to the
commission, a report identifying any electrical transmission
facility, upgrade, or enhancement that is reasonably necessary to
achieve the renewables portfolio standard procurement
requirements of this article. Each report shall look forward at least
five years and, to ensure that adequate investments are made in a
timely manner, shall include a preliminary schedule when an
application for a certificate of public convenience and necessity
will be made, pursuant to Chapter 5 (commencing with Section
1001), for any electrical transmission facility identified as being
reasonably necessary to achieve the renewable energy resources
procurement requirements of this article. Each electrical
corporation that owns electrical transmission facilities shall ensure
that project-specific interconnection studies are completed in a
timely manner.

(3) The commission shall direct each retail seller to prepare and
submit an annual compliance report that includes all of the
following:

(A) The current status and progress made during the prior year
toward procurement of eligible renewable energy resources as a
percentage of retail sales, including, if applicable, the status of any
necessary siting and permitting approvals from federal, state, and
local agencies for those eligible renewable energy resources
procured by the retail seller, and the current status of compliance
with the portfolio content requirements of subdivision (c) of
Section 399.16, including procurement of eligible renewable energy
resources located outside the state and within the WECC and
unbundled renewable energy credits.

(B) If the retail seller is an electrical corporation, the current
status and progress made during the prior year toward construction
of, and upgrades to, transmission and distribution facilities and
other electrical system components it owns to interconnect eligible
renewable energy resources and to supply the electricity generated
by those resources to load, including the status of planning, siting,
and permitting transmission facilities by federal, state, and local
agencies.

(C) Recommendations to remove impediments to making
progress toward achieving the renewable energy resources
procurement requirements established pursuant to this article.

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(D) The current status of the retail seller’s procurement to
ensure a balanced mix of eligible renewable energy resources
required to maintain the reliability of the electrical grid without
increasing fossil fuel consumption.

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(4) The commission shall adopt, by rulemaking, all of the
following:

(A) A process that provides criteria for the rank ordering and
begin delete selection end delete begin insert selecting end insert of least-cost and best-fit eligible renewable
energy resources to comply with the California Renewables
Portfolio Standard Program obligations on a total cost basis. This
process shall take into account all of the following:

(i) Estimates of indirect costs associated with needed
transmission investments and ongoing electrical corporation
expenses resulting from integrating and operating eligible
renewable energy resources.

(ii) The cost impact of procuring the eligible renewable energy
resources on the electrical corporation’s electricity portfolio.

(iii) The viability of the project to construct and reliably operate
the eligible renewable energy resource, including the developer’s
experience, the feasibility of the technology used to generate
electricity, and the risk that the facility will not be built, or that
construction will be delayed, with the result that electricity will
not be supplied as required by the contract.

(iv) Workforce recruitment, training, and retention efforts,
including the employment growth associated with the construction
and operation of eligible renewable energy resources and goals
for recruitment and training of women, minorities, and disabled
veterans.

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(v) Procurement of specific types of eligible renewable energy
resources necessary to maintain the reliability of the electrical
grid to meet electrical demand on a 24-hour basis, including
identifying the eligible renewable energy resources by type and
operating characteristics.

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(vi) Consideration of the attributes of utilizing geothermal
resources, including their system inertia, small footprint in terms
of surface land requirements, habitat and other environmental
impacts, their ability to provide baseload generation while
reducing emissions resulting from the burning of fossil fuels in an
air basin designated as including a federal extreme nonattainment
area, and their ability to act as a hedge against fuel price increases
to ensure a balanced portfolio.

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(vii) Consideration of eligible renewable energy resources in
the area of the Salton Sea that provide additional environmental
benefits that should be encouraged to meet the state’s mitigation
requirements for the region.

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(B) Rules permitting retail sellers to accumulate, beginning
January 1, 2011, excess procurement in one compliance period to
be applied to any subsequent compliance period. The rules shall
apply equally to all retail sellers. In determining the quantity of
excess procurement for the applicable compliance period, the
commission shall deduct from actual procurement quantities, the
total amount of procurement associated with contracts of less than
10 years in duration. In no event shall electricity products meeting
the portfolio content of paragraph (3) of subdivision (b) of Section
399.16 be counted as excess procurement.

(C) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource, at a minimum, shall include the
renewable energy credits associated with all electricity generation
specified under the contract. The standard terms and conditions
shall include the requirement that, no later than six months after
the commission’s approval of an electricity purchase agreement
entered into pursuant to this article, the following information
about the agreement shall be disclosed by the commission: party
names, resource type, project location, and project capacity.

(D) An appropriate minimum margin of procurement above the
minimum procurement level necessary to comply with the
renewables portfolio standard to mitigate the risk that renewable
projects planned or under contract are delayed or canceled begin insert or to
achieve the required balanced mix of eligible renewable energy
resources end insert . This paragraph does not preclude an electrical
corporation from voluntarily proposing a margin of procurement
above the appropriate minimum margin established by the
commission.

(5) Consistent with the goal of increasing California’s reliance
on eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall
include all of the following:

(A) An assessment of annual or multiyear portfolio supplies
and demand to determine the optimal mix of eligible renewable
energy resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity begin insert ,
with identification of each source of supply by resource type and
detail on how the mix of resources will maintain reliability of the
electrical grid throughout each 24-hour period end insert .

(B) Potential compliance delays related to the conditions
described in paragraph (4) of subdivision (b) of Section 399.15.

(C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.

(D) A status update on the development schedule of all eligible
renewable energy resources currently under contract.

(E) Consideration of mechanisms for price adjustments
associated with the costs of key components for eligible renewable
energy resource projects with online dates more than 24 months
after the date of contract execution.

(F) An assessment of the risk that an eligible renewable energy
resource will not be built, or that construction will be delayed,
with the result that electricity will not be delivered as required by
the contract.

(6) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years duration, unless the commission approves of a
contract of shorter duration.

(7) In soliciting and procuring eligible renewable energy
resources for California-based projects, each electrical corporation
shall give preference to renewable energy projects that provide
environmental and economic benefits to communities afflicted
with poverty or high unemployment, or that suffer from high
emission levels of toxic air contaminants, criteria air pollutants,
and greenhouse gases.

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(8) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall give preference to
resource types that will contribute toward ensuring a balanced
resource mix that maintains reliability of the electrical grid
throughout each 24-hour period without increasing consumption
of fossil fuels.

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(b) A retail seller may enter into a combination of long- and
short-term contracts for electricity and associated renewable energy
credits. The commission may authorize a retail seller to enter into
a contract of less than 10 years’ duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources
to be procured through contracts of at least 10 years’ duration.

(c) The commission shall review and accept, modify, or reject
each electrical corporation’s renewable energy resource
procurement plan prior to the commencement of renewable energy
procurement pursuant to this article by an electrical corporation.

(d) Unless previously preapproved by the commission, an
electrical corporation shall submit a contract for the generation of
an eligible renewable energy resource to the commission for review
and approval consistent with an approved renewable energy
resource procurement plan. If the commission determines that the
bid prices are elevated due to a lack of effective competition among
the bidders, the commission shall direct the electrical corporation
to renegotiate the contracts or conduct a new solicitation.

(e) If an electrical corporation fails to comply with a commission
order adopting a renewable energy resource procurement plan, the
commission shall exercise its authority pursuant to Section 2113
to require compliance. The commission shall enforce comparable
penalties on any retail seller that is not an electrical corporation
that fails to meet the procurement targets established pursuant to
Section 399.15.

(f) (1) The commission may authorize a procurement entity to
enter into contracts on behalf of customers of a retail seller for
electricity products from eligible renewable energy resources to
satisfy the retail seller’s renewables portfolio standard procurement
requirements. The commission shall not require any person or
corporation to act as a procurement entity or require any party to
purchase eligible renewable energy resources from a procurement
entity.

(2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and
are directly benefiting from the procurement of eligible renewable
energy resources.

(g) Procurement and administrative costs associated with
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article and approved
by the commission are reasonable and prudent and shall be
recoverable in rates.

(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives, are “public works” for the purposes
of Chapter 1 (commencing with Section 1720) of Part 7 of Division
2 of the Labor Code.

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begin insert SEC. 3. end insert   

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begin insert Section 399.15 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

399.15.  

(a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all retail sellers to procure a minimum quantity of
electricity products from eligible renewable energy resources as
a specified percentage of total kilowatthours sold to their retail
end-use customers each compliance period to achieve the targets
established under this article. For any retail seller procuring at least
14 percent of retail sales from eligible renewable energy resources
in 2010, the deficits associated with any previous renewables
portfolio standard shall not be added to any procurement
requirement pursuant to this article.

(b) The commission shall implement renewables portfolio
standard procurement requirements only as follows:

(1) Each retail seller shall procure a minimum quantity of
eligible renewable energy resources for each of the following
compliance periods:

(A) January 1, 2011, to December 31, 2013, inclusive.

(B) January 1, 2014, to December 31, 2016, inclusive.

(C) January 1, 2017, to December 31, 2020, inclusive.

(2) (A) No later than January 1, 2012, the commission shall
establish the quantity of electricity products from eligible
renewable energy resources to be procured by the retail seller for
each compliance period. These quantities shall be established in
the same manner for all retail sellers and result in the same
percentages used to establish compliance period quantities for all
retail sellers.

(B) In establishing quantities for the compliance period from
January 1, 2011, to December 31, 2013, inclusive, the commission
shall require procurement for each retail seller equal to an average
of 20 percent of retail sales. For the following compliance periods,
the quantities shall reflect reasonable progress in each of the
intervening years sufficient to ensure that the procurement of
electricity products from eligible renewable energy resources
achieves 25 percent of retail sales by December 31, 2016, and 33
percent of retail sales by December 31, 2020. The commission
shall require retail sellers to procure not less than 33 percent of
retail sales of electricity products from eligible renewable energy
resources in all subsequent years.

(C) Retail sellers shall be obligated to procure no less than the
quantities associated with all intervening years by the end of each
compliance period. Retail sellers shall not be required to
demonstrate a specific quantity of procurement for any individual
intervening year.

(3) The commission shall not require the procurement of eligible
renewable energy resources in excess of the quantities identified
in paragraph (2) begin insert , except to the extent necessary to ensure a
balanced mix of eligible renewable energy resources with attributes
necessary to ensure an adequate and reliable supply of electrical
generation from eligible renewable energy resources that best
matches the demand for electricity and maintains the reliability
of the electrical grid end insert . A retail seller may voluntarily increase its
procurement of eligible renewable energy resources beyond the
renewables portfolio standard procurement requirements.

(4) Only for purposes of establishing the renewables portfolio
standard procurement requirements of paragraph (1) and
determining the quantities pursuant to paragraph (2), the
commission shall include all electricity sold to retail customers by
the Department of Water Resources pursuant to Division 27
(commencing with Section 80000) of the Water Code in the
calculation of retail sales by an electrical corporation.

(5) The commission shall waive enforcement of this section if
it finds that the retail seller has demonstrated any of the following
conditions are beyond the control of the retail seller and will
prevent compliance:

(A) There is inadequate transmission capacity to allow for
sufficient electricity to be delivered from proposed eligible
renewable energy resource projects using the current operational
protocols of the Independent System Operator. In making its
findings relative to the existence of this condition with respect to
a retail seller that owns transmission lines, the commission shall
consider both of the following:

(i) Whether the retail seller has undertaken, in a timely fashion,
reasonable measures under its control and consistent with its
obligations under local, state, and federal laws and regulations, to
develop and construct new transmission lines or upgrades to
existing lines intended to transmit electricity generated by eligible
renewable energy resources. In determining the reasonableness of
a retail seller’s actions, the commission shall consider the retail
seller’s expectations for full-cost recovery for these transmission
lines and upgrades.

(ii) Whether the retail seller has taken all reasonable operational
measures to maximize cost-effective deliveries of electricity from
eligible renewable energy resources in advance of transmission
availability.

(B) Permitting, interconnection, or other circumstances that
delay procured eligible renewable energy resource projects, or
there is an insufficient supply of eligible renewable energy
resources available to the retail seller. In making a finding that this
condition prevents timely compliance, the commission shall
consider whether the retail seller has done all of the following:

(i) Prudently managed portfolio risks, including relying on a
sufficient number of viable projects begin insert and end insert begin insert procuring a sufficiently
balanced mix of different types of eligible renewable energy
resources with characteristics sufficient to maintain reliability of
the electrical grid, including system inertia end insert .

(ii) Sought to develop one of the following: its own eligible
renewable energy resources, transmission to interconnect to eligible
renewable energy resources, or energy storage used to integrate
eligible renewable energy resources. This clause shall not require
an electrical corporation to pursue development of eligible
renewable energy resources pursuant to Section 399.14.

(iii) Procured an appropriate minimum margin of procurement
above the minimum procurement level necessary to comply with
the renewables portfolio standard to compensate for foreseeable
delays or insufficient supply.

(iv) Taken reasonable measures, under the control of the retail
seller, to procure cost-effective distributed generation and allowable
unbundled renewable energy credits.

(C) Unanticipated curtailment of eligible renewable energy
resources necessary to address the needs of a balancing authority begin insert ,
but only to the extent that the retail seller has demonstrated that
it has procured a balanced mix of different resource types with
characteristics sufficient to maintain reliability of the electrical
grid end insert begin insert , including system inertia end insert .

(6) If the commission waives the compliance requirements of
this section, the commission shall establish additional reporting
requirements on the retail seller to demonstrate that all reasonable
actions under the control of the retail seller are taken in each of
the intervening years sufficient to satisfy future procurement
requirements.

(7) The commission shall not waive enforcement pursuant to
this section, unless the retail seller demonstrates that it has taken
all reasonable actions under its control, as set forth in paragraph
(5), to achieve full compliance.

(8) If a retail seller fails to procure sufficient eligible renewable
energy resources to comply with a procurement requirement
pursuant to paragraphs (1) and (2) and fails to obtain an order from
the commission waiving enforcement pursuant to paragraph (5),
the commission shall exercise its authority pursuant to Section
2113.

(9) Deficits associated with the compliance period shall not be
added to a future compliance period.

(c) The commission shall establish a limitation for each electrical
corporation on the procurement expenditures for all eligible
renewable energy resources used to comply with the renewables
portfolio standard. In establishing this limitation, the commission
shall rely on the following:

(1) The most recent renewable energy procurement plan.

(2) Procurement expenditures that approximate the expected
cost of building, owning, and operating eligible renewable energy
resources.

(3) The potential that some planned resource additions may be
delayed or canceled.

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(4) The amount of additional eligible renewable energy
resources of specific characteristics required to be procured to
ensure reliability of the electrical grid.

end insert

(d) In developing the limitation pursuant to subdivision (c), the
commission shall ensure all of the following:

(1) The limitation is set at a level that prevents disproportionate
rate impacts.

(2) The costs of all procurement credited toward achieving the
renewables portfolio standard are counted towards the limitation.

(3) Procurement expenditures do not include any indirect
expenses, including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, transmission
upgrades, or the costs associated with relicensing any utility-owned
hydroelectric facilities.

(e) (1) No later than January 1, 2016, the commission shall
prepare a report to the Legislature assessing whether each electrical
corporation can achieve a 33-percent renewables portfolio standard
by December 31, 2020, and maintain that level thereafter, within
the adopted cost limitations. If the commission determines that it
is necessary to change the limitation for procurement costs incurred
by any electrical corporation after that date, it may propose a
revised cap consistent with the criteria in subdivisions (c) and (d).
The proposed modifications shall take effect no earlier than January
1, 2017.

(2) Notwithstanding Section 10231.5 of the Government Code,
the requirement for submitting a report imposed under paragraph
(1) is inoperative on January 1, 2021.

(3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

(f) If the cost limitation for an electrical corporation is
insufficient to support the projected costs of meeting the
renewables portfolio standard procurement requirements, the
electrical corporation may refrain from entering into new contracts
or constructing facilities beyond the quantity that can be procured
within the limitation, unless eligible renewable energy resources
can be procured without exceeding a de minimis increase in rates,
consistent with the long-term procurement plan established for the
electrical corporation pursuant to Section 454.5.

(g) (1) The commission shall monitor the status of the cost
limitation for each electrical corporation in order to ensure
compliance with this article.

(2) If the commission determines that an electrical corporation
may exceed its cost limitation prior to achieving the renewables
portfolio standard procurement requirements, the commission shall
do both of the following within 60 days of making that
determination:

(A) Investigate and identify the reasons why the electrical
corporation may exceed its annual cost limitation.

(B) Notify the appropriate policy and fiscal committees of the
Legislature that the electrical corporation may exceed its cost
limitation, and include the reasons why the electrical corporation
may exceed its cost limitation.

(h) The establishment of a renewables portfolio standard shall
not constitute implementation by the commission of the federal
Public Utility Regulatory Policies Act of 1978 (Public Law
95-617).

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begin insert SEC. 4. end insert   

end insert

begin insert Section 399.16 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

399.16.  

(a) Various electricity products begin insert , with various
characteristics, end insert from eligible renewable energy resources located
within the WECC transmission network service area shall be
eligible to comply with the renewables portfolio standard
procurement requirements in Section 399.15. These electricity
products begin insert and characteristics, including system inertia, end insert may be
differentiated by their impacts on the operation of the begin insert electrical end insert
grid in supplying electricity begin insert and maintaining the reliability of the
electrical grid end insert , as well as, meeting the requirements of this article.

(b) Consistent with the goals of procuring the least-cost and
best-fit electricity products from eligible renewable energy
resources that meet project viability principles adopted by the
commission pursuant to paragraph (4) of subdivision (a) of Section
399.13 and that provide the benefits set forth in Section 399.11, a
balanced portfolio of eligible renewable energy resources shall be
procured consisting of the following portfolio content categories
begin insert and characteristics end insert :

(1) Eligible renewable energy resource electricity products that
meet begin delete either end delete begin insert any end insert of the following criteria:

(A) Have a first point of interconnection with a California
balancing authority, have a first point of interconnection with
distribution facilities used to serve end users within a California
balancing authority area, or are scheduled from the eligible
renewable energy resource into a California balancing authority
without substituting electricity from another source. The use of
another source to provide real-time ancillary services required to
maintain an hourly or subhourly import schedule into a California
balancing authority shall be permitted, but only the fraction of the
schedule actually generated by the eligible renewable energy
resource shall count toward this portfolio content category.

(B) Have an agreement to dynamically transfer electricity to a
California balancing authority.

begin insert

(C) Have characteristics that are capable of providing a diverse
and balanced mix of eligible renewable energy resources that can
contribute to maintaining reliability of the electrical grid to meet
the demand for electricity in every 24-hour period and can include
electrical generation produced on an as-available, firm,
dispatchable, or ramping basis, providing system inertia benefits,
whether from the generating facility alone or in combination with
additional technologies, including energy storage.

end insert

(2) Firmed and shaped eligible renewable energy resource
electricity products providing incremental electricity and scheduled
into a California balancing authority.

(3) Eligible renewable energy resource electricity products, or
any fraction of the electricity generated, including unbundled
renewable energy credits, that do not qualify under the criteria of
paragraph (1) or (2).

(c) In order to achieve a balanced portfolio, all retail sellers
shall meet the following requirements for all procurement credited
toward each compliance period:

(1) Not less than 50 percent for the compliance period ending
December 31, 2013, 65 percent for the compliance period ending
December 31, 2016, and 75 percent thereafter of the eligible
renewable energy resource electricity products associated with
contracts executed after June 1, 2010, shall meet the product
content requirements of paragraph (1) of subdivision (b).

(2) Not more than 25 percent for the compliance period ending
December 31, 2013, 15 percent for the compliance period ending
December 31, 2016, and 10 percent thereafter of the eligible
renewable energy resource electricity products associated with
contracts executed after June 1, 2010, shall meet the product
content requirements of paragraph (3) of subdivision (b).

(3) Any renewable energy resources contracts executed on or
after June 1, 2010, not subject to the limitations of paragraph (1)
or (2), shall meet the product content requirements of paragraph
(2) of subdivision (b).

(4) For purposes of electric service providers only, the
restrictions in this subdivision on crediting eligible renewable
energy resource electricity products to each compliance period
shall apply to contracts executed after January 13, 2011.

(d) Any contract or ownership agreement originally executed
prior to June 1, 2010, shall count in full toward the procurement
requirements established pursuant to this article, if all of the
following conditions are met:

(1) The renewable energy resource was eligible under the rules
in place as of the date when the contract was executed.

(2) For an electrical corporation, the contract has been approved
by the commission, even if that approval occurs after June 1, 2010.

(3) Any contract amendments or modifications occurring after
June 1, 2010, do not increase the nameplate capacity or expected
quantities of annual generation, or substitute a different renewable
energy resource. The duration of the contract may be extended if
the original contract specified a procurement commitment of 15
or more years.

(e) A retail seller may apply to the commission for a reduction
of a procurement content requirement of subdivision (c). The
commission may reduce a procurement content requirement of
subdivision (c) to the extent the retail seller demonstrates that it
cannot comply with that subdivision because of conditions beyond
the control of the retail seller as provided in paragraph (5) of
subdivision (b) of Section 399.15. The commission shall not, under
any circumstance, reduce the obligation specified in paragraph (1)
of subdivision (c) below 65 percent for any compliance obligation
after December 31, 2016.

begin insert

begin insert SEC. 5. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin delete

SECTION 1.  

Section 40709.8 is added to the Health and Safety
Code, to read:

40709.8.  

A district that has established a system pursuant to
Section 40709 by which reductions in emissions may be banked
or otherwise credited to offset future increases in the emissions of
air contaminants, or that utilizes a calculation method that enables
internal emissions reductions to be credited against increases in
emissions, shall not impose any conditions to physically destroy
existing equipment that may be currently operating or not operating
that is or will be retired at an electrical generation facility unless
either of the following applies:

(a) The owner or operator retires that equipment to provide
emission reduction credits, emission offsets, or an offset exemption
from the district.

(b) The new source review program of the federal Clean Air
Act (42 U.S.C. Sec. 7401 et seq.) requires the imposition of such
a condition.

end delete

begin delete

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
a local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.

end delete