BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                       SB 1139|
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                                    THIRD READING


          Bill No:  SB 1139
          Author:   Hueso (D)
          Amended:  05/27/14
          Vote:     21

           
           SENATE ENERGY, UTILITIES & COMMUNICATIONS COMM  :  6-2, 4/29/14
          AYES:  Padilla, Block, Corbett, DeSaulnier, Hill, Wolk
          NOES:  Fuller, Knight
          NO VOTE RECORDED:  Cannella, De León, Pavley

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/23/14
          AYES:  De León, Hill, Lara, Padilla, Steinberg
          NOES:  Walters, Gaines


           SUBJECT  :    California Renewables Portfolio Standard Program

           SOURCE  :     Author


           DIGEST  :    This bill requires that retail sellers procure a  
          statewide total of 500 megawatts (MW) of electricity generated  
          by new geothermal powerplants by December 31, 2024.

           ANALYSIS  :    Existing law:

          1.Requires investor-owned utilities, community choice  
            aggregators, and energy service providers (collectively  
            defined as retail sellers), and local publicly owned electric  
            utilities, 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  
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            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. 

          2.Defines as the Renewables Portfolio Standard (RPS) eligible,  
            electric generation resources from biomass, solar thermal,  
            photovoltaic, wind, geothermal, fuel cells using renewable  
            fuels, small hydroelectric generation of 30 MWs or less,  
            digester gas, landfill gas, ocean wave, ocean thermal, tidal  
            current, and municipal solid waste conversion that uses a  
            non-combustion thermal process to convert solid waste to a  
            clean-burning fuel.

          3.Requires investor-owned utilities to procure at least 250 MWs  
            of renewable generating capacity from bioenergy projects  
            including 110 MWs from wastewater treatment, municipal organic  
            waste diversion, food processing and codigestion; 90 MWs from  
            dairy and other agriculture bioenergy; and 50 MWs from  
            generation using byproducts of sustainable forest management. 

          4.Establishes the Geothermal Resources Development Account into  
            which federal revenues are deposited to fund grants to  
            eligible local jurisdictions and private entities for projects  
            and activities that promote development geothermal energy  
            resources, mitigate any adverse impacts caused by geothermal  
            development, or help local jurisdictions offset the costs of  
            providing public services necessitated by geothermal  
            development.  
           
           This bill:

          1.Requires, no later than December 31, 2024, each retail seller  
            shall procure a proportionate share of a statewide total of  
            500 megawatts of electricity generated by baseload geothermal  
            powerplants that began being constructed after January 1,  
            2015. 

          2.Requires, no later than June 30, 2015, the Energy Commission  
            (Commission) determine the proportionate share of the 500  
            megawatts of electricity that each retail seller is required  
            to procure.  Specifies "proportionate share" shall be based on  
            the forecast retail sales for the year 2018.








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          3.Requires, no later than January 1, 2016, each retail seller  
            file with the Commission a plan for complying with this bill.   
            Requires those plans require each retail seller to procure at  
            least one-half of its proportionate share by December 31,  
            2019. Those plans may authorize a retail seller to aggregate  
            its proportionate share with the proportionate share of  
            another retail seller in order to minimize administrative and  
            contracting costs. The commission shall review and approve,  
            modify, or reject plans filed by retail sellers.

          4.Specifies the electricity procured pursuant to this bill not  
            count towards meeting the requirements specified in the  
            California Renewables Portfolio Standard Program.

           Background
           
          Geothermal energy is defined as heat from the Earth. It is a  
          clean, renewable resource that provides energy in the United  
          States and around the world in a variety of applications and  
          resources.  Although areas with telltale signs like hot springs  
          are more obvious and are often the first places geothermal  
          resources are used, the heat of the Earth is available  
          everywhere, and the industry reports that it is learning to use  
          it in a broader diversity of circumstances. It is considered a  
          renewable resource because the heat emanating from the interior  
          of the Earth is essentially limitless.  A geothermal system  
          requires heat, permeability, and water.  The heat from the  
          Earth's core continuously flows outward. Sometimes the heat, as  
          magma, reaches the surface as lava, but it usually remains below  
          the Earth's crust, heating nearby rock and water, sometimes to  
          levels as hot as 700?F.  When water is heated by the Earth's  
          heat, hot water or steam can be trapped in permeable and porous  
          rocks under a layer of impermeable rock and a geothermal  
          reservoir can form.  This hot geothermal water can manifest  
          itself on the surface as hot springs or geysers, but most of it  
          stays deep underground, trapped in cracks and porous rock.  This  
          natural collection of hot water is called a geothermal  
          reservoir. 

          To develop electricity from geothermal resources, wells are  
          drilled into a geothermal reservoir. The wells bring the  
          geothermal water to the surface, where its heat energy is  
          converted into electricity at a geothermal power plant.  The  
          Geysers in Lake County are typical of geothermal generation and  







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          are dry steam power plants where steam is produced directly from  
          the geothermal reservoir to run the turbines that power the  
          generator, and no separation is necessary because wells only  
          produce steam.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          According to the Senate Appropriations Committee:

           Ongoing costs of $155,000 annually from the Public Utilities  
            Commission Utilities Reimbursement Account (special) to the  
            California Public Utilities Commission for staff to review and  
            approve geothermal procurement plants for retail sellers and  
            to oversee compliance.

           Onetime costs of $272,000 annually from the General Fund to  
            the California Energy Commission for at least one year for the  
            development of regulations to determine proportionate shares  
            of the procurement requirement.

           Ongoing costs in the low millions of dollars from the General  
            Fund and various special funds for increased electricity costs  
            for electricity used by the state.

           SUPPORT  :   (Verified  5/28/14)

          Blue Green Alliance
          Board of Supervisors - Imperial County
          Board of Supervisors - Riverside County
          CA State Association of Electrical Workers
          Cal Energy
          California State Council of Laborers
          City of Imperial
          City of Indio
          Coachella Valley Economic Partnership
          County of Imperial
          Defenders of Wildlife
          Desert Valleys Builders Association
          Enel Green Power North America
          Energy Source
          Environment California
          Geothermal Energy Association
          Greater Palm Springs Convention & Visitors Bureau







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          GreenFire Energy
          Imperial County Building Construction Trades Council
          Imperial County Workforce Development
          Imperial Irrigation District
          Imperial Valley Economic Development Corporation
          Imperial Valley Regional Occupational Program
          Latino Water Coalition
          Light Source Renewables
          MidAmerican Renewables
          National Electrical Contractors Association
          Ormat
          Salton Sea Authority
          Sierra Club California
          U.S. Geothermal Inc.
          
           OPPOSITION  :    (Verified  5/28/14)

          Board of Supervisors - Lassen County
          California Biomass Energy Alliance
          California Chamber of Commerce
          California Manufacturers & Technology Association
          California Wind Energy Association
          City of Los Angeles
          City of Los Angeles Department of Water and Power
          M-S-R Public Power Agency
          Office of Ratepayer Advocates
          Pacific Gas & Electric
          Sacramento Municipal Utilities District
          San Diego Gas & Electric
          Southern California Edison
          Southern California Public Power Authority

           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          California and the Western United States have uniquely high  
          quality solar and geothermal resources.  California utilities  
          are dramatically increasing their utilization of solar  
          resources, but not effectively increasing utilization of  
          geothermal resources. In fact, only a fraction of the geothermal  
          resources that could be supplying California consumers are  
          currently being tapped, and there has been very little increase  
          in geothermal generation capacity during the past decade.  For  
          example, the Salton Sea Known Geothermal Resource Area, which  
          provides one of the greatest opportunities for geothermal energy  
          development in the United States, is currently producing less  







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          than 500 MWs of power.  The remaining untapped generation  
          capacity at this resource is estimated to be at 1,700 MWs.  This  
          is a wasted opportunity of such a valuable resource.  The long  
          term electric supply portfolio serving California consumers  
          should include much greater reliance on geothermal resources so  
          that we have a balanced portfolio as we move toward a  
          carbon-free generation supply.

           ARGUMENTS IN OPPOSITION  :    The California Chamber of Commerce  
          states in opposition that, "Creating an additional mandate of  
          500 MW of geothermal resources, in addition to the RPS is not a  
          sound method for creating an affordable and reliable energy  
          supply.  When generation from an individual resource does not  
          have to compete against other resources, the result will likely  
          be a higher cost, which will increase rates throughout the  
          state."  
           

          JG:nl  5/28/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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