BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1139| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED SB 1139 Page 2 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. SB 1139 Page 3 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 SB 1139 Page 4 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 SB 1139 Page 5 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 SB 1139 Page 6 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 **** END ****