BILL ANALYSIS Ó
SB 1139
Page 1
SENATE THIRD READING
SB 1139 (Hueso)
As Amended August 22, 2014
Majority vote
SENATE VOTE :21-11
UTILITIES & COMMERCE 8-5 NATURAL
RESOURCES 6-2
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|Ayes:|Bradford, Bonilla, |Ayes:|Chesbro, Garcia, |
| |Buchanan, Fong, Roger | |Muratsuchi, Skinner, |
| |Hernández, Mullin, | |Stone, Williams |
| |Rendon, Skinner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Patterson, Chávez, Dahle, |Nays:|Dahle, Patterson |
| | | | |
| |Beth Gaines, Jones | | |
| | | | |
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APPROPRIATIONS 9-5
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Gomez, | | |
| |Holden, Pan, | | |
| |Ridley-Thomas, Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bigelow, Donnelly, Jones, | | |
| |Linder, Wagner | | |
| | | | |
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SUMMARY : Mandates that retail sellers procure a proportionate
share of a statewide total of 500 megawatts (MWs) of electricity
generated by baseload geothermal powerplants constructed after
January 1, 2015. Specifically, this bill :
1)Requires, no later than December 31, 2024, each retail seller
of electricity to procure a proportionate share, as determined
by the California Public Utilities Commission (PUC), of a
statewide total of 500 MWs of electricity generated by
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baseload geothermal powerplants.
2)Requires that no later than January 1, 2016, each retail
seller file a plan for complying with the mandate with the
California Public Utilities Commission (PUC).
3)Requires each retail seller to procure at least one-half of
its proportionate share by December 31, 2019, and the full
allotment by December 31, 2024. 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.
4)Requires projects generating electricity procured demonstrate
an environmental benefit to California.
5)States that PUC shall review and approve, modify, or reject
plans filed by retail sellers.
6)Authorizes the PUC to determine whether this mandate shall
count toward meeting the requirements of the California
Renewable Portfolio Standard (RPS).
7)Requires the PUC, no later than July 1, 2015, to issue an
order instituting an investigation to examine the expiration
of power purchase agreements between retail sellers and
existing geothermal generation facilities.
8)Stipulates that electricity procured pursuant to this mandate
shall be procured to reasonably minimize costs.
9)Specifies that the PUC shall not approve a power purchase
agreement to procure electricity that would result in a
cumulative increase in the average rate for electricity paid
by the ratepayers of the retail seller of one percent or more.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs of $390,000 for two years from the Public
Utilities Reimbursement Account to the PUC to establish
proceedings and investigations necessary to implement the
procurement plan.
2)Ongoing costs of $125,000 annually from the Public Utilities
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Reimbursement Account to the PUC for staff to review and
approve geothermal procurement plants for retail sellers and
to oversee compliance.
3)Onetime costs of $272,000 annually from the General Fund to
the CEC for at least one year for the development of
regulations to determine proportionate shares of the
procurement requirement.
4)Potential ongoing costs from the General Fund and various
special funds for increased electricity costs for electricity
used by the state.
COMMENTS :
1)Geothermal projects in California: According to the CEC's Web
site, in-state electric generation has not grown. In fact,
between 2001 and 2013 generation averaged 13,000 gigawatt
hours. As of 2013, generation was estimated at 12,485
gigawatt hours. In-state generation capacity for geothermal
over the same time period ranged between 2,600 to 2,700
megawatts.
The PUC's analysis notes a report from the Geothermal Energy
Association which includes data on the quantity and capacity
of geothermal projects (on the supply-side) under development
in California. The report indicates there are approximately
31 geothermal projects under development for a total capacity
of an estimated 1,100 megawatts. It is unknown when these
projects will be completed and fully operational.
By the end of 2013, an estimated 17,400 MWs of RPS-eligible
renewable energy capacity were operating in California of
which approximately 15,500 MWs were sold to a utility or the
market (wholesale) and an additional 1,900 MWs was
self-generation. Of the 15,500 MWs of wholesale generation,
46 projects are geothermal resources and represent 2,782 MWs
of capacity which is 4.4% of generation capacity. However,
geothermal produces approximately 25% of the renewable
electricity supplied to California retail customers.
The distribution of the 46 online projects which serve
California load is:
a) Imperial County, 20 projects; 705 MWs;
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b) Inyo County, three projects; 302 MWs;
c) Lake County, six projects; 418 MWs;
d) Mono County, four projects; 54 MWs;
e) Sonoma County, 12 projects; 1,238 MWs; and
f) State of Nevada, one project; 65 MWs.
Projects under development include eight projects totaling 618
MWs have received environmental permits but are not yet
operational.
2)Existing Geothermal Projects with expiring contracts. Calpine
Corporation, owner and operator of 725 MWs at The Geysers
(geothermal energy resource located in Lake and Sonoma
Counties) claims this measure jeopardizes its ability to
recontract approximately 650 MW of existing geothermal
capacity due to expire between 2017 and 2021. Furthermore,
Calpine notes that it has made investments to develop and
permit two geothermal projects at The Geysers with project
labor agreements for each.
3)Programs that promote specific renewable technologies: This
bill mandates that no later than December 31, 2024, the
investor owned utilities (IOUs) procure a proportionate share
of a statewide total of 500 MW of electricity generated by
baseload geothermal powerplants constructed after January 1,
2015.
Opponents to this measure argue that it is bad public policy
to mandate procurement of a preferred renewable resource.
However, there are many "carve-out" programs for certain
renewable technologies created by the Legislature. These
policies were envisioned to incentivize market transformation
for emerging technologies where ratepayer funds may return
long-term benefits to all Californian's. The PUC's analysis
notes that geothermal technology, on the other hand, has been
commercially available for decades and may not reasonably be
considered an emerging technology. See information below
detailing the many "carve-out" programs for specific renewable
technologies:
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a) Self-Generation Incentive Program (SGIP). Approximately
483 projects totaling 1,583 MWs have been developed to date
in this program.
b) California Solar Initiative (CSI). Since its creation,
135,588 projects totaling 1,500 megawatts have been
developed.
c) Community Renewable Program provides mechanism where
customers can procure renewable generation for their home
or business. Authorized capacity is 600 MWs. Most of this
will not count toward the IOUs RPS requirements.
d) Energy Storage. Requires IOUs to procure 1,325
megawatts of storage by 2020 with installations no later
than 2024.
e) Bioenergy Feed-in Tariff. Requires the IOUs to procure
a combined total of 250 MWs from bioenergy projects.
Procurement must be from projects that are three MWs or
smaller that achieve operation after June 1, 2013. No
projects have been developed to date.
f) Combined Heat and Power (CHP), referred to as
cogeneration, is the simultaneous generation of useful heat
and electricity from a single fuel source. Two projects,
for a combined total of 103.68 MWs have been developed thus
far. Authorized capacity is 3,000 MWs.
g) Feed-in tariff (FiT)/Renewable Market Adjusting Tariff
(Re-MAT) program is a simplified procurement mechanism for
small renewable generators (three MWs or less) to sell
power to a utility at predefined terms and conditions. This
program applies to the IOUs. The first program period of
FiT/ReMAT program began in October 2013. No projects have
been developed to date. Authorized capacity is 500 MWs.
h) The Renewable Auction Mechanism (RAM) is a simplified
market-based procurement mechanism for renewable generation
projects greater than 3 MW and up to 20 MWs. The program
requires Pacific Gas and Electric Company, Southern
California Edison, and San Diego Gas and Electric to
procure a combined total of 1,330 MWs of renewable energy
over a three year period. The first RAM auction contracts
were approved in April 2012 Authorized capacity is 1,000
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MWs (PUC Decision D.10-12-048)
i) IOUs are required to offer Net Energy Metering (NEM)
until they reach a cap of 5% of the electrical
corporations' peak capacity. NEM projects are also exempt
from interconnection studies and costs.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0005281