BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 197 (Eduardo Garcia) - Public utilities: renewable resources.
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|Version: April 29, 2015 |Policy Vote: E., U., & C. 7 - 1 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: July 13, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: This bill modifies the Renewable Portfolio Standard
procurement process to require consideration of the statutory
greenhouse gas (GHG) emissions limit and grid reliability.
Fiscal
Impact:
Ongoing annual cost pressures of $226,000 from the Public
Utilities Reimbursement Account (special fund) for additional
review of procurement plans.
One-time cost pressures of $157,000 annually for two years to
the Public Utilities Reimbursement Account (special fund) for
a proceeding.
Annual cost pressures of $800,000 for five years to the Public
Utilities Reimbursement Account (special fund) to hire
consultants for modeling and analysis.
Background: Existing law requires retail sellers of electricity -
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investor-owned utilities (IOUs), community choice aggregators,
and energy service providers- and publically owned utilities
(POUs) to increase purchase of renewable energy such that at
least 33 percent of the retail sales are procured from renewable
energy resources by December 31, 2020. This requirement is
phased through specified compliance periods. This requirement is
known as the Renewable Portfolio Standard (RPS).
The IOUs, which are regulated by the CPUC, individually submit
proposed plans to the CPUC that detail how the IOUs intend to
procure renewable energy resources in the coming compliance
period. The CPUC can approve, modify, or reject the plan. In the
CPUC's review, it is required to assess the total cost of
achieving the RPS requirements. Specifically, the statute
requires the CPUC to develop a process that provides criteria to
rank least-cost and best-fit eligible renewable resources so
that RPS procurement obligations can be done on a "total cost"
basis. This process is required to "take into account" the
following:
Estimates of indirect costs associated with needed
transmission investments.
The cost of procurement.
The project's viability to construct and reliability operate.
Workforce development- and employment growth-related issues.
Integration and operating expenses.
If an electrical corporation would be unable to achieve the RPS
requirements without exceeding the cost limitations, the IOU
would be exempted from entering into new contracts that would
exceed the limitation so long as there are no eligible renewable
energy resources that can be procured without exceeding a de
minimums increase in rates.
Proposed Law:
This bill would add two factors that the CPUC is required to
consider when ranking and selecting the "least-cost" and
"best-fit" renewable resources: (1) the statewide GHG limit
under AB 32, and (2) capacity and essential reliability services
to ensure grid reliability. Electric utilities would be required
to consider these two additional factors when adopting their
procurement plan.
This bill would also add "best-fit" to the basis by which the
CPUC is to rank order and select least-cost and best-fit
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eligible renewable energy resources.
This bill would require an electrical corporation to enter into
new contracts or construct facilities beyond the cost limit to
the extent that the procurement is authorized by a CPUC.
The enactment of this bill is contingent upon the enactment of
AB 645 (Williams), which increases the RPS requirement to 50% by
2031. AB 645 is currently in the Senate Appropriations
Committee.
Staff
Comments: The CPUC, at least to some extent, already takes
actions that would be required by this bill, especially since
reliability is key to the CPUC's core mission. As this bill only
requires the CPUC to "take into account" the statewide GHG
limits and grid reliability, and not any specific actions, in a
strict reading of the bill, one could conclude that the CPUC
already largely complies with the bill and therefore should
incur minimal costs. As stated in the Senate Energy Committee's
analysis of this bill, "[T]he bill sets a low bar that the
electric utilities, in developing their procurement plans, and
the CPUC in reviewing the IOUs' plans, should easily clear?In
fact, the CPUC reports that the procurement process already
considers these factors."
However, critics of the CPUC's existing least-cost, best-fit
procurement process believe that GHG emissions and grid
reliability are not being given sufficient consideration. To the
extent that this bill gives legislative direction to the CPUC to
increase its efforts in this area, or gives statutory language
for interested parties to urge the CPUC to do so, this bill
creates cost pressures.
The CPUC anticipates that it would have annual costs of $157,000
for two years for a proceeding and $226,000 annually ongoing for
additional staff to review procurement plans and to modify its
long-term planning process to consider the statewide GHG limit
and grid reliability. The CPUC also feels that it would need to
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contract out for modeling and analysis at an annual cost of
$800,000 for five years.
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