BILL ANALYSIS Ó
AB 1144
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1144 (Rendon) - As Amended April 14, 2015
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|Policy |Utilities and Commerce |Vote:|12 - 0 |
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| |Natural Resources | |9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill revises the Renewables Portfolio Standard (RPS)
product content categories to provide that unbundled renewable
energy credits (RECs) count in Category 1 if they are associated
with electricity generated by a landfill or digester gas source
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and used at a publicly owned wastewater treatment facility put
into service on or after January 1, 2016.
FISCAL EFFECT:
Minor, absorbable state costs.
COMMENTS:
1)Rationale. Wastewater utilities generate methane emissions
from their operations. Air Quality regulators require
wastewater agencies to minimize methane emissions. If the
utility does not use the methane, then they generally are
required to flare the methane to reduce air pollution.
According to the author, while some wastewater utilities
already capture and use their methane to produce and use the
electricity at their own facility, such energy-water
infrastructure may not be affordable for others, particularly
smaller facilities.
This bill allows public wastewater agencies to sell their RECs
in category 1 to generate funding to pay for the
infrastructure.
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2)Background. The California Renewables Portfolio Standard
program requires investor- owned utilities, local
publicly-owned utilities, and energy service providers to
increase purchases of renewable energy to at least 33% of
retail sales by December 31, 2020.
The original RPS bill, SB 1078 (Sher), Chapter 516, Statutes
of 2002, set a goal of 20 percent by 2017. SB 107 (Simitian),
Chapter 464, Statutes of 2006, accelerated the deadline for 20
percent to 2010.
SBX1 2 (Simitian), Chapter 1, Statutes of 2011-12 First
Extraordinary Session, codified the current 33 percent by 2020
RPS target and also established product content categories (or
"buckets"), which place the highest value (Category 1) on
renewable energy that is directly delivered into California
because it has the greatest economic, environmental and
reliability benefits. In contrast, Category 3 has the
smallest demand and lowest prices. When an agency creates and
uses its own renewable electricity and wishes to sell the REC,
it is unbundled, and therefore Category 3.
3)REC Categories. RPS law establishes balanced portfolio
requirements for procurement based on the following three
categories of renewable energy products:
a) Category 1 - Renewable energy interconnected to the grid
within, scheduled for direct delivery into, or dynamically
transferred to, a California balancing authority (i.e.,
real renewable energy supplied to the California grid,
located within or directly proximate to the state). Of the
total renewable energy contracts executed after June 1,
2010, the following percentages must fall into this
category:
i) At least 50 percent for the 2011-2013.
ii) At least 65 percent for the 2014-2016.
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iii) At least 75 percent thereafter.
b) Category 2 - Renewable energy where substitute
non-renewable energy is used to provide a reliable delivery
schedule into a California balancing authority (i.e.,
firmed and shaped energy where substitute energy is used to
compensate for delivery problems due to intermittent
generation or inadequate transmission capacity from a
remote renewable resource).
c) Category 3 - Renewable energy products not meeting
either condition above, including unbundled renewable
energy credits (RECs) (i.e., the original source of
renewable energy must be located within the western grid,
but otherwise need not have a physical connection to
California). Of the total renewable energy contracts
executed after June 1, 2010, the following percentages may
fall into this category:
i) Not more than 25 percent for the 2011-2013.
ii) Not more than 15 percent for the 2014-2016.
iii) Not more than 10 percent thereafter.
4)Further Issues to Address. This bill addresses part of the
larger issue regarding the manner in which RECs associated
with renewable energy produced and used onsite should be
counted towards meeting the requirements of RPS. The larger
issue affects a variety of renewable sources produced onsite
including distributed solar, geothermal as well as biogass
from wastewater, dairy and landfill sources.
Resolving how REC categories are valued and counted will be
part of the larger discussion on how to reach 50% RPS by 2030.
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Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081