California Legislature—2015–16 Regular Session

Assembly BillNo. 1698


Introduced by Assembly Member Hadley

January 25, 2016


An act to amend Section 39719 of the Health and Safety Code, to amend Sections 25710, 25711, and 25711.5 of, and to amend the heading of Chapter 8.1 (commencing with Section 25710) of Division 15 of, the Public Resources Code, and to amend Section 399.15 of the Public Utilities Code, relating to energy, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 1698, as introduced, Hadley. Renewable energy.

Existing decisions of the Public Utilities Commission (PUC) institute an Electric Program Investment Charge (EPIC) that requires electric utility corporations to collect a surcharge on their ratepayers’ electricity bills to fund renewable energy research, development, and demonstration projects with the aim of making electricity service cheaper, safer, and more reliable for the corporations’ own ratepayers.

Existing law creates in the State Treasury the EPIC Fund to be administered by the State Energy Resources Conservation and Development Commission (Energy Commission) and requires moneys received by the PUC for those programs the PUC has determined should be administered by the Energy Commission to be forwarded by the PUC to the Energy Commission at least quarterly for deposit in the fund.

Existing law requires all moneys, except for fines and penalties, collected by the State Air Resources Board from the auction or sale of allowances as part of a market-based compliance mechanism relative to reduction of greenhouse gas emissions to be deposited in the Greenhouse Gas Reduction Fund. Existing law continuously appropriates specified portions of the annual proceeds in the Greenhouse Gas Reduction Fund to various programs related to transportation, affordable housing, and sustainable communities.

This bill would discontinue the EPIC surcharge and repeal the EPIC Fund. The bill would create the Green and Renewable Energy Enlisting New Technologies (GREEN) Fund to fund the GREEN program. The bill would transfer previously collected EPIC moneys to a specified account within the GREEN Fund. The bill would convey the Legislature’s intent that the EPIC program’s renewable energy research, development, and demonstration projects continue under the GREEN program. The bill would continuously appropriate $200,000,000 of the annual proceeds of the Greenhouse Gas Reduction Fund to a specified account within the GREEN Fund to fund the GREEN program.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

It is the intent of the Legislature that the Public
2Utilities Commission and public utilities corporations no longer
3charge or collect the Electric Program Investment Charge instituted
4by the Public Utilities Commission pursuant to Decision 11-12-035
5and subsequent decisions. Instead, it is the intent of the Legislature
6that the Electric Program Investment Charge program’s renewable
7energy research, development, and demonstration projects continue
8under the Green and Renewable Energy Enlisting New
9Technologies program and be funded through a continuous
10appropriation of cap and trade funds.

11

SEC. 2.  

Section 39719 of the Health and Safety Code is
12amended to read:

13

39719.  

(a) The Legislature shall appropriate the annual
14proceeds of the fund for the purpose of reducing greenhouse gas
15emissions in this state in accordance with the requirements of
16Section 39712.

17(b) To carry out a portion of the requirements of subdivision
18(a), annual proceeds are continuously appropriated for the
19following:

20(1) Beginning in the 2015-16 fiscal year, and notwithstanding
21Section 13340 of the Government Code, 35 percent of annual
P3    1proceeds are continuously appropriated, without regard to fiscal
2years, for transit, affordable housing, and sustainable communities
3programs as following:

4(A) Ten percent of the annual proceeds of the fund is hereby
5continuously appropriated to the Transportation Agency for the
6Transit and Intercity Rail Capital Program created by Part 2
7(commencing with Section 75220) of Division 44 of the Public
8Resources Code.

9(B) Five percent of the annual proceeds of the fund is hereby
10continuously appropriated to the Low Carbon Transit Operations
11Program created by Part 3 (commencing with Section 75230) of
12Division 44 of the Public Resources Code. Funds shall be allocated
13by the Controller, according to requirements of the program, and
14pursuant to the distribution formula in subdivision (b) or (c) of
15Section 99312 of, and Sections 99313 and 99314 of, the Public
16Utilities Code.

17(C) Twenty percent of the annual proceeds of the fund is hereby
18continuously appropriated to the Strategic Growth Council for the
19Affordable Housing and Sustainable Communities Program created
20by Part 1 (commencing with Section 75200) of Division 44 of the
21Public Resources Code. Of the amount appropriated in this
22subparagraph, no less than 10 percent of the annual proceeds, shall
23be expended for affordable housing, consistent with the provisions
24of that program.

25(2) Beginning in the 2015-16 fiscal year, notwithstanding
26Section 13340 of the Government Code, 25 percent of the annual
27proceeds of the fund is hereby continuously appropriated to the
28High-Speed Rail Authority for the following components of the
29initial operating segment and Phase I Blended System as described
30in the 2012 business plan adopted pursuant to Section 185033 of
31the Public Utilities Code:

32(A) Acquisition and construction costs of the project.

33(B) Environmental review and design costs of the project.

34(C) Other capital costs of the project.

35(D) Repayment of any loans made to the authority to fund the
36project.

begin insert

37(3) Beginning in the 2017-18 fiscal year, notwithstanding
38Section 13340 of the Government Code, two hundred million
39dollars ($200,000,000) of the annual proceeds of the fund are
40hereby continuously appropriated to the Green and Renewable
P4    1Energy Enlisting New Technologies Account created by Chapter
28.1 (commencing with Section 25710) of Division 15 of the Public
3Resources Code.

end insert

4(c) In determining the amount of annual proceeds of the fund
5for purposes of the calculation in subdivision (b), the funds subject
6to Section 39719.1 shall not be included.

7

SEC. 3.  

The heading of Chapter 8.1 (commencing with Section
825710) of Division 15 of the Public Resources Code is amended
9to read:

10 

11Chapter  8.1. begin deleteElectric Program Investment Chargeend deletebegin insert Green
12and Renewable Energy Eend insert
begin insertnlisting New Technologiesend insert Fund
13

 

14

SEC. 4.  

Section 25710 of the Public Resources Code is
15amended to read:

16

25710.  

begin deleteFor end deletebegin insert(a)end insertbegin insertend insertbegin insertThis chapter shall be known and may be cited
17as the GREEN Act.end insert

18begin insert(b)end insertbegin insertend insertbegin insertForend insert the purposes of this chapter,begin delete the following terms have
19the following meanings:end delete
begin insert “fund” means the end insertbegin insertGreen and Renewable
20Energy Enlisting New Technologies Fund created by Section
2125711.end insert

begin delete

22(a) “Electric Program Investment Charge” means the surcharge
23instituted by the Public Utilities Commission pursuant to Decision
2411-12-035 or any subsequent decisions to collect funds for
25renewable energy programs and research, development, and
26demonstration programs.

end delete
begin delete

27(b) “Fund” means the portion of the Electric Program Investment
28Charge Fund created by Section 25711.

end delete
29

SEC. 5.  

Section 25711 of the Public Resources Code is
30amended to read:

31

25711.  

begin insert(a)end insertbegin insertend insert For the purposes of implementing this chapter, the
32begin delete Electric Program Investment Chargeend deletebegin insert end insertbegin insertGreen and Renewable Energy
33Enlisting New Technologiesend insert
Fund is hereby created in the State
34Treasury.

begin delete

35(a)

end delete

36begin insert(1)end insert The commission shall administer the fund.

begin delete

37(b) At least quarterly, moneys received by the Public Utilities
38Commission pursuant to the Electric Program Investment Charge
39for those programs the Public Utilities Commission has determined
40should be administered by the Energy Commission shall be
P5    1forwarded by the Public Utilities Commission to the commission
2for deposit in the fund.

end delete
begin delete

3(c)

end delete

4begin insert(2)end insert The Controller shall, as directed by the commission, disburse
5moneys in the fund for purposes of this chapter.

begin delete

6(d)

end delete

7begin insert(3)end insert The commission may use moneys in the fund for the
8administration of this chapter, as authorized by the Public Utilities
9Commission and appropriated by the Legislature in the annual
10Budget Act.

begin insert

11(b) There shall be two accounts within the fund:

end insert
begin insert

12(1) The Green and Renewable Energy Enlisting New
13Technologies Account.

end insert
begin insert

14(2) The Electric Program Investment Charge Account. Moneys
15in the Electric Program Investment Charge Account shall be
16expended consistent with any applicable requirements of Southern
17California Edison Company v. Public Utilities Commission (2014)
18227 Cal.App.4th 172.

end insert
19

SEC. 6.  

Section 25711.5 of the Public Resources Code is
20amended to read:

21

25711.5.  

In administering moneys in the fund for research,
22development, and demonstration programs under this chapter, the
23commission shall develop and implement thebegin delete Electric Program
24Investment Charge (EPIC)end delete
begin insert Green and Renewable Energy Enlisting
25New Technologies (GREEN)end insert
program to do all of the following:

26(a) Award funds for projects that will benefit electricity
27ratepayers and lead to technological advancement and
28breakthroughs to overcome the barriers that prevent the
29achievement of the state’s statutory energy goals and that result
30in a portfolio of projects that is strategically focused and
31sufficiently narrow to makebegin delete advancementend deletebegin insert advancementsend insert on the
32most significant technological challenges that shall include, but
33not be limited to, energy storage, renewable energy and its
34integration into the electrical grid, energy efficiency, integration
35of electric vehicles into the electrical grid, and accurately
36forecasting the availability of renewable energy for integration
37into the grid.

38(b) In consultation with the Treasurer, establish terms that shall
39be imposed as a condition to receipt of funding for the state to
40accrue any intellectual property interest or royalties that may derive
P6    1from projects funded by thebegin delete EPICend deletebegin insert GREENend insert program. The
2commission, when determining if imposition of the proposed terms
3is appropriate, shall balance the potential benefit to the state from
4those terms and the effect those terms may have on the state
5achieving its statutory energy goals. The commission shall require
6each reward recipient, as a condition of receiving moneys pursuant
7to this chapter, to agree to any terms the commission determines
8are appropriate for the state to accrue any intellectual property
9interest or royalties that may derive from projects funded by the
10begin delete EPICend deletebegin insert GREENend insert program.

11(c) Require each applicant to report how the proposed project
12may lead to technological advancement and potential breakthroughs
13to overcome barriers to achieving the state’s statutory energy goals.

14(d) Establish a process for tracking the progress and outcomes
15of each funded project, including an accounting of the amount of
16funds spent by program administrators and individual grant
17recipients on administrative and overhead costs and whether the
18project resulted in any technological advancement or breakthrough
19to overcome barriers to achieving the state’s statutory energy goals.

20(e) Notwithstanding Section 10231.5 of the Government Code,
21prepare and submit to the Legislature no later than April 30 of
22each year an annual report in compliance with Section 9795 of the
23Government Code that shall include all of the following:

24(1) A brief description of each project for which funding was
25awarded in the immediately prior calendar year, including the
26name of the recipient and the amount of the award, a description
27of how the project is thought to lead to technological advancement
28or breakthroughs to overcome barriers to achieving the state’s
29statutory energy goals, and a description of why the project was
30selected.

31(2) A brief description of each project funded by thebegin delete EPICend delete
32begin insert GREENend insert program that was completed in the immediately prior
33calendar year, including the name of the recipient, the amount of
34the award, and the outcomes of the funded project.

35(3) A brief description of each project funded by thebegin delete EPICend delete
36begin insert GREENend insert program for which an award was made in the previous
37years but that is not completed, including the name of the recipient
38and the amount of the award, and a description of how the project
39will lead to technological advancement or breakthroughs to
40overcome barriers to achieving the state’s statutory energy goals.

P7    1(4) Identification of the award recipients that are
2California-based entities, small businesses, or businesses owned
3by women, minorities, or disabled veterans.

4(5) Identification of which awards were made through a
5competitive bid, interagency agreement, or sole source method,
6and the action of the Joint Legislative Budget Committee pursuant
7to paragraph (2) of subdivision (g) for each award made through
8an interagency agreement or sole source method.

9(6) Identification of the total amount of administrative and
10overhead costs incurred for each project.

11(f) Establish requirements to minimize program administration
12and overhead costs, including costs incurred by program
13administrators and individual grant recipients. Each program
14administrator and grant recipient, including a public entity, shall
15be required to justify actual administration and overhead costs
16incurred, even if the total costs incurred do not exceed a cap on
17those costs that the commission may adopt.

18(g) (1) The commission shall use a sealed competitive bid as
19the preferred method to solicit project applications and award funds
20pursuant to thebegin delete EPICend deletebegin insert GREENend insert program.

21(2) (A) The commission may use a sole source or interagency
22agreement method if the project cannot be described with sufficient
23specificity so that bids can be evaluated against specifications and
24criteria set forth in a solicitation for bid and if both of the following
25conditions are met:

26(i) The commission, at least 60 days prior to making an award
27pursuant to this subdivision, notifies the Joint Legislative Budget
28Committee and the relevant policy committees in both houses of
29the Legislature, in writing, of its intent to take the proposed action.

30(ii) The Joint Legislative Budget Committee either approves or
31does not disapprove the proposed action within 60 days from the
32date of notification required by clause (i).

33(B) It is the intent of the Legislature to enact this paragraph to
34ensure legislative oversight for awards made on a sole source basis,
35or through an interagency agreement.

36(3) Notwithstanding any other law, standard terms and
37conditions that generally apply to contracts between the
38commission and any entities, including state entities, do not
39automatically preclude the award of moneys from the fund through
40the sealed competitive bid method.

P8    1

SEC. 7.  

Section 399.15 of the Public Utilities Code is amended
2to read:

3

399.15.  

(a) In order to fulfill unmet long-term resource needs,
4the commission shall establish a renewables portfolio standard
5requiring all retail sellers to procure a minimum quantity of
6electricity products from eligible renewable energy resources as
7a specified percentage of total kilowatthours sold to their retail
8end-use customers each compliance period to achieve the targets
9established under this article. For any retail seller procuring at least
1014 percent of retail sales from eligible renewable energy resources
11in 2010, the deficits associated with any previous renewables
12portfolio standard shall not be added to any procurement
13requirement pursuant to this article.

14(b) The commission shall implement renewables portfolio
15standard procurement requirements only as follows:

16(1) Each retail seller shall procure a minimum quantity of
17eligible renewable energy resources for each of the following
18compliance periods:

19(A) January 1, 2011, to December 31, 2013, inclusive.

20(B) January 1, 2014, to December 31, 2016, inclusive.

21(C) January 1, 2017, to December 31, 2020, inclusive.

22(D) January 1, 2021, to December 31, 2024, inclusive.

23(E) January 1, 2025, to December 31, 2027, inclusive.

24(F) January 1, 2028, to December 31, 2030, inclusive.

25(2) (A) No later than January 1, 2017, the commission shall
26establish the quantity of electricity products from eligible
27renewable energy resources to be procured by the retail seller for
28each compliance period. These quantities shall be established in
29the same manner for all retail sellers and result in the same
30percentages used to establish compliance period quantities for all
31retail sellers.

32(B) In establishing quantities for the compliance period from
33January 1, 2011, to December 31, 2013, inclusive, the commission
34shall require procurement for each retail seller equal to an average
35of 20 percent of retail sales. For the following compliance periods,
36the quantities shall reflect reasonable progress in each of the
37intervening years sufficient to ensure that the procurement of
38electricity products from eligible renewable energy resources
39achieves 25 percent of retail sales by December 31, 2016, 33
40percent by December 31, 2020, 40 percent by December 31, 2024,
P9    145 percent by December 31, 2027, and 50 percent by December
231, 2030. The commission shall establish appropriate three-year
3compliance periods for all subsequent years that require retail
4sellers to procure not less than 50 percent of retail sales of
5electricity products from eligible renewable energy resources.

6(C) Retail sellers shall be obligated to procure no less than the
7quantities associated with all intervening years by the end of each
8compliance period. Retail sellers shall not be required to
9demonstrate a specific quantity of procurement for any individual
10intervening year.

11(3) The commission may require the procurement of eligible
12renewable energy resources in excess of the quantities specified
13in paragraph (2).

14(4) Only for purposes of establishing the renewables portfolio
15 standard procurement requirements of paragraph (1) and
16determining the quantities pursuant to paragraph (2), the
17commission shall include all electricity sold to retail customers by
18the Department of Water Resources pursuant to Division 27
19(commencing with Section 80000) of the Water Code in the
20calculation of retail sales by an electrical corporation.

21(5) The commission shall waive enforcement of this section if
22it finds that the retail seller has demonstrated any of the following
23conditions are beyond the control of the retail seller and will
24prevent compliance:

25(A) There is inadequate transmission capacity to allow for
26sufficient electricity to be delivered from proposed eligible
27renewable energy resource projects using the current operational
28protocols of the Independent System Operator. In making its
29findings relative to the existence of this condition with respect to
30a retail seller that owns transmission lines, the commission shall
31consider both of the following:

32(i) Whether the retail seller has undertaken, in a timely fashion,
33reasonable measures under its control and consistent with its
34obligations under local, state, and federal laws and regulations, to
35develop and construct new transmission lines or upgrades to
36existing lines intended to transmit electricity generated by eligible
37renewable energy resources. In determining the reasonableness of
38a retail seller’s actions, the commission shall consider the retail
39seller’s expectations for full-cost recovery for these transmission
40lines and upgrades.

P10   1(ii) Whether the retail seller has taken all reasonable operational
2measures to maximize cost-effective deliveries of electricity from
3eligible renewable energy resources in advance of transmission
4availability.

5(B) Permitting, interconnection, or other circumstances that
6delay procured eligible renewable energy resource projects, or
7there is an insufficient supply of eligible renewable energy
8resources available to the retail seller. In making a finding that this
9condition prevents timely compliance, the commission shall
10consider whether the retail seller has done all of the following:

11(i) Prudently managed portfolio risks, including relying on a
12sufficient number of viable projects.

13(ii) Sought to develop one of the following: its own eligible
14renewable energy resources, transmission to interconnect to eligible
15renewable energy resources, or energy storage used to integrate
16eligible renewable energy resources. This clause shall not require
17an electrical corporation to pursue development of eligible
18renewable energy resources pursuant to Section 399.14.

19(iii) Procured an appropriate minimum margin of procurement
20above the minimum procurement level necessary to comply with
21the renewables portfolio standard to compensate for foreseeable
22delays or insufficient supply.

23(iv) Taken reasonable measures, under the control of the retail
24seller, to procure cost-effective distributed generation and allowable
25unbundled renewable energy credits.

26(C) Unanticipated curtailment of eligible renewable energy
27resources if the waiver would not result in an increase in
28greenhouse gas emissions.

29(D) Unanticipated increase in retail sales due to transportation
30electrification. In making a finding that this condition prevents
31timely compliance, the commission shall consider all of the
32 following:

33(i) Whether transportation electrification significantly exceeded
34forecasts in that retail seller’s service territory based on the best
35and most recently available information filed with the State Air
36Resources Board, the Energy Commission, or other state agency.

37(ii) Whether the retail seller has taken reasonable measures to
38procure sufficient resources to account for unanticipated increases
39in retail sales due to transportation electrification.

P11   1(6) If the commission waives the compliance requirements of
2this section, the commission shall establish additional reporting
3requirements on the retail seller to demonstrate that all reasonable
4actions under the control of the retail seller are taken in each of
5the intervening years sufficient to satisfy future procurement
6requirements.

7(7) The commission shall not waive enforcement pursuant to
8this section, unless the retail seller demonstrates that it has taken
9all reasonable actions under its control, as set forth in paragraph
10(5), to achieve full compliance.

11(8) If a retail seller fails to procure sufficient eligible renewable
12energy resources to comply with a procurement requirement
13pursuant to paragraphs (1) and (2) and fails to obtain an order from
14the commission waiving enforcement pursuant to paragraph (5),
15the commission shall assess penalties for noncompliance. A
16schedule of penalties shall be adopted by the commission that shall
17be comparable for electrical corporations and other retail sellers.
18For electrical corporations, the cost of any penalties shall not be
19collected in rates. Any penalties collected under this article shall
20be deposited into thebegin delete Electric Program Investment Chargeend deletebegin insert Green
21and Renewable Energy Enlisting New Technologiesend insert
Fund and used
22for the purposes described in Chapter 8.1 (commencing with
23Section 25710) of Division 15 of the Public Resources Code.

24(9) Deficits associated with the compliance period shall not be
25added to a future compliance period.

26(c) The commission shall establish a limitation for each electrical
27corporation on the procurement expenditures for all eligible
28renewable energy resources used to comply with the renewables
29portfolio standard. This limitation shall be set at a level that
30prevents disproportionate rate impacts.

31(d) If the cost limitation for an electrical corporation is
32insufficient to support the projected costs of meeting the
33renewables portfolio standard procurement requirements, the
34electrical corporation may refrain from entering into new contracts
35or constructing facilities beyond the quantity that can be procured
36within the limitation, unless eligible renewable energy resources
37can be procured without exceeding a de minimis increase in rates,
38consistent with the long-term procurement plan established for the
39electrical corporation pursuant to Section 454.5.

P12   1(e) (1) The commission shall monitor the status of the cost
2limitation for each electrical corporation in order to ensure
3compliance with this article.

4(2) If the commission determines that an electrical corporation
5may exceed its cost limitation prior to achieving the renewables
6portfolio standard procurement requirements, the commission shall
7do both of the following within 60 days of making that
8determination:

9(A) Investigate and identify the reasons why the electrical
10corporation may exceed its annual cost limitation.

11(B) Notify the appropriate policy and fiscal committees of the
12Legislature that the electrical corporation may exceed its cost
13limitation, and include the reasons why the electrical corporation
14may exceed its cost limitation.

15(f) The establishment of a renewables portfolio standard shall
16not constitute implementation by the commission of the federal
17Public Utility Regulatory Policies Act of 1978 (Public Law
1895-617).

19

SEC. 8.  

(a) On and after the effective date of this act, the
20Public Utilities Commission shall discontinue the surcharge for
21renewable energy programs imposed by Decision 11-12-035 and
22subsequent decisions.

23(b) The funds collected pursuant to the surcharge instituted by
24the Public Utilities Commission pursuant to Decision 11-12-035
25and subsequent decisions related to renewable energy programs
26not already deposited into the Electric Program Investment Charge
27Fund established pursuant to former Section 25711 of the Public
28Resources Code by the effective date of this act shall be transferred
29to the Treasurer for deposit in the Electric Program Investment
30Charge Account within the Green and Renewable Energy Enlisting
31New Technologies Fund established pursuant to Section 25711 of
32the Public Resources Code. Any moneys in the Electrical Program
33Investment Charge Fund on the effective date of this act shall be
34transferred to the Electric Program Investment Charge Account.

35(c) The former Electric Program Investment Charge (EPIC)
36program developed and implemented pursuant to former Section
3725711.5 of the Public Utilities Code shall be continued as the Green
P13   1and Renewable Energy Enlisting New Technologies (GREEN)
2program pursuant to Section 25711.5 of the Public Utilities Code.



O

    99