Amended in Assembly April 14, 2016

Amended in Assembly April 5, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1923

Introduced by Assembly Member Wood

February 11, 2016

An act to amend Section 399.20 of the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1923, as amended, Wood. Bioenergy feed-in tariff.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law requires every electrical corporation to file with the commission a standard tariff for electricity generated by an electric generation facility, as defined, that qualifies for the tariff, is owned and operated by a retail customer of the electrical corporation, and is located within the service territory of, and developed to sell electricity to, the electrical corporation. The commission refers to this requirement as the renewable feed-in tariff. Existing law requires that, in order to qualify for the tariff, the electric generation facility: (1) have an effective capacity of not more than 3 megawatts, subject to the authority of the commission to reduce this megawatt limitation, (2) be interconnected and operate in parallel with the electric transmission and distribution grid, (3) be strategically located and interconnected to the electrical transmission and distribution system in a manner that optimizes the deliverability of electricity generated at the facility to load centers, and (4) meet the definition of an eligible renewable energy resource under the California Renewables Portfolio Standard Program. Existing law requires an electrical corporation to make the tariff available to the owner or operator of an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until the electrical corporation meets its proportionate share of a statewide cap of 750 megawatts cumulative rated generation capacity served under the renewable feed-in tariff and a renewable feed-in tariff that is applicable to a local publicly owned electric utility. In addition to the 750 megawatt limitation, the renewable feed-in tariff requires the commission to direct the electrical corporations to collectively procure at least 250 megawatts of cumulative rated generating capacity from developers of bioenergy projects that commence operation on or after June 1, 2013 (bioenergy feed-in tariff). The commission is required to undertake specific steps to implement the bioenergy feed-in tariff requirement.

This bill would require the commission to direct the electrical corporations to authorize a bioenergy electric generation facility with a nameplate generating capacity of up to 5 megawatts to participate in the bioenergy feed-in tariff if the facility delivers no more than 3 megawatts to the grid begin delete in any hour end delete begin insert at any time end insert and complies with specified interconnection and payment requirements.

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

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

SECTION 1.  

Section 399.20 of the Public Utilities Code is
amended to read:

399.20.  

(a) It is the policy of this state and the intent of the
Legislature to encourage electrical generation from eligible
renewable energy resources.

(b) As used in this section, “electric generation facility” means
an electric generation facility located within the service territory
of, and developed to sell electricity to, an electrical corporation
that meets all of the following criteria:

(1) Has an effective capacity of not more than three begin delete megawatts. end delete

begin insert megawatts, with the exception of those facilities participating in
a tariff made available pursuant to paragraph (2) of subdivision
(f). end insert

(2) Is interconnected and operates in parallel with the electrical
transmission and distribution grid.

(3) Is strategically located and interconnected to the electrical
transmission and distribution grid in a manner that optimizes the
deliverability of electricity generated at the facility to load centers.

(4) Is an eligible renewable energy resource.

(c) Every electrical corporation shall file with the commission
a standard tariff for electricity purchased from an electric
generation facility. The commission may modify or adjust the
requirements of this section for any electrical corporation with less
than 100,000 service connections, as individual circumstances
merit.

(d) (1) The tariff shall provide for payment for every
kilowatthour of electricity purchased from an electric generation
facility for a period of 10, 15, or 20 years, as authorized by the
commission. The payment shall be the market price determined
by the commission pursuant to paragraph (2) and shall include all
current and anticipated environmental compliance costs, including,
but not limited to, mitigation of emissions of greenhouse gases
and air pollution offsets associated with the operation of new
generating facilities in the local air pollution control or air quality
management district where the electric generation facility is
located.

(2) The commission shall establish a methodology to determine
the market price of electricity for terms corresponding to the length
of contracts with an electric generation facility, in consideration
of the following:

(A) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation’s general
procurement activities as authorized by the commission.

(B) The long-term ownership, operating, and fixed-price fuel
costs associated with fixed-price electricity from new generating
facilities.

(C) The value of different electricity products including
baseload, peaking, and as-available electricity.

(3) The commission may adjust the payment rate to reflect the
value of every kilowatthour of electricity generated on a
time-of-delivery basis.

(4) The commission shall ensure, with respect to rates and
charges, that ratepayers that do not receive service pursuant to the
tariff are indifferent to whether a ratepayer with an electric
generation facility receives service pursuant to the tariff.

(e) An electrical corporation shall provide expedited
interconnection procedures to an electric generation facility located
on a distribution circuit that generates electricity at a time and in
a manner so as to offset the peak demand on the distribution circuit,
if the electrical corporation determines that the electric generation
facility will not adversely affect the distribution grid. The
commission shall consider and may establish a value for an electric
generation facility located on a distribution circuit that generates
electricity at a time and in a manner so as to offset the peak demand
on the distribution circuit.

(f) (1) An electrical corporation shall make the tariff available
to the owner or operator of an electric generation facility within
the service territory of the electrical corporation, upon request, on
a first-come-first-served basis, until the electrical corporation meets
its proportionate share of a statewide cap of 750 megawatts
cumulative rated generation capacity served under this section and
Section 399.32. The proportionate share shall be calculated based
on the ratio of the electrical corporation’s peak demand compared
to the total statewide peak demand.

(2) By June 1, 2013, the commission shall, in addition to the
750 megawatts identified in paragraph (1), direct the electrical
corporations to collectively procure at least 250 megawatts of
cumulative rated generating capacity from developers of bioenergy
projects that commence operation on or after June 1, 2013. The
commission shall, for each electrical corporation, allocate shares
of the additional 250 megawatts based on the ratio of each electrical
corporation’s peak demand compared to the total statewide peak
demand. In implementing this paragraph, the commission shall do
all of the following:

(A) Allocate the 250 megawatts identified in this paragraph
among the electrical corporations based on the following
categories:

(i) For biogas from wastewater treatment, municipal organic
waste diversion, food processing, and codigestion, 110 megawatts.

(ii) For dairy and other agricultural bioenergy, 90 megawatts.

(iii) For bioenergy using byproducts of sustainable forest
management, 50 megawatts. Allocations under this category shall
be determined based on the proportion of bioenergy that sustainable
forest management providers derive from sustainable forest
management in fire threat treatment areas, as designated by the
Department of Forestry and Fire Protection.

(B) Direct the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process.

(C) Coordinate, to the maximum extent feasible, any incentive
or subsidy programs for bioenergy with the agencies listed in
subparagraph (A) of paragraph (3) in order to provide maximum
benefits to ratepayers and to ensure that incentives are used to
reduce contract prices.

(D) The commission shall encourage gas and electrical
corporations to develop and offer programs and services to facilitate
development of in-state biogas for a broad range of purposes.

(E) Direct the electrical corporations to authorize a bioenergy
electric generation facility with a nameplate generating capacity
of up to five megawatts to participate in the tariff made available
pursuant to this paragraph, if it meets the following conditions:

(i) It delivers no more than three megawatts to the grid begin delete in an
hour. end delete begin insert at any time. end insert

(ii) It complies with the electrical corporation’s Electric Rule
21 tariff or other distribution access tariff.

(iii) Payment is made pursuant to paragraph (1) of subdivision
(d) and no payment is made for any begin delete generation end delete begin insert electricity exported
to the grid end insert in excess of three megawatts in any hour.

(3) (A) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, the State
Air Resources Board, the Department of Forestry and Fire
Protection, the Department of Food and Agriculture, and the
Department of Resources Recycling and Recovery, may review
the allocations of the 250 additional megawatts identified in
paragraph (2) to determine if those allocations are appropriate.

(B) If the commission finds that the allocations of the 250
additional megawatts identified in paragraph (2) are not
appropriate, the commission may reallocate the 250 megawatts
among the categories established in subparagraph (A) of paragraph
(2).

(4) For the purposes of this subdivision, “bioenergy” means
biogas and biomass.

(g) The electrical corporation may make the terms of the tariff
available to owners and operators of an electric generation facility
in the form of a standard contract subject to commission approval.

(h) Every kilowatthour of electricity purchased from an electric
generation facility shall count toward meeting the electrical
corporation’s renewables portfolio standard annual procurement
targets for purposes of paragraph (1) of subdivision (b) of Section
399.15.

(i) The physical generating capacity of an electric generation
facility shall count toward the electrical corporation’s resource
adequacy requirement for purposes of Section 380.

(j) (1) The commission shall establish performance standards
for any electric generation facility that has a capacity greater than
one megawatt to ensure that those facilities are constructed,
operated, and maintained to generate the expected annual net
production of electricity and do not impact system reliability.

(2) The commission may reduce the three megawatt capacity
limitation of paragraph (1) of subdivision (b) if the commission
finds that a reduced capacity limitation is necessary to maintain
system reliability within that electrical corporation’s service
territory.

(k) (1) Any owner or operator of an electric generation facility
that received ratepayer-funded incentives in accordance with
Section 379.6 of this code, or with Section 25782 of the Public
Resources Code, and participated in a net metering program
pursuant to Sections 2827, 2827.9, and 2827.10 of this code prior
to January 1, 2010, shall be eligible for a tariff or standard contract
filed by an electrical corporation pursuant to this section.

(2) In establishing the tariffs or standard contracts pursuant to
this section, the commission shall consider ratepayer-funded
incentive payments previously received by the generation facility
pursuant to Section 379.6 of this code or Section 25782 of the
Public Resources Code. The commission shall require
reimbursement of any funds received from these incentive
programs to an electric generation facility, in order for that facility
to be eligible for a tariff or standard contract filed by an electrical
corporation pursuant to this section, unless the commission
determines ratepayers have received sufficient value from the
incentives provided to the facility based on how long the project
has been in operation and the amount of renewable electricity
previously generated by the facility.

(3) A customer that receives service under a tariff or contract
approved by the commission pursuant to this section is not eligible
to participate in any net metering program.

(l) An owner or operator of an electric generation facility
electing to receive service under a tariff or contract approved by
the commission shall continue to receive service under the tariff
or contract until either of the following occurs:

(1) The owner or operator of an electric generation facility no
longer meets the eligibility requirements for receiving service
pursuant to the tariff or contract.

(2) The period of service established by the commission pursuant
to subdivision (d) is completed.

(m) Within 10 days of receipt of a request for a tariff pursuant
to this section from an owner or operator of an electric generation
facility, the electrical corporation that receives the request shall
post a copy of the request on its Internet Web site. The information
posted on the Internet Web site shall include the name of the city
in which the facility is located, but information that is proprietary
and confidential, including, but not limited to, address information
beyond the name of the city in which the facility is located, shall
be redacted.

(n) An electrical corporation may deny a tariff request pursuant
to this section if the electrical corporation makes any of the
following findings:

(1) The electric generation facility does not meet the
requirements of this section.

(2) The transmission or distribution grid that would serve as the
point of interconnection is inadequate.

(3) The electric generation facility does not meet all applicable
state and local laws and building standards and utility
interconnection requirements.

(4) The aggregate of all electric generating facilities on a
distribution circuit would adversely impact utility operation and
load restoration efforts of the distribution system.

(o) Upon receiving a notice of denial from an electrical
corporation, the owner or operator of the electric generation facility
denied a tariff pursuant to this section shall have the right to appeal
that decision to the commission.

(p) In order to ensure the safety and reliability of electric
generation facilities, the owner of an electric generation facility
receiving a tariff pursuant to this section shall provide an inspection
and maintenance report to the electrical corporation at least once
every other year. The inspection and maintenance report shall be
prepared at the owner’s or operator’s expense by a
California-licensed contractor who is not the owner or operator of
the electric generation facility. A California-licensed electrician
shall perform the inspection of the electrical portion of the
generation facility.

(q) The contract between the electric generation facility
receiving the tariff and the electrical corporation shall contain
provisions that ensure that construction of the electric generating
facility complies with all applicable state and local laws and
building standards, and utility interconnection requirements.

(r) (1) All construction and installation of facilities of the
electrical corporation, including at the point of the output meter
or at the transmission or distribution grid, shall be performed only
by that electrical corporation.

(2) All interconnection facilities installed on the electrical
corporation’s side of the transfer point for electricity between the
electrical corporation and the electrical conductors of the electric
generation facility shall be owned, operated, and maintained only
by the electrical corporation. The ownership, installation, operation,
reading, and testing of revenue metering equipment for electric
generating facilities shall only be performed by the electrical
corporation.