BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1923|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  AB 1923
          Author:   Wood (D)
          Amended:  8/19/16 in Senate
          Vote:     21 

           SENATE ENERGY, U. & C. COMMITTEE:  10-0, 6/21/16
           AYES:  Hueso, Morrell, Cannella, Gaines, Hertzberg, Lara,  
            Leyva, McGuire, Pavley, Wolk
           NO VOTE RECORDED:  Hill

          SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  79-0, 5/5/16 (Consent) - See last page for  
            vote

           SUBJECT:   Bioenergy feed-in tariff


          SOURCE:    Humboldt County Board of Supervisors


          DIGEST:  This bill increases, from three megawatts (MW) to five  
          MW, the limit on the nameplate capacity of a bioenergy electric  
          generation facility that may participate in the investor-owned  
          utilities' (IOU) bioenergy feed-in-tariff programs, so long as  
          the generation facility delivers no more than three MW to the  
          grid at any time.
          
          Senate Floor Amendments of 8/19/16 clarify that the modification  
          to the 250 MW bioenergy feed-in tariff (FIT) program apply only  
          to that program, and not to the larger 750 MW FIT program; and  
          also make technical amendments to avoid chaptering conflicts.









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          ANALYSIS:  

          Existing law:
          
          1)Requires all IOUs and publicly owned utilities (POUs) that  
            serve more than 75,000 retail customers to develop a standard  
            contract or tariff (aka feed-in-tariff or FIT) available for  
            renewable energy facilities up to three MW.  Statewide  
            participation is capped at 750 MW.  (Public Utilities Code  
            §§399.20 and 387.8)


          2)Requires IOUs to offer FITs for facilities up to three MW,  
            capped at 250 MW statewide and allocated as follows:


             a)   For biogas from wastewater treatment, municipal organic  
               waste diversion, food processing, and codigestion, 110 MW.


             b)   For dairy and other agricultural bioenergy, 90 MW.


             c)   For bioenergy using byproducts of sustainable forest  
               management, 50 MW. 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.  (Public Utilities Code §399.20)


          3)Directs 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.  (Public Utilities Code §399.20)


          4)Counts renewable energy generation FIT contracts to qualify  
            for credit toward and IOUs Renewable Portfolio Standard (RPS)  
            goals and resource adequacy requirements.  (Public Utilities  
            Code §399.20)









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          This bill:

          1)Increases, from three MW to five MW, the limit on the  
            nameplate capacity of a bioenergy electric generation facility  
            that may participate in the IOU's bioenergy FIT programs.

          2)Conditions the exception described in 1), as follows:

             a)   The bioenergy electric generation facility delivers no  
               more than three MW to the grid at any time.

             b)   It complies with the IOU's Electric Rule 21 tariff or  
               other distribution access tariff.

             c)   Payment is made pursuant to FIT program rules and no  
               payment is made for any electricity delivered to the grid  
               in excess of three MW at any time.

             d)   The facility 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 or is  
               interconnected to an existing transmission line.

          Background

          Feed-in tariffs and California's bioenergy feed-in tariff, in  
          particular.  According to the National Renewable Energy  
          Laboratory (NREL), a FIT offers a guarantee of payments to  
          renewable energy developers for the electricity they produce.   
          NREL reports that FITs are used in many U.S. states and around  
          the world. 

          California, too, offers a FIT program.  State law requires all  
          IOUs and POUs that serve more than 75,000 retail customers to  
          develop a standard FIT contract available to renewable energy  
          facilities up to three MW.  Statewide participation is capped at  
          750 MW.   


          In addition, state law requires the IOUs to procure another 250  
          MW of renewable FIT electricity from small-scale bioenergy  
          projects from each of three categories of bioenergy: 








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                 Biogas from wastewater treatment, municipal organic  
               waste diversion, food processing, and codigestion - 110 MW.
                 Dairy and other agricultural bioenergy - 90 MW.
                 Bioenergy using byproducts of sustainable forest  
               management - 50 MW.


          This is known as the bioenergy FIT program.  While the bioenergy  
          FIT program is new, program participation to date has been  
          anemic:  the CPUC reports that, to date, only one bioenergy FIT  
          contract has been signed, it for two MW of power generated from  
          an eligible facility using biogas.


          This bill proposes a minor modification to the bioenergy FIT  
          program.  Specifically, it increases, from three MW to five MW,  
          the limit on the nameplate capacity of a bioenergy electric  
          generation facility that may participate in the IOU's bioenergy  
          FIT programs, so long as it delivers no more than three MW to  
          the grid at any time.  It is questionable how much this will  
          help the bioenergy FIT program.  

          Related/Prior Legislation
          
          AB 1979 (Bigelow, 2016) makes an exception to the FIT program  
          three-MW limit on the generating capacity of an eligible  
          electric generation facility to newly allow participation by a  
          conduit hydroelectric facility with a nameplate generating  
          capacity of up to four MW that meets certain conditions.  The  
          bill is pending consideration by the full Senate.


          SB 1112 (Rubio, Chapter 612, Statutes of 2012) required an  
          additional 250 MW of renewable FIT procurement from small-scale  
          bioenergy projects that commence operation on or after June 1,  
          2013.


          SB 32 (Negrete-McLeod, Chapter 328, Statutes of 2009) increased  
          the FIT program limit from 480 MW to 750 MW and increased from  
          1.5 MW effective capacity to three MW effective capacity the  
          limit on electric generating facilities eligible to participate  
          in the FIT program.







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          AB 1969 (Yee, Chapter 731, Statutes of 2006) authorized the  
          state's first FIT program, which authorized the state's largest  
          IOU's to purchase up to 480 MW of renewable generating capacity  
          from renewable facilities with an effective capacity of not more  
          than 1.5 MW.




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified8/19/16)


          Humboldt County Board of Supervisors (source)
          Association of California Water Agencies
          Calaveras County Water District
          City of Fortuna
          League of California Cities Redwood Empire Division
          NLine Energy, Inc.
          Placer Land Trust
          Sierra Business Council
          Sierra Foothill Conservancy
          Sierra Institute for Community and Environment
          The Watershed Research and Training Center
          Truckee Land Trust
          Several Individual


          OPPOSITION:   (Verified8/19/16)


          Pacific Gas and Electric Company
          West Biofuels

          ARGUMENTS IN SUPPORT:  According to the author:
          
          Current regulations make it cost-prohibitive to invest in  
          this renewable energy [biomass energy].  Generators under  
          five MW, in particular three-MW generators, are not common  







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          and extremely expensive to purchase.  AB 1923 allows  
          electric generation facilities to be eligible for the  
          renewable feed-in tariff if it has a nameplate generating  
          capacity of up to five MWs, if it runs at a maximum of three  
          MW.  This will allow small sawmill investors to purchase  
          affordable, used five MW generators and export energy at  
          three MW.

          ARGUMENTS IN OPPOSITION:According to the opponents, this bill is  
          intended to expand the Biomass Market Adjusting Tariff program  
          to allow for more projects to participate and to lower the  
          overall cost of the program, but as written, will not accomplish  
          these goals and will actively hinder the success of the program.

          ASSEMBLY FLOOR:  79-0, 5/5/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,  
            McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Beth Gaines

          Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
          8/22/16 22:10:21


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