BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1923| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. AB 1923 Page 2 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) AB 1923 Page 3 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: AB 1923 Page 4 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. AB 1923 Page 5 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 AB 1923 Page 6 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 **** END ****