BILL ANALYSIS Ó
AB 1937
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 1937
(Gomez) - As Amended April 4, 2016
SUBJECT: Electricity: procurement
SUMMARY: Modifies the procurement requirements applicable to
those electrical corporations regulated by the California Public
Utilities Commission (CPUC) to include consideration of
disadvantaged communities when contracting for electricity
supplies. Specifically, this bill:
1)Requires electrical corporations' proposed procurement plans
to include a showing that the electrical corporations: a) in
soliciting bids for gas-fired generation resources, actively
seek bids that are not located in or adjacent to disadvantaged
communities; and b) in considering bids for, or negotiating
bilateral contracts for, gas-fired generation resources, give
priority to generation resources that are not located in or
adjacent to disadvantaged communities.
2)Specifies that the above requirements apply to all procurement
of eligible renewable energy resources for California-based
projects whether the procurement occurs through all-source
requests for offers, eligible renewable energy resources only
requests for offers, or other procurement mechanisms.
EXISTING LAW:
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1)Establishes requirements for electric service providers to
procure 50% of their electricity supplies from renewable
energy by 2030, otherwise known as the Renewable Portfolio
Standard (RPS). (Public Utilities Code Section 399.12)
2)Requires, in soliciting and procuring eligible renewable
energy resources for California-based projects, each
electrical corporation to give preference to renewable energy
projects that provide environmental and economic benefits to
communities afflicted with poverty or high unemployment, or
that suffer from high emission levels of toxic air
contaminants, criteria air pollutants, and greenhouse gases.
(Public Utilities Code Section 399.13)
3)Requires the CPUC to specify the allocation of electricity,
including quantity, characteristics, and duration of
electricity delivery, that the Department of Water Resources
shall provide under its power purchase agreements to the
customers of each electrical corporation, which shall be
reflected in the electrical corporation's proposed procurement
plan. Each electrical corporation shall file a proposed
procurement plan with the commission not later than 60 days
after the commission specifies the allocation of electricity.
The proposed procurement plan shall specify the date that the
electrical corporation intends to resume procurement of
electricity for its retail customers, consistent with its
obligation to serve. After the commission's adoption of a
procurement plan, the CPUC shall allow not less than 60 days
before the electrical corporation resumes procurement pursuant
to this section. (Public Utilities Code Section 454.5)
4)Requires a competitive procurement process under which the
electrical corporation may request bids for
procurement-related services, including the format and
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criteria of that procurement process. (Public Utilities Code
Section 454.5)
5)Establishes short-term and long-term goals and electricity
procurement guidelines for electrical corporations, which are
filed with the CPUC for approval. (Public Utilities Code
Section 454.5)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Background: The CPUC issued D.13-02-015,<1> on February 13,
2013, and ordered Southern California Edison (SCE) to procure,
via a Request for Offers (RFO), a minimum of 215 megawatts
(MW) and a maximum of 290 MW of electrical capacity in the
Moorpark sub-area of the Big Creek/Ventura local reliability
area (Moorpark sub-area) to meet identified long-term local
capacity requirements (LCR) by 2021. The CPUC found this LCR
need existed, in large part, due to the expected retirement of
the Ormond Beach and Mandalay once-through-cooling generation
facilities, which are both located in Oxnard, California.
These facilities currently have approximately 2000 MW of
capacity.
On November 26, 2014, SCE filed an Application for approval of
the results of its 2013 LCR RFO for the Moorpark sub-area
seeking approval of 11 contracts. One of the contracts is a
20-year contract for gas-fired generation (totaling 262 MW of
capacity). This contract is a resource adequacy (RA) purchase
agreement with NRG Energy Center Oxnard, LLC (NRG) for a new
simple cycle peaking facility known as the Puente Power
--------------------------
<1>
http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M158/K355/158355
879.PDF
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Project (NRG Puente Project).
Environmental justice matters were raised in the proceeding in
connection with the NRG Puente Project. One argument focuses
on NRG's proposed use of a brownfield site for the NRG Puente
Project. A second environmental justice argument raised in
the proceeding focuses on the community surrounding the site.
Some groups contend that the City of Oxnard is not a
disadvantaged community and that projects will be built in
affluent communities. According to the author, the top 30%
environmentally-burdened communities in Oxnard include:
a) 85% Latino;
b) 29.03% linguistic isolation (percent of households in
which no one age 14 and over speaks English "very well" or
speaks English only), placing these residents in the top
10% of linguistically isolated households;
c) 56.44% of the population living below two times the
federal poverty level, placing these residents in the top
20% of poverty stricken households; and
d) 46.5% of the population over 25 years of age with less
than a high school education, placing these residents in
the top 10-20% of California residents.
The CPUC concluded in its alternate decision that the
California Energy Commission (CEC) has jurisdiction to review
environmental issues, including environmental justice. In its
discussion on the decision the CPUC pointed out that, "The CEC
has clear jurisdiction to review the environmental impact of
the NRG Puente Project." The CEC Web site (Energy Facilities
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Licensing Process) at
http://www.energy.ca.gov/siting/guide_license_process.html
states: "The [CEC's] thorough site certification process
provides a timely review and analysis of all aspects of a
proposed project, including need, public health and
environmental impacts, safety, efficiency, and reliability."
2)Considering Preferred Resources: The CPUC has a long-standing
policy to promote "the loading order," which means that energy
procurement focuses first on energy efficiency and clean
energy resources prior to procuring from fossil-fuel
resources. As the Center for Energy Efficiency and Renewable
Technology (CEERT) points out in a March 2, 2016 letter to the
CPUC Commissioners:
[?.] none of these proposed decisions examine why
this RFO failed for preferred resources and what
could be changed to achieve different, more
environmentally beneficial results. While CEERT is
not a party to this application, it is clearly
concerned with all of the SCE and [San Diego Gas and
Electric] RFO outcomes, alone and especially in
combination with each other, which are putting this
State on track away from, not toward, a low carbon
energy future.
The results of that RFO for California's clean
energy future are the most troubling - where the so
called "reliability need" has always been in
question, and the RFO resulted in less than 5% of
the procurement being from preferred resources (with
no demand response), and the remaining 95%
represented by gas fired generation.
3)Clarification needed: Current statute requires consideration
of communities afflicted with poverty or high unemployment, or
that suffer from high emission levels of toxic air
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contaminants, criteria air pollutants, and greenhouse gases in
the utility solicitations for renewable energy projects . A
similar statute does not exist for fossil-fueled energy
projects.
This bill requires consideration of those locations that are
listed in "CalEnviroScreen" tool used to inform the investment
of state cap-and-trade funds specifically targeted for
disadvantaged communities.
The author may wish to modify the language in the bill to
reflect the same language used for renewable energy projects
instead of referencing a tool that was specifically developed
for cap-and-trade fund investments.
In addition, the author may wish to clarify that the
provisions apply to new or repowered gas facilities.
4)Suggested amendment:
454.5 (b)(9)(D). The electrical corporation, in soliciting
bids for gas-fired generation resources from new or repowered
facilities , shall actively seek bids for generation resources
that are not located in or adjacent to disadvantaged
communities identified pursuant to Section 39711 of the Health
and Safety Code. communities afflicted with poverty or high
unemployment, or that suffer from high emission levels of
toxic air contaminants, criteria air pollutants, and
greenhouse gases . In considering bids for, or negotiating
contracts for, new or repowered gas-fired generation
resources, the electrical corporation shall provide greater
priority to gas-fired generation resources that are not
located in or adjacent to disadvantaged communities identified
pursuant to Section 39711 of the Health and Safety Code.
communities afflicted with poverty or high unemployment, or
that suffer from high emission levels of toxic air
contaminants, criteria air pollutants, and greenhouse gases .
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5)Arguments in Support: Supporters argue that this bill will
close a loophole by requiring the CPUC to consider
disadvantaged communities in its energy procurement process.
They point out that California's disadvantaged communities
already bear disproportionate burdens of pollution and
poverty.
6)Arguments in Opposition: Opponents are concerned that there is
a casual use of the term "environmental justice" being used as
a tool to thwart projects that are needed for electric
reliability purposes and they state that clean natural gas
plants are important for system and local reliability
requirements. These resources are also needed to complement
California's move to a 50% RPS, when the sun is not shining
and the wind is not blowing.
REGISTERED SUPPORT / OPPOSITION:
Support
Audubon California
Azul
California Environmental Justice Alliance
California League of Conservation Voters
Clean Power Campaign
Coalition for Clean Air
Environment California
Environmental Defense Fund
Opposition
Independent Energy Producers
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Sacramento Municipal Utility District
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083