BILL ANALYSIS Ó
AB 1937
Page 1
Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 1937
(Gomez) - As Amended April 4, 2016
SUBJECT: Electricity: procurement
SUMMARY: Requires each investor-owned utility's (IOU) proposed
procurement plan to include a showing that the IOU will actively
seek bids, and provide greater priority in considering bids for,
or negotiating contracts for, gas-fired generation resources
that are not located in or adjacent to identified disadvantaged
communities (DACs), and makes related clarifications.
EXISTING LAW:
1)Requires each IOU to file with the Public Utilities Commission
(PUC), and requires the PUC to review and accept, modify or
reject, a proposed electricity procurement plan. Among other
elements, the procurement plan must include a showing that it
will achieve the following:
a) The IOU will procure eligible renewable energy
resources in an amount sufficient to meet its procurement
requirements pursuant to the California Renewables
Portfolio Standard Program.
AB 1937
Page 2
b) The IOU will create or maintain a diversified
procurement portfolio consisting of both short-term and
long-term electricity and electricity-related and demand
reduction products.
c) The IOU will first meet its unmet resource needs
through all available energy efficiency and demand
reduction resources that are cost effective, reliable,
and feasible.
2)Requires each IOU, in soliciting and procuring eligible
renewable energy resources for California-based projects, 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 (GHG).
3)Establishes the Greenhouse Gas Reduction Fund (GGRF)
Investment Plan and Communities Revitalization Act [AB 1532
(John A. Pérez), Chapter 807, Statutes of 2012 and SB 535 (De
Leon), Chapter 830, Statutes of 2012] to set procedures for
the investment of GHG allowance auction revenues. AB 1532
authorizes a range of GHG reduction investments and
establishes several additional policy objectives. SB 535
requires the GGRF Investment Plan to allocate: 1) a minimum
of 25% of the available moneys in the fund to projects that
provide benefits to identified DACs; and, 2) a minimum of 10%
of the available moneys in the fund to projects located within
identified DACs. SB 535 requires the California Environmental
Protection Agency (CalEPA) to identify DACs for purposes of
GGRF investment opportunities, based on geographic,
socioeconomic, public health, and environmental hazard
criteria.
AB 1937
Page 3
THIS BILL:
1)Requires each IOU's proposed procurement plan to include a
showing that the IOU will actively seek bids, and provide
greater priority in considering bids for, or negotiating
contracts for, gas-fired generation resources that are not
located in or adjacent to DACs identified by CalEPA for GGRF
investment purposes pursuant to SB 535. Requires the PUC, in
reviewing IOU procurement plans, to ensure that the plan
contains this element.
2)Clarifies that the requirement that each IOU 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 GHGs
applies all procurement of eligible renewable energy resources
for California-based projects, whether the procurement occur
through all-source requests for offers, eligible renewable
resources only requests for offers, or other procurement
mechanisms.
FISCAL EFFECT: Unknown
COMMENTS:
1)The Moorpark RFO example. The PUC issued D.13-02-015, 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
AB 1937
Page 4
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 PUC
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) with NRG Energy Center Oxnard, LLC (NRG) for a new
simple cycle peaking facility known as the Puente Power
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.
The PUC 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."
AB 1937
Page 5
2)CalEnviroScreen. SB 535 directed that, in addition to
reducing GHG emissions, a quarter of the proceeds from the
GGRF must go to projects that provide a benefit to DACs, as
identified by CalEPA. A minimum of 10% of the funds must be
for projects located within those communities.
To identify DACs for the purpose of SB 535, CalEPA developed
the California Communities Environmental Health Screening Tool
(CaEnviroScreen), which assesses all census tracts in
California to identify the areas disproportionately burdened
by and vulnerable to multiple sources of pollution.
Census tracts identified as disadvantaged for SB 535's
purposes by CalEnviroScreen 2.0 include the majority of the
San Joaquin Valley; much of Los Angeles and the Inland Empire;
pockets of other communities near ports, freeways, and major
industrial facilities, such as refineries and power plants;
and large swaths of the Coachella Valley, Imperial Valley, and
Mojave Desert.
CalEnviroScreen has not thus far been used in reverse, to
prioritize projects outside of DACs, or otherwise as a tool to
influence or govern siting or land use.
3)Author's statement:
The negative public health and environmental impacts of
gas-fired power plants are well documented. Air pollution
AB 1937
Page 6
and particulate matter from power plants are linked to
asthma, respiratory ailments, and chronic mortality; heavy
metals are linked to cancer; and carbon dioxide emissions
and methane leakage contribute significantly to climate
change. With the decommissioning of nuclear power plants
and once-through cooling facilities, utilities are
procuring new gas-fired generation. It is imperative that
utilities, if soliciting and procuring large-scale,
polluting gas-fired power plants, prioritize resources that
are not located in or adjacent to disadvantaged communities
that have disproportionately borne the brunt of poverty and
environmental pollution for decades. As we transition away
from fossil fuels and increasingly meet our energy demand
with cleaner distributed energy, including renewable
energy, energy efficiency, demand response, and energy
storage, we must ensure that California's most impacted
communities are not left behind.
4)Sparing one community at the expense of another? Though this
bill would not be enacted in time to affect to the Moorpark
RFO, if it was applied, the bill would appear to require SCE
to "prioritize" gas-fired power plants in communities other
than Oxnard, such as Santa Paula or Goleta, rather than
pursuing the preferred alternatives that would be better for
the region and state as a whole, such as renewable energy,
energy storage, energy efficiency, and/or demand reduction.
The author and the committee may wish to consider amending the
bill to (1) require IOUs, when considering bids for gas-fired
generation in communities with a high air pollution burden, to
consider a broader range of alternative resources, rather than
prioritizing gas-fired generation in other communities, and
(2) require the PUC to assure that the IOU has undertaken all
feasible efforts to meet the identified resource need through
AB 1937
Page 7
available renewable energy, energy storage, energy efficiency,
and demand reduction resources that are cost effective,
reliable, and feasible.
5)Double referral/amendments. This bill passed the Assembly
Utilities and Commerce Committee by a vote of 10-5 on April
13, 2016. The Utilities and Commerce Committee's action
included an agreement to adopt the following amendments in
this Committee:
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 .
REGISTERED SUPPORT / OPPOSITION:
AB 1937
Page 8
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
Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)
319-2092