BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 1937
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|Author: |Gomez and Williams |
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|Version: |6/27/2016 |Hearing |6/29/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Electricity: procurement.
ANALYSIS:
Existing law:
1) Requires each investor-owned utility (IOU) to file with the
California Public Utilities Commission (CPUC), and requires
the CPUC 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.
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
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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) Requires the California Environmental Protection Agency
(CalEPA) to identify disadvantaged communities for purposes
of cap-and-trade auction proceeds investment opportunities
and requires those communities be identified based on
geographic, socioeconomic, public health, and environmental
hazard criteria. (HSC §39711)
This bill:
1) Requires each IOU's proposed procurement plan to include a
showing that the IOU will actively seek bids, and provide
greater preference in considering bids for, or negotiating
contracts for, gas-fired generation resources that are not
located in communities that suffer from cumulative pollution
burdens, including, but not limited to, high emission levels
of toxic air contaminants, criteria air pollutants, and
greenhouse gases.
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 to 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.
3) Requires an IOU to undertake all feasible efforts to meet any
identified resource need through available renewable energy,
energy storage, energy efficiency, and demand reduction
resources that are cost effective, reliable, and feasible.
4) Requires the CPUC, prior to approving a contract for any new
gas-fired generation resource, to require the IOU to
demonstrate it has complied with its approved procurement
plan.
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Background
1) The Moorpark RFO example. The CPUC issued a decision on
February 13, 2013 ordering Southern California Edison (SCE)
to procure, via a solicitation (called a Request for Offers,
or 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 to meet identified
long-term local capacity requirements (LCR) by 2021. The
CPUC found this local capacity requirements 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 Power 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
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the site.
In the proposed decision on January 11, 2016, Administrative
Law Judge DeAngelis noted that further consideration is
warranted of the contract for gas-fired generation with NRG
Puente Power Project following the review by the California
Energy Resources Conservation and Development Commission
(CEC), prior to approval by the CPUC of the contract for the
Puente Power Project. The proposed decision stated that,
"While the Commission is not required to hold this proceeding
until CEC review is complete, it has the authority to do so.
In this instance, the CEC's review may enhance the
Commission's independent determination of critical safety
issues and environmental justice matters and also clarify
reliability risks posed by locating the new electric
infrastructure on the beach in the City of Oxnard." An
alternate decision issued by Commissioner Peterman in February
of this year, dissented, and expressed support for approving
the Puente Power Project prior to completion of CEC's
environmental review.
The final decision was issued on May 26, 2016, with the CPUC
formally approving the NRG Puente Project contract. The
Decision noted that, "it is clear that environmental justice
issues are not only within the purview of CEC environmental
review, but will be specifically considered in the CEC's
review of the Puente Project. Consideration of the NRG Puente
Project contract by this Commission does not prejudge the CEC
review."
The decision also notes, "There is no clear or compelling
reason based on the record of this proceeding to modify the
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process of allocating responsibilities between this Commission
and the CEC that has been used successfully for many years, by
deferring Commission contract review until the CEC
environmental review is complete."
2) CEC, CEQA and Puente Power Project. The CEC is the lead
agency for licensing thermal powerplants 50 megawatts and
larger and the plants related facilities, including
transmission lines, fuel supply lines, water pipelines, under
the California Environmental Quality Act (CEQA) and has a
certified regulatory program under CEQA. Under its certified
program, CEC is exempt from having to prepare an
environmental impact report. Its certified program, however,
does require environmental analysis of the project, including
an analysis of alternatives and mitigation measures to
minimize any significant adverse effect the project may have
on the environment and on public health and safety, and
considers environmental justice populations in this analysis.
The NRG Puente Project is currently under review by the CEC
for certification pursuant to CEC's certified regulatory
program under CEQA. On June 17, 2016, CEC staff released
their Preliminary Staff Assessment (PSA) for the Puente Power
Project. The PSA reports that, "the proposed [Puente Power]
project has not been fully mitigated for all its impacts.
Staff is continuing the development of CEQA mitigation
measures to ensure the proposed Air Quality conditions of
certification would include suitable mitigation to reduce the
[Puente Power Project's] direct and cumulative Air Quality
impacts to a less than significant level, including impacts
to the environmental justice population. Assuming adequate
mitigation is obtained, there would be no Air Quality
environmental justice issues related to the [Puente Power
Project] and no minority or low-income populations would be
significantly or adversely impacted."
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Comments
1) Purpose of Bill. According to the author, "AB 1937
underscores the importance of environmental justice as a
consideration in the state's energy procurement. This bill
requires utilities to demonstrate that they have undertaken
all feasible efforts to meet demand with cleaner, preferred
resources that are cost-effective, feasible and reliable. If
the need to procure new gas-fired generation persists, AB
1937 requires utilities to give preference to resources that
are not located in communities that have borne the brunt of
multiple pollution burdens for decades. Lastly, the bill
clarifies existing law as it relates to eligible renewable
resources to ensure that as California moves towards a clean
energy economy, our underserved communities are not left
behind. Instead of becoming home to more large-scale,
polluting gas-fired power plants, disadvantaged communities
and communities across the state should benefit directly from
the state's transition to clean, alternative resources and
help California set the stage for the global clean energy
revolution."
2) Going forward. This bill would have no effect on SCE's
procurement of energy from the Puente Power Project since the
CPUC has already approved the purchase agreement. However,
the author intends this bill to explicitly require an IOU,
when engaged in procurement similar to that which SCE
undertook in pursuant to CPUC's decision requiring they
procure additional energy generation resources, to consider
and give priority to energy resources that are not gas-fired
generation resources located in communities
disproportionately harmed by pollution.
3) Repowers. The most recent set of amendments to AB 1937
exclude repowers of existing powerplants from the
requirements of the bill. It is unclear why the protections
the author seeks to apply to bids for new gas-fired
generation resources should not also apply to bids to repower
equivalent resources. The potential environmental harm to
communities that suffer from cumulative pollution burdens
caused by the operation of a gas-fired powerplant is
independent of whether the powerplant is new or repowered.
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An amendment is needed to add repowered gas-fired generation
back into the bill.
DOUBLE REFERRAL:
This measure was heard in the Senate Energy, Utilities and
Communication Committee on June 21, 2016, and passed out of
committee with a vote of 7-3.
SOURCE: Author
SUPPORT:
Audubon California
Azul
California Environmental Justice Alliance and CEJA Action
California League of Conservation Voters
Clean Power Campaign
Coalition for Clean Air
Environment California
Environmental Defense Fund
Sierra Club California
Union of Concerned Scientists
OPPOSITION:
None received
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