BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1937|
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THIRD READING
Bill No: AB 1937
Author: Gomez (D) and Williams (D), et al.
Amended: 6/27/16 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 7-3, 6/21/16
AYES: Hueso, Hertzberg, Lara, Leyva, McGuire, Pavley, Wolk
NOES: Morrell, Cannella, Gaines
NO VOTE RECORDED: Hill
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/29/16
AYES: Wieckowski, Hill, Jackson, Leno, Pavley
NOES: Gaines, Bates
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/1/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 51-26, 5/23/16 - See last page for vote
SUBJECT: Electricity: procurement
SOURCE: Author
DIGEST: This bill requires an electric investor-owned utility
(IOU) that bids for new gas-fired generation resources to
consider, and give preference to, bids for resources that are
not gas-fired generation resources located in communities that
suffer from cumulative pollution burdens.
ANALYSIS:
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Existing law:
1)Requires electric utilities to procure 50 percent of their
retail sales of electricity from renewable energy by 2030.
This is known as the Renewable Portfolio Standard (RPS).
(Public Utilities Code §399.11 et seq.)
2)Requires each IOU, in soliciting and procuring eligible
renewable energy resources for RPS-eligible 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). (Public Utilities
Code §399.13)
3)Requires each IOU to file with the California Public Utilities
Commission (CPUC), and requires the CPUC to review and accept,
modify or reject, each IOU's 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 RPS 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.
(Public Utilities Code §454.5)
4)Requires the CPUC to adopt a process for each IOU to file an
integrated resource plan (IRP) to ensure IOUs meet the GHG
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emissions reduction targets for the electricity sector;
procure at least 50 percent eligible renewable energy
resources by December 31, 2030; enable each IOU to fulfill its
obligation to serve its customers at just and reasonable
rates; minimize impacts on ratepayers' bills; ensure system
and local reliability; strengthen the diversity,
sustainability, and resilience of the bulk transmission and
distribution systems, and local communities; enhance
distribution systems and demand-side energy management; and
minimize localized air pollutants and other GHG emissions,
with early priority on disadvantaged communities. (Public
Resources Code §454.52)
5)Prohibits the construction of a thermal powerplant or electric
transmission line without certification from California Energy
Commission (CEC), which serves as the lead permitting agency,
and authorizes CEC to require the applicant for certification
to submit any information, document, or data, it determines is
reasonably necessary to make any decision on the application.
(Public Resources Code §§25517 and 25519).
This bill:
1)Requires an IOU's proposed procurement plan to include a
showing that the procurement plan will achieve the following:
a) The IOU, in soliciting bids for gas-fired generation
resources from new facilities, is actively seeking bids for
resources that are not gas-fired generation resources
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 GHGs.
b) The IOU, in considering bids for, or negotiating
contracts for, new gas-fired generation resources,
providing greater preference to resources that are not
gas-fired generation resources 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 GHGs.
c) The IOU undertaking all feasible efforts to meet any
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identified resource need through available renewable
energy, energy storage, energy efficiency, and demand
reduction resources that are cost-effective, reliable, and
feasible.
2)States that requirements described in 1) do not apply to
contracts signed by an IOU and approved by the CPUC prior to
January 1, 2017.
3)Requires the CPUC, prior to approving a contract for any new
or repowered gas-fired generation resource, requiring the IOU
to demonstrate it has complied with the IOU's approved
procurement plan.
4)States that the requirement in existing law - 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 and declares this statement to
be declarative of existing law.
Background
Procurement plans tell how an IOU will procure electricity to
meet the needs of its customers. The CPUC describes its
long-term procurement plan (LTPP) proceedings as intended to
ensure a safe, reliable and cost-effective electricity supply in
California through integration and refinement of a comprehensive
set of procurement policies, practices and. LTPP proceedings
take a 10-year-ahead look at system, local, and flexible needs.
Proceeding assumptions are revised every two years to
incorporate changes in the resource mix and revisions to state
policies.
An IOU's procurement plan - part of an LTPP proceeding - details
what and how an IOU is going to procure. These plans must
adhere to state policies, including the loading order, which
mandates that utilities seek to meet need first though
cost-effective energy efficiency and demand response, followed
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by procurement of renewable energy and, lastly, procurement of
fossil-fuel-generated electricity. If an IOU's procurement plan
does not comply with state policies or adequately balance
safety, reliability, cost, and environmental goals, the CPUC
orders the IOU to modify the plan.
This bill requires that an IOU's procurement plan make several
additional showings, each related to the IOU's procurement of
new natural-gas-fired generation resources. Specifically, this
bill requires the procurement plan to newly show that the IOU
will:
Actively seek bids for resources that are not gas-fired
generation resources 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 GHGs.
In considering bids for, or negotiating contracts for, new
gas-fired generation resources, provide greater preference to
resources that are not gas-fired generation resources 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 GHGs.
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.
The author is concerned that the IOU's future procurement of
natural-gas fired electricity generating resources may result in
the construction of gas-fired generators in communities already
disproportionately harmed by pollution. As an example, the
author points to recent experience in the Oxnard area in Ventura
County, in which SCE, in 2014, sought approval of 11 contracts,
including a 20-year contract for gas-fired generation with NRG
Energy Center Oxnard, LLC for a new simple-cycle peaking
facility known as the Puente Power Project. Some interested
parties objected that the project would occur in a community
already disproportionately harmed by pollution and in other ways
disadvantaged; other parties disagreed.
What about integrated resource plans? In 2015, the Legislature
passed SB 350 (De Leon, Chapter 547, Statutes of 2015). In
addition to significantly increasing the state's commitment to
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renewable energy and energy efficiency, the statute requires the
IOUs (as well as the publicly owned utilities) to develop and
regularly update IRPs. The plans, which the CPUC must review
and approve, are to detail how each IOU is to meet the state's
clean energy and environmental objectives.
There is much overlap between the IRP requirements and the
requirements of this bill. The author says this overlap is by
design. According to the author, the IRP addresses localized
air pollutants and related issues at the planning stage, while
the requirements of this bill address similar issues at the
procurement stage. The CPUC, conversely, contends the IRP
process will subsume the LTPP process. If the IRP process works
as the CPUC intends, it is unclear there is a need for this
bill.
Good for the goose but not the gander? It is unclear why the
protections the author seeks to apply to bids for new gas-fired
generation resources would not apply to bids to repower
equivalent resources. The potential environmental harm to
communities that suffer from cumulative pollution burdens caused
by a gas-fired powerplant is independent of whether the
powerplant is new or repowered.
Prior/Related Legislation
SB 350 (De Leon, Chapter 547, Statutes of 2015) created, among
other things, the obligation that IOUs develop and regularly
update IRPs, which the CPUC must review and approve, and are to
detail how each IOU is to meet the state's clean energy and
environmental objectives.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Committee on Appropriations, one-time
costs of approximately $93,000 to the CPUC (Utilities
Reimbursement Account) to conduct a rulemaking.
SUPPORT: (Verified7/28/16)
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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: (Verified7/28/16)
None received
ARGUMENTS IN SUPPORT: According to the author:
The negative public health and environmental impacts of
gas-fired power plants are well documented. Air pollution 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 make every feasible effort to
meet reliability needs through cleaner, preferred resources. If
the need to procure new, gas-fired generation persists,
utilities should provide greater priority to resources that do
not exacerbate the pollution burdens of communities that have
disproportionately borne the brunt of environmental pollution
for decades. As we transition away from fossil fuels and
towards a cleaner energy future, we must ensure that
California's most impacted communities are not left behind. AB
1937 will ensure that utilities' procurement plans examine
options for siting of fossil fuel plants outside of already
polluted disadvantaged communities and help them to actively
seek clean, renewable generation that benefits these
communities.
ASSEMBLY FLOOR: 51-26, 5/23/16
AYES: Alejo, Atkins, Baker, Bloom, Bonilla, Bonta, Brown,
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Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Daly, Dodd, Frazier, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger
Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low,
Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell,
Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Chávez,
Dahle, Beth Gaines, Gallagher, Gray, Grove, Hadley, Harper,
Jones, Kim, Lackey, Linder, Mathis, Mayes, Melendez,
Obernolte, Olsen, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Arambula, Eggman, Patterson
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
8/3/16 18:12:27
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