BILL ANALYSIS Ó AB 1937 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1937 (Gomez and Williams) As Amended August 17, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |51-26 |(May 23, 2016) |SENATE: |26-13 |(August 22, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY: 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 and directs the California Public Utilities Commission (CPUC) to ensure IOU procurement plans include showings that the IOU contains this element. The Senate amendments: 1)Apply the provisions of this bill to new gas-fired generation facilities, thereby excluding applying the provisions of this bill to projects that refurbish (known as repowering) gas-fired generation facilities. AB 1937 Page 2 2)Specifies that this bill does not apply to utility contracts signed before January 1, 2017. 3)Make a technical amendment to relocate provisions applicable to the CPUC to a more appropriate location in the code and makes minor technical amendments to terms used to describe gas generators. FISCAL EFFECT: According to the Senate Appropriations Committee, one-time costs of approximately $93,000 to the CPUC (Utilities Reimbursement Account) to conduct a rulemaking. COMMENTS: 1)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 how much and sources of electricity that the IOU will procure to meet its customer demand. These plans must adhere to state policies, including the loading order, which mandates that utilities first meet the demand for electricity through cost-effective energy efficiency and demand response, followed 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. AB 1937 Page 3 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: a) 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 greenhouse gases (GHGs). b) 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. c) 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. Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083 FN: 0004525 AB 1937 Page 4