BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 1979 Hearing Date: 6/21/2016
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|Author: |Bigelow |
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|Version: |5/23/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Renewable feed-in tariff: hydroelectric facilities
DIGEST: This bill makes an exception to the feed-in-tariff
program three-megawatt limit on the generating capacity of an
eligible electric generation facility to newly allow
participation by a conduit hydroelectric facility with a
nameplate generating capacity of up to four megawatts that meets
certain conditions.
ANALYSIS:
Existing law:
1)Requires all investor-owned utilities (IOUs) and publicly
owned utilities (POUs) that serve more than 75,000 retail
customers, to develop a standard contract or tariff (aka
feed-in-tariff or FIT) available for renewable energy
facilities up to three megawatts (MW). Statewide
participation is capped at 750 MW. (Public Utilities Code
§399.20 and 387.8)
2)Directs the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process. (Public Utilities Code §399.20)
3)Counts renewable energy generation FIT contracts to qualify
for credit toward and IOUs Renewable Portfolio Standard (RPS)
goals and resource adequacy requirements. (Public Utilities
AB 1979 (Bigelow) PageB of?
Code §399.20)
This bill:
1)Creates an exception to the existing FIT program eligibility
limit of three MW to allow a conduit hydroelectric facility
with a nameplate generating capacity of up to four MW if the
conduit hydroelectric facility meets the following conditions:
It delivers no more than three megawatts to the grid at
any time.
It complies with the electrical corporation's Electric
Rule 21 tariff or other distribution access tariff.
Payment is made pursuant to the FIT program no payment
is made for any deliveries in excess of three MW at any
time.
It was operational as of January 1, 1990, and is an
eligible renewable energy resource.
1)Prohibits the California Public Utilities Commission (CPUC)
from reducing the MW limitation for a conduit hydroelectric
facility described above.
Background
Feed-in-tariff programs. According to the National Renewable
Energy Laboratory (NREL), a FIT offers a guarantee of payments
to renewable energy developers for the electricity they produce.
NREL reports that FITs are used in many U.S. states and around
the world.<1>
California, too, offers a FIT program to renewable resources.
In 2006, legislation<2> authorized the state's first FIT
program, which authorized the state's largest IOU's to purchase
up to 480 MW of renewable generating capacity from renewable
facilities with an "effective capacity" of not more than 1.5 MW.
The FIT program set the price paid to small generators, on a
first-come, first-served basis, at a price comparable to the
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<1>
http://www.nrel.gov/tech_deployment/state_local_governments/basic
s_tariffs.html.
<2> AB 1969 (Yee), Chapter 731, Statutes of 2006.
AB 1979 (Bigelow) PageC of?
price of electricity generated using natural gas plus the value
of some environmental attributes.
Legislation expanded the state's FIT program in 2009.<3> First,
the program limit was increased from 480 MW to 750 MW. Second,
the cap on the size of an electric generation facility eligible
to participate in the FIT program was increased from 1.5 MW
effective capacity to three MW effective capacity. This bill
notes that the Legislature finds and declares that small
projects of less than three MW that are otherwise eligible
renewable energy resources may face difficulties in
participating in competitive solicitations under the RPS
program.
Effective capacity versus nameplate capacity. As described
above, existing statute limits participation in the bioenergy
FIT program to electric generation facilities with and
"effective capacity" of three MW. Creates a conditional
exception to the existing FIT program eligibility limit of three
MW to allow a conduit hydroelectric facility with a "nameplate
generating capacity" of up to four MW. So, what's the
difference between effective capacity and nameplate capacity?
The practical answer: there is none. The CPUC determined, in
Decision 12-05-035, that he three MW limitation corresponds to
the nameplate capacity of the facility, meaning the capacity
stamped on the metal nameplate attached to the generation
facility by the manufacturer.
The problem of being a little bit too big. Statute, in
legislative findings and declarations, provides a market-based
rationale for limiting participation in the FIT program to those
facilities with an effective capacity no more than three MW.
That is, statute declares that small projects of less than three
MW that are otherwise eligible renewable energy resources may
face difficulties in participating in competitive solicitations
under the RPS program.
Bill proponents do not object to the fundamental rationale
behind the FIT program's three-MW limit. They do, however,
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<3> SB 32 (Negrete-McLeod), Chapter 328, Statutes of 2009.
AB 1979 (Bigelow) PageD of?
object to the exclusion of facilities that have a nameplate
capacity of greater than three MW but that are incapable of
exporting more than three MW to the grid. As a particular
example, proponents point to the Utica Water & Power Authority
(UWPA), which owns and operates a small conduit hydroelectric
generator with a nameplate capacity of 3.6 MW. Proponents
assert that, despite its nameplate capacity, the generator will
never produce more than three MW of electricity because of
existing water system constraints.
This bill crafts a narrow exemption to the FIT program capacity
limitation for hydroelectric facilities like that UWPA's, as
characterized by bill proponents. In fact, the exemption is so
narrowly crafted that it is unlikely that any facility other
than UWPA's will qualify for the exemption. In any case, the
effect of the exemption should be minor from the perspective of
both ratepayers and grid operators.
Prior/Related Legislation
AB 1969 (Yee, Chapter 731, Statutes of 2006) authorized the
state's first FIT program, which authorized the state's largest
IOU's to purchase up to 480 MW of renewable generating capacity
from renewable facilities with an effective capacity of not more
than 1.5 Ms.
SB 32 (Negrete-McLeod, Chapter 328, Statutes of 2009) increased
the FIT program limit from 480 MW to 750 MW and increased from
1.5 MW effective capacity to three MW effective capacity the
limit on electric generating facilities eligible to participate
in the FIT program.
SB 1112 (Rubio, Chapter 612, Statutes of 2012) required an
additional 250 MW of renewable FIT procurement from small-scale
bioenergy projects that commence operation on or after June 1,
2013.
AB 1923 (Wood, 2016) would increase, from three MW nameplate to
five MW, the limit on the nameplate capacity of a bioenergy
electric generation facility that may participate in the IOU's
AB 1979 (Bigelow) PageE of?
bioenergy feed-in-tariff programs. The bill is pending
consideration by this committee.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
Utica Water and Power Authority (Source)
Calaveras County Supervisor, District 3
Calaveras County Water District
City of Angels Camp
Murphys Sanitary District
NLine energy
OPPOSITION:
Sierra Club California
ARGUMENTS IN SUPPORT: According to the author:
Small hydroelectric generators with a nameplate of over three MW
are prohibited from participating in the FIT even though the
generator will never actually run above the three-MW threshold.
For example, the Utica Water & Power Authority owns and operates
a small conduit hydroelectric generator with a nameplate of 3.6
MW. However, due to the existing water system, the generator
will never run above three MW. In fact, it will likely never
run above 2.5 MW. Despite this, the facility is ineligible to
participate in this important program aimed at promoting these
exact types of small renewable generators.
This bill will allow an existing conduit hydroelectric
generation facility to be eligible for the renewable FIT program
if it has a nameplate generating capacity of up to four MW but
does not operate above three MW, and was operational as of
January 1, 1990.
ARGUMENTS IN OPPOSITION: According to the opponents, this
bill would allow larger hydroelectric generating facilities to
qualify for the renewable FIT while starving out other more
AB 1979 (Bigelow) PageF of?
truly renewable and environmentally sound projects. It would
also increase workload at the CPUC for projects that are barely
renewable.
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