California Legislature—2015–16 Regular Session

Assembly BillNo. 2620

Introduced by Assembly Member Dababneh

February 19, 2016

An act to amend Section 701.1 of the Public Utilities Code, relating to energy.


AB 2620, as introduced, Dababneh. Valuation of energy resources.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. The Public Utilities Act prohibits any electrical corporation or gas corporation from beginning the construction of, among other things, a line, plant, or system, or of any extension thereof, without having first obtained from the commission a certificate that the present or future public convenience and necessity require or will require that construction. The act requires the commission, when calculating the cost-effectiveness of energy resources, to include a value for any costs and benefits to the environment.

This bill would make a nonsubstantive, revision to the requirement that the commission, when calculating the cost-effectiveness of energy resources, include a value for any costs and benefits to the environment.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P1    1


Section 701.1 of the Public Utilities Code is
2amended to read:

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(a) (1) The Legislature finds and declares that, in
2addition to other ratepayer protection objectives, a principal goal
3of electric and natural gas utilities’ resource planning and
4investment shall be to minimize the cost to society of the reliable
5energy services that are provided by natural gas and electricity,
6and to improve the environment and to encourage the diversity of
7energy sources through improvements in energy efficiency,
8development of renewable energy resources, such as wind, solar,
9biomass, and geothermal energy, and widespread transportation

11(2) The amendment made to this subdivision by the Clean
12Energy and Pollution Reduction Act of 2015begin insert (Chapter 547 of the
13Statutes of 2015)end insert
does not expand the authority of the commission
14beyond that provided by other law.

15(b) The Legislature further finds and declares that, in addition
16to any appropriate investments in energy production, electrical
17and natural gas utilities should seek to exploit all practicable and
18cost-effective conservation and improvements in the efficiency of
19energy use and distribution that offer equivalent or better system
20reliability, and which are not being exploited by any other entity.

21(c) In calculating the cost-effectiveness of energy resources,
22including conservation and load management options, the
23commission shall include, in addition to other ratepayer protection
24objectives, a value for any costs and benefits to the environment,
25including air quality. The commission shall ensure that any values
26it develops pursuant to this section are consistent with values
27developed by the State Energy Resources Conservation and
28Development Commission pursuant to Section 25000.1 of the
29Public Resources Code. However, if the commission determines
30that a value developed pursuant to this subdivision is not consistent
31with a value developed by the State Energy Resources
32Conservation and Development Commission pursuant to
33subdivision (c) of Section 25000.1 of the Public Resources Code,
34the commission may nonetheless use this value if, in the
35appropriate record of its proceedings, it states its reasons for using
36the value it has selected.

37(d) In determining the emission values associated with the
38current operating capacity of existing electric powerplants pursuant
39to subdivision (c), the commission shall adhere to the following
40protocol in determining values for air quality costs and benefits to
P3    1the environment. If the commission finds that an air pollutant that
2is subject to regulation is a component of residual emissions from
3an electric powerplant and that the owner of that powerplant is
4either of the following:

5(1) Using a tradable emission allowance, right, or offset for that
6pollutant, which (A) has been approved by the air quality district
7regulating the powerplant, (B) is consistent with federal and state
8law, and (C) has been obtained, authorized, or acquired in a
9market-based system.

10(2) Paying a tax per measured unit of that pollutant.

11The commission shall not assign a value or cost to that residual
12pollutant for the current operating capacity of that powerplant
13because the alternative protocol for dealing with the pollutant
14operates to internalize its cost for the purpose of planning for and
15acquiring new generating resources.

16(e) (1) The values determined pursuant to subdivision (c) to
17represent costs and benefits to the environment shall not be used
18by the commission, in and of themselves, to require early
19decommissioning or retirement of an electric utility powerplant
20that complies with applicable prevailing environmental regulations.

21(2) Further, the environmental values determined pursuant to
22subdivision (c) shall not be used by the commission in a manner
23which, when those values are aggregated, will result in advancing
24an electric utility’s need for new powerplant capacity by more than
2515 months.

26(f) This subdivision shall apply whenever a powerplant bid
27solicitation is required by the commission for an electric utility
28and a portion of the amount of new powerplant capacity, which is
29the subject of the bid solicitation, is the result of the commission’s
30use of environmental values to advance that electric utility’s need
31for new powerplant capacity in the manner authorized by paragraph
32(2) of subdivision (e). The affected electric utility may propose to
33the commission any combination of alternatives to that portion of
34the new powerplant capacity that is the result of the commission’s
35use of environmental values as authorized by paragraph (2) of
36subdivision (c). The commission shall approve an alternative in
37place of the new powerplant capacity if it finds all of the following:

38(1) The alternative has been approved by the relevant air quality

40(2) The alternative is consistent with federal and state law.

P4    1(3) The alternative will result in needed system reliability for
2the electric utility at least equivalent to that which would result
3from bidding for new powerplant capacity.

4(4) The alternative will result in reducing system operating costs
5for the electric utility over those which would result from the
6process of bidding for new powerplant capacity.

7(5) The alternative will result in equivalent or better
8environmental improvements at a lower cost than would result
9from bidding for new powerplant capacity.

10(g) This section does not require an electric utility to alter the
11dispatch of its powerplants for environmental purposes.

12(h) This section does not preclude an electric utility from
13submitting to the commission any combination of alternatives to
14meet a commission-identified need for new capacity, if the
15submission is otherwise authorized by the commission.

16(i) This section does not change or alter any provision of
17commission decision 92-04-045, dated April 22, 1992.