BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 2630


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          Date of Hearing:  April 6, 2016


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                  Mike Gatto, Chair


          AB 2630  
          (Salas) - As Introduced February 19, 2016


          SUBJECT:  San Joaquin Valley Clean Energy and Jobs Act


          SUMMARY:   Requires the Public Utilities Commission (CPUC) and  
          California Energy Commission (CEC) to evaluate potential  
          renewable energy projects on least-conflict lands in the San  
          Joaquin Valley. Specifically, this bill:


          1)Requires the CPUC and CEC to evaluate potential renewable  
            energy projects on least-conflict lands in the San Joaquin  
            Valley. The projects that provide the following benefits shall  
            be prioritized:
             a)   Economically viable and beneficial reuse of  
               drainage-impaired agricultural lands.
             b)   Retirement of drainage-impaired land and the  
               facilitation of regional agricultural drainage solutions.


             c)   Facilitate surface water supply redirection from  
               drainage-impaired agricultural lands to other productive  
               agricultural land.


          2)Requires the CPUC and CEC on or before January 31, 2017, to  
            recommend to the Independent System Operator (CAISO) an amount  











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            of renewable energy that reasonably maximizes, consistent with  
            the state's overall need for renewable energy, and the use of  
            least-conflict lands as identified by the San Joaquin Valley  
            Solar Convening.
          EXISTING LAW:  


          1)Requires that each electrical corporation continue to operate  
            its electric distribution grid in its service territory in a  
            safe, reliable, efficient, and cost-effective manner. (Public  
            Utilities Code Section 399.2)
          2)Requires each electrical corporation to make reasonable  
            investments in its electric distribution grid. Each electrical  
            corporation shall continue to have a reasonable opportunity to  
            fully recover from all customers of the electrical  
            corporation, in a manner determined by the commission pursuant  
            to this code, all of the following: 


             a)   Reasonable investments in its electric distribution  
               grid.
             b)   A reasonable return on the investments in its electric  
               distribution grid. 


             c)   Reasonable costs to operate its electric distribution  
               grid. (Public Utilities Code Section 399.2)


          3)Requires the CPUC to specify the allocation of electricity,  
            including quantity, characteristics, and duration of  
            electricity delivery, that the Department of Water Resources  
            shall provide under its power purchase agreements to the  
            customers of each electrical corporation, which shall be  
            reflected in the electrical corporation's proposed procurement  
            plan. Each electrical corporation shall file a proposed  
            procurement plan with the commission not later than 60 days  
            after the commission specifies the allocation of electricity.  
            The proposed procurement plan shall specify the date that the  











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            electrical corporation intends to resume procurement of  
            electricity for its retail customers, consistent with its  
            obligation to serve. After the commission's adoption of a  
            procurement plan, the CPUC shall allow not less than 60 days  
            before the electrical corporation resumes procurement pursuant  
            to this section. (Public Utilities Code Section 454.5)
          4)Requires a competitive procurement process under which the  
            electrical corporation may request bids for  
            procurement-related services, including the format and  
            criteria of that procurement process. (Public Utilities Code  
            Section 454.5)


          5)Establishes short-term and long-term goals and electricity  
            procurement guidelines for electrical corporations, which are  
            filed with the CPUC for approval. (Public Utilities Code  
            Section 454.5)


          6)Requires that all rates for any service or product charged by  
            an electrical corporation be just and reasonable. (Public  
            Utilities Code Section 451)


          FISCAL EFFECT:  Unknown


          COMMENTS: 


          1)Author's Statement: "Due to the lack of reliable water  
            supplies, drainage issues and other challenges to agriculture  
            in the Central Valley, there is a lot of potential for  
            renewable development on unproductive farmland throughout the  
            Central Valley and permanently retired lands within Wetlands.  
            The U.S. Department of Energy's National Renewable Energy  
            Laboratory (NREL) publishes renewable energy potential maps  
            for the United States by county. NREL demonstrates that the  
            San Joaquin Valley has the third highest rating on the solar  











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            potential scale. NREL estimates solar would produce enough  
            energy to power up to 1,000,000 homes in the San Joaquin  
            Valley. Last year, the University of California (UC) Berkeley  
            and the Governor's Office of Planning and Research initiated  
            the San Joaquin Valley Solar Convening, a multi-party  
            stakeholder effort to discuss ways that the clean energy  
            economy could be realized in the Central Valley. UC Berkeley  
            conducted a survey that identified the major concerns that  
            must be addressed to increase clean energy development in the  
            San Joaquin Valley. Some of the major issues found included  
            the lack of transmission capacity in promising areas;  
            protection of endangered species; high land costs and lack of  
            available sites; and lack of a statewide solar development  
            plan."
          2)Background: In April 2015, Governor Edmund G. Brown Jr. issued  
             Executive Order B-30-15  to establish a new target to reduce  
            greenhouse gas emissions 40% below 1990 levels by 2030, and to  
            80% below 1990 levels by 2050. To meet California's greenhouse  
            gas reduction goals it's critical to move to a largely  
            carbon-free electricity system that is well coordinated to  
            balance out the supply and demand across the electric grid. In  
            an effort to meet these goals, the Clean Energy and Pollution  
            Reduction Act of 2015 (SB 350 (De León), Chapter 547, Statutes  
            of 2015) was signed into law on October 7, 2015, which  
            established targets to increase sales of renewable electricity  
            to at least 50 percent by 2030. This effort will require  
            extensive planning throughout the state and the western region  
            of the United States.


            In an effort to meet the original goals of 33% renewable  
            electricity, thousands of megawatts of renewable energy  
            projects have been approved for construction in the Mojave  
            Desert and Carrizo Plain. However, many believe that the San  
            Joaquin Valley has been neglected for their renewable energy  
            potential. The first San Joaquin Valley area project, known as  
            the Westlands Competitive Renewable Energy Zone (CREZ), has  
            the potential to contribute clean energy to meet California's  
            carbon reduction goals.











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            Historically, the San Joaquin Valley has been a disadvantaged  
            community disproportionately neglected by the green economy.  
            According to the screening tool created by the Office of  
            Environmental Health Hazard Assessment, CalEnviroScreen 2.0,  
            this area also has at least 8 out of the top 10 most  
            disadvantaged communities. Therefore, it would be reasonable  
            to suggest that there needs to be a stronger focus on energy  
            projects in this area. However, there are other factors that  
            are important for energy procurement and transmission planning  
            that the state considers, such as impact on rates and customer  
            energy bills. Furthermore, there are other disadvantaged  
            communities throughout the state that also have high renewable  
            energy potential and also have a lot of need, such as the  
            Imperial Valley.


          3)Impact on Ratepayers: The bill itself will not have an  
            immediate impact on the ratepayers because, according to the  
            California Independent System Operator (CAISO), the  
            transmission lines in the San Joaquin Valley have the  
            potential to handle 2,000 MW to 3,000 MW. According to CAISO,  
            3,000 MW is a large portion of the 12,000 MW to 14,000 MW of  
            renewable energy necessary to reach the 50% renewable  
            requirement.
            As this bill requires an evaluation only, it does not alter  
            procurement or transmission planning at this time. However,  
            this bill does imply that this region is preferred over other  
            regions of the state that may also be rich in clean energy  
            opportunities. At the same time, procurement and transmission  
            planning should also consider ratepayer costs and benefits.  
             The author may wish to consider an amendment to include an  
            assessment of the costs and benefits to ratepayers.  


          4)Renewable Energy Procurement in California: In 2014,  
            California became the first state in the nation to get more  
            than 5% of its utility-scale electricity generation from solar  











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            resources. California Independent System Operator (CAISO)  
            shows that, left unaddressed, generation from renewable power  
            will grow to a point where there will be excess generation on  
            the electric grid both in mid-day and days when demand for  
            electricity is low (spring and fall). This is driven mainly by  
            the selection of primarily one generation technology in the  
            RPS contract process: the CPUC's most recent RPS report shows  
            that as much as 75% of all RPS procurement coming on line in  
            2015 is solar technology.<1>   


           5)Jobs for the Central Valley?: According to CA Employment  
            Development Department (EDD), the San Joaquin Valley has some  
            of the highest rates of unemployment in California with Kern  
            at 10.9%, Kings at 11.3%, and Fresno at 10.5%. However, the  
            Imperial Valley also ranks at the top of that list with a  
            ranking of 18.6%. 


          6)Other communities with similar potential: There are different  
            communities with similar potential as the San Joaquin Valley,  
            but it would be important to set proper parameters so much  
            like the San Joaquin Valley they are also prioritized with  
            prospective energy infrastructure projects. If the main reason  
            to conduct this evaluation was the unemployment rate, then we  
            would find that Colusa County tops the list with an  
            unemployment rate of 21.6%, Imperial Valley with 18.6%, Plumas  
            County with 13.7%, Merced with 12.6%, and so on. Throughout  
            the state there are counties with unique economic needs but of  
            course not all of them have the same potential to produce  
            renewable energy. Two large communities that stand out with  
            strong solar potential and concentrations of poverty are the  
            San Joaquin and Imperial Valley. However, throughout  
            California and even within these valleys there are communities  
            with more need than others. Therefore, it's important to  
          ---------------------------


          <1>  
           http://www.cpuc.ca.gov/uploadedFiles/CPUC_Website/Content/Utiliti 
          es_and_Industries/Energy/Reports_and_White_Papers/FINAL12302015Se 
          ction913_6Report.pdf  








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            create some sort of parameters that render the evaluation  
            comprehensive enough to be included when evaluating  
            California's infrastructure needs to achieve the 50% RPS  
            standard. In addition, it's also important to have an  
            evaluation that can adjust to, both population growth, and the  
            anticipated continual expansion of renewable energy in the  
            future, so the San Joaquin Valley and other similar  
            communities are not overlooked in the near and interim future.  
            There is already an existing tool, CalEviroScreen 2.0, that  
            measures the unemployment rate and  uses 19 other indicators  
            (environmental and socio-economical) to identify disadvantaged  
            communities. This tool along with existing CEC, CPUC, and  
            CAISO procedures may be the best parameters to capture those  
            communities with the most need and the best investment for  
            renewable energy.  


          7)Chicken or Egg Problem: As the author's office describes, it  
            is worth noting that the San Joaquin Valley has substantial  
            potential for energy growth based on the criteria they have  
            outlined in this bill. However, for a project to be viable per  
            the CPUC process it must hold a contract to deliver power to a  
            state utility or a power purchase agreement (PPA). Per CPUC  
            planning process if projects are not in the portfolio the  
            transmission needed is considered a low priority. Essentially,  
            this is why it becomes a scenario of what was first: the  
            chicken or the egg. If you do not have enough transmission you  
            do not have a PPA, and as a result you are not included in the  
            CPUC portfolio. However, if you are not included in the CPUC  
            portfolio then you do not get prioritized for a CAISO  
            transmission either. As it stands, there is currently a build  
            out capacity of 3,000 MW in that area, which has the energy to  
            power 2.25 million homes. 


          8)Least Conflict Lands: Retired Farmland? Something else?:  
            According to a study by EcoNorthwest, there are about 279,00  
            to 299,000 drainage impaired acres in the Central Valley.  
            Drainage impaired lands typically have low productivity, poor  











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            drainage, and high selenium concentration in shallow waters.  
            They recommend taking these areas out of irrigated production  
            and instead using them for dry farming, solar production, and  
            habitat restoration. These lands offer the unique opportunity  
            of having the least detrimental impact on the environment.


            As written, this bill uses but does not define does define  
            least-conflict land. It is unclear that this means and whether  
            this refers to land that is no longer productive enough for  
            agricultural use of any type or if it means that there is  
            little conflict between the community and developers as to  
            changing the use from agricultural to commercial uses. As a  
            result, additional work is needed to clarify what is intended  
            by this bill and whether the CPUC is the correct entity to be  
            determining what is or is not least-conflict land.


             The author may wish to consider an amendment to strike  
            references to least-conflict land throughout the bill.


           9)There are already mechanisms in order to appropriately  
            determine procurement why an extra study?:  The state of  
            California already has regulatory planning pathways to  
            identify transmission planning, renewable procurement, and  
            where renewable energy is most likely to occur. The CAISO,  
            CPUC, CEC collaborate to develop inputs for the annual  
            transmission process. The CPUC develops portfolios of  
            renewable energy for CAISO based on contracted generation and  
            projected renewable generation.
            According to the CPUC:


                 To facilitate electric transmission coordination and  
                 planning, the CEC, CPUC, and the CAISO have  
                 initiated the Renewable Energy Transmission  
                 Initiative 2.0, also known as RETI 2.0. RETI 2.0 is  
                 an open, transparent, and science-based process that  











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                 will explore the abundant renewable generation  
                 resources in California and throughout the West,  
                 consider critical land use and environmental  
                 constraints, and identify potential transmission  
                 opportunities that could access and integrate  
                 renewable energy with the most environmental,  
                 economic, and community benefits.


            This bill also has the potential to encourage preferential,  
            non-economic treatment of particular regions and resources;  
            create delays with the existing or planned generation and  
            transmission planning processes involving CPUC, CAISO, and  
            CEC; be inconsistent with the transition to integrated  
            resource planning required by statute. For example, the CPUC  
            already works with the CEC and CAISO in an annual planning  
            process to identify plausible patterns of future renewable  
            energy development and future transmission needs and,  
            according to the CPUC, the CPUC has already worked with the  
            CEC to obtain the geographic dataset reflecting the  
            least-conflicts area developed in the San Joaquin Valley Solar  
            Convening referenced in this bill. The CPUC reports that it  
            has evaluated the ability of the region specified in AB2630 to  
            contribute to RPS goals and publicly released, in the RPS  
            proceeding, a draft portfolio reflecting 800 MW of new solar  
            photovoltaic (PV) resources in the San Joaquin Valley by 2026.  



          10)Arguments in Support: According to the sponsors of this bill,  
            San Luis & Delta-Mendota Water Authority and the Wetlands  
            Water District, "The state needs more clean energy and the  
            Central Valley needs clean jobs. The Central Valley's  
            unemployment rates remain stubbornly high, e.g. Kern, Fresno,  
            Kings, Merced and Madera counties continue having doubledigit  
            unemployment rates."
          11)Related Legislation:













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            AB 33 (Quirk), 2015: Requires the California Air Resources  
            Board (CARB) to develop future emissions reduction goals for  
            the purposes of the second scoping plan. Pending in the Senate  
            Energy, Utilities, and Communications Committee. 


            SB 32 (Pavley), 2015:  Requires CARB to approve a statewide  
            GHG emission limit that is equivalent to 80% below the 1990  
            level to be achieved by 2050. Pending in the Assembly Natural  
            Resources Committee. 


          12)Prior Legislation:
            SB 350 (De León), Chapter 547, Statutes of 2015: Clean Energy  
            and Pollution Reduction Act of 2015 sets two targets for 2030  
            -- requiring California to receive half of its electricity  
            from renewable sources such as solar and doubling energy  
            efficiency.


          13)Double Referred: This bill is double referred to the Assembly  
            Natural Resources Committee.
          14)Suggested amendments:


            The Legislature finds and declares all of the following:


            (a) The California Global Warming Solutions Act of 2006  
            (Division 25.5 (commencing with Section 38500) of the Health  
            and Safety Code) established a policy to reduce emissions of  
            greenhouse gases to 1990 levels by 2020 and to continue  
            reductions of emissions of greenhouse gases beyond 2020.


            (b) The Clean Energy and Pollution Reduction Act of 2015  
            (Chapter 547 of the Statutes of 2015) established further  
            clean energy policies to reduce emissions of greenhouse gases  
            and expand renewable energy to at least 50 percent of total  











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            retail sales of electricity in California by December 31,  
            2030.


            (c) The San Joaquin Valley remains mired in chronic double  
            digit unemployment, unprecedented rates of poverty, a severe  
            ongoing drought, and poor air quality.


            (d) California's energy sector is undergoing significant  
            advancement and transformation driven by evolving regulation,  
            expanding renewable energy goals, and increasing greenhouse  
            gas emissions reduction efforts.


            (e) While rich in natural resources and clean energy  
            opportunities, the San Joaquin Valley has largely been left  
            behind in California's clean energy revolution. The  
            overwhelming majority of the state's new transmission assets  
            have been sited in other regions, particularly southern  
            California, and renewable energy investment, jobs, and  
            economic and environmental benefits have followed grid access.


            (f) Unlocking the renewable energy potential of the San  
            Joaquin Valley by providing more equitable investment in a  
            clean energy economy should be a key priority of California  
            policymakers.


            (g) Timely investment and improved transmission access are  
            critical to the San Joaquin Valley and will allow the region  
            to more effectively and efficiently develop clean energy  
            opportunities, create jobs, and derive cobenefits for  
            disadvantaged communities.


            (h) The Governor's office is nearing completion of the San  
            Joaquin Valley Solar Convening to identify high potential  











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            least-conflict lands for solar energy development in the San  
            Joaquin Valley that maximize renewable energy benefits and  
            minimize environmental biological and habitat impacts.


             (i) Development of renewable energy projects on least-conflict  
            lands will provide for the economically viable and  
            environmentally beneficial reuse of physically impaired  
            agricultural soils, facilitate solutions to agricultural  
            drainage problems by retiring marginal agricultural land from  
            irrigated agriculture, and redirect increasing scarce surface  
            water supplies from impaired lands to more productive  
            agricultural land.


             (j) As future clean energy investments are planned and  
            implemented, state officials must ensure an appropriate share  
            is targeted to improve environmental quality, expand economic  
            development, contribute to environmental solutions, and create  
            jobs in the San Joaquin Valley.



            399.23. (a) The Public Utilities Commission and the State  
            Energy Resources Conservation and Development Commission shall  
            evaluate potential renewable energy projects on least-conflict  
            lands in the San Joaquin Valley  while also evaluating  
            ratepayer costs and ratepayer benefits.  Evaluation of projects  
            that provide the following benefits shall be prioritized:

             (1)  The economically viable and environmentally beneficial  
               reuse of drainage-impaired agricultural lands.
                                            
             (2)  The retirement of drainage-impaired agricultural land  
               and facilitation of regional agricultural drainage  
               solutions.

             (3)  The facilitation of surface water supply redirection  
               from drainage-impaired agricultural lands to other  











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               productive agricultural land.

            (b) Using the results of the evaluation, on or before January  
            31, 2017, the Public Utilities Commission and the State Energy  
            Resources Conservation and Development Commission shall  
            recommend to the Independent System Operator an amount of  
            renewable energy production in the San Joaquin Valley   that  
            reasonably maximizes, consistent with the state's overall need  
            for renewable energy.  , the use of least-conflict lands.   as  
            identified by the San Joaquin Valley Solar Convening.
             


          REGISTERED SUPPORT / OPPOSITION:




          Support


          San Luis & Delta-Mendota Water Authority


          Wetlands Water District


          Natural Resources Defense Council




          Opposition


          None on file.














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          Analysis Prepared by:Jose Torres / U. & C. / (916) 319-2083