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