BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 2630           Hearing Date:    6/27/2016
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          |Author:    |Salas                                                |
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          |Version:   |6/20/2016    As Amended                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Jay Dickenson                                        |
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          SUBJECT: San Joaquin Valley Clean Energy and Jobs Act

            DIGEST:    This bill requires the California Public Utilities  
          Commission (CPUC) and the California Energy Commission (CEC) to  
          recommend to the California Independent System Operator (CAISO)  
          an amount of electricity to be generated from resources in the  
          San Joaquin Valley and any associated, necessary transmission  
          upgrades.

          ANALYSIS:
          
          Existing law:
          
          1)Creates CAISO and charges it with ensuring efficient use and  
            reliable operation of the transmission grid.  (Public  
            Utilities Code §345 et seq.)

          2)Requires the CEC, at least every two years, to conduct  
            assessments and forecasts of all aspects of energy industry  
            supply, production, transportation, delivery and distribution,  
            demand, and prices.  The CEC shall use these assessments and  
            forecasts to develop and evaluate energy policies and programs  
            that conserve resources, protect the environment, ensure  
            energy reliability, enhance the state's economy, and protect  
            public health and safety.  These assessments and forecasts  
            shall be done in consultation with the appropriate state and  
            federal agencies including, but not limited to, the CPUC and  
            CAISO. (Public Resources Code §25301 et seq.)

          3)Directs the CEC, in consultation with the CPUC, CAISO,  
            transmission owners, users, and consumers, to adopt a  








          AB 2630 (Salas)                                       PageB of?
          
            strategic plan for the state's electric transmission grid  
            using existing resources.  The strategic plan shall identify  
            and recommend actions required to implement investments needed  
            to ensure reliability, relieve congestion, and meet future  
            growth in load and generation, including, but not limited to,  
            renewable resources, energy efficiency, and other demand  
            reduction measures.  (Public Resources Code §25324)

          4)States that no electric utility shall begin the construction  
            of a line without having first obtained from the CPUC a  
            certificate that the present or future public convenience and  
            necessity require or will require such construction.  Requires  
            the CPUC, in making a determination on issuance of a  
            certificate, to consider the following:
               a.     Community values.
               b.     Recreational and park areas.
               c.     Historical and aesthetic values.
               d.     Influence on the environment. 

               (Public Utilities Code §§1001 and 1002)

          5)Requires electric utilities to procure 50 percent of their  
            retail sales of electricity from renewable energy by 2030.   
            This is known as the Renewable Portfolio Standard (RPS).   
            (Public Utilities Code §399.11 et seq.) 

          6)Requires each investor-owned utility (IOU) to file with the  
            CPUC, and requires the CPUC to review and accept, modify or  
            reject, each IOU's proposed electricity procurement plan.   
            Among other elements, the procurement plan must include a  
            showing that it will achieve the IOU procuring eligible  
            renewable energy resources in an amount sufficient to meet its  
            procurement requirements pursuant to the RPS.  (Public  
            Utilities Code §454.5)

          This bill:

          1)Makes numerous findings and declarations about California's  
            environmental and energy goals, the economic condition of the  
            San Joaquin Valley, and other statements, including:

               a)     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.









          AB 2630 (Salas)                                       PageC of?
          

               b)     Given the proximity to existing transmission  
                 corridors, solar projects in the San Joaquin Valley can  
                 be developed in a way that minimizes the need for new  
                 transmission by prioritizing the use of existing  
                 transmission corridors consistent with the principles of  
                 transmission corridor planning developed by the CEC  
                 pursuant to the "Garamendi Principles."

               c)     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.
          2)Requires the CPUC and CEC to evaluate potential eligible  
            renewable energy resource projects in the San Joaquin Valley,  
            prioritizing projects that provide the following land-use  
            benefits or attributes:

               a)     The economically viable and environmentally  
                 beneficial reuse of drainage-impaired agricultural lands.

               b)     The retirement of drainage-impaired agricultural  
                 land and facilitation of regional agricultural drainage  
                 solutions.

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

          3)Requires CPUC and CEC, on or before January 31, 2017, to  
            recommend to CAISO an amount of electricity to be generated  
            from eligible renewable energy resources in the San Joaquin  
            Valley that reasonably maximizes the amount of electricity to  
            be generated from eligible renewable energy resources,  
            consistent with the state's overall need for electricity and  
            the requirements of this article, and that accomplishes all of  
            the following:

               a)     Takes into account the 470,000 acres identified in  
                 the Governor's May 2016 Solar Convening Report, entitled  
                 "A Path Forward: Identifying Least-Conflict Solar PV  
                 Development in California's San Joaquin Valley," along  
                 with all other lands in the Central Valley that have  
                 entitlements for solar development.









          AB 2630 (Salas)                                       PageD of?
          

               b)     Provides eligible renewable energy resources within  
                 the San Joaquin Valley with full capacity deliverability  
                 status.

               c)     Minimizes the need for new transmission by  
                 prioritizing the use of existing transmission corridors  
                 consistent with the principles of transmission corridor  
                 planning developed by the CEC pursuant to the Garamendi  
                 Principles.

          4)Requires CPUC and CEC, on or before January 31, 2017, to  
            recommend to CAISO any network transmission upgrades needed to  
            fulfill the recommendations regarding renewable energy  
            development in the San Joaquin Valley.  This recommendation  
            shall seek to minimize the need for new transmission by  
            prioritizing the use of existing transmission corridors  
            consistent with the Garamendi Principles.



          Background

          Demand forecast, identification of need, transmission planning  
          and procurement:  an integrated process.  The transmission  
          planning processes of the state's energy agencies - the CEC,  
          CPUC, and CAISO - are independent and complimentary.  The CEC  
          biennially develops a 10-year forecast of statewide electricity  
          demand, which it publishes in its Integrated Energy Policy  
          Report (IEPR).  The CPUC, through its long-term planning process  
          (LTPP), reviews and approves the procurement plans of the  
          state's IOUs, which detail the renewable energy resources  
          throughout the state the IOUs will rely on to meet their RPS  
          requirements.  The CEC and CPUC, respectively, relay the IEPR  
          and the LTPP portfolios to CAISO, which form key elements of its  
          annual transmission planning process.  As a result of that  
          process, CAISO approves new and upgraded electricity  
          transmission required to meet economic need or to achieve the  
          state's policies, such as the requirements of the RPS.   
          Consistent with its obligation under its authority provided by  
          the Federal Energy Regulatory Commission, CAISO approves only  
          those transmission projects that meet specified energy needs and  
          ensure just and reasonable rates.

          Working off CAISO's approved transmission projects, the state's  









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          IOUs propose construction or upgrades of specific transmission  
          lines.  The CPUC, as the state regulator of utility rates,  
          reviews each project proposed by an IOU.  In doing so, the CPUC  
          acts as the lead permitting agency and considers the  
          environmental effects of the proposed transmission project and,  
          for a larger transmission project (over 200 kilovolts), the need  
          for the project and its economics.  If the CPUC approves an  
          IOU's transmission project, the IOU may recover the cost of the  
          project from its ratepayers. 

          Transmission planning:  Renewable Energy Transmission Initiative  
          (RETI), set, go.   The CEC, CPUC and CAISO have initiated the  
          RETI 2.0.  The stakeholder process is to consider potential  
          renewable energy resources in California and the West, as well  
          as land use and environmental constraints, and identify  
          potential transmission opportunities to access and integrate  
          renewable energy with the most environmental, economic, and  
          community benefits.  According to CEC, RETI 2.0 will frame and  
          inform future transmission planning proceedings to help reach  
          the state's energy and environmental goals.

          The Garamendi Principals.  In 1988, SB 2431 (Garamendi, Chapter  
          1457, Statutes of 1988) declared it in the best interests of the  
          state to accomplish the following, known as the Garamendi  
          Principles:

                 Encourage the use of existing rightsofway by upgrading  
               existing transmission facilities where technically and  
               economically justifiable.

                 When construction of new transmission lines is required,  
               encourage expansion of existing rightsofway, when  
               technically and economically feasible. 

                 Provide for the creation of new rights ofway when  
               justified by environmental, technical, or economic reasons,  
               as determined by the appropriate licensing agency.

                 Where there is a need to construct additional  
               transmission, seek agreement among all interested utilities  
               on the efficient use of that capacity.

          Outcome of the San Joaquin Valley Solar Convening - least  
          conflict?  In 2015, at the request of the Governor's Office of  
          Planning and Research (OPR), the Conservation Biology Institute,  









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          Berkeley Law's Center for Law, Energy and the Environment, and  
          Terrell Watt Planning Associates undertook a stakeholder process  
          - known as the San Joaquin Valley Solar Convening - to explore  
          how multiple and diverse parties could quickly (within six  
          months) identify least-conflict lands for solar photovoltaic  
          (PV) development in the San Joaquin Valley.  The process brought  
          together four stakeholder groups: (1) environmental  
          conservationists, (2) agricultural farmland conservationists,  
          (3) solar industry representatives, and (4) transmission groups.  
           The goal of the project, as described by project coordinators,  
          was to identify potential areas for solar PV development in the  
          San Joaquin Valley that each stakeholder group viewed as  
          least-conflict.  

          The results of the project were released in May of this year.<1>  
           The product is a series of what project coordinators call  
          "least-conflict maps" for each stakeholder group that led to a  
          final composite map.

          Project coordinators acknowledge that stakeholder groups each  
          approached the exercise with diverse methods and outputs.  They  
          described the effort as a "non-binding, non-regulatory planning  
          effort." Some stakeholder participants - notably, those  
          representing solar interests - remark that the project results  
          were a "snapshot in time," represent "combined but not consensus  
          results," and, "most importantly, it did not arrive at a true  
          conclusion regarding which lands in the San Joaquin Valley are  
          least conflict."

          Process confused, but the outcome is clear.  As described above,  
          much of the work of the state's energy agencies - the CEC, the  
          CPUC, and CAISO - are independent and complimentary.  The CEC  
          forecasts demand; the CPUC approves the IOUs' portfolios of  
          renewable energy projects; CAISO, relying on the work of the CEC  
          and CPUC, approves transmission projects that are economic and  
          needed; the CPUC approves proposals by IOUs for specific  
          transmission line construction or upgrade that is consistent  
          with CAISO transmission project approval.  This bill confuses  
          and conflates these agencies' roles in transmission planning.  

          First, this bill directs the CEC and CPUC to evaluate potential  
          ---------------------------
          <1>  
           https://www.law.berkeley.edu/wp-content/uploads/2016/05/A-PATH-FO 
          RWARD-May-2016.pdf  .









          AB 2630 (Salas)                                       PageG of?
          
          eligible renewable energy resource projects in the San Joaquin  
          Valley according to specific land-use related criteria.  This  
          bill then requires the agencies, using the results of their  
          evaluation, to recommend to CAISO (a) an amount of renewable  
          energy resources in the San Joaquin Valley and (b) any network  
          transmission upgrades needed to fulfill the renewable energy  
          recommendations.  As described above, neither agency currently  
          recommends to CAISO either an amount of renewable energy  
          resources to be procured from any region in the state or  
          transmission upgrades needed to accommodate such procurement.

          The requirements of this bill are based on several key premises.  
           These premises can be found in this bill's findings and  
          declarations.

                 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.

                 The San Joaquin Valley Solar Convening project  
               identified land ready for solar development with the least  
               conflict.

                 Solar projects in the San Joaquin Valley can be  
               developed in a way that minimizes the need for new  
               transmission by prioritizing the use of existing  
               transmission corridors consistent with the principles of  
               transmission corridor planning known as the Garamendi  
               Principles.

          Each premise is questionable, at least, or disputed by  
          participants to the convening or regulatory agencies.  

          First, is unclear why state policymakers should prioritize  
          development of renewable energy in the San Joaquin Valley over  
          development of those resources in other areas of the state.   
          This bill accurately describes economic and environmental  
          conditions in the San Joaquin Valley.  Those conditions,  
          however, are not unique to the San Joaquin Valley.  Other areas  
          of the state, too, suffer from persistent, high unemployment and  
          poverty, drought, and poor air quality.  Many of these areas  
          also possess rich renewable energy resources that have not been  
          developed, in some cases because of a lack of transmission.










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          Second, it is clear from the recent input of participants to the  
          San Joaquin Solar Convening that the project did not identify  
          lands least subject to conflict, at least not in any definitive  
          sense.  Representatives of the solar industry describe the  
          process, at best, as a first step that might, after additional  
          work and more and broader stakeholder input, successfully  
          identify least-conflict lands in the San Joaquin Valley.   
          Despite this disagreement, this bill directs the CEC and CPUC,  
          in making its recommendations to the CPUC, to take into account  
          the 470,000 acres identified in the preceding.  This requirement  
          seems premature, especially as it is attached to prescriptive  
          requirements of the state agencies.

          Finally, it is true that solar projects in the San Joaquin  
          Valley can be developed in a way that minimizes the need for new  
          transmission by prioritizing the use of existing transmission  
          corridors.  This bill references the Garamendi principles. Those  
          principals, as described above, include the following:  

                 Encourage the use of existing rightsof way by upgrading  
               existing transmission facilities where technically and  
               economically justifiable.
                         
                 When construction of new transmission lines is required,  
               encourage expansion of existing rightsofway, when  
               technically and economically feasible. 

                 Provide for the creation of new rights ofway when  
               justified by environmental, technical, or economic reasons,  
               as determined by the appropriate licensing agency.

          The CAISO, with encouragement of many members of the Legislature  
          who represent the San Joaquin Valley, has considered the  
          economic need of developing new or upgraded transmission lines  
          in the valley using existing rights of way.  Recently, CAISO  
          determined, consistent with the Garamendi principals, that  
          additional transmission development in the valley using existing  
          rights of way is not economically justified, at least not at  
          this time:  sufficient transmission capacity exists to meet  
          current and projected electricity demand.  The CAISO has noted,  
          however, that, should renewable resources be further developed  
          in the San Joaquin Valley, there may be economic need to develop  
          new transmission lines to better connect the valley with load  
          centers closer to the Bay Area.  Such transmission lines might  
          not follow existing rights of way.









          AB 2630 (Salas)                                       PageI of?
          

          The state has progressed in meeting its renewable energy goals.   
          It has a well-defined process for identifying the need for  
          electricity transmission.  This bill would not improve upon that  
          process.  However, it is not unreasonable to require the state's  
          energy agencies to take into account the Solar Convening Report  
          when undertaking transmission-related activities.  The report  
          may be, as some describe it, a first step.  Undeniably, it  
          represents a tremendous amount of effort and collaboration by  
          multiple stakeholders.  The output of that effort and  
          collaboration should not be dismissed.  And it is a low  
          threshold to require the energy agencies to take the report  
          "into consideration;" it requires no specific outcome.   
          Therefore, the author may wish delete the existing provisions of  
          this bill entirely and amend it to read, as follows:

                Section 1:  findings and declarations.
               It is the intent of the Legislature that the state's  
               processes for identifying and planning for electric  
               transmission shall take into account the Governor's May  
               2016 Solar Convening Report, entitled "A Path Forward:  
               Identifying Least-Conflict Solar PV Development in  
               California's San Joaquin Valley" and the principles of  
               transmission corridor planning developed by the State  
               Energy Resources Conservation and Development Commission in  
               response to Senate Bill 2431 (Chapter 1457 of the Statutes  
               of 1988), known as the Garamendi Principles.

               Section 2: Section 399.23 is added to the Public Utilities  
               Code, to read:

               399.23.  (a) The CAISO, when undertaking transmission  
               planning activities, shall take into account the Governor's  
               May 2016 Solar Convening Report, entitled "A Path Forward:  
               Identifying Least-Conflict Solar PV Development in  
               California's San Joaquin Valley" and the principles of  
               transmission corridor planning developed by the State  
               Energy Resources Conservation and Development Commission in  
               response to Senate Bill 2431 (Chapter 1457 of the Statutes  
               of 1988), known as the Garamendi Principles.

               (b) The CEC, CPUC and the CAISO, when undertaking  
               activities as part of the Renewable Energy Transmission  
               Initiative, shall take into account  the Governor's May  
               2016 Solar Convening Report, entitled "A Path Forward:  









          AB 2630 (Salas)                                       PageJ of?
          
               Identifying Least-Conflict Solar PV Development in  
               California's San Joaquin Valley" and the Garamendi  
               Principles. 
           
          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            


          SUPPORT:  

          San Luis and Delta - Mendota Water Authority (Source)
          Westlands Water District (Source)
          Agricultural Energy Consumers Association
          Audubon California
          California Farm Bureau Federation
          City of Hanford
          Defenders of Wildlife
          Natural Resources Defense Council
          Westlands Solar Park

          OPPOSITION:

          Advanced Energy Economy
          Independent Energy Producers Association
          Large-scale Solar Association

          ARGUMENTS IN SUPPORT:    According to the author:

               Last year, California enacted legislation to require that  
               the state reach a 50 percent RPS by 2030, creating new  
               demand for large utility scale solar development. 

               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 shows 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 OPR 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.

                AB 2630 would require the CEC and the CPUC to examine the  
               impact of the 50 percent RPS, while taking into  
               consideration ratepayer costs and benefits, to inform the  
               state's actions toward unlocking new renewable development  
               in the Central Valley.
          
          ARGUMENTS IN OPPOSITION:    Opponents contend this bill would  
          unnecessarily complicate the process by which renewable projects  
          and transmission lines are planned for and developed, all on the  
          basis of a report requires additional consideration that does  
          not represent a consensus view of all stakeholders.
          
          

                                      -- END --