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 ----------------------------------------------------------------- |Author: |Salas | |-----------+-----------------------------------------------------| |Version: |6/20/2016 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Jay Dickenson | | | | ----------------------------------------------------------------- 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 AB 2630 (Salas) PageE of? 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, AB 2630 (Salas) PageF of? 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. AB 2630 (Salas) PageH of? 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 AB 2630 (Salas) PageK of? 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 --