Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2700


Introduced by Assembly Member Salas

February 19, 2016


An act to amend Sectionbegin delete 454.51end deletebegin insert 399.13end insert of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

AB 2700, as amended, Salas. Electrical corporation:begin insert California Renewables Portfolio Standard Program:end insert procurement plans.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations.begin delete The Public Utilities Act requires the commission to review and accept, modify, or reject a procurement plan for each electrical corporation in accordance with specified elements, incentive mechanisms, and objectives. The act requires the commission to (1) identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, (2) direct each electrical corporation to include, as part of its proposed procurement plan, a strategy for procuring best-fit and least-cost resources to satisfy the portfolio needs identified by the commission, (3) ensure that the net costs of any incremental renewable energy integration resources procured by an electrical corporation to satisfy the need identified by the commission are allocated on a fully nonbypassable basis, and (4) permit community choice aggregators to submit proposals for satisfying their portion of the renewable energy resource integration needs identified by the commission.end deletebegin insert The California Renewables Portfolio Standard Program requires the commission to establish a renewables portfolio standard requiring all retail sellers, defined as including an electrical corporation, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, at specified percentages of the total kilowatthours sold to their retail end-use customers during specified compliance periods. The program requires the commission to direct each electrical corporation to annually prepare a renewable energy procurement plan to satisfy its procurement requirements pursuant to the program. As part of the renewable energy procurement plan process, the commission is required to adopt rules establishing a process that provides criteria for the rank ordering and selection of least-cost and best-fit eligible renewable energy resources to comply with the program’s procurement obligations and requires that the criteria take specified matters into account, including workforce recruitment, training, and retention efforts, as specified.end insert

begin delete

This bill would make nonsubstantive revisions to the above-described requirements of the commission relative to integration of renewable energy resources to ensure a reliable electricity supply through the procurement plan process.

end delete
begin insert

This bill would require that the criteria take into account jobs retained associated with contracting for existing eligible renewable energy resources. The bill would require the commission to update the criteria by July 1, 2017, to identify the value of maintaining existing baseload resources to achieve the goal of a balanced portfolio of eligible renewable energy resources.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 399.13 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
2amended to read:end insert

3

399.13.  

(a) (1) The commission shall direct each electrical
4corporation to annually prepare a renewable energy procurement
5plan that includes the matter in paragraph (5), to satisfy its
6obligations under the renewables portfolio standard. To the extent
7feasible, this procurement plan shall be proposed, reviewed, and
8adopted by the commission as part of, and pursuant to, a general
9procurement plan process. The commission shall require each
10electrical corporation to review and update its renewable energy
P3    1procurement plan as it determines to be necessary. The commission
2shall require all other retail sellers to prepare and submit renewable
3energy procurement plans that address the requirements identified
4in paragraph (5).

5(2) Every electrical corporation that owns electrical transmission
6facilities shall annually prepare, as part of the Federal Energy
7Regulatory Commission Order 890 process, and submit to the
8commission, a report identifying any electrical transmission
9facility, upgrade, or enhancement that is reasonably necessary to
10achieve the renewables portfolio standard procurement
11requirements of this article. Each report shall look forward at least
12five years and, to ensure that adequate investments are made in a
13timely manner, shall include a preliminary schedule when an
14application for a certificate of public convenience and necessity
15will be made, pursuant to Chapter 5 (commencing with Section
161001), for any electrical transmission facility identified as being
17reasonably necessary to achieve the renewable energy resources
18procurement requirements of this article. Each electrical
19corporation that owns electrical transmission facilities shall ensure
20that project-specific interconnection studies are completed in a
21timely manner.

22(3) The commission shall direct each retail seller to prepare and
23submit an annual compliance report that includes all of the
24following:

25(A) The current status and progress made during the prior year
26toward procurement of eligible renewable energy resources as a
27percentage of retail sales, including, if applicable, the status of any
28necessary siting and permitting approvals from federal, state, and
29local agencies for those eligible renewable energy resources
30procured by the retail seller, and the current status of compliance
31with the portfolio content requirements of subdivision (c) of
32Section 399.16, including procurement of eligible renewable energy
33resources located outside the state and within the WECC and
34unbundled renewable energy credits.

35(B) If the retail seller is an electrical corporation, the current
36status and progress made during the prior year toward construction
37of, and upgrades to, transmission and distribution facilities and
38other electrical system components it owns to interconnect eligible
39renewable energy resources and to supply the electricity generated
40by those resources to load, including the status of planning, siting,
P4    1and permitting transmission facilities by federal, state, and local
2agencies.

3(C) Recommendations to remove impediments to making
4progress toward achieving the renewable energy resources
5procurement requirements established pursuant to this article.

6(4) The commission shall adopt, by rulemaking, all of the
7following:

8(A) A process that provides criteria for the rank ordering and
9selection of least-cost and best-fit eligible renewable energy
10resources to comply with the California Renewables Portfolio
11Standard Program obligations on a total cost and best-fit basis.
12This process shall take into account all of the following:

13(i) Estimates of indirect costs associated with needed
14transmission investments.

15(ii) The cost impact of procuring the eligible renewable energy
16resources on the electrical corporation’s electricity portfolio.

17(iii) The viability of the project to construct and reliably operate
18the eligible renewable energy resource, including the developer’s
19experience, the feasibility of the technology used to generate
20electricity, and the risk that the facility will not be built, or that
21construction will be delayed, with the result that electricity will
22not be supplied as required by the contract.

23(iv) Workforce recruitment, training, and retention efforts,
24includingbegin insert jobs retained associated with contracting for existing
25eligible renewable energy resources,end insert
the employment growth
26associated with the construction and operation of eligible renewable
27energybegin delete resourcesend deletebegin insert resources,end insert and goals for recruitment and training
28of women, minorities, and disabled veterans.

29(v) (I) Estimates of electrical corporation expenses resulting
30from integrating and operating eligible renewable energy resources,
31including, but not limited to, any additional wholesale energy and
32capacity costs associated with integrating each eligible renewable
33resource.

34(II) No later than December 31, 2015, the commission shall
35approve a methodology for determining the integration costs
36described in subclause (I).

37(vi) Consideration of any statewide greenhouse gas emissions
38limit established pursuant to the California Global Warming
39Solutions Act of 2006 (Division 25.5 (commencing with Section
4038500) of the Health and Safety Code).

P5    1(vii) Consideration of capacity and system reliability of the
2eligible renewable energy resource to ensure grid reliability.

3(B) Rules permitting retail sellers to accumulate, beginning
4January 1, 2011, excess procurement in one compliance period to
5be applied to any subsequent compliance period. The rules shall
6apply equally to all retail sellers. In determining the quantity of
7excess procurement for the applicable compliance period, the
8commission shall retain the rules adopted by the commission and
9in effect as of January 1, 2015, for the compliance period specified
10in subparagraphs (A) to (C), inclusive, of paragraph (1) of
11subdivision (b) of Section 399.15. For any subsequent compliance
12period, the rules shall allow the following:

13(i) For electricity products meeting the portfolio content
14requirements of paragraph (1) of subdivision (b) of Section 399.16,
15contracts of any duration may count as excess procurement.

16(ii) Electricity products meeting the portfolio content
17requirements of paragraph (2) or (3) of subdivision (b) of Section
18399.16 shall not be counted as excess procurement. Contracts of
19any duration for electricity products meeting the portfolio content
20requirements of paragraph (2) or (3) of subdivision (b) of Section
21399.16 that are credited towards a compliance period shall not be
22deducted from a retail seller’s procurement for purposes of
23calculating excess procurement.

24(iii) If a retail seller notifies the commission that it will comply
25with the provisions of subdivision (b) for the compliance period
26beginning January 1, 2017, the provisions of clauses (i) and (ii)
27shall take effect for that retail seller for that compliance period.

28(C) Standard terms and conditions to be used by all electrical
29corporations in contracting for eligible renewable energy resources,
30including performance requirements for renewable generators. A
31contract for the purchase of electricity generated by an eligible
32renewable energy resource, at a minimum, shall include the
33renewable energy credits associated with all electricity generation
34specified under the contract. The standard terms and conditions
35shall include the requirement that, no later than six months after
36the commission’s approval of an electricity purchase agreement
37entered into pursuant to this article, the following information
38about the agreement shall be disclosed by the commission: party
39names, resource type, project location, and project capacity.

P6    1(D) An appropriate minimum margin of procurement above the
2minimum procurement level necessary to comply with the
3renewables portfolio standard to mitigate the risk that renewable
4projects planned or under contract are delayed or canceled. This
5paragraph does not preclude an electrical corporation from
6voluntarily proposing a margin of procurement above the
7appropriate minimum margin established by the commission.

8(5) Consistent with the goal of increasing California’s reliance
9on eligible renewable energy resources, the renewable energy
10procurement plan shall include all of the following:

11(A) An assessment of annual or multiyear portfolio supplies
12and demand to determine the optimal mix of eligible renewable
13energy resources with deliverability characteristics that may include
14peaking, dispatchable, baseload, firm, and as-available capacity.

15(B) Potential compliance delays related to the conditions
16described in paragraph (5) of subdivision (b) of Section 399.15.

17(C) A bid solicitation setting forth the need for eligible
18renewable energy resources of each deliverability characteristic,
19required online dates, and locational preferences, if any.

20(D) A status update on the development schedule of all eligible
21renewable energy resources currently under contract.

22(E) Consideration of mechanisms for price adjustments
23associated with the costs of key components for eligible renewable
24energy resource projects with online dates more than 24 months
25after the date of contract execution.

26(F) An assessment of the risk that an eligible renewable energy
27resource will not be built, or that construction will be delayed,
28with the result that electricity will not be delivered as required by
29the contract.

30(6) In soliciting and procuring eligible renewable energy
31resources, each electrical corporation shall offer contracts of no
32less than 10 years duration, unless the commission approves of a
33contract of shorter duration.

34(7) In soliciting and procuring eligible renewable energy
35resources for California-based projects, each electrical corporation
36shall give preference to renewable energy projects that provide
37 environmental and economic benefits to communities afflicted
38with poverty or high unemployment, or that suffer from high
39emission levels of toxic air contaminants, criteria air pollutants,
40and greenhouse gases.

P7    1(8) In soliciting and procuring eligible renewable energy
2resources, each retail seller shall consider the best-fit attributes of
3resource types that ensure a balanced resource mix to maintain the
4reliability of the electrical grid.

5(b) A retail seller may enter into a combination of long- and
6short-term contracts for electricity and associated renewable energy
7credits. Beginning January 1, 2021, at least 65 percent of the
8procurement a retail seller counts toward the renewables portfolio
9standard requirement of each compliance period shall be from its
10contracts of 10 years or more in duration or in its ownership or
11ownership agreements for eligible renewable energy resources.

12(c) The commission shall review and accept, modify, or reject
13each electrical corporation’s renewable energy resource
14procurement plan prior to the commencement of renewable energy
15procurement pursuant to this article by an electrical corporation.
16The commission shall assess adherence to the approved renewable
17energy resource procurement plans in determining compliance
18with the obligations of this article.

19(d) Unless previously preapproved by the commission, an
20electrical corporation shall submit a contract for the generation of
21an eligible renewable energy resource to the commission for review
22and approval consistent with an approved renewable energy
23resource procurement plan. If the commission determines that the
24bid prices are elevated due to a lack of effective competition among
25the bidders, the commission shall direct the electrical corporation
26to renegotiate the contracts or conduct a new solicitation.

27(e) If an electrical corporation fails to comply with a commission
28order adopting a renewable energy resource procurement plan, the
29commission shall exercise its authority to require compliance.

30(f) (1) The commission may authorize a procurement entity to
31enter into contracts on behalf of customers of a retail seller for
32electricity products from eligible renewable energy resources to
33satisfy the retail seller’s renewables portfolio standard procurement
34requirements. The commission shall not require any person or
35corporation to act as a procurement entity or require any party to
36purchase eligible renewable energy resources from a procurement
37entity.

38(2) Subject to review and approval by the commission, the
39procurement entity shall be permitted to recover reasonable
40administrative and procurement costs through the retail rates of
P8    1end-use customers that are served by the procurement entity and
2are directly benefiting from the procurement of eligible renewable
3energy resources.

4(g) Procurement and administrative costs associated with
5contracts entered into by an electrical corporation for eligible
6renewable energy resources pursuant to this article and approved
7by the commission are reasonable and prudent and shall be
8recoverable in rates.

9(h) Construction, alteration, demolition, installation, and repair
10work on an eligible renewable energy resource that receives
11production incentives pursuant to Section 25742 of the Public
12Resources Code, including work performed to qualify, receive, or
13maintain production incentives, are “public works” for the purposes
14of Chapter 1 (commencing with Section 1720) of Part 7 of Division
152 of the Labor Code.

16begin insert

begin insertSEC. 2.end insert  

end insert

begin insertBy July 1, 2017, the commission shall update the
17criteria for the rank ordering and selection of least-cost and best-fit
18eligible renewable energy resources adopted pursuant to
19subparagraph (A) of paragraph (4) of subdivision (a) of Section
20399.13 to identify the value of maintaining existing baseload
21resources to achieve the goal of a balanced portfolio of eligible
22renewable energy resources.end insert

begin delete
23

SECTION 1.  

Section 454.51 of the Public Utilities Code is
24amended to read:

25

454.51.  

The commission shall do all of the following:

26(a) Identify a diverse and balanced portfolio of resources needed
27to ensure a reliable electricity supply that provides optimal
28integration of renewable energy resources in a cost-effective
29manner. The portfolio shall rely upon zero carbon-emitting
30resources to the maximum extent reasonable and be designed to
31achieve any statewide greenhouse gas emissions limit established
32pursuant to the California Global Warming Solutions Act of 2006
33(Division 25.5 (commencing with Section 38500) of the Health
34and Safety Code) or any successor legislation.

35(b) Direct each electrical corporation to include, as part of its
36proposed procurement plan, a strategy for procuring best-fit and
37least-cost resources to satisfy the portfolio needs identified by the
38commission pursuant to subdivision (a).

39(c) Ensure that the net costs of any incremental renewable energy
40integration resources procured by an electrical corporation to satisfy
P9    1the need identified in subdivision (a) are allocated on a fully
2nonbypassable basis consistent with the treatment of costs
3identified in paragraph (2) of subdivision (c) of Section 365.1.

4(d) Permit community choice aggregators to submit proposals
5for satisfying their portion of the renewable energy resource
6 integration need identified in subdivision (a). If the commission
7finds this need is best met through long-term procurement
8commitments for resources, community choice aggregators shall
9also be required to make long-term commitments for resources.
10The commission shall approve proposals pursuant to this
11subdivision if it finds all of the following:

12(1) The resources proposed by a community choice aggregator
13will provide equivalent integration of renewable energy resources.

14(2) The resources proposed by a community choice aggregator
15will promote the efficient achievement of state energy policy
16objectives, including reductions in emissions of greenhouse gases.

17(3) Bundled customers of an electrical corporation will be
18indifferent from the approval of the community choice aggregator
19proposals.

20(4) All costs resulting from nonperformance will be borne by
21the electrical corporation or community choice aggregator
22responsible for them.

end delete


O

    98