Amended in Assembly May 11, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2700


Introduced by Assembly Memberbegin delete Salasend deletebegin insert Brownend insert

February 19, 2016


An act to amend Section 399.13 of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

AB 2700, as amended, begin deleteSalasend delete begin insertBrownend insert. Electrical corporation: California Renewables Portfolio Standard Program: procurement plans.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. 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.

This bill would require that the criteria take into account jobs retained associated with contracting for existing eligible renewable energy resources.begin delete 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 delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 399.13 of the Public Utilities Code is
2amended to read:

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
11procurement plan as it determines to be necessary. The commission
12shall require all other retail sellers to prepare and submit renewable
13energy procurement plans that address the requirements identified
14in paragraph (5).

15(2) Every electrical corporation that owns electrical transmission
16facilities shall annually prepare, as part of the Federal Energy
17Regulatory Commission Order 890 process, and submit to the
18commission, a report identifying any electrical transmission
19facility, upgrade, or enhancement that is reasonably necessary to
20achieve the renewables portfolio standard procurement
21requirements of this article. Each report shall look forward at least
22five years and, to ensure that adequate investments are made in a
23timely manner, shall include a preliminary schedule when an
24application for a certificate of public convenience and necessity
25will be made, pursuant to Chapter 5 (commencing with Section
261001), for any electrical transmission facility identified as being
27reasonably necessary to achieve the renewable energy resources
P3    1procurement requirements of this article. Each electrical
2corporation that owns electrical transmission facilities shall ensure
3that project-specific interconnection studies are completed in a
4timely manner.

5(3) The commission shall direct each retail seller to prepare and
6submit an annual compliance report that includes all of the
7following:

8(A) The current status and progress made during the prior year
9toward procurement of eligible renewable energy resources as a
10percentage of retail sales, including, if applicable, the status of any
11necessary siting and permitting approvals from federal, state, and
12local agencies for those eligible renewable energy resources
13procured by the retail seller, and the current status of compliance
14with the portfolio content requirements of subdivision (c) of
15Section 399.16, including procurement of eligible renewable energy
16resources located outside the state and within the WECC and
17unbundled renewable energy credits.

18(B) If the retail seller is an electrical corporation, the current
19status and progress made during the prior year toward construction
20of, and upgrades to, transmission and distribution facilities and
21other electrical system components it owns to interconnect eligible
22renewable energy resources and to supply the electricity generated
23by those resources to load, including the status of planning, siting,
24and permitting transmission facilities by federal, state, and local
25agencies.

26(C) Recommendations to remove impediments to making
27progress toward achieving the renewable energy resources
28procurement requirements established pursuant to this article.

29(4) The commission shall adopt, by rulemaking, all of the
30following:

31(A) A process that provides criteria for the rank ordering and
32selection of least-cost and best-fit eligible renewable energy
33resources to comply with the California Renewables Portfolio
34Standard Program obligations on a total cost and best-fit basis.
35This process shall take into account all of the following:

36(i) Estimates of indirect costs associated with needed
37transmission investments.

38(ii) The cost impact of procuring the eligible renewable energy
39resources on the electrical corporation’s electricity portfolio.

P4    1(iii) The viability of the project to construct and reliably operate
2the eligible renewable energy resource, including the developer’s
3experience, the feasibility of the technology used to generate
4electricity, and the risk that the facility will not be built, or that
5construction will be delayed, with the result that electricity will
6not be supplied as required by the contract.

7(iv) Workforce recruitment, training, and retention efforts,
8including jobs retained associated with contracting for existing
9eligible renewable energy resources, the employment growth
10associated with the construction and operation of eligible renewable
11energy resources, and goals for recruitment and training of women,
12minorities, and disabled veterans.

13(v) (I) Estimates of electrical corporation expenses resulting
14from integrating and operating eligible renewable energy resources,
15including, but not limited to, any additional wholesale energy and
16capacity costs associated with integrating each eligible renewable
17resource.

18(II) No later than December 31, 2015, the commission shall
19approve a methodology for determining the integration costs
20described in subclause (I).

21(vi) Consideration of any statewide greenhouse gas emissions
22limit established pursuant to the California Global Warming
23Solutions Act of 2006 (Division 25.5 (commencing with Section
2438500) of the Health and Safety Code).

25(vii) Consideration of capacity and system reliability of the
26eligible renewable energy resource to ensure grid reliability.

27(B) Rules permitting retail sellers to accumulate, beginning
28January 1, 2011, excess procurement in one compliance period to
29be applied to any subsequent compliance period. The rules shall
30apply equally to all retail sellers. In determining the quantity of
31excess procurement for the applicable compliance period, the
32commission shall retain the rules adopted by the commission and
33in effect as of January 1, 2015, for the compliance period specified
34in subparagraphs (A) to (C), inclusive, of paragraph (1) of
35subdivision (b) of Section 399.15. For any subsequent compliance
36period, the rules shall allow the following:

37(i) For electricity products meeting the portfolio content
38requirements of paragraph (1) of subdivision (b) of Section 399.16,
39contracts of any duration may count as excess procurement.

P5    1(ii) Electricity products meeting the portfolio content
2requirements of paragraph (2) or (3) of subdivision (b) of Section
3399.16 shall not be counted as excess procurement. Contracts of
4any duration for electricity products meeting the portfolio content
5requirements of paragraph (2) or (3) of subdivision (b) of Section
6399.16 that are credited towards a compliance period shall not be
7deducted from a retail seller’s procurement for purposes of
8calculating excess procurement.

9(iii) If a retail seller notifies the commission that it will comply
10with the provisions of subdivision (b) for the compliance period
11beginning January 1, 2017, the provisions of clauses (i) and (ii)
12shall take effect for that retail seller for that compliance period.

13(C) Standard terms and conditions to be used by all electrical
14corporations in contracting for eligible renewable energy resources,
15including performance requirements for renewable generators. A
16contract for the purchase of electricity generated by an eligible
17renewable energy resource, at a minimum, shall include the
18renewable energy credits associated with all electricity generation
19specified under the contract. The standard terms and conditions
20shall include the requirement that, no later than six months after
21the commission’s approval of an electricity purchase agreement
22entered into pursuant to this article, the following information
23about the agreement shall be disclosed by the commission: party
24names, resource type, project location, and project capacity.

25(D) An appropriate minimum margin of procurement above the
26minimum procurement level necessary to comply with the
27renewables portfolio standard to mitigate the risk that renewable
28projects planned or under contract are delayed or canceled. This
29paragraph does not preclude an electrical corporation from
30voluntarily proposing a margin of procurement above the
31appropriate minimum margin established by the commission.

32(5) Consistent with the goal of increasing California’s reliance
33on eligible renewable energy resources, the renewable energy
34procurement plan shall include all of the following:

35(A) An assessment of annual or multiyear portfolio supplies
36and demand to determine the optimal mix of eligible renewable
37energy resources with deliverability characteristics that may include
38peaking, dispatchable, baseload, firm, and as-available capacity.

39(B) Potential compliance delays related to the conditions
40described in paragraph (5) of subdivision (b) of Section 399.15.

P6    1(C) A bid solicitation setting forth the need for eligible
2renewable energy resources of each deliverability characteristic,
3required online dates, and locational preferences, if any.

4(D) A status update on the development schedule of all eligible
5renewable energy resources currently under contract.

6(E) Consideration of mechanisms for price adjustments
7associated with the costs of key components for eligible renewable
8energy resource projects with online dates more than 24 months
9after the date of contract execution.

10(F) An assessment of the risk that an eligible renewable energy
11resource will not be built, or that construction will be delayed,
12with the result that electricity will not be delivered as required by
13the contract.

14(6) In soliciting and procuring eligible renewable energy
15resources, each electrical corporation shall offer contracts of no
16less than 10 years duration, unless the commission approves of a
17contract of shorter duration.

18(7) In soliciting and procuring eligible renewable energy
19resources for California-based projects, each electrical corporation
20shall give preference to renewable energy projects that provide
21 environmental and economic benefits to communities afflicted
22with poverty or high unemployment, or that suffer from high
23emission levels of toxic air contaminants, criteria air pollutants,
24and greenhouse gases.

25(8) In soliciting and procuring eligible renewable energy
26resources, each retail seller shall consider the best-fit attributes of
27resource types that ensure a balanced resource mix to maintain the
28reliability of the electrical grid.

29(b) A retail seller may enter into a combination of long- and
30short-term contracts for electricity and associated renewable energy
31credits. Beginning January 1, 2021, at least 65 percent of the
32procurement a retail seller counts toward the renewables portfolio
33standard requirement of each compliance period shall be from its
34contracts of 10 years or more in duration or in its ownership or
35ownership agreements for eligible renewable energy resources.

36(c) The commission shall review and accept, modify, or reject
37each electrical corporation’s renewable energy resource
38procurement plan prior to the commencement of renewable energy
39procurement pursuant to this article by an electrical corporation.
40The commission shall assess adherence to the approved renewable
P7    1energy resource procurement plans in determining compliance
2with the obligations of this article.

3(d) Unless previously preapproved by the commission, an
4electrical corporation shall submit a contract for the generation of
5an eligible renewable energy resource to the commission for review
6and approval consistent with an approved renewable energy
7resource procurement plan. If the commission determines that the
8bid prices are elevated due to a lack of effective competition among
9the bidders, the commission shall direct the electrical corporation
10to renegotiate the contracts or conduct a new solicitation.

11(e) If an electrical corporation fails to comply with a commission
12order adopting a renewable energy resource procurement plan, the
13commission shall exercise its authority to require compliance.

14(f) (1) The commission may authorize a procurement entity to
15enter into contracts on behalf of customers of a retail seller for
16electricity products from eligible renewable energy resources to
17satisfy the retail seller’s renewables portfolio standard procurement
18requirements. The commission shall not require any person or
19corporation to act as a procurement entity or require any party to
20purchase eligible renewable energy resources from a procurement
21entity.

22(2) Subject to review and approval by the commission, the
23procurement entity shall be permitted to recover reasonable
24administrative and procurement costs through the retail rates of
25end-use customers that are served by the procurement entity and
26are directly benefiting from the procurement of eligible renewable
27energy resources.

28(g) Procurement and administrative costs associated with
29contracts entered into by an electrical corporation for eligible
30renewable energy resources pursuant to this article and approved
31by the commission are reasonable and prudent and shall be
32recoverable in rates.

33(h) Construction, alteration, demolition, installation, and repair
34work on an eligible renewable energy resource that receives
35production incentives pursuant to Section 25742 of the Public
36Resources Code, including work performed to qualify, receive, or
37maintain production incentives, are “public works” for the purposes
38of Chapter 1 (commencing with Section 1720) of Part 7 of Division
392 of the Labor Code.

begin delete
P8    1

SEC. 2.  

By July 1, 2017, the commission shall update the
2criteria for the rank ordering and selection of least-cost and best-fit
3eligible renewable energy resources adopted pursuant to
4subparagraph (A) of paragraph (4) of subdivision (a) of Section
5399.13 to identify the value of maintaining existing baseload
6resources to achieve the goal of a balanced portfolio of eligible
7renewable energy resources.

end delete


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