BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 2700


                                                                     Page A


          Date of Hearing:  April 6, 2016


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                  Mike Gatto, Chair


          AB 2700  
          (Salas) - As Amended March 17, 2016


          SUBJECT:  Electrical corporation:  California Renewables  
          Portfolio Standard Program:  procurement plans


          SUMMARY:  Revises the Renewable Portfolio Standard (RPS) related  
          to job creation and requires the California Public Utilities  
          Commission (CPUC) to update criteria used to rank RPS projects.   
          Specifically, this bill:  


          1)Revises existing provision related to job creation that is to  
            be used in the ranking of RPS projects to include  
            consideration of jobs retained that are associated with  
            contracting for existing eligible renewable energy resources.


          2)Requires the CPUC to update the criteria it uses to rank RPS  
            projects relative to the additional job creation provisions  
            added by this bill and to identify the value of maintaining  
            existing baseload resources to achieve the goal of a balanced  
            portfolio of eligible renewable energy resources.


          EXISTING LAW:  













                                                                    AB 2700


                                                                     Page B


          1)Establishes requirements for electric service providers to  
            procure 50% of their electricity supplies from renewable  
            energy by 2030, otherwise known as the RPS.  (Public Utilities  
            Code Section 399.12)



          2)Requires the CPUC, in implementing the RPS to adopt, by  
            rulemaking, criteria for the ranking and selection of  
            least-cost and best-fit (LCBF) eligible renewable energy on a  
            total cost and best-fit basis that takes into account  
            estimates of indirect costs associated with needed  
            transmission investments; the cost impact of procuring the  
            eligible renewable energy resources on the electrical  
            corporation's electricity portfolio; the viability of the  
            project to construct and reliably operate the eligible  
            renewable energy resource, including the developer's  
            experience, the feasibility of the technology used to generate  
            electricity, and the risk that the facility will not be built,  
            or that construction will be delayed, with the result that  
            electricity will not be supplied as required by the contract;  
            workforce recruitment, training, and retention efforts,  
            including the employment growth associated with the  
            construction and operation of eligible renewable energy  
            resources and goals for recruitment and training of women,  
            minorities, and disabled veterans, and; estimates of  
            electrical corporation expenses resulting from integrating and  
            operating eligible renewable energy resources, including, but  
            not limited to, any additional wholesale energy and capacity  
            costs associated with integrating each eligible renewable  
            resource. (Public Utilities Code Section 399.12 (a)(4)(A))



          3)Requires the CPUC to establish, no later than December 31,  
            2015, a method for determining expenses resulting from  
            integrating and operating eligible renewable energy resources.  
            (Public Utilities Code Section 399.12 (a)(4)(A))












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          FISCAL EFFECT:  Unknown.


          COMMENTS:  


          1)Author's Statement: "It is important to promote a policy that  
            will help ensure the state's renewable portfolio standard  
            procurement process creates a more level playing field and  
            evaluates all renewable resources comprehensively. The result  
            will be a more diverse and cost-effective portfolio of  
            renewable energy resources, which will help to balance the  
            grid and maintain reliability while keeping consumer electric  
            rates affordable.
            "AB 2700 requires the CPUC to update the LCBF criteria so that  
            this analysis comprehensively reflects the values  
            appropriately outlined in statute of particular renewable  
            resources. This is significant given the range of renewable  
            procurement options available to California public utilities."


          2)Belly of the Duck:  The new infamous "duck chart" developed by  
            the 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>  The belly of the duck represents the net load  
            for electricity after all generation and load is taken into  
            account. The tail and neck of the duck represents the speed at  
            which generation must be made available as the sun sets and  
          ---------------------------


          <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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                                                                     Page D


            the solar projects stop generating. For the most part, the  
            electricity needed for the ramps will be provided by natural  
            gas generation facilities. This could lead to problems with  
            maintaining a reliable transmission system due to the need to  
            respond quickly to the changing real-time conditions because  
            natural gas generators take time to start up (several hours or  
            more). As a result, gas generators must be held in  
            standby-mode to be ready when called upon to replace the  
            output that was previously provided by the solar projects.  
            (Note that simultaneous with the renewable "overgeneration"  
            California is importing electricity from out of state).


            Another way to address the ramp, though, would be to diversify  
            RPS procurement so that the belly fills and the tail and neck  
            flatten - which would have the effect of reducing the ramps at  
            help with reliable operation of the transmission system. Other  
            forms of renewable generation, such as biomass and geothermal  
            facilities are both capable of generating electricity at any  
            time of the day.


            Certain biomass facilities have been unable to secure new  
            contracts with utilities because the utilities have satisfied  
            their RPS procurement requirements using other resources.  
            Thus, leading to closure and loss of jobs in their  
            communities. Utilities are also planning not to renew  
            geothermal projects and new geothermal projects have not  
            ranked favorably in the RPS selection process.


            This bill seeks balanced procurement selection by encouraging  
            the CPUC to rank existing renewable projects in a more  
            favorable manner relative to existing jobs and to identify the  
            value of maintaining existing baseload resources.


          3)Support:  Supporters state that a LCBF criteria reflected is  
            an important recognition of the distinct value brought by  











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                                                                     Page E


            biomass facilities, helping to diversify an increasingly  
            homogenous renewable portfolio and lead to a more level  
            playing field. Further, they state that this bill will lead to  
            more use of biomass for electric generation and assist with  
            lowering the risk of wildfires.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Associated California Loggers


          California Farm Bureau Federation


          CalForests


          Humboldt/Mendocino Redwood Companies


          Pacific Ultrapower Chinese Station (11 employees of)




          Opposition


          None on file














                                                                    AB 2700


                                                                     Page F



          Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083