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