BILL ANALYSIS Ó AB 2700 Page 1 Date of Hearing: April 18, 2016 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 2700 (Salas) - As Amended March 17, 2016 SUBJECT: Electrical corporation: California Renewables Portfolio Standard Program: procurement plans SUMMARY: Requires the Public Utilities Commission (PUC) to update the "least-cost, best-fit" (LCBF) criteria used to rank contracts under the Renewables Portfolio Standard (RPS) to identify the value of maintaining existing baseload resources to achieve the goal of a balanced portfolio of eligible renewable energy resources. EXISTING LAW: 1)Requires "retail sellers" of electricity, i.e., investor-owned utilities (IOUs), energy service providers (ESPs) and community choice aggregators (CCAs), as well as publicly-owned utilities (POUs), to procure 50% of their retail electricity sales from eligible renewable energy resources by 2030 and thereafter, including interim targets of 25% by 2016, 33% by 2020, 40% by 2024, and 45% by 2027. 2)Requires the PUC to direct each IOU to include in its proposed procurement plan a strategy for procuring a diverse portfolio of resources that provide a reliable electricity supply, AB 2700 Page 2 including renewable energy integration needs, using zero carbon-emitting resources to the maximum extent reasonable. 3)Requires the PUC to adopt a process that provides criteria for the rank ordering and selection of LCBF resources to comply with the RPS obligations on a total cost and best-fit basis. Among other things, the LCBF process must take into account 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. 4)Requires each retail seller, in soliciting and procuring RPS resources, to consider the best-fit attributes of resource types that ensure a balanced resource mix to maintain the reliability of the electrical grid. THIS BILL: 1)Requires the PUC, by July 1, 2017, to update the LCBF criteria to identify the value of maintaining existing baseload resources to achieve the goal of a balanced portfolio of eligible renewable energy resources. 2)Adds "jobs retained associated with contracting for existing eligible renewable energy resources" to the workforce considerations that the LCBF process must take into account. FISCAL EFFECT: Unknown AB 2700 Page 3 COMMENTS: 1)Author's statement: 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. The (RPS) states that the objective of the program is to ensure that the most cost-effective and efficient investments in renewable energy resources are vigorously pursued and that the objectives of the program shall be to increase renewable generation from facilities located in state, while protecting system reliability, fostering resource diversity and obtaining the greatest environmental benefits for California residents. Statute further requires utilities to give preference to renewable energy projects that provide environmental and economic benefits to communities afflicted with poverty or high unemployment, or that suffer from high emission levels of toxic air contaminants, criteria air pollutants, and greenhouse gases. California has a diverse and abundant supply of new and existing intermittent and baseload renewable resources. Together, these resources can and should play a significant role in meeting AB 2700 Page 4 California's low carbon and clean energy policies. But the utilities' portfolios have become less diverse, not more. The procurement of new wind, solar thermal and solar PV has gone up dramatically while the procurement of biomass and geothermal has declined significantly. California's renewables portfolio needs to be balanced and diversified. Diversity promotes reliability by balancing intermittent resources like wind and solar with baseload and balancing renewable resources such as biomass and geothermal. AB 2700 is intended to correct this problem and avoid unnecessary costs burdening ratepayers and negative impacts that the loss of these resources will have on communities. 2)More fit. Certain biomass facilities have been unable to secure new contracts with utilities because the utilities have satisfied their RPS procurement requirements using other, lower-cost resources. The inability to secure new contracts has led to the closure of several biomass plants and loss of jobs in their communities. Contracts with existing geothermal plants are also at risk of not being renewed and new geothermal projects have not ranked favorably in the RPS selection process. This bill seeks balanced procurement selection by encouraging the PUC to rank existing renewable projects in a more favorable manner relative to existing jobs and to identify the value of maintaining existing baseload resources. AB 2700 Page 5 3)Double referral. This bill passed the Assembly Utilities and Commerce Committee by a vote of 15-0 on April 6, 2016. REGISTERED SUPPORT / OPPOSITION: Support Agricultural Council of California Associated California Loggers Becerra Ag California Biomass Energy Alliance California Farm Bureau Federation California Forestry Association AB 2700 Page 6 DG Fairhaven Power LLC IHI Generation IHI Power Services Rio Bravo Fresno Rio Bravo Rocklin Tuolumne County Chamber of Commerce Wadham Energy LP Wilson Ag 13 Individuals Opposition None on file AB 2700 Page 7 Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916) 319-2092