Amended in Assembly July 8, 2015

Senate BillNo. 350


Introduced by Senators De León and Leno

(Coauthors: Senators Hancock and Monning)

February 24, 2015


An act to amend Section 43013begin delete ofend deletebegin insert of, and to add Section 44258.5 to,end insert the Health and Safety Code, to amend Sections 25000.5 and 25943 of the Public Resources Code, and to amend Sections 399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21,begin delete and 399.30end deletebegin insert 399.30, 701.1, and 740.8end insert of, to addbegin delete Section 454.51end deletebegin insert Sections 237.5, 454.51, and 740.12end insert to, and to add Article 17 (commencing with Section 400) to Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

SB 350, as amended, De León. Clean Energy and Pollution Reduction Act of 2015.

(1) Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, as defined, while local publicly owned electric utilities, as defined, are under the direction of their governing boards.begin insert Under existing law, a violation of the Public Utilities Act is a crime.end insert

Existing law establishes the California Renewables Portfolio Standard (RPS)begin delete program,end deletebegin insert Program,end insert whichbegin insert is codified in the Public Utilities Act andend insert expresses the intent of the Legislature that the amount of electricity generated per year from eligible renewable energy resources be increased to an amount that equals at least 33% of the total electricity sold to retail customers in California per year by December 31, 2020. Existing law requires the PUC, by January 1, 2012, to establish the quantity of electricity products from eligible renewable energy resources to be procured by each retail seller for specified compliance periods, sufficient to ensure that the procurement of electricity products from eligible renewable energy resources achieves 25% of retail sales by December 31, 2016, and 33% of retail sales by December 31, 2020, and that retail sellers procure not less than 33% of retail sales in all subsequent years. Existing law includes as an eligible renewable energybegin delete resourcesend deletebegin insert resourceend insert a specified facility engaged in the combustion of municipal solid waste.

Existing law makes the requirements of the RPSbegin delete programend deletebegin insert Programend insert applicable to local publicly owned electric utilities, except that the utility’s governing board is responsible for implementation of those requirements, instead of the PUC, and certain enforcement authority with respect to local publicly owned electric utilities is given to the State Energy Resources Conservation and Development Commission (Energy Commission) and State Air Resources Board, instead of the PUC.

This bill would additionally express the intent of the Legislature for the purposes of the RPSbegin delete programend deletebegin insert Programend insert that the amount of electricity generated per year from eligible renewable energy resources be increased to an amount equal to at least 50% by December 31, 2030, and would require the PUC, by January 1, 2017, to establish the quantity of electricity products from eligible renewable energy resourcesbegin insert toend insert be procured by each retail seller for specified compliance periods sufficient to ensure that the procurement of electricity products from eligible renewable energy resources achieves 50% of retail sales by December 31, 2030. The bill would require the governing boards of local publicly owned electric utilities to ensure that specified quantities of electricity products from eligible renewable energy resources to be procured for specified compliance periods to ensure that the procurement of electricity products from eligible renewable energy resources achieve 50% of retail sales by December 31, 2030. The bill would exclude all facilities engaged in the combustion of municipal solid waste from being eligible renewable energy resources. The bill would require community choice aggregators and electric service providers to prepare and submit renewable energy procurement plans. The bill would revise other aspects of the RPSbegin delete program,end deletebegin insert Program,end insert including, among other things, the enforcement provisions and would require penalties collectedbegin insert from retail sellersend insert for noncompliance to be deposited in the Electric Program Investment Charge Fund. The bill would require the PUC to direct electrical corporations to include in their proposed procurement plans a strategy for procuring a diverse portfolio of resources that provide a reliable electricity supply. The bill would require the PUC and the Energy Commission to take certain actions in furtherance of meeting the state’s clean energy and pollution reduction objectives.

begin insert

This bill would authorize the PUC to authorize a procurement entity, and would authorize a local publicly owned utility, to procure an unspecified percentage of retail sales of onsite generation meeting certain requirements within the area served by the procurement entity to serve local electricity needs.

end insert
begin insert

Existing law requires the PUC, in cooperation with specified entities, to evaluate and implement policies to promote development of equipment and infrastructure needed to facilitate the use of electricity and natural gas to fuel low-emission vehicles. Existing law requires those policies to prohibit utilities from passing the costs and expenses related to programs for the development of that equipment or infrastructure through to ratepayers unless the PUC finds and determines that those programs are in the interest of ratepayers. Existing law defines “interests” of the ratepayers for this purpose.

end insert
begin insert

This bill would revise the definition of “interests” of the ratepayers. The bill would require the PUC, in consultation with specified entities, to direct electric corporations to propose multiyear programs and investments to accelerate widespread transportation electrification as a means to achieve certain goals. The bill would require the commission to review data concerning current and future electric transportation adoption rates and charging infrastructure utilization rates no less than every 3 years.

end insert
begin delete

(2) Under existing law, a violation of the RPS program is a crime.

end delete

Because thebegin insert aboveend insert provisionsbegin delete of this bill would expand the RPS program,end deletebegin insert are codified in the Public Utilities Act,end insert a violation of these provisions would impose a state-mandated local program by expanding the definition of abegin insert crime or establishing a newend insert crime.

begin delete

(3) By

end delete

begin insertBy end insertplacing additional requirements upon local publicly owned electric utilities, this bill would impose a state-mandated local program.

begin delete

(4)

end delete

begin insert(2)end insert Existing law requires the State Air Resources Board to adopt and implement various standards related to emissions from motor vehicles.

This bill would require those standards to be in furtherance of achieving a reduction in petroleum use in motor vehicles by 50% by January 1, 2030.begin insert The bill would require the state board, by January 1, 2017, to prepare a strategy and implementation plan to achieve this reduction.end insert

begin insert

Existing law requires the State Air Resources Board to adopt greenhouse gas emission limits and emissions reduction measures, by regulations, to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions in furtherance of achieving the statewide greenhouse gas emissions limit. Existing law requires the state board, in adoption regulations, to, among other things, design the regulations to include distribution of emissions allowance, where appropriate, to minimize the costs and maximize total benefits to California.

end insert
begin insert

The Charge Ahead California Initiative states goals of, among other things, placing in service at least 1,000,000 zero-emission and near-zero-emission vehicles by January 1, 2023, and increasing access for disadvantaged, low-income, and moderate-income communities and consumers to zero-emission and near-zero-emission vehicles.

end insert
begin insert

This bill would require the state board to identify and adopt appropriate policies to remove regulatory disincentives facing retail sellers from facilitating the achievement of greenhouse gas emissions reduction in other sectors through increased investments in transportation and building electrification that includes allocation of greenhouse gas emissions allowances to retail sellers to account for increased greenhouse gas emissions in the electric sector from transportation electrification.

end insert
begin delete

(5)

end delete

begin insert(3)end insert Existing law states the policy of the state to exploit all practicable and cost-effective conservation and improvements in the efficiency of energy use and distribution, and to achieve energy security, diversity of supply sources, and competitiveness of transportation energy markets based on the least environmental and economic costs.

This bill would additionally state the policy of the state to exploit those conservation and improvements in furtherance of reducing petroleum use in the transportation sector by 50% by January 1, 2030.begin insert The bill would state the policy of the state to encourage transportation electrification natural gas vehicles as a short-term measure, fuel cell vehicles, and transportation innovations as means to achieve certain goals.end insert

begin delete

(6)

end delete

begin insert(4)end insert Existing law requires the Energy Commission to establish a regulatory proceeding to develop and implement a comprehensive program to achieve greater energy savings in California’s existing residential and nonresidential building stock and to periodically update criteria for the program.

This bill would require the Energy Commission, by January 1, 2017, and at least once every 3 years thereafter, to adopt an update to the program in furtherance of achieving a doubling of energy efficiency in buildings by January 1, 2030.begin insert The bill would require the Energy Commission to adopt, implement, and enforce certain policy regarding ratepayer-funded energy efficiency programs.end insert

begin delete

(7)

end delete

begin insert(5)end insert The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act forbegin delete aend delete specified reasons.

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

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

P5    1

SECTION 1.  

This act shall be known and may be cited as the
2Clean Energy and Pollution Reduction Act of 2015.

3

SEC. 2.  

(a) The Legislature finds and declares that the
4Governor has called for a new set of objectives in clean energy,
5clean air, and pollution reduction for 2030 and beyond. Those
6objectives consist of the following:

7(1) To increase from 33 percent to 50 percent, the procurement
8of our electricity from renewable sources.

9(2) To reduce today’s petroleum use in cars and trucks by up
10to 50 percent.

11(3) To double the efficiency of existing buildings.

12(b) It is the intent of the Legislature in enacting this act to codify
13the targets described under subdivision (a) to ensure they are
14permanent, enforceable, and quantifiable.

15

SEC. 3.  

Section 43013 of the Health and Safety Code is
16amended to read:

17

43013.  

(a) The state board shall adopt and implement motor
18vehicle emission standards, in-use performance standards, and
19motor vehicle fuel specifications for the control of air contaminants
20and sources of air pollution which the state board has found to be
P6    1necessary, cost effective, and technologically feasible, to carry out
2the purposes of this division and in furtherance of achieving a
3reduction in petroleum use in motor vehicles by 50 percent by
4January 1, 2030, unless preempted by federal law.

5(b) The state board shall, consistent with subdivision (a), adopt
6standards and regulations for light-duty and heavy-duty motor
7vehicles, medium-duty motor vehicles, as determined and specified
8by the state board, portable fuel containers and spouts, and off-road
9or nonvehicle engine categories, including, but not limited to,
10off-highway motorcycles, off-highway vehicles, construction
11equipment, farm equipment, utility engines, locomotives, and, to
12the extent permitted by federal law, marine vessels.

13(c) Prior to adopting standards and regulations for farm
14equipment, the state board shall hold a public hearing and find and
15determine that the standards and regulations are necessary, cost
16effective, and technologically feasible. The state board shall also
17consider the technological effects of emission control standards
18on the cost, fuel consumption, and performance characteristics of
19mobile farm equipment.

20(d) Notwithstanding subdivision (b), the state board shall not
21adopt any standard or regulation affecting locomotives until the
22final study required under Section 5 of Chapter 1326 of the Statutes
23of 1987 has been completed and submitted to the Governor and
24Legislature.

25(e) Prior to adopting or amending any standard or regulation
26relating to motor vehicle fuel specifications pursuant to this section,
27the state board shall, after consultation with public or private
28entities that would be significantly impacted as described in
29paragraph (2) of subdivision (f), do both of the following:

30(1) Determine the cost-effectiveness of the adoption or
31amendment of the standard or regulation. The cost-effectiveness
32shall be compared on an incremental basis with other mobile source
33control methods and options.

34(2) Based on a preponderance of scientific and engineering data
35in the record, determine the technological feasibility of the adoption
36or amendment of the standard or regulation. That determination
37shall include, but is not limited to, the availability, effectiveness,
38reliability, and safety expected of the proposed technology in an
39application that is representative of the proposed use.

P7    1(f) Prior to adopting or amending any motor vehicle fuel
2specification pursuant to this section, the state board shall do both
3of the following:

4(1) To the extent feasible, quantitatively document the
5significant impacts of the proposed standard or specification on
6affected segments of the state’s economy. The economic analysis
7shall include, but is not limited to, the significant impacts of any
8change on motor vehicle fuel efficiency, the existing motor vehicle
9fuel distribution system, the competitive position of the affected
10segment relative to border states, and the cost to consumers.

11(2) Consult with public or private entities that would be
12significantly impacted to identify those investigative or preventive
13actions that may be necessary to ensure consumer acceptance,
14product availability, acceptable performance, and equipment
15reliability. The significantly impacted parties shall include, but are
16not limited to, fuel manufacturers, fuel distributors, independent
17marketers, vehicle manufacturers, and fuel users.

begin insert

18(g) (1) No later than January 1, 2017, the state board, after
19one or more public workshops, shall prepare a strategy and
20implementation plan to achieve a reduction in petroleum use in
21motor vehicles by 50 percent by January 1, 2030, and provide a
22copy of the strategy and plan to the appropriate policy committees
23of the Legislature.

end insert
begin insert

24(2) Beginning January 1, 2020, and every three years thereafter,
25the state board shall provide an update to the strategy and plan
26that reflects any changes made to the strategy and plan.

end insert
begin delete

27(g)

end delete

28begin insert(h)end insert To the extent that there is any conflict between the
29information required to be prepared by the state board pursuant to
30subdivision (f) and information required to be prepared by the state
31board pursuant to Chapter 3.5 (commencing with Section 11340)
32of Part 1 of Division 3 of Title 2 of the Government Code, the
33requirements established under subdivision (f) shall prevail.

begin delete

34(h)

end delete

35begin insert(i)end insert It is the intent of the Legislature that the state board act as
36expeditiously as is feasible to reduce nitrogen oxide emissions
37from diesel vehicles, marine vessels, and other categories of
38vehicular and mobile sources which significantly contribute to air
39pollution problems.

P8    1begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 44258.5 is added to the end insertbegin insertHealth and Safety
2Code
end insert
begin insert, to read:end insert

begin insert
3

begin insert44258.5.end insert  

(a) For the purposes of this section, the following
4terms mean the following:

5(1) “Retail seller” has the same meaning as set forth in Section
6399.12 of the Public Utilities Code.

7(2) “Transportation electrification” has the same meaning as
8set forth in Section 237.5 of the Public Utilities Code.

9(b) The state board shall identify and adopt appropriate policies
10to remove regulatory disincentives facing retail sellers from
11facilitating the achievement of greenhouse gas emission reductions
12in other sectors through increased investments in transportation
13electrification. Those policies shall include, but are not limited to,
14an allocation of greenhouse gas emissions allowances to retail
15sellers to account for increased greenhouse gas emissions in the
16electric sector from transportation electrification.

end insert
17

begin deleteSEC. 4.end delete
18begin insertSEC. 5.end insert  

Section 25000.5 of the Public Resources Code is
19amended to read:

20

25000.5.  

(a) The Legislature finds and declares that
21overdependence on the production, marketing, and consumption
22of petroleum based fuels as an energy resource in the transportation
23sector is a threat to the energy security of the state due to
24continuing market and supply uncertainties. In addition, petroleum
25use as an energy resource contributes substantially to the following
26public health and environmental problems: air pollution, acid rain,
27global warming, and the degradation of California’s marine
28environment and fisheries.

29(b) Therefore, it is the policy of this state to fully evaluate the
30economic and environmental costs of petroleum use, and the
31economic and environmental costs of other transportation fuels
32and options, including the costs and values of environmental
33impacts, and to establish a state transportation energy policy that
34results in the least environmental and economic cost to the state.
35In pursuing the “least environmental and economic cost” strategy,
36it is the policy of the state to exploit all practicable and
37cost-effective conservation and improvements in the efficiency of
38energy use and distribution, and to achieve energy security,
39diversity of supply sources, and competitiveness of transportation
40energy markets based on the least environmental and economic
P9    1cost, and in furtherance of reducing petroleum use in the
2transportation sector by 50 percent by January 1, 2030.

3(c) It is also the policy of this state to minimize the economic
4and environmental costs due to the use of petroleum-based and
5other transportation fuels by state agencies. In implementing a
6least-cost economic and environmental strategy for state fleets, it
7is the policy of the state to implement practicable and cost-effective
8measures, including, but not necessarily limited to, the purchase
9of the cleanest and most efficient automobiles and replacement
10tires, the use of alternative fuels in its fleets, and other conservation
11measures.

12(d) For the purposes of this section, “petroleum based fuels”
13means fuels derived from liquid unrefined crude oil, including
14natural gas liquids, liquefied petroleum gas, or the energy fraction
15of methyl tertiary-butyl ether (MTBE) or other ethers that is not
16attributed to natural gas.

17

begin deleteSEC. 5.end delete
18begin insertSEC. 6.end insert  

Section 25943 of the Public Resources Code is
19amended to read:

20

25943.  

(a) (1) By March 1, 2010, the commission shall
21establish a regulatory proceeding to develop and implement a
22comprehensive program to achieve greater energy savings in
23California’s existing residential and nonresidential building stock.
24This program shall comprise a complementary portfolio of
25techniques, applications, and practices that will achieve greater
26energy efficiency in existing residential and nonresidential
27structures that fall significantly below the current standards in Title
2824 of the California Code of Regulations, as determined by the
29commission.

30(2) The comprehensive program may include, but need not be
31limited to, a broad range of energy assessments, building
32benchmarking, energy rating, cost-effective energy efficiency
33 improvements, public and private sector energy efficiency
34financing options, public outreach and education efforts, and green
35workforce training.

begin insert

36(3) The commission shall adopt, implement, and enforce a
37responsible contractor policy for use across all ratepayer-funded
38energy efficiency programs that involve installation or
39maintenance, or both installation and maintenance, by building
40contractors to ensure that retrofits meet high-quality performance
P10   1standards and reduce energy savings lost or foregone due to
2poor-quality workmanship.

end insert

3(b) To develop and implement the program specified in
4subdivision (a), the commission shall do both of the following:

5(1) Coordinate with the Public Utilities Commission and consult
6with representatives from the Bureau of Real Estate, the
7Department of Housing and Community Development,
8investor-owned and publicly owned utilities, local governments,
9real estate licensees, commercial and homebuilders, commercial
10property owners, small businesses, mortgage lenders, financial
11institutions, home appraisers, inspectors, energy rating
12organizations, consumer groups, environmental and environmental
13justice groups, and other entities the commission deems
14appropriate.

15(2) Hold at least three public hearings in geographically diverse
16locations throughout the state.

17(c) In developing the requirements for the program specified in
18subdivision (a), the commission shall consider all of the following:

19(1) The amount of annual and peak energy savings, greenhouse
20gas emission reductions, and projected customer utility bill savings
21that will accrue from the program.

22(2) The most cost-effective means and reasonable timeframes
23to achieve the goals of the program.

24(3) The various climatic zones within the state.

25(4) An appropriate method to inform and educate the public
26about the need for, benefits of, and environmental impacts of, the
27comprehensive energy efficiency program.

28(5) The most effective way to report the energy assessment
29results and the corresponding energy efficiency improvements to
30the owner of the residential or nonresidential building, including,
31among other things, the following:

32(A) Prioritizing the identified energy efficiency improvements.

33(B) The payback period or cost-effectiveness of each
34improvement identified.

35(C) The various incentives, loans, grants, and rebates offered
36to finance the improvements.

37(D) Available financing options including all of the following:

38(i) Mortgages or sales agreement components.

39(ii) On-bill financing.

40(iii) Contractual property tax assessments.

P11   1(iv) Home warranties.

2(6) Existing statutory and regulatory requirements to achieve
3energy efficiency savings and greenhouse gas emission reductions.

4(7) A broad range of implementation approaches, including both
5utility and nonutility administration of energy efficiency programs.

6(8) Any other considerations deemed appropriate by the
7commission.

8(d) The program developed pursuant to this section shall do all
9of the following:

10(1) Minimize the overall costs of establishing and implementing
11the comprehensive energy efficiency program requirements.

12(2) Ensure, for residential buildings, that the energy efficiency
13assessments, ratings, or improvements do not unreasonably or
14unnecessarily affect the home purchasing process or the ability of
15individuals to rent housing. A transfer of property subject to the
16program implemented pursuant to this section shall not be
17invalidated solely because of the failure of a person to comply
18with a provision of the program.

19(3) Ensure, for nonresidential buildings, that the energy
20improvements do not have an undue economic impact on California
21businesses.

22(4) Determine, for residential buildings, the appropriateness of
23the Home Energy Rating System (HERS) program to support the
24goals of this section and whether there are a sufficient number of
25HERS-certified raters available to meet the program requirements.

26(5) Determine, for nonresidential structures, the availability of
27an appropriate cost-effective energy efficiency assessment system
28and whether there are a sufficient number of certified raters or
29auditors available to meet the program requirements.

30(6) Coordinate with the California Workforce Investment Board,
31the Employment Training Panel, the California Community
32Colleges, and other entities to ensure a qualified, well-trained
33workforce is available to implement the program requirements.

34(7) Coordinate with, and avoid duplication of, existing
35proceedings of the Public Utilities Commission and programs
36administered by utilities.

37(e) A home energy rating or energy assessment service does not
38meet the requirements of this section unless the service has been
39certified by the commission to be in compliance with the program
P12   1criteria developed pursuant to this section and is in conformity
2with other applicable elements of the program.

3(f) (1) The commission shall periodically update the criteria
4and adopt any revision that, in its judgment, is necessary to improve
5or refine program requirements after receiving public input.

6(2) On or before January 1, 2017, and at least once every three
7years thereafter, the commission shall adopt an update to the
8program in furtherance of achievingbegin delete aend deletebegin insert an overallend insert doubling of the
9energy efficiency of buildings by January 1, 2030.

10(g) Before implementing an element of the program developed
11pursuant to subdivision (a) that requires the expansion of statutory
12authority of the commission or the Public Utilities Commission,
13the commission and the Public Utilities Commission shall obtain
14legislative approval for the expansion of their authorities.

15(h) The commission shall report on the status of the program in
16the integrated energy policy report pursuant to Section 25302.

17(i) The commission shall fund activities undertaken pursuant
18to this section from the Federal Trust Fund consistent with the
19federal American Recovery and Reinvestment Act of 2009 (Public
20Law 111-5) or other sources of nonstate funds available to the
21commission for the purposes of this section.

22(j) For purposes of this section,begin delete “energyend deletebegin insert the following terms
23mean the following:end insert

24begin insert(1)end insertbegin insertend insertbegin insert“Energyend insert assessment” means a determination of an energy
25user’s energy consumption level, relative efficiency compared to
26other users, and opportunities to achieve greater efficiency or
27improve energy resource utilization.

begin insert

28(2) “Energy efficiency” means delivering equal or more services
29with less energy input from an energy source.

end insert
30begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 237.5 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert, to
31read:end insert

begin insert
32

begin insert237.5.end insert  

“Transportation electrification” means the use of
33electricity from the electric grid to power all or part of vehicles,
34vessels, trains, boats, or other equipment that are mobile sources
35of air pollution and greenhouse gases.

end insert
36

begin deleteSEC. 6.end delete
37begin insertSEC. 8.end insert  

Section 399.11 of the Public Utilities Code is amended
38to read:

39

399.11.  

The Legislature finds and declares all of the following:

P13   1(a) In order to attain a target of generating 20 percent of total
2retail sales of electricity in California from eligible renewable
3energy resources by December 31, 2013, 33 percent by December
431, 2020, and 50 percent by December 31, 2030, it is the intent of
5the Legislature that the commission and the Energy Commission
6implement the California Renewables Portfolio Standard Program
7described in this article.

8(b) Achieving the renewables portfolio standard through the
9 procurement of various electricity products from eligible renewable
10energy resources is intended to provide unique benefits to
11California, including all of the following, each of which
12independently justifies the program:

13(1) Displacing fossil fuel consumption within the state.

14(2) Adding new electrical generating facilities in the
15transmission network within the Western Electricity Coordinating
16Council service area.

17(3) Reducing air pollution in the state.

18(4) Meeting the state’s climate change goals by reducing
19emissions of greenhouse gases associated with electrical generation.

20(5) Promoting stable retail rates for electric service.

21(6) Meeting the state’s need for a diversified and balanced
22energy generation portfolio.

23(7) Assistance with meeting the state’s resource adequacy
24requirements.

25(8) Contributing to the safe and reliable operation of the
26electrical grid, including providing predictable electrical supply,
27voltage support, lower line losses, and congestion relief.

28(9) Implementing the state’s transmission and land use planning
29activities related to development of eligible renewable energy
30resources.

31(c) The California Renewables Portfolio Standard Program is
32intended to complement the Renewable Energy Resources Program
33administered by the Energy Commission and established pursuant
34to Chapter 8.6 (commencing with Section 25740) of Division 15
35of the Public Resources Code.

36(d) New and modified electric transmission facilities may be
37necessary to facilitate the state achieving its renewables portfolio
38standard targets.

39(e) (1) Supplying electricity to California end-use customers
40that is generated by eligible renewable energy resources is
P14   1necessary to improve California’s air quality and public health,
2and the commission shall ensure rates are just and reasonable, and
3are not significantly affected by the procurement requirements of
4this article. This electricity may be generated anywhere in the
5interconnected grid that includes many states, and areas of both
6Canada and Mexico.

7(2) This article requires generating resources located outside of
8California that are able to supply that electricity to California
9end-use customers to be treated identically to generating resources
10located within the state, without discrimination.

11(3) California electrical corporations have already executed,
12and the commission has approved, power purchase agreements
13with eligible renewable energy resources located outside of
14California that will supply electricity to California end-use
15customers. These resources will fully count toward meeting the
16renewables portfolio standard procurement requirements.

17

begin deleteSEC. 7.end delete
18begin insertSEC. 9.end insert  

Section 399.12 of the Public Utilities Code is amended
19to read:

20

399.12.  

For purposes of this article, the following terms have
21the following meanings:

22(a) “Conduit hydroelectric facility” means a facility for the
23generation of electricity that uses only the hydroelectric potential
24of an existing pipe, ditch, flume, siphon, tunnel, canal, or other
25manmade conduit that is operated to distribute water for a
26beneficial use.

27(b) “Balancing authority” means the responsible entity that
28integrates resource plans ahead of time, maintains load-interchange
29generation balance within a balancing authority area, and supports
30interconnection frequency in real time.

31(c) “Balancing authority area” means the collection of
32generation, transmission, and loads within the metered boundaries
33of the area within which the balancing authority maintains the
34electrical load-resource balance.

35(d) “California balancing authority” is a balancing authority
36with control over a balancing authority area primarily located in
37this state and operating for retail sellers and local publicly owned
38electric utilities subject to the requirements of this article and
39includes the Independent System Operator (ISO) and a local
40publicly owned electric utility operating a transmission grid that
P15   1is not under the operational control of the ISO. A California
2balancing authority is responsible for the operation of the
3transmission grid within its metered boundaries which may not be
4limited by the political boundaries of the State of California.

5(e) “Eligible renewable energy resource” means an electrical
6generating facility that meets the definition of a “renewable
7electrical generation facility” in Section 25741 of the Public
8Resources Code, subject to the following:

9(1) (A) An existing small hydroelectric generation facility of
1030 megawatts or less shall be eligible only if a retail seller or local
11publicly owned electric utility procured the electricity from the
12facility as of December 31, 2005. A new hydroelectric facility that
13commences generation of electricity after December 31, 2005, is
14not an eligible renewable energy resource if it will cause an adverse
15impact on instream beneficial uses or cause a change in the volume
16or timing of streamflow.

17(B) Notwithstanding subparagraph (A), a conduit hydroelectric
18facility of 30 megawatts or less that commenced operation before
19January 1, 2006, is an eligible renewable energy resource. A
20conduit hydroelectric facility of 30 megawatts or less that
21commences operation after December 31, 2005, is an eligible
22renewable energy resource so long as it does not cause an adverse
23impact on instream beneficial uses or cause a change in the volume
24or timing of streamflow.

25(C) A facility approved by the governing board of a local
26publicly owned electric utility prior to June 1, 2010, for
27procurement to satisfy renewable energy procurement obligations
28adopted pursuant to former Section 387, shall be certified as an
29eligible renewable energy resource by the Energy Commission
30pursuant to this article, if the facility is a “renewable electrical
31generation facility” as defined in Section 25741 of the Public
32Resources Code.

33(D) (i) A small hydroelectric generation unit with a nameplate
34capacity not exceeding 40 megawatts that is operated as part of a
35water supply or conveyance system is an eligible renewable energy
36resource only for the retail seller or local publicly owned electric
37utility that procured the electricity from the unit as of December
3831, 2005. No unit shall be eligible pursuant to this subparagraph
39if an application for certification is submitted to the Energy
40Commission after January 1, 2013. Only one retail seller or local
P16   1publicly owned electric utility shall be deemed to have procured
2electricity from a given unit as of December 31, 2005.

3(ii) Notwithstanding clause (i), a local publicly owned electric
4utility that meets the criteria of subdivision (j) of Section 399.30
5may sell to another local publicly owned electric utility electricity
6from small hydroelectric generation units that qualify as eligible
7renewable energy resources under clause (i), and that electricity
8may be used by the local publicly owned electric utility that
9purchased the electricity to meet its renewables portfolio standard
10procurement requirements. The total of all those sales from the
11utility shall be no greater than 100,000 megawatthours of
12electricity.

13(iii) The amendments made to this subdivision by the act adding
14this subparagraph are intended to clarify existing law and apply
15from December 10, 2011.

16(2) (A) A facility engaged in the combustion of municipal solid
17waste shall not be considered an eligible renewable energy
18resource.

19(B) Subparagraph (A) does not apply to contracts entered into
20before January 1, 2016, for the procurement of renewable energy
21resources from a facility located in Stanislaus County that was
22operational prior to September 26, 1996.

23(f) “Procure” means to acquire through ownership or contract.

24(g) “Procurement entity” means any person or corporation
25authorized by the commission to enter into contracts to procure
26eligible renewable energy resources on behalf of customers of a
27retail seller pursuant to subdivision (f) of Section 399.13.

28(h) (1) “Renewable energy credit” means a certificate of proof
29associated with the generation of electricity from an eligible
30renewable energy resource, issued through the accounting system
31established by the Energy Commission pursuant to Section 399.25,
32that one unit of electricity was generated and delivered by an
33eligible renewable energy resource.

34(2) “Renewable energy credit” includes all renewable and
35environmental attributes associated with the production of
36electricity from the eligible renewable energy resource, except for
37an emissions reduction credit issued pursuant to Section 40709 of
38the Health and Safety Code and any credits or payments associated
39with the reduction of solid waste and treatment benefits created
40by the utilization of biomass or biogas fuels.

P17   1(3) (A) Electricity generated by an eligible renewable energy
2resource attributable to the use of nonrenewable fuels, beyond a
3de minimis quantity used to generate electricity in the same process
4through which the facility converts renewable fuel to electricity,
5shall not result in the creation of a renewable energy credit. The
6Energy Commission shall set the de minimis quantity of
7nonrenewable fuels for each renewable energy technology at a
8level of no more than 2 percent of the total quantity of fuel used
9by the technology to generate electricity. The Energy Commission
10may adjust the de minimis quantity for an individual facility, up
11to a maximum of 5 percent, if it finds that all of the following
12conditions are met:

13(i) The facility demonstrates that the higher quantity of
14nonrenewable fuel will lead to an increase in generation from the
15eligible renewable energy facility that is significantly greater than
16generation from the nonrenewable fuel alone.

17(ii) The facility demonstrates that the higher quantity of
18nonrenewable fuels will reduce the variability of its electrical
19output in a manner that results in net environmental benefits to the
20state.

21(iii) The higher quantity of nonrenewable fuel is limited to either
22natural gas or hydrogen derived by reformation of a fossil fuel.

23(B) Electricity generated by a small hydroelectric generation
24facility shall not result in the creation of a renewable energy credit
25unless the facility meets the requirements of subparagraph (A) or
26(D) of paragraph (1) of subdivision (e).

27(C) Electricity generated by a conduit hydroelectric generation
28facility shall not result in the creation of a renewable energy credit
29unless the facility meets the requirements of subparagraph (B) of
30paragraph (1) of subdivision (e).

31(D) Electricity generated by a facility engaged in the combustion
32of municipal solid waste shall not result in the creation of a
33renewable energy credit. This subparagraph does not apply to
34renewable energy credits that were generated before January 1,
352016, by a facility engaged in the combustion of municipal solid
36waste located in Stanislaus County that was operational prior to
37September 26, 1996, and sold pursuant to contacts entered into
38before January 1, 2016.

39(i) “Renewables portfolio standard” means the specified
40percentage of electricity generated by eligible renewable energy
P18   1resources that a retail seller or a local publicly owned electric utility
2is required to procure pursuant to this article.

3(j) “Retail seller” means an entity engaged in the retail sale of
4electricity to end-use customers located within the state, including
5any of the following:

6(1) An electrical corporation, as defined in Section 218.

7(2) A community choice aggregator. A community choice
8aggregator shall participate in the renewables portfolio standard
9program subject to the same terms and conditions applicable to an
10electrical corporation.

11(3) An electric service provider, as defined in Section 218.3.
12The electric service provider shall be subject to the same terms
13and conditions applicable to an electrical corporation pursuant to
14this article. This paragraph does not impair a contract entered into
15between an electric service provider and a retail customer prior to
16the suspension of direct access by the commission pursuant to
17Section 80110 of the Water Code.

18(4) “Retail seller” does not include any of the following:

19(A) A corporation or person employing cogeneration technology
20or producing electricity consistent with subdivision (b) of Section
21218.

22(B) The Department of Water Resources acting in its capacity
23pursuant to Division 27 (commencing with Section 80000) of the
24Water Code.

25(C) A local publicly owned electric utility.

26(k) “WECC” means the Western Electricity Coordinating
27Council of the North American Electric Reliability Corporation,
28or a successor to the corporation.

29

begin deleteSEC. 8.end delete
30begin insertSEC. 10.end insert  

Section 399.13 of the Public Utilities Code is amended
31to read:

32

399.13.  

(a) (1) The commission shall direct each electrical
33corporation to annually prepare a renewable energy procurement
34plan that includes the matter in paragraph (5), to satisfy its
35obligations under the renewables portfolio standard. To the extent
36feasible, this procurement plan shall be proposed, reviewed, and
37adopted by the commission as part of, and pursuant to, a general
38procurement plan process. The commission shall require each
39electrical corporation to review and update its renewable energy
40procurement plan as it determines to be necessary. The commission
P19   1shall require all other retail sellers to prepare and submit renewable
2energy procurement plans that address the requirements identified
3in paragraph (5).

4(2) Every electrical corporation that owns electrical transmission
5facilities shall annually prepare, as part of the Federal Energy
6Regulatory Commission Order 890 process, and submit to the
7commission, a report identifying any electrical transmission
8facility, upgrade, or enhancement that is reasonably necessary to
9achieve the renewables portfolio standard procurement
10requirements of this article. Each report shall look forward at least
11five years and, to ensure that adequate investments are made in a
12timely manner, shall include a preliminary schedule when an
13application for a certificate of public convenience and necessity
14will be made, pursuant to Chapter 5 (commencing with Section
151001), for any electrical transmission facility identified as being
16reasonably necessary to achieve the renewable energy resources
17procurement requirements of this article. Each electrical
18corporation that owns electrical transmission facilities shall ensure
19that project-specific interconnection studies are completed in a
20timely manner.

21(3) The commission shall direct each retail seller to prepare and
22submit an annual compliance report that includes all of the
23following:

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

34(B) If the retail seller is an electrical corporation, the current
35status and progress made during the prior year toward construction
36of, and upgrades to, transmission and distribution facilities and
37other electrical system components it owns to interconnect eligible
38renewable energy resources and to supply the electricity generated
39by those resources to load, including the status of planning, siting,
P20   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 basis. This process
12shall 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,
24including the employment growth associated with the construction
25and operation of eligible renewable energy resources and goals
26for recruitment and training of women, minorities, and disabled
27veterans.

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

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

36(B) Rules permitting retail sellers to accumulate, beginning
37January 1, 2011, excess procurement in one compliance period to
38be applied to any subsequent compliance period. The rules shall
39apply equally to all retail sellers. In determining the quantity of
40excess procurement for the applicable compliance period, the
P21   1commission shall deduct from actual procurement quantities the
2total amount of procurement associated with contracts of less than
310 years in duration and electricity products meeting the portfolio
4content of paragraph (3) of subdivision (b) of Section 399.16.

5(C) Standard terms and conditions to be used by all electrical
6corporations in contracting for eligible renewable energy resources,
7including performance requirements for renewable generators. A
8contract for the purchase of electricity generated by an eligible
9renewable energy resource, at a minimum, shall include the
10renewable energy credits associated with all electricity generation
11specified under the contract. The standard terms and conditions
12shall include the requirement that, no later than six months after
13the commission’s approval of an electricity purchase agreement
14entered into pursuant to this article, the following information
15about the agreement shall be disclosed by the commission: party
16names, resource type, project location, and project capacity.

17(D) An appropriate minimum margin of procurement above the
18minimum procurement level necessary to comply with the
19renewables portfolio standard to mitigate the risk that renewable
20projects planned or under contract are delayed or canceled. This
21paragraph does not preclude an electrical corporation from
22voluntarily proposing a margin of procurement above the
23appropriate minimum margin established by the commission.

24(5) Consistent with the goal of increasing California’s reliance
25on eligible renewable energy resources, the renewable energy
26procurement plan shall include all of the following:

27(A) An assessment of annual or multiyear portfolio supplies
28and demand to determine the optimal mix of eligible renewable
29energy resources with deliverability characteristics that may include
30peaking, dispatchable, baseload, firm, and as-available capacity.

31(B) Potential compliance delays related to the conditions
32described in paragraph (5) of subdivision (b) of Section 399.15.

33(C) A bid solicitation setting forth the need for eligible
34renewable energy resources of each deliverability characteristic,
35required online dates, and locational preferences, if any.

36(D) A status update on the development schedule of all eligible
37renewable energy resources currently under contract.

38(E) Consideration of mechanisms for price adjustments
39associated with the costs of key components for eligible renewable
P22   1energy resource projects with online dates more than 24 months
2after the date of contract execution.

3(F) An assessment of the risk that an eligible renewable energy
4resource will not be built, or that construction will be delayed,
5with the result that electricity will not be delivered as required by
6the contract.

7(6) In soliciting and procuring eligible renewable energy
8resources, each electrical corporation shall offer contracts of no
9less than 10 years duration, unless the commission approves of a
10contract of shorter duration.

11(7) In soliciting and procuring eligible renewable energy
12resources for California-based projects, each electrical corporation
13shall give preference to renewable energy projects that provide
14environmental and economic benefits to communities afflicted
15with poverty or high unemployment, or that suffer from high
16emission levels of toxic air contaminants, criteria air pollutants,
17and greenhouse gases.

18(b) A retail seller may enter into a combination of long- and
19short-term contracts for electricity and associated renewable energy
20credits. The commission may authorize a retail seller to enter into
21a contract of less than 10 years’ duration with an eligible renewable
22energy resource, if the commission has established, for each retail
23seller, minimum quantities of eligible renewable energy resources
24to be procured through contracts of at least 10 years’ duration.

25(c) The commission shall review and accept, modify, or reject
26each electrical corporation’s renewable energy resource
27 procurement plan prior to the commencement of renewable energy
28procurement pursuant to this article by an electrical corporation.

29(d) Unless previously preapproved by the commission, an
30electrical corporation shall submit a contract for the generation of
31an eligible renewable energy resource to the commission for review
32and approval consistent with an approved renewable energy
33resource procurement plan. If the commission determines that the
34bid prices are elevated due to a lack of effective competition among
35the bidders, the commission shall direct the electrical corporation
36to renegotiate the contracts or conduct a new solicitation.

37(e) If an electrical corporation fails to comply with a commission
38order adopting a renewable energy resource procurement plan, the
39commission shall exercise its authority to require compliance.

P23   1(f) (1) The commission may authorize a procurement entity to
2enter into contracts on behalf of customers of a retail seller for
3electricity products from eligible renewable energy resources to
4satisfy the retail seller’s renewables portfolio standard procurement
5requirements. The commission shall not require any person or
6corporation to act as a procurement entity or require any party to
7purchase eligible renewable energy resources from a procurement
8entity.

9(2) Subject to review and approval by the commission, the
10procurement entity shall be permitted to recover reasonable
11administrative and procurement costs through the retail rates of
12end-use customers that are served by the procurement entity and
13are directly benefiting from the procurement of eligible renewable
14energy resources.

begin insert

15(3) The commission may authorize a procurement entity to
16procure ____ percent of retail sales of onsite generation within
17the area served by the procurement entity to serve local electricity
18needs. Onsite renewable generation shall be eligible renewable
19energy resources certified by the Energy Commission pursuant to
20Section 399.25 with a tracking system described in subdivision (c)
21of Section 399.25. Estimation of energy production from onsite
22generation shall not be used to demonstrate compliance with this
23article.

end insert

24(g) Procurement and administrative costs associated with
25contracts entered into by an electrical corporation for eligible
26renewable energy resources pursuant to this article and approved
27by the commission are reasonable and prudent and shall be
28recoverable in rates.

29(h) Construction, alteration, demolition, installation, and repair
30work on an eligible renewable energy resource that receives
31production incentives pursuant to Section 25742 of the Public
32Resources Code, including work performed to qualify, receive, or
33maintain production incentives, are “public works” for the purposes
34of Chapter 1 (commencing with Section 1720) of Part 7 of Division
352 of the Labor Code.

36

begin deleteSEC. 9.end delete
37begin insertSEC. 11.end insert  

Section 399.15 of the Public Utilities Code is amended
38to read:

39

399.15.  

(a) In order to fulfill unmet long-term resource needs,
40the commission shall establish a renewables portfolio standard
P24   1requiring all retail sellers to procure a minimum quantity of
2electricity products from eligible renewable energy resources as
3a specified percentage of total kilowatthours sold to their retail
4end-use customers each compliance period to achieve the targets
5established under this article. For any retail seller procuring at least
614 percent of retail sales from eligible renewable energy resources
7in 2010, the deficits associated with any previous renewables
8portfolio standard shall not be added to any procurement
9requirement pursuant to this article.

10(b) The commission shall implement renewables portfolio
11standard procurement requirements only as follows:

12(1) Each retail seller shall procure a minimum quantity of
13eligible renewable energy resources for each of the following
14compliance periods:

15(A) January 1, 2011, to December 31, 2013, inclusive.

16(B) January 1, 2014, to December 31, 2016, inclusive.

17(C) January 1, 2017, to December 31, 2020, inclusive.

18(D) January 1, 2021, to December 31, 2024, inclusive.

19(E) January 1, 2025, to December 31, 2027, inclusive.

begin delete

20(D)

end delete

21begin insert(F)end insert January 1, 2028, to December 31, 2030, inclusive.

22(2) (A) No later than January 1, 2017, the commission shall
23establish the quantity of electricity products from eligible
24renewable energy resources to be procured by the retail seller for
25each compliance period. These quantities shall be established in
26the same manner for all retail sellers and result in the same
27percentages used to establish compliance period quantities for all
28retail sellers.

29(B) In establishing quantities for the compliance period from
30January 1, 2011, to December 31, 2013, inclusive, the commission
31shall require procurement for each retail seller equal to an average
32of 20 percent of retail sales. For the following compliance periods,
33the quantities shall reflect reasonable progress in each of the
34intervening years sufficient to ensure that the procurement of
35electricity products from eligible renewable energy resources
36achieves 25 percent of retail sales by December 31, 2016, 33
37percent by December 31, 2020, 40 percent by December 31, 2024,
3845 percent by December 31, 2027, and 50 percent by December
3931, 2030. The commission shall establish appropriate multiyear
40compliance periods for all subsequent years that require retail
P25   1sellers to procure not less than 50 percent of retail sales of
2electricity products from eligible renewable energy resources.

3(C) Retail sellers shall be obligated to procure no less than the
4quantities associated with all intervening years by the end of each
5compliance period. Retail sellers shall not be required to
6demonstrate a specific quantity of procurement for any individual
7intervening year.

8(3) The commission may require the procurement of eligible
9renewable energy resources in excess of the quantities specified
10in paragraph (2).

11(4) Only for purposes of establishing the renewables portfolio
12standard procurement requirements of paragraph (1) and
13determining the quantities pursuant to paragraph (2), the
14commission shall include all electricity sold to retail customers by
15the Department of Water Resources pursuant to Division 27
16(commencing with Section 80000) of the Water Code in the
17 calculation of retail sales by an electrical corporation.

18(5) The commission shall waive enforcement of this section if
19it finds that the retail seller has demonstrated any of the following
20conditions are beyond the control of the retail seller and will
21prevent compliance:

22(A) There is inadequate transmission capacity to allow for
23sufficient electricity to be delivered from proposed eligible
24renewable energy resource projects using the current operational
25protocols of the Independent System Operator. In making its
26findings relative to the existence of this condition with respect to
27a retail seller that owns transmission lines, the commission shall
28consider both of the following:

29(i) Whether the retail seller has undertaken, in a timely fashion,
30reasonable measures under its control and consistent with its
31obligations under local, state, and federal laws and regulations, to
32develop and construct new transmission lines or upgrades to
33existing lines intended to transmit electricity generated by eligible
34renewable energy resources. In determining the reasonableness of
35a retail seller’s actions, the commission shall consider the retail
36seller’s expectations for full-cost recovery for these transmission
37lines and upgrades.

38(ii) Whether the retail seller has taken all reasonable operational
39measures to maximize cost-effective deliveries of electricity from
P26   1eligible renewable energy resources in advance of transmission
2availability.

3(B) Permitting, interconnection, or other circumstances that
4delay procured eligible renewable energy resource projects, or
5there is an insufficient supply of eligible renewable energy
6resources available to the retail seller. In making a finding that this
7condition prevents timely compliance, the commission shall
8consider whether the retail seller has done all of the following:

9(i) Prudently managed portfolio risks, including relying on a
10sufficient number of viable projects.

11(ii) Sought to develop one of the following: its own eligible
12renewable energy resources, transmission to interconnect to eligible
13renewable energy resources, or energy storage used to integrate
14eligible renewable energy resources. This clause shall not require
15an electrical corporation to pursue development of eligible
16renewable energy resources pursuant to Section 399.14.

17(iii) Procured an appropriate minimum margin of procurement
18above the minimum procurement level necessary to comply with
19the renewables portfolio standard to compensate for foreseeable
20delays or insufficient supply.

21(iv) Taken reasonable measures, under the control of the retail
22seller, to procure cost-effective distributed generation and allowable
23unbundled renewable energy credits.

24(C) Unanticipated curtailment of eligible renewable energy
25resourcesbegin delete necessary to address the needs of a balancing authority.end delete
26begin insert if the waiver would not result in an increase in greenhouse gas
27emissions.end insert

begin insert

28(D) Unanticipated increase in retail sales due to transportation
29electrification. In making a finding that this condition prevents
30timely compliance, the commission shall consider all of the
31following:

end insert
begin insert

32(i) Whether transportation electrification significantly exceeded
33forecasts in that retail seller’s service territory based on the best
34and most recently available information filed with the State Air
35Resources Board, the Energy Commission, or other state agency.

end insert
begin insert

36(ii) Whether the retail seller has taken reasonable measures to
37procure sufficient resources to account for unanticipated increases
38in retail sales due to transportation electrification.

end insert

39(6) If the commission waives the compliance requirements of
40this section, the commission shall establish additional reporting
P27   1requirements on the retail seller to demonstrate that all reasonable
2actions under the control of the retail seller are taken in each of
3the intervening years sufficient to satisfy future procurement
4requirements.

5(7) The commission shall not waive enforcement pursuant to
6this section, unless the retail seller demonstrates that it has taken
7 all reasonable actions under its control, as set forth in paragraph
8(5), to achieve full compliance.

9(8) If a retail seller fails to procure sufficient eligible renewable
10energy resources to comply with a procurement requirement
11pursuant to paragraphs (1) and (2) and fails to obtain an order from
12the commission waiving enforcement pursuant to paragraph (5),
13the commission shall assess penalties for noncompliance. A
14schedule of penalties shall be adopted by the commission that shall
15be comparable for electrical corporations and other retail sellers.
16For electrical corporations, the cost of any penalties shall not be
17collected in rates. Any penalties collected under this article shall
18be deposited into the Electric Program Investment Charge Fund
19and used for the purposes described in Chapter 8.1 (commencing
20with Section 25710) of Division 15 of the Public Resources Code.

21(9) Deficits associated with the compliance period shall not be
22added to a future compliance period.

23(c) The commission shall establish a limitation for each electrical
24corporation on the procurement expenditures for all eligible
25renewable energy resources used to comply with the renewables
26portfolio standard. This limitation shall be set at a level that
27prevents disproportionate rate impacts.

28(d) If the cost limitation for an electrical corporation is
29insufficient to support the projected costs of meeting the
30renewables portfolio standard procurement requirements, the
31electrical corporation may refrain from entering into new contracts
32or constructing facilities beyond the quantity that can be procured
33within the limitation, unless eligible renewable energy resources
34can be procured without exceeding a de minimis increase in rates,
35consistent with the long-term procurement plan established for the
36electrical corporation pursuant to Section 454.5.

37(e) (1) The commission shall monitor the status of the cost
38limitation for each electrical corporation in order to ensure
39compliance with this article.

P28   1(2) If the commission determines that an electrical corporation
2may exceed its cost limitation prior to achieving the renewables
3portfolio standard procurement requirements, the commission shall
4do both of the following within 60 days of making that
5determination:

6(A) Investigate and identify the reasons why the electrical
7corporation may exceed its annual cost limitation.

8(B) Notify the appropriate policy and fiscal committees of the
9Legislature that the electrical corporation may exceed its cost
10limitation, and include the reasons why the electrical corporation
11may exceed its cost limitation.

12(f) The establishment of a renewables portfolio standard shall
13not constitute implementation by the commission of the federal
14Public Utility Regulatory Policies Act of 1978 (Public Law
1595-617).

16

begin deleteSEC. 10.end delete
17begin insertSEC. 12.end insert  

Section 399.16 of the Public Utilities Code is amended
18to read:

19

399.16.  

(a) Various electricity products from eligible renewable
20energy resources located within the WECC transmission network
21service area shall be eligible to comply with the renewables
22portfolio standard procurement requirements in Section 399.15.
23These electricity products may be differentiated by their impacts
24on the operation of the grid in supplying electricity, as wellbegin delete as,end deletebegin insert asend insert
25 meeting the requirements of this article.

26(b) Consistent with the goals of procuring the least-cost and
27best-fit electricity products from eligible renewable energy
28resources that meet project viability principles adopted by the
29commission pursuant to paragraph (4) of subdivision (a) of Section
30399.13 and that provide the benefits set forth in Section 399.11, a
31balanced portfolio of eligible renewable energy resources shall be
32procured consisting of the following portfolio content categories:

33(1) Eligible renewable energy resource electricity products that
34meet either of the following criteria:

35(A) Have a first point of interconnection with a California
36balancing authority, have a first point of interconnection with
37distribution facilities used to serve end users within a California
38balancing authority area, or are scheduled from the eligible
39renewable energy resource into a California balancing authority
40without substituting electricity from another source. The use of
P29   1another source to provide real-time ancillary services required to
2maintain an hourly or subhourly import schedule into a California
3balancing authority shall be permitted, but only the fraction of the
4schedule actually generated by the eligible renewable energy
5resource shall count toward this portfolio content category.

6(B) Have an agreement to dynamically transfer electricity to a
7California balancing authority.

8(2) Firmed and shaped eligible renewable energy resource
9electricity products providing incremental electricity and scheduled
10into a California balancing authority.

11(3) Eligible renewable energy resource electricity products, or
12any fraction of the electricity generated, including unbundled
13renewable energy credits, that do not qualify under the criteria of
14paragraph (1) or (2).

15(c) In order to achieve a balanced portfolio, all retail sellers
16shall meet the following requirements for all procurement credited
17toward each compliance period:

18(1) Not less than 50 percent for the compliance period ending
19December 31, 2013, 65 percent for the compliance period ending
20December 31, 2016, and 75 percent for the compliance period
21ending December 31, 2020, of the eligible renewable energy
22resource electricity products associated with contracts executed
23after June 1, 2010, shall meet the product content requirements of
24paragraph (1) of subdivision (b). Each retail seller shall continue
25to satisfy the product content requirements applicable to
26procurement quantities associated with the compliance period
27ending December 31, 2020, and ensure that, for compliance periods
28ending after December 31, 2020, not less than 75 percent of the
29incremental renewable procurement requirements in each
30compliance period shall be satisfied with eligible renewable energy
31resource electricity products meeting the requirements of paragraph
32(1) of subdivision (b).

33(2) Not more than 25 percent for the compliance period ending
34December 31, 2013, 15 percent for the compliance period ending
35December 31, 2016, and 10 percent forbegin insert theend insert compliance period
36ending December 31, 2020, of the eligible renewable energy
37resource electricity products associated with contracts executed
38after June 1, 2010, shall meet the product content requirements of
39paragraph (3) of subdivision (b). For the compliance periods ending
40after December 31, 2020, not more than 10 percent of the
P30   1incremental renewable procurement requirements in each
2compliance period shall be satisfied with eligible renewable energy
3resource electricity products meeting the requirements of paragraph
4(3) of subdivision (b).

5(3) Any renewable energy resources contracts executed on or
6after June 1, 2010, not subject to the limitations of paragraph (1)
7or (2), shall meet the product content requirements of paragraph
8(2) of subdivision (b).

9(4) For purposes of electric service providers only, the
10restrictions in this subdivision on crediting eligible renewable
11energy resource electricity products to each compliance period
12shall apply to contracts executed after January 13, 2011.

13(d) Any contract or ownership agreement originally executed
14prior to June 1, 2010, shall count in full toward the procurement
15requirements established pursuant to this article, if all of the
16following conditions are met:

17(1) The renewable energy resource was eligible under the rules
18in place as of the date when the contract was executed.

19(2) For an electrical corporation, the contract has been approved
20by the commission, even if that approval occurs after June 1, 2010.

21(3) Any contract amendments or modifications occurring after
22June 1, 2010, do not increase the nameplate capacity or expected
23quantities of annual generation, or substitute a different renewable
24energy resource. The duration of the contract may be extended if
25the original contract specified a procurement commitment of 15
26or more years.

27(e) A retail seller may apply to the commission for a reduction
28of a procurement content requirement of subdivision (c). The
29commission may reduce a procurement content requirement of
30subdivision (c) to the extent the retail seller demonstrates that it
31cannot comply with that subdivision because of conditions beyond
32the control of the retail seller as provided in paragraph (5) of
33subdivision (b) of Section 399.15. The commission shall not, under
34any circumstance, reduce the obligation specified in paragraph (1)
35of subdivision (c) below 65 percent for any compliance period
36obligation after December 31, 2016.

37

begin deleteSEC. 11.end delete
38begin insertSEC. 13.end insert  

Section 399.18 of the Public Utilities Code is amended
39to read:

P31   1

399.18.  

(a) This section applies to an electrical corporation
2that as of January 1, 2010, met either of the following conditions:

3(1) Served 30,000 or fewer customer accounts in California and
4had issued at least four solicitations for eligible renewable energy
5resources prior to June 1, 2010.

6(2) Had 1,000 or fewer customer accounts in California and was
7not connected to any transmission system or to the Independent
8System Operator.

9(b) For an electrical corporation or its successor, electricity
10products from eligible renewable energy resources may be used
11for compliance with this article, notwithstanding any procurement
12content limitation in Section 399.16, provided that all of the
13following conditions are met:

14(1) The electrical corporation or its successor participates in,
15and complies with, the accounting system administered by the
16Energy Commission pursuant to subdivision (b) of Section 399.25.

17(2) The Energy Commission verifies that the electricity
18generated by the facility is eligible to meet the requirements of
19Section 399.15.

20(3) The electrical corporation continues to satisfy either of the
21conditions described in subdivision (a).

22

begin deleteSEC. 12.end delete
23begin insertSEC. 14.end insert  

Section 399.21 of the Public Utilities Code is amended
24to read:

25

399.21.  

(a) The commission, by rule, shall authorize the use
26of renewable energy credits to satisfy the renewables portfolio
27standard procurement requirements established pursuant to this
28article, subject to the following conditions:

29(1) The commission and the Energy Commission shall ensure
30that the tracking system established pursuant to subdivision (c) of
31Section 399.25, is operational, is capable of independently
32verifying that electricity earning the credit is generated by an
33eligible renewable energy resource, and can ensure that renewable
34energy credits shall not be double counted by any seller of
35electricity within the service territory of the WECC.

36(2) Each renewable energy credit shall be counted only once
37for compliance with the renewables portfolio standard of this state
38or any other state, or for verifying retail product claims in this state
39or any other state.

P32   1(3) All revenues received by an electrical corporation for the
2sale of a renewable energy credit shall be credited to the benefit
3of ratepayers.

4(4) Renewable energy credits shall not be created for electricity
5generated pursuant to any electricity purchase contract with a retail
6seller or a local publicly owned electric utility executed before
7January 1, 2005, unless the contract contains explicit terms and
8conditions specifying the ownership or disposition of those credits.
9Procurement under those contracts shall be tracked through the
10accounting system described in subdivision (b) of Section 399.25
11and included in the quantity of eligible renewable energy resources
12of the purchasing retail seller pursuant to Section 399.15.

13(5) Renewable energy credits shall not be created for electricity
14generated under any electricity purchase contract executed after
15January 1, 2005, pursuant to the federal Public Utility Regulatory
16Policies Act of 1978 (16 U.S.C. Sec. 2601 et seq.). Procurement
17under the electricity purchase contracts shall be tracked through
18the accounting system implemented by the Energy Commission
19pursuant to subdivision (b) of Section 399.25 and count toward
20the renewables portfolio standard procurement requirements of
21the purchasing retail seller.

22(6) A renewable energy credit shall not be eligible for
23compliance with a renewables portfolio standard procurement
24requirement unless it is retired in the tracking system established
25pursuant to subdivision (c) of Section 399.25 by the retail seller
26or local publicly owned electric utility within 36 months from the
27initial date of generation of the associated electricity.

28(b) The commission shall allow an electrical corporation to
29recover the reasonable costs of purchasing, selling, and
30administering renewable energy credit contracts in rates.

31

begin deleteSEC. 13.end delete
32begin insertSEC. 15.end insert  

Section 399.30 of the Public Utilities Code is amended
33to read:

34

399.30.  

(a) To fulfill unmet long-term generation resource
35needs, each local publicly owned electric utility shall adopt and
36implement a renewable energy resources procurement plan that
37requires the utility to procure a minimum quantity of electricity
38products from eligible renewable energy resources, including
39renewable energy credits, as a specified percentage of total
P33   1kilowatthours sold to the utility’s retail end-use customers, each
2compliance period, to achieve the targets of subdivision (c).

3(b) The governing board shall implement procurement targets
4for a local publicly owned electric utility that require the utility to
5procure a minimum quantity of eligible renewable energy resources
6for each of the following compliance periods:

7(1) January 1, 2011, to December 31, 2013, inclusive.

8(2) January 1, 2014, to December 31, 2016, inclusive.

9(3) January 1, 2017, to December 31, 2020, inclusive.

begin delete

10(D)

end delete

11begin insert(4)end insert January 1, 2021, to December 31, 2024, inclusive.

begin delete

12(E)

end delete

13begin insert(5)end insert January 1, 2025, to December 31, 2027, inclusive.

begin delete

14(D)

end delete

15begin insert(6)end insert January 1, 2028, to December 31, 2030, inclusive.

16(c) The governing board of a local publicly owned electric utility
17shall ensure all of the following:

18(1) The quantities of eligible renewable energy resources to be
19procured for the compliance period from January 1, 2011, to
20December 31, 2013, inclusive, are equal to an average of 20 percent
21of retail sales.

22(2) The quantities of eligible renewable energy resources to be
23procured for all other compliance periods reflect reasonable
24progress in each of the intervening years sufficient to ensure that
25the procurement of electricity products from eligible renewable
26energy resources achieves 25 percent of retail sales by December
2731, 2016, 33 percent by December 31, 2020, 40 percent by
28December 31, 2024, 45 percent by December 31, 2027, and 50
29percent by December 31, 2030. The Energy Commission shall
30establish appropriate multiyear compliance periods for all
31subsequent years that require the local publicly owned electric
32utility to procure not less than 50 percent of retail sales of
33electricity products from eligible renewable energy resources.

34(3) A local publicly owned electric utility shall adopt
35procurement requirements consistent with Section 399.16.

begin insert

36(4) A local publicly owned electric utility may procure ____
37percent of retail sales of onsite generation within the area served
38by that utility to serve local electricity needs. Onsite renewable
39generation shall be eligible renewable energy resources certified
40by the Energy Commission pursuant to Section 399.25 with a
P34   1tracking system described in subdivision (c) of Section 399.25.
2Estimation of energy production from onsite generation shall not
3be used to demonstrate compliance with this article.

end insert

4(d) The governing board of a local publicly owned electric utility
5may adopt the following measures:

6(1) Rules permitting the utility to apply excess procurement in
7one compliance period to subsequent compliance periods in the
8same manner as allowed for retail sellers pursuant to Section
9399.13.

10(2) Conditions that allow for delaying timely compliance
11consistent with subdivision (b) of Section 399.15.

12(3) Cost limitations for procurement expenditures consistent
13with subdivision (c) of Section 399.15.

14(e) The governing board of the local publicly owned electric
15utility shall adopt a program for the enforcement of this article.
16The program shall be adopted at a publicly noticed meeting offering
17all interested parties an opportunity to comment. Not less than 30
18days’ notice shall be given to the public of any meeting held for
19purposes of adopting the program. Not less than 10 days’ notice
20shall be given to the public before any meeting is held to make a
21substantive change to the program.

22(f) (1) Each local publicly owned electric utility shall annually
23post notice, in accordance with Chapter 9 (commencing with
24Section 54950) of Part 1 of Division 2 of Title 5 of the Government
25Code, whenever its governing body will deliberate in public on its
26renewable energy resources procurement plan.

27(2) Contemporaneous with the posting of the notice of a public
28meeting to consider the renewable energy resources procurement
29plan, the local publicly owned electric utility shall notify the
30Energy Commission of the date, time, and location of the meeting
31in order to enable the Energy Commission to post the information
32on its Internet Web site. This requirement is satisfied if the local
33publicly owned electric utility provides the uniform resource
34locator (URL) that links to this information.

35(3) Upon distribution to its governing body of information
36related to its renewable energy resources procurement status and
37future plans, for its consideration at a noticed public meeting, the
38local publicly owned electric utility shall make that information
39available to the public and shall provide the Energy Commission
40with an electronic copy of the documents for posting on the Energy
P35   1Commission’s Internet Web site. This requirement is satisfied if
2the local publicly owned electric utility provides the uniform
3resource locator (URL) that links to the documents or information
4regarding other manners of access to the documents.

5(g) A public utility district that receives all of its electricity
6pursuant to a preference right adopted and authorized by the United
7States Congress pursuant to Section 4 of the Trinity River Division
8Act of August 12, 1955 (Public Law 84-386) shall be in compliance
9with the renewable energy procurement requirements of this article.

10(h) For a local publicly owned electric utility that was in
11existence on or before January 1, 2009, that provides retail electric
12service to 15,000 or fewer customer accounts in California, and is
13interconnected to a balancing authority located outside this state
14but within the WECC, an eligible renewable energy resource
15includes a facility that is located outside California that is
16connected to the WECC transmission system, if all of the following
17conditions are met:

18(1) The electricity generated by the facility is procured by the
19local publicly owned electric utility, is delivered to the balancing
20authority area in which the local publicly owned electric utility is
21located, and is not used to fulfill renewable energy procurement
22requirements of other states.

23(2) The local publicly owned electric utility participates in, and
24complies with, the accounting system administered by the Energy
25Commission pursuant to this article.

26(3) The Energy Commission verifies that the electricity
27generated by the facility is eligible to meet the renewables portfolio
28standard procurement requirements.

29(i) Notwithstanding subdivision (a), for a local publicly owned
30electric utility that is a joint powers authority of districts established
31pursuant to state law on or before January 1, 2005, that furnish
32electric services other than to residential customers, and is formed
33pursuant to the Irrigation District Law (Division 11 (commencing
34with Section 20500) of the Water Code), the percentage of total
35kilowatthours sold to the district’s retail end-use customers, upon
36which the renewables portfolio standard procurement requirements
37in subdivision (b) are calculated, shall be based on the authority’s
38average retail sales over the previous seven years. If the authority
39has not furnished electric service for seven years, then the
40calculation shall be based on average retail sales over the number
P36   1of completed years during which the authority has provided electric
2service.

3(j) A local publicly owned electric utility in a city and county
4that only receives greater than 67 percent of its electricity sources
5from hydroelectric generation located within the state that it owns
6and operates, and that does not meet the definition of a “renewable
7electrical generation facility” pursuant to Section 25741 of the
8Public Resources Code, shall be required to procure eligible
9renewable energy resources, including renewable energy credits,
10to meet only the electricity demands unsatisfied by its hydroelectric
11generation in any given year, in order to satisfy its renewable
12energy procurement requirements.

13(k) (1) A local publicly owned electric utility that receives
14greater than 50 percent of its annual retail sales from its own
15hydroelectric generation that is not an eligible renewable energy
16resource shall not be required to procure additional eligible
17renewable energy resources in excess of either of the following:

18(A) The portion of its retail sales not supplied by its own
19hydroelectric generation. For these purposes, retail sales supplied
20by an increase in hydroelectric generation resulting from an
21increase in the amount of water stored by a dam because the dam
22is enlarged or otherwise modified after December 31, 2012, shall
23not count as being retail sales supplied by the utility’s own
24hydroelectric generation.

25(B) The cost limitation adopted pursuant to this section.

26(2) For the purposes of this subdivision, “hydroelectric
27generation” means electricity generated from a hydroelectric
28facility that satisfies all of the following:

29(A) Is owned solely and operated by the local publicly owned
30electric utility as of 1967.

31(B) Serves a local publicly owned electric utility with a
32distribution system demand of less than 150 megawatts.

33(C) Involves a contract in which an electrical corporation
34receives the benefit of the electric generation through June of 2014,
35at which time the benefit reverts back to the ownership and control
36of the local publicly owned electric utility.

37(D) Has a maximum penstock flow capacity of no more than
383,200 cubic feet per second and includes a regulating reservoir
39with a small hydroelectric generation facility producing fewer than
P37   120 megawatts with a maximum penstock flow capacity of no more
2than 3,000 cubic feet per second.

3(3) This subdivision does not reduce or eliminate any renewable
4procurement requirement for any compliance period ending prior
5to January 1, 2014.

6(4) This subdivision does not require a local publicly owned
7electric utility to purchase additional eligible renewable energy
8resources in excess of the procurement requirements of subdivision
9 (c).

10(l) A local publicly owned electric utility shall retain discretion
11over both of the following:

12(1) The mix of eligible renewable energy resources procured
13by the utility and those additional generation resources procured
14by the utility for purposes of ensuring resource adequacy and
15reliability.

16(2) The reasonable costs incurred by the utility for eligible
17renewable energy resources owned by the utility.

begin delete

18(m) The Energy Commission shall adopt regulations specifying
19the requirements under this article and require local governing
20boards to adopt timely requirements consistent with this article.
21The Energy Commission shall adopt regulations specifying
22procedures for enforcement of these requirements, including the
23adoption of a schedule of penalties to be imposed pursuant to
24subdivision (n). The regulations shall include a public process
25under which the Energy Commission may issue a notice of
26violation and correction against a local publicly owned electric
27utility for failure to comply with this article and assess penalties
28pursuant to subdivision (n).

end delete
begin insert

29(m) The Energy Commission shall adopt regulations specifying
30procedures for enforcement of this article. The regulations shall
31include a public process under which the Energy Commission may
32issue a notice of violation and correction against a local publicly
33owned electric utility for failure to comply with this article, and
34for referral of violations to the State Air Resources Board for
35penalties pursuant to subdivision (n).

end insert

36(n) begin insert(1)end insertbegin insertend insert Upon a determination by the Energy Commission that
37a local publicly owned electric utility has failed to comply with
38this article, the Energy Commission shall begin delete impose penalties
39comparable to those adopted by the commission for noncompliance
40by retail sellers. Any penalties collected under this article shall be
P38   1deposited into the Electric Program Investment Charge Fund and
2used for the purposes described in Chapter 8.1 (commencing with
3Section 25710) of Division 15 of the Public Resources Code.end delete
begin insert refer
4the failure to comply with this article to the State Air Resources
5Board, which may impose penalties to enforce this article
6consistent with Part 6 (commencing with Section 38580) of
7Division 25.5 of the Health and Safety Code. Any penalties imposed
8shall be comparable to those adopted by the commission for
9noncompliance by retail sellers.end insert

begin insert

10(2) Any penalties collected by the State Air Resources Board
11pursuant to this article shall be deposited in the Air Pollution
12Control Fund and, upon appropriation by the Legislature, shall
13be expended for reducing emissions of air pollution or greenhouse
14gases within the same geographic area as the local publicly owned
15electric utility.

end insert
16

begin deleteSEC. 14.end delete
17begin insertSEC. 16.end insert  

Article 17 (commencing with Section 400) is added
18to Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code,
19to read:

20 

21Article 17.  Clean Energy and Pollution Reduction
22

 

23

400.  

The commission and the Energy Commission shall do all
24of the following in furtherance of meeting the state’s clean energy
25and pollution reduction objectives:

26(a) Take into accountbegin delete the benefits of distributed generation and
27promoteend delete
the use of distributed generationbegin delete whereend deletebegin insert to the extent thatend insert
28 it provides economic and environmentalbegin delete benefits, particularlyend delete
29begin insert benefitsend insert in disadvantaged communities as identified pursuant to
30Section 39711 of the Health and Safety Code.

31(b) begin deleteAllow for consideration of costs and benefits of grid
32integration end delete
begin insertTake into account the opportunities to decrease costs
33and increase benefits, including pollution reduction and grid
34integration, using technologies with zero onsite greenhouse gas
35emissions end insert
in proceedings associated with meeting the objectives.

36(c) Where feasible,begin delete adopt rules for integrating renewable energyend delete
37begin insert authorize procurement of resources to provide grid reliability
38servicesend insert
that minimizebegin insert reliance onend insert system power and fossil fuel
39begin delete purchasesend deletebegin insert resourcesend insert and, wherebegin delete feasibleend deletebegin insert feasible, cost-effective,end insert
40 and consistent with other state policy objectives, increase the use
P39   1ofbegin delete energy storage,end deletebegin insert largeend insertbegin insert- and smallend insertbegin insert-scale energy storage with a
2variety of technologies, targeted energy efficiency,end insert
demand
3response,begin delete and other low-emission or zero-end deletebegin insert eligible renewable
4energy resources, or otherend insert
technologiesbegin insert with zero onsite
5greenhouse gas emissionsend insert
to protect system reliability.

6(d) Review technologybegin delete incentiveend deletebegin insert incentive, research,
7development, deployment, and market facilitationend insert
programs
8overseen by the commission and the Energy Commission and make
9recommendationsbegin delete for adjustments that more effectively and
10consistently align withend delete
begin insert to advanceend insert state clean energy and pollution
11reductionbegin delete objectives, and thatend deletebegin insert objectives andend insert provide benefits to
12disadvantaged communities as identified pursuant to Section 39711
13of the Health and Safety Code.

14(e) To the extent feasible, give first priority to the manufacture
15and deployment of clean energy and pollution reduction
16technologies that create employment opportunities, including high
17wage, highly skilled employment opportunities, and increased
18investment in the state.

begin insert

19(f) Establish a publicly available tracking system to provide
20up-to-date information on progress toward meeting the clean
21energy and pollution reduction goals of the Clean Energy and
22Pollution Reduction Act of 2015.

end insert
begin insert

23(g) Establish an advisory group consisting of representatives
24from disadvantaged communities identified in Section 39711 of
25the Health and Safety Code. The advisory group shall review and
26provide advice on programs proposed to achieve clean energy and
27pollution reduction and determine whether those proposed
28programs will be effective and useful in disadvantaged
29communities.

end insert
30

begin deleteSEC. 15.end delete
31begin insertSEC. 17.end insert  

Section 454.51 is added to the Public Utilities Code,
32to read:

33

454.51.  

The commission shall direct each electrical corporation
34to include in its proposed procurement plan a strategy for procuring
35a diverse portfolio of resources that provide a reliable electricity
36supply, including renewable energy integration needs, using zero
37carbon-emitting resources to the maximum extent reasonable. The
38net capacity costs of those resources shall be allocated on a fully
39nonbypassable basis consistent with the treatment of costs
40identified in paragraph (2) of subdivision (c) of Section 365.1.

P40   1begin insert

begin insertSEC. 18.end insert  

end insert

begin insertSection 701.1 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is amended
2to read:end insert

3

701.1.  

(a) begin insert(1)end insertbegin insertend insert The Legislature finds and declares that, in
4addition to other ratepayer protection objectives, a principal goal
5of electric and natural gas utilities’ resource planning and
6investment shall be to minimize the cost to society of the reliable
7energy services that are provided by natural gas and electricity,
8and to improve the environment and to encourage the diversity of
9energy sources through improvements in energy efficiency and
10development of renewable energy resources, such as wind, solar,
11biomass,begin delete andend delete geothermalbegin delete energy.end deletebegin insert energy, and widespread
12transportation electrification.end insert

begin insert

13(2) The amendment made to this subdivision by the Clean Energy
14and Pollution Reduction Act of 2015 does not expand the authority
15of the commission beyond that provided by other law.

end insert

16(b) The Legislature further finds and declares that, in addition
17to any appropriate investments in energy production, electrical
18and natural gas utilities should seek to exploit all practicable and
19cost-effective conservation and improvements in the efficiency of
20energy use and distribution that offer equivalent or better system
21reliability, and which are not being exploited by any other entity.

22(c) In calculating the cost effectiveness of energy resources,
23including conservation and load management options, the
24commission shall include, in addition to other ratepayer protection
25objectives, a value for any costs and benefits to the environment,
26including air quality. The commission shall ensure that any values
27it develops pursuant to this section are consistent with values
28developed by the State Energy Resources Conservation and
29Development Commission pursuant to Section 25000.1 of the
30Public Resources Code. However, if the commission determines
31that a value developed pursuant to this subdivision is not consistent
32with a value developed by the State Energy Resources
33Conservation and Development Commission pursuant to
34subdivision (c) of Section 25000.1 of the Public Resources Code,
35the commission may nonetheless use this value if, in the
36appropriate record of its proceedings, it states its reasons for using
37the value it has selected.

38(d) In determining the emission values associated with the
39current operating capacity of existing electric powerplants pursuant
40to subdivision (c), the commission shall adhere to the following
P41   1protocol in determining values for air quality costs and benefits to
2the environment. If the commission finds that an air pollutant that
3is subject to regulation is a component of residual emissions from
4an electric powerplant and that the owner of that powerplant is
5either of the following:

6(1) Using a tradable emission allowance, right, or offset for that
7pollutant, which (A) has been approved by the air quality district
8regulating the powerplant, (B) is consistent with federal and state
9law, and (C) has been obtained, authorized, or acquired in a
10market-based system.

11(2) Paying a tax per measured unit of that pollutant.

12The commission shall not assign a value or cost to that residual
13pollutant for the current operating capacity of that powerplant
14because the alternative protocol for dealing with the pollutant
15operates to internalize its cost for the purpose of planning for and
16acquiring new generating resources.

17(e) (1) The values determined pursuant to subdivision (c) to
18represent costs and benefits to the environment shall not be used
19by the commission, in and of themselves, to require early
20decommissioning or retirement of an electric utility powerplant
21that complies with applicable prevailing environmental regulations.

22(2) Further, the environmental values determined pursuant to
23subdivision (c) shall not be used by the commission in a manner
24which, whenbegin delete suchend deletebegin insert thoseend insert values are aggregated, will result in
25advancing an electric utility’s need for new powerplant capacity
26by more than 15 months.

27(f) This subdivision shall apply whenever a powerplant bid
28solicitation is required by the commission for an electric utility
29and a portion of the amount of new powerplant capacity, which is
30the subject of the bid solicitation, is the result of the commission’s
31use of environmental values to advance that electric utility’s need
32for new powerplant capacity in the manner authorized by paragraph
33(2) of subdivision (e). The affected electric utility may propose to
34the commission any combination of alternatives to that portion of
35the new powerplant capacity that is the result of the commission’s
36use of environmental values as authorized by paragraph (2) of
37subdivision (c). The commission shall approve an alternative in
38place of the new powerplant capacity if it finds all of the following:

39(1) The alternative has been approved by the relevant air quality
40district.

P42   1(2) The alternative is consistent with federal and state law.

2(3) The alternative will result in needed system reliability for
3the electric utility at least equivalent to that which would result
4from bidding for new powerplant capacity.

5(4) The alternative will result in reducing system operating costs
6for the electric utility over those which would result from the
7process of bidding for new powerplant capacity.

8(5) The alternative will result in equivalent or better
9environmental improvements at a lower cost than would result
10from bidding for new powerplant capacity.

11(g) begin deleteNo provision of this section shall be construed as requiring end delete
12begin insertThis section does not require end insertan electric utility to alter the dispatch
13of its powerplants for environmental purposes.

14(h)  begin deleteNo provision of this section shall prelude end delete begin insertThis section does
15not preclude end insert
an electric utility from submitting to the commission
16any combination of alternatives to meet a commission-identified
17need for new capacity, ifbegin delete such aend deletebegin insert theend insert submission is otherwise
18authorized by the commission.

19(i) begin deleteNo provision of this section shall be construed to end deletebegin insertThis section
20does not end insert
change or alter any provision of commission decision
2192-04-045, dated April 22, 1992.

22begin insert

begin insertSEC. 19.end insert  

end insert

begin insertSection 740.8 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is amended
23to read:end insert

24

740.8.  

As used in Section 740.3, “interests” of ratepayers,
25short- or long-term, mean direct benefits that are specific to
26ratepayers in the form ofbegin delete safer,end deletebegin insert any of the following:end insert

27begin insert(a)end insertbegin insertend insertbegin insertSafer,end insert more reliable, or less costly gas or electrical service,
28consistent with Sectionbegin delete 451, and activitiesend deletebegin insert 451.end insert

begin insert

29(b) More efficient use of the electric system.

end insert
begin insert

30(c) Improve integration of renewable energy generation.

end insert

31begin insert(d)end insertbegin insertend insertbegin insertActivitiesend insert thatbegin insert both directlyend insert benefit ratepayers and that
32promotebegin delete energy efficiency, reductionend deletebegin insert at least one of the following:end insert

begin insert

33(1) Energy efficiency.

end insert

34begin insert(2)end insertbegin insertend insertbegin insertReductionend insert of health and environmental impacts from air
35begin delete pollution, and greenhouseend deletebegin insert pollution.end insert

36begin insert(3)end insertbegin insertend insertbegin insertReduction of greenhouseend insert gas emissions related to electricity
37and natural gas production andbegin delete use, and increasedend deletebegin insert use.end insert

38begin insert(4)end insertbegin insertend insertbegin insertIncreasedend insert use of alternative fuels.

39begin insert

begin insertSEC. 20.end insert  

end insert

begin insertSection 740.12 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert,
40to read:end insert

begin insert
P43   1

begin insert740.12.end insert  

(a) (1) The Legislature finds and declares all of the
2following:

3(A) Transportation electrification, natural gas vehicles as a
4short-term measure, fuel cell vehicles, and transportation
5innovations are needed to reduce petroleum use, to meet air quality
6standards, to improve public health, and to achieve greenhouse
7gas emissions reduction goals.

8(B) Widespread transportation electrification is needed to
9achieve the goals of the Charge Ahead California Initiative
10(Chapter 8.5 (commencing with Section 44258) of Part 5 of
11Division 26 of the Health and Safety Code).

12(C) Reducing emissions of greenhouse gases to 40 percent below
131990 levels by 2030 and to 80 percent below 1990 levels by 2050
14will require widespread transportation electrification.

15(D) Widespread transportation electrification requires electrical
16corporations to increase access to the use of electricity as a
17transportation fuel.

18(E) Deploying electric vehicles should assist in integrating
19generation from eligible renewable energy resources and reduce
20fuel costs for vehicle drivers who charge in a manner consistent
21with electric grid conditions.

22(F) Deploying electric vehicle charging infrastructure should
23facilitate increased sales of electric vehicles by making charging
24easily accessible and should provide the opportunity to access
25electricity as a fuel that is cleaner than gasoline or other fossil
26fuels.

27(G) Deploying natural gas and fuel cell infrastructure should
28facilitate increased sales of natural gas or fuel cell vehicles by
29making refueling easily accessible and should provide the
30opportunity to access fuels that are cleaner than gasoline.

31(H) According to the State Alternative Fuels Plan analysis by
32the Energy Commission and the State Air Resources Board, light-,
33medium-, and heavy-duty vehicle electrification results in
34approximately 70 percent fewer greenhouse gases emitted, over
3585 percent fewer ozone-forming air pollutants emitted, and 100
36percent fewer petroleum used. These reductions will become larger
37as renewable generation increases.

38(2) It is the policy of the state and the intent of the Legislature
39to encourage transportation electrification as a means to achieve
40ambient air quality standards and the state’s climate goals.
P44   1Agencies designing and implementing regulations, guidelines,
2plans, and funding programs to reduce greenhouse gas emissions
3should take the finding described in subparagraph (H) of
4paragraph (1) into account.

5(b) The commission, in consultation with the State Air Resources
6Board and the Energy Commission, shall direct electrical
7corporations to propose multiyear programs and investments to
8accelerate widespread transportation electrification to reduce
9dependence on petroleum, meet air quality standards, achieve the
10goals set forth in the Charge Ahead California Initiative (Chapter
118.5 (commencing with Section 44258) of Part 5 of Division 26 of
12the Health and Safety Code), and reduce emissions of greenhouse
13gases to 40 percent below 1990 levels by 2030 and to 80 percent
14below 1990 levels by 2050. The commission shall approve
15programs and investments that deploy charging infrastructure, as
16distribution system costs, if they are consistent with this section
17and Section 740.3.

18(c) The commission shall review data concerning current and
19future electric transportation adoption rates and charging
20infrastructure utilization rates no less than every three years and
21prior to any further authorization for an electrical corporation to
22collect additional new program costs related to transportation
23electrification in ratepayer rates. If market barriers unrelated to
24the investment made by an electric corporation prevent electric
25transportation from adequately utilizing available charging
26infrastructure, the commission shall not permit additional
27investments in transportation electrification without adequate
28assurance that the investments would not result in stranded costs
29recoverable from ratepayers.

end insert
30

begin deleteSEC. 16.end delete
31begin insertSEC. 21.end insert  

No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33a local agency or school district has the authority to levy service
34charges, fees, or assessments sufficient to pay for the program or
35level of service mandated by this act or because costs that may be
36incurred by a local agency or school district will be incurred
37because this act creates a new crime or infraction, eliminates a
38crime or infraction, or changes the penalty for a crime or infraction,
39within the meaning of Section 17556 of the Government Code, or
P45   1changes the definition of a crime within the meaning of Section 6
2of Article XIII B of the California Constitution.



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