Amended in Assembly September 4, 2015

Amended in Assembly July 16, 2015

Amended in Assembly July 8, 2015

Senate Bill No. 350

Introduced by Senators De León and Leno

(Coauthors: Senators Hancock and Monning)

February 24, 2015

An act to amend Section 43013 of, and to add begin delete Section 44258.5 end delete begin insert Sections 39628, 43013.5, and 44258.5 end insert to, the Health and Safety Code, begin insert to amend Section 1720 of the Labor Code, end insert to amend Sections begin delete 25000.5 end delete begin insert 25000.5, 25310, end insert and 25943 begin delete of end delete begin insert of, and to add Sections 25302.2 and 25327 to, end insert the Public Resources Code, and to amend Sections begin insert 359, 399.4, end insert 399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, begin insert 454.55, 454.56, end insert 701.1, begin delete and 740.8 end delete begin insert 740.8, 9505, and 9620 end insert of, begin insert to add Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, end insert to add Sections 237.5, begin insert 365.2, 366.3, end insert 454.51, begin delete and 740.12 end delete begin insert 454.52, 636, 740.12, 9621, and 9622 end 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.

begin insert

(1) Under existing law, the Public Utilities Commission (PUC) has regulatory jurisdiction over public utilities, including electrical corporations, community choice aggregators, and electric service providers, while local publicly owned electric utilities are under the direction of their governing boards. Existing law imposes various regulations on public utilities and local publicly owned electric utilities. Existing law establishes the California Renewables Portfolio Standards (RPS) Program, which is codified in the Public Utilities Act, with the target to increase the amount of electricity generated per year from eligible renewable energy resources to an amount that equals at least 33% of the total electricity sold to retail customers per year by December 31, 2020. Under existing law, a violation of the Public Utilities Act is a crime.

end insert begin insert

This bill would require that the amount of electricity generated and sold to retail customer per year from eligible renewable energy resources be increased to 50% by December 31, 2030, as provided. The bill would make other revisions to the RPS Program and to certain other requirements on public utilities and publicly owned electric utilities.

end insert begin insert

Because certain of the above provisions are codified in the Public Utilities Act, this bill would impose a state-mandated local program by expanding the definition of a crime or establishing a new crime.

end insert begin insert

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

end insert begin insert

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. The bill would require the state board to take certain actions, as provided, to further this goal.

end insert begin insert

(3) Existing law requires the PUC to identify cost-effective electricity efficiency savings and establish efficiency targets for an electrical corporation to achieve, and to identify cost-effective natural gas efficiency savings and establish efficiency targets for a gas corporation to achieve. Existing law requires a local publicly owned electric utility to identify all potential achievable cost-effective electricity efficiency savings and to establish annual targets for energy efficiency savings and demand reduction for the next 10-year period.

end insert begin insert

This bill would require the State Energy Resources Conservation and Development Commission to establish annual targets for statewide energy efficiency savings and demand reduction that will achieve a cumulative doubling of statewide energy efficiency savings in electricity and natural gas final end uses of retail customers by January 1, 2030. The bill would require the PUC to establish efficiency targets for electrical and gas corporations consistent with this goal. The bill would require local publicly owned electric utilities to establish annual targets for energy efficiency savings and demand reduction consistent with this goal.

end insert begin insert

(4) The existing restructuring of the electrical industry within the Public Utilities Act provides for the establishment of the Independent System Operator (ISO) and requires the ISO to ensure efficient and reliable operation of the electrical transmission grid. Existing law prohibits the ISO from entering into a multistate entity or regional organization unless the ISO receives approval from the Electricity Oversight Board. Existing law states the intent of the Legislature to provide for the evolution of the ISO into a regional organization to promote the development of regional electricity transmission markets in the western states.

end insert begin insert

This bill would state the intent of the Legislature to enact legislation to provide for the evolution of the ISO into a regional organization.

end insert begin insert

(5) 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.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

(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. Under existing law, a violation of the Public Utilities Act is a crime.

end delete begin delete

Existing law establishes the California Renewables Portfolio Standard (RPS) Program, which is codified in the Public Utilities Act, with the target to increase the amount of electricity generated per year from eligible renewable energy resources 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. For these purposes, a retail seller is defined to include electrical corporations, electric service providers, and community choice aggregators. The RPS Program requires an electrical corporation to submit to the PUC, for its approval, a renewable energy procurement plan. Existing law includes as an eligible renewable energy resource a specified facility engaged in the combustion of municipal solid waste.

end delete begin delete

Existing law makes the requirements of the RPS Program applicable to a local publicly owned electric utility, as defined, 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.

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This bill would require 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 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 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 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 RPS Program, including, among other things, the enforcement provisions and would require penalties collected from retail sellers 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.

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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.

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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.

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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 delete begin delete

Because the above provisions are codified in the Public Utilities Act, a violation of these provisions would impose a state-mandated local program by expanding the definition of a crime or establishing a new crime.

end delete begin delete

By placing additional requirements upon local publicly owned electric utilities, this bill would impose a state-mandated local program.

end delete begin delete

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

end delete begin delete

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. The bill would require the state board, by January 1, 2017, to prepare a strategy and implementation plan to achieve this reduction.

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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.

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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.

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This bill would require the state board to identify and adopt appropriate policies to remove regulatory disincentives facing retail sellers and local publicly owned electric utilities 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 and local publicly owned electric utilities to account for increased greenhouse gas emissions in the electric sector from transportation electrification.

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(3) 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.

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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. The bill would state the policy of the state to encourage transportation electrification to achieve ambient air quality standards and the state’s climate goals.

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(4) 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.

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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. The bill would require the Energy Commission to adopt, implement, and enforce certain policy regarding ratepayer-funded energy efficiency programs.

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(5) 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.

end delete begin delete

This bill would provide that no reimbursement is required by this act for specified reasons.

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

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

SECTION 1.  

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

SEC. 2.  

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

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

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

(3) To double the begin delete efficiency of existing buildings. end delete begin insert energy savings
in electricity and natural gas final end uses of retail customers
through energy efficiency and conservation. end insert

begin insert

(b) The Legislature further finds and declares that in order for
California to achieve its statewide greenhouse gas emissions limits
and reduce petroleum use in motor vehicles by 50 percent by
January 1, 2030, it will be necessary to improve and expand access
to all of the following:

end insert begin insert

(1) Advanced clean vehicle technologies.

end insert begin insert

(2) Clean, low-carbon fuels.

end insert begin insert

(3) Transportation choices that reduce vehicle miles traveled.

end insert begin delete

(b)

end delete

begin insert (c) end insert  It is the intent of the Legislature in enacting this act to codify
the targets described under subdivision (a) to ensure they are
permanent, enforceable, and quantifiable.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 39628 is added to the end insert begin insert Health and Safety Code end insert begin insert ,
to read: end insert

begin insert

begin insert 39628. end insert   

(a) By July 1, 2016, the state board, in collaboration
with the Department of Transportation, the State Energy Resources
Conservation and Development Commission, and the Governor’s
Office of Business and Economic Development, in a public process
that allows input from other stakeholders, shall develop an
integrated action plan that establishes targets to improve freight
efficiency, transition to zero-emission technologies, and increase
the competitiveness of California’s freight system.

(b) The action plan shall identify state policies, programs, and
investments to achieve the targets described in subdivision (a) and
shall be informed by existing state strategies, including the
California Freight Mobility Plan, the Sustainable Freight:
Pathways to Zero and Near-Zero Emissions plan, and the
integrated energy policy report prepared pursuant to Section 25302
of the Public Resources Code.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

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

43013.  

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

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

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

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

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

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

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

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

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

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

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

(2)

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

(h)

end delete

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

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(i)

end delete

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

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 43013.5 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 43013.5. end insert   

The state board shall ensure any updates to the
regional greenhouse gas emission reduction targets pursuant to
clause (iv) of subparagraph (A) of paragraph (2) of subdivision
(b) of Section 65080 of the Government Code are consistent with
achieving a 50-percent reduction in petroleum use in motor
vehicles by January 1, 2030.

end insert

begin delete SEC. 4. end delete
begin insert SEC. 6. end insert   

Section 44258.5 is added to the Health and Safety
Code, to read:

44258.5.  

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

(1) “Local publicly owned electric utility” has the same meaning
as defined in Section 224.3 of the Public Utilities Code.

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

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

(b) The state board shall identify and adopt appropriate begin delete policies end delete
begin insert policies, rules, or regulations end insert to remove regulatory disincentives
begin delete facing end delete begin insert preventing end insert retail sellers and local publicly owned electric
utilities from facilitating the achievement of greenhouse gas
emission reductions in other sectors through increased investments
in transportation electrification. begin delete Those policies end delete begin insert Policies to be
considered end insert shall include, but are not limited to, an allocation of
greenhouse gas emissions allowances to retail sellers and local
publicly owned electric begin delete utilities end delete begin insert utilities, or other regulatory
mechanisms, end insert to account for increased greenhouse gas emissions
in the electric sector from transportation electrification.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 1720 of the end insert begin insert Labor Code end insert begin insert is amended to read: end insert

1720.  

(a) As used in this chapter, “public works” means:

(1) Construction, alteration, demolition, installation, or repair
work done under contract and paid for in whole or in part out of
public funds, except work done directly by any public utility
company pursuant to order of the Public Utilities Commission or
other public authority. For purposes of this paragraph,
“construction” includes work performed during the design and
preconstruction phases of construction, including, but not limited
to, inspection and land surveying work, and work performed during
the postconstruction phases of construction, including, but not
limited to, all cleanup work at the jobsite. For purposes of this
paragraph, “installation” includes, but is not limited to, the
assembly and disassembly of freestanding and affixed modular
office systems.

(2) Work done for irrigation, utility, reclamation, and
improvement districts, and other districts of this type. “Public
work” does not include the operation of the irrigation or drainage
system of any irrigation or reclamation district, except as used in
Section 1778 relating to retaining wages.

(3) Street, sewer, or other improvement work done under the
direction and supervision or by the authority of any officer or
public body of the state, or of any political subdivision or district
thereof, whether the political subdivision or district operates under
a freeholder’s charter or not.

(4) The laying of carpet done under a building lease-maintenance
contract and paid for out of public funds.

(5) The laying of carpet in a public building done under contract
and paid for in whole or in part out of public funds.

(6) Public transportation demonstration projects authorized
pursuant to Section 143 of the Streets and Highways Code.

(7) (A) Infrastructure project grants from the California
Advanced Services Fund pursuant to Section 281 of the Public
Utilities Code.

(B) For purposes of this paragraph, the Public Utilities
Commission is not the awarding body or the body awarding the
contract, as defined in Section 1722.

(b) For purposes of this section, “paid for in whole or in part
out of public funds” means all of the following:

(1) The payment of money or the equivalent of money by the
state or political subdivision directly to or on behalf of the public
works contractor, subcontractor, or developer.

(2) Performance of construction work by the state or political
subdivision in execution of the project.

(3) Transfer by the state or political subdivision of an asset of
value for less than fair market price.

(4) Fees, costs, rents, insurance or bond premiums, loans, interest
rates, or other obligations that would normally be required in the
execution of the contract, that are paid, reduced, charged at less
than fair market value, waived, or forgiven by the state or political
subdivision.

(5) Money loaned by the state or political subdivision that is to
be repaid on a contingent basis.

(6) Credits that are applied by the state or political subdivision
against repayment obligations to the state or political subdivision.

(c) Notwithstanding subdivision (b):

(1) Private residential projects built on private property are not
subject to the requirements of this chapter unless the projects are
built pursuant to an agreement with a state agency, redevelopment
agency, or local public housing authority.

(2) If the state or a political subdivision requires a private
developer to perform construction, alteration, demolition,
installation, or repair work on a public work of improvement as a
condition of regulatory approval of an otherwise private
development project, and the state or political subdivision
contributes no more money, or the equivalent of money, to the
overall project than is required to perform this public improvement
work, and the state or political subdivision maintains no proprietary
interest in the overall project, then only the public improvement
work shall thereby become subject to this chapter.

(3) If the state or a political subdivision reimburses a private
developer for costs that would normally be borne by the public,
or provides directly or indirectly a public subsidy to a private
development project that is de minimis in the context of the project,
an otherwise private development project shall not thereby become
subject to the requirements of this chapter.

(4) The construction or rehabilitation of affordable housing units
for low- or moderate-income persons pursuant to paragraph (5) or
(7) of subdivision (e) of Section 33334.2 of the Health and Safety
Code that are paid for solely with moneys from the Low and
Moderate Income Housing Fund established pursuant to Section
33334.3 of the Health and Safety Code or that are paid for by a
combination of private funds and funds available pursuant to
Section 33334.2 or 33334.3 of the Health and Safety Code do not
constitute a project that is paid for in whole or in part out of public
funds.

(5) Unless otherwise required by a public funding program, the
construction or rehabilitation of privately owned residential projects
is not subject to the requirements of this chapter if one or more of
the following conditions are met:

(A) The project is a self-help housing project in which no fewer
than 500 hours of construction work associated with the homes
are to be performed by the home buyers.

(B) The project consists of rehabilitation or expansion work
associated with a facility operated on a not-for-profit basis as
temporary or transitional housing for homeless persons with a total
project cost of less than twenty-five thousand dollars ($25,000).

(C) Assistance is provided to a household as either mortgage
assistance, downpayment assistance, or for the rehabilitation of a
single-family home.

(D) The project consists of new construction, expansion, or
rehabilitation work associated with a facility developed by a
nonprofit organization to be operated on a not-for-profit basis to
provide emergency or transitional shelter and ancillary services
and assistance to homeless adults and children. The nonprofit
organization operating the project shall provide, at no profit, not
less than 50 percent of the total project cost from nonpublic
sources, excluding real property that is transferred or leased. Total
project cost includes the value of donated labor, materials,
architectural, and engineering services.

(E) The public participation in the project that would otherwise
meet the criteria of subdivision (b) is public funding in the form
of below-market interest rate loans for a project in which
occupancy of at least 40 percent of the units is restricted for at
least 20 years, by deed or regulatory agreement, to individuals or
families earning no more than 80 percent of the area median
income.

(d) Notwithstanding any provision of this section to the contrary,
the following projects shall not, solely by reason of this section,
be subject to the requirements of this chapter:

(1) Qualified residential rental projects, as defined by Section
142(d) of the Internal Revenue Code, financed in whole or in part
through the issuance of bonds that receive allocation of a portion
of the state ceiling pursuant to Chapter 11.8 (commencing with
Section 8869.80) of Division 1 of Title 2 of the Government Code
on or before December 31, 2003.

(2) Single-family residential projects financed in whole or in
part through the issuance of qualified mortgage revenue bonds or
qualified veterans’ mortgage bonds, as defined by Section 143 of
the Internal Revenue Code, or with mortgage credit certificates
under a Qualified Mortgage Credit Certificate Program, as defined
by Section 25 of the Internal Revenue Code, that receive allocation
of a portion of the state ceiling pursuant to Chapter 11.8
(commencing with Section 8869.80) of Division 1 of Title 2 of
the Government Code on or before December 31, 2003.

(3) Low-income housing projects that are allocated federal or
state low-income housing tax credits pursuant to Section 42 of the
Internal Revenue Code, Chapter 3.6 (commencing with Section
50199.4) of Part 1 of Division 31 of the Health and Safety Code,
or Section 12206, 17058, or 23610.5 of the Revenue and Taxation
Code, on or before December 31, 2003.

begin insert

(e) Notwithstanding paragraph (1) of subdivision (a),
construction, alteration, demolition, installation, or repair work
on the electric transmission system located in California constitutes
a public works project for the purposes of this chapter.

end insert begin delete

(e)

end delete

begin insert (f) end insert  If a statute, other than this section, or a regulation, other than
a regulation adopted pursuant to this section, or an ordinance or a
contract applies this chapter to a project, the exclusions set forth
in subdivision (d) do not apply to that project.

begin delete

(f)

end delete

begin insert (g) end insert  For purposes of this section, references to the Internal
Revenue Code mean the Internal Revenue Code of 1986, as
amended, and include the corresponding predecessor sections of
the Internal Revenue Code of 1954, as amended.

begin delete

(g)

end delete

begin insert (h) end insert  The amendments made to this section by either Chapter 938
of the Statutes of 2001 or the act adding this subdivision shall not
be construed to preempt local ordinances requiring the payment
of prevailing wages on housing projects.

begin delete SEC. 5. end delete
begin insert SEC. 8. end insert   

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

25000.5.  

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

(b) Therefore, it is the policy of this state to fully evaluate the
economic and environmental costs of petroleum use, and the
economic and environmental costs of other transportation fuels
and options, including the costs and values of environmental
impacts, and to establish a state transportation energy policy that
results in the least environmental and economic cost to the state.
In pursuing the “least environmental and economic cost” strategy,
it is the policy of the state to exploit all practicable and
cost-effective begin insert energy end insert conservation begin insert measures end insert 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 cost, begin delete and end delete in furtherance of reducing petroleum use
in the transportation sector by 50 percent by January 1, 2030.

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

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

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 25302.2 is added to the end insert begin insert Public Resources Code end insert begin insert ,
to read: end insert

begin insert

begin insert 25302.2. end insert   

As part of he 2019 edition of the integrated energy
policy report, the commission shall evaluate the actual energy
efficiency savings, as defined in Section 25310, from negative
therm interactive effects generated as a result of electricity
efficiency improvements.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 25310 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

25310.  

begin delete On end delete begin insert (a) end insert begin insert   end insert begin insert For purposes of this section, the following terms
have the following meanings: end insert

begin insert

(1) “End use” means the purpose for which energy is used,
including, but not limited to, heating, cooling, or lighting, or class
of energy uses upon which an energy efficiency program is focused,
typically categorized by equipment purpose, equipment energy use
intensity, or building type.

end insert begin insert

(2) “Energy efficiency savings” means reduced electricity or
natural gas usage produced either by the installation of an energy
efficiency measure or the adoption of an energy efficiency practice
that maintains at least the same level of end-use service or by
conservation actions that reduce energy use by reducing the
quantity or quality of baseline energy services demanded.

end insert

begin insert (b) end insert begin insert   end insert begin insert On end insert or before November 1, 2007, and by November 1 of
every third year thereafter, the commission in consultation with
the Public Utilities Commission and local publicly owned electric
utilities, in a public process that allows input from other
stakeholders, shall develop a statewide estimate of all potentially
achievable cost-effective electricity and natural gas efficiency
savings and establish targets for statewide annual energy efficiency
savings and demand reduction for the next 10-year period. The
commission shall base its estimate at least in part on information
developed pursuant to Sections 454.55, 454.56, 715, begin insert 9505, end insert 9615,
and 9615.5 of the Public Utilities Code. The commission shall,
for each electrical corporation and each gas corporation, include
in the integrated energy policy report, a comparison of the public
utility’s annual targets established pursuant to Sections 454.55 and
454.56, and the public utility’s actual energy efficiency savings
and demand reductions.

begin insert

(c) (1) On or before November 1, 2017, the commission, in
collaboration with the Public Utilities Commission and local
publicly owned electric utilities, in a public process that allows
input from other stakeholders, shall establish annual targets for
statewide energy efficiency savings and demand reduction that
will achieve a cumulative doubling of statewide energy efficiency
savings in electricity and natural gas final end uses of retail
customers by January 1, 2030. The commission shall base the
targets on a doubling of the midcase estimate of additional
achievable energy efficiency savings, as contained in the California
Energy Demand Updated Forecast, 2015-2025, adopted by the
commission, extended to 2030 using an average annual growth
rate, and the targets adopted by local publicly owned electric
utilities pursuant to Section 9505 of the Public Utilities Code,
extended to 2030 using an average annual growth rate, to the
extent doing so is cost effective, feasible, and will not adversely
impact public health and safety.

end insert begin insert

(2) The commission may establish targets for the purposes of
paragraph (1) that aggregate energy efficiency savings from both
electricity and natural gas final end uses. Before establishing
aggregate targets, the commission shall, in a public process that
allows input from other stakeholders, adopt a methodology for
aggregating electricity and natural gas final end-use energy
efficiency savings in a consistent manner based on source of energy
reduction and other relevant factors.

end insert begin insert

(3) In establishing the targets pursuant to paragraph (1), the
commission shall assess the hourly and seasonal impact on
statewide and local electricity demand.

end insert begin insert

(4) In assessing the feasibility and cost-effectiveness of energy
efficiency savings for the purposes of paragraph (1), the
commission and the Public Utilities Commission shall consider
the results of energy efficiency potential studies that are not
restricted by previous levels of utility energy efficiency savings.

end insert begin insert

(5) The energy efficiency savings and demand reduction reported
for the purposes of achieving the targets established pursuant to
paragraph (1) shall be measured taking into consideration the
overall reduction in normalized metered electricity and natural
gas consumption where these measurement techniques are feasible
and cost effective.

end insert begin insert

(d) The targets established in subdivision (c) may be achieved
through energy efficiency savings and demand reduction resulting
from a variety of programs that include, but are not limited to, the
following:

end insert begin insert

(1) Appliance and building energy efficiency standards
developed and adopted pursuant to Section 25402.

end insert begin insert

(2) A comprehensive program to achieve greater energy
efficiency savings in California’s existing residential and
nonresidential building stock pursuant to Section 25943.

end insert begin insert

(3) Programs funded and authorized pursuant to the California
Clean Energy Job Creation Act (Division 16.3 (commencing with
Section 26200)).

end insert begin insert

(4) Programs funded by the Greenhouse Gas Reduction Fund
established pursuant to Section 16428.8 of the Government Code.

end insert begin insert

(5) Programs funded and authorized pursuant to this division.

end insert begin insert

(6) Programs of electrical or gas corporations that provide
financial incentives, rebates, technical assistance, and support to
their customers to increase energy efficiency, authorized by the
Public Utilities Commission.

end insert begin insert

(7) Programs of local publicly owned electric utilities that
provide financial incentives, rebates, technical assistance, and
support to their customers to increase energy efficiency pursuant
to Section 385 of the Public Utilities Code.

end insert begin insert

(8) Programs of electrical or gas corporations, or local publicly
owned electric utilities that achieve energy efficiency savings
through operational, behavioral, and retrocommissioning activities.

end insert begin insert

(9) Programs that save energy in final end uses by reducing
distribution feeder service voltage, known as conservation voltage
reduction.

end insert begin insert

(10) Programs that save energy in final end uses by using
cleaner fuels to reduce greenhouse gas emissions as measured on
a lifecycle basis from the provision of energy services.

end insert begin insert

(11) Property Assessed Clean Energy (PACE) programs.

end insert begin insert

(e) Beginning with the 2019 edition of the integrated energy
policy report and every two years thereafter, the commission shall
provide recommendations and an update on progress toward
achieving a doubling of energy efficiency savings in electricity
and natural gas final end uses of retail customers by January 1,
2030, pursuant to paragraph (1) of subdivision (c). The commission
shall also include with the recommendations and update both of
the following:

end insert begin insert

(1) An assessment of the effect of energy efficiency savings on
electricity demand statewide, in local service territories, and on
an hourly and seasonal basis.

end insert begin insert

(2) Specific strategies for, and an update on, progress toward
maximizing the contribution of energy efficiency savings in
disadvantaged communities identified pursuant to Section 39711
of the Health and Safety Code.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 25327 is added to the end insert begin insert Public Resources Code end insert begin insert ,
to read: end insert

begin insert

begin insert 25327. end insert   

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

(1) There is insufficient information available to fully realize
the potential of solar photovoltaic energy generation in
disadvantaged communities.

(2) There is insufficient understanding of the barriers to access
for low-income customers to all forms of renewable energy being
generated in the state.

(3) There is insufficient understanding of the barriers to access
for low-income customers to energy efficiency investments.

(4) There is insufficient understanding of the barriers to access
for low-income customers to zero-emission and near-zero-emission
transportation options.

(b) On or before January 1, 2017, the commission, with input
from relevant state agencies and the public, shall conduct and
complete a study on both of the following:

(1) Barriers to, and opportunities for, solar photovoltaic energy
generation as well as barriers to, and opportunities for, access to
other renewable energy by low-income customers.

(2) Barriers to contracting opportunities for local small
businesses in disadvantaged communities.

(c) On or before January 1, 2017, the commission, with input
from relevant state agencies and the public, shall develop and
publish a study on barriers for low-income customers to energy
efficiency and weatherization investments, particularly in
disadvantaged communities, as well as recommendations on how
to increase access to energy efficiency and weatherization
investments to low-income customers.

(d) On or before January 1, 2017, the State Air Resources
Board, in consultation with the commission and with input from
relevant state agencies and the public, shall develop and publish
a study on barriers for low-income customers to zero-emission
and near-zero-emission transportation options, particularly in
disadvantaged communities, as well as recommendations on how
to increase access to zero-emission and near-zero-emission
transportation options to low-income customers in disadvantaged
communities.

end insert

begin delete SEC. 6. end delete
begin insert SEC. 12. end insert   

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

25943.  

(a) (1) By March 1, 2010, the commission shall
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.
This program shall comprise a complementary portfolio of
techniques, applications, and practices that will achieve greater
energy efficiency in existing residential and nonresidential
structures that fall significantly below the current standards in Title
24 of the California Code of Regulations, as determined by the
commission.

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

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

begin insert

(4) The commission, in consultation with the Public Utilities
Commission, shall establish consumer protection guidelines for
energy efficiency products and services.

end insert

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

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

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

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

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

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

(3) The various climatic zones within the state.

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

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

(A) Prioritizing the identified energy efficiency improvements.

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

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

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

(i) Mortgages or sales agreement components.

(ii) On-bill financing.

(iii) Contractual property tax assessments.

(iv) Home warranties.

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

(7) A broad range of implementation approaches, including both
utility and nonutility administration of energy efficiency begin delete programs. end delete
begin insert programs, especially the use of not-for-profit and community-based
organizations that assist with deployment in disadvantaged
communities identified pursuant to Section 39711 of the Health
and Safety Code. end insert

begin insert

(8) Workforce development and job training for residents in
disadvantaged communities, including veterans, at-risk youth, and
members of the state and local community conservation corps.

end insert begin delete

(8)

end delete

begin insert (9) end insert  Any other considerations deemed appropriate by the
commission.

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

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

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

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

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

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

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

begin insert

(7) Promote greater project penetration in disadvantaged
communities identified pursuant to Section 39711 of the Health
and Safety Code, including the deployment of energy efficiency
surveys and audits, energy efficiency retrofits and upgrades,
weatherization, and followup project inspections by state-certified
community conservation corps and other community-based
workforce development organizations that serve residents of
disadvantaged communities, including veterans and disadvantaged
youth.

end insert begin delete

(7)

end delete

begin insert (8) end insert  Coordinate with, and avoid duplication of, existing
proceedings of the Public Utilities Commission and programs
administered by utilities.

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

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

(2) On or before January 1, 2017, and at least once every three
years thereafter, the commission shall adopt an update to the
program in furtherance of achieving begin delete an overall doubling of the
energy efficiency of buildings end delete begin insert a cumulative doubling of statewide
energy efficiency savings in electricity and natural gas final end
uses of retail customers end insert by January 1, 2030.

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

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

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

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

(1) “Energy assessment” means a determination of an energy
user’s energy consumption level, relative efficiency compared to
other users, and opportunities to achieve greater efficiency or
improve energy resource utilization.

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

begin delete SEC. 7. end delete
begin insert SEC. 13. end insert   

Section 237.5 is added to the Public Utilities Code,
to read:

237.5.  

“Transportation electrification” means the use of
electricity from begin delete the electrical grid to power end delete begin insert external sources of
electrical power, including the electrical grid, for end insert all or part of
vehicles, vessels, trains, boats, or other equipment that are mobile
sources of air pollution and greenhouse begin delete gases. end delete begin insert gases and the related
programs and charging and propulsion infrastructure investments
to enable and encourage this use of electricity. end insert

begin insert

begin insert SEC. 14. end insert   

end insert

begin insert Article 5.5 (commencing with Section 359.5) is added
to Chapter 2.3 of Part 1 of Division 1 of the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

 

Article begin insert 5.5. end insert   Regional Organization

 

begin insert 359.5. end insert   

It is the intent of the Legislature to enact legislation to
provide for the evolution of the Independent System Operator into
a regional organization, to promote the development of regional
electricity transmission markets in the western states, and to
improve the access of consumers served by the Independent System
Operator to those markets, and that the evolution should occur
where it is in the best interests of California ratepayers.

end insert

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert Section 365.2 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 365.2. end insert   

The commission shall ensure that bundled retail
customers of an electrical corporation do not experience any cost
increases as a result of retail customers of an electrical corporation
customers electing to receive service from other providers. The
commission shall also ensure that departing load does not
experience any cost increases as a result of an allocation of costs
that were not incurred on behalf of, or that do not benefit, the
departing load.

end insert

begin insert

begin insert SEC. 16. end insert   

end insert

begin insert Section 366.3 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 366.3. end insert   

Bundled retail customers of an electrical corporation
shall not experience any cost increase as a result of the
implementation of a community choice aggregator program. The
commission shall also ensure that departing load does not
experience any cost increases as a result of an allocation of costs
that were not incurred on behalf of, or do not benefit, the departing
load.

end insert

begin insert

begin insert SEC. 17. end insert   

end insert

begin insert Section 399.4 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

399.4.  

(a) (1) In order to ensure that prudent investments in
energy efficiency continue to be made that produce cost-effective
energy savings, reduce customer demand, and contribute to the
safe and reliable operation of the electric distribution grid, it is the
policy of this state and the intent of the Legislature that the
commission shall continue to administer cost-effective energy
efficiency programs authorized pursuant to existing statutory
authority.

(2) As used in this section, the term “energy efficiency” includes,
but is not limited to, cost-effective activities to achieve peak load
reduction that improve end-use efficiency, lower customers’ bills,
and reduce system needs.

(b) (1) Any rebates or incentives offered by a public utility for
an energy efficiency improvement or installation of energy efficient
components, equipment, or appliances in buildings shall be
provided only if the recipient of the rebate or incentive certifies
that the improvement or installation has complied with any
applicable permitting requirements and, if a contractor performed
the installation or improvement, that the contractor holds the
appropriate license for the work performed.

(2) This subdivision does not imply or create authority or
responsibility, or expand existing authority or responsibility, of a
public utility for the enforcement of the building energy and water
efficiency standards adopted pursuant to subdivision (a) or (b) of
Section 25402 of the Public Resources Code, or appliance
efficiency standards and certification requirements adopted
pursuant to subdivision (c) of Section 25402 of the Public
Resources Code.

(c) The commission, in evaluating energy efficiency investments
under its existing statutory authority, shall also ensure that local
and regional interests, multifamily dwellings, and energy service
industry capabilities are incorporated into program portfolio design
and that local governments, community-based organizations, and
energy efficiency service providers are encouraged to participate
in program implementation where appropriate.

begin insert

(d) The commission, in a new or existing proceeding, shall
review and update its policies governing energy efficiency
programs funded by utility customers to facilitate achieving the
targets established pursuant to subdivision (c) of Section 25310
of the Public Resources Code. In updating its policies, the
commission shall, at a minimum, do all of the following:

end insert begin insert

(1) Ensure that customers may use incentives and rebates
provided by gas and electrical corporations to help bring buildings
from existing conditions to, or above, code or other applicable
standards.

end insert begin insert

(2) Evaluate program benefits as the net present value of
avoided costs of the supply-side resources avoided or deferred in
assessing the cost-effectiveness of energy efficiency savings for
purposes of achieving the targets established pursuant to
subdivision (c) of Section 25310 of the Public Resources Code.

end insert begin insert

(3) Authorize market transformation programs with appropriate
levels of funding to achieve deeper energy efficiency savings.

end insert begin insert

(4) Authorize pay for performance programs that link incentives
directly to measured energy savings. As part of pay for
performance programs authorized by the commission, customers
should be reasonably compensated for developing and
implementing an energy efficiency plan, with a portion of their
incentive reserved pending post project measurement results.

end insert begin insert

(5) Authorize programs to achieve deeper savings through
operational, behavioral, and retrocommissioning activities.

end insert begin insert

(6) Ensure that customers have certainty in the values and
methodology used to determine energy efficiency incentives by
basing the amount of any incentives provided by gas and electrical
corporations on the values and methodology contained in the
executed customer agreement. Incentive payments shall be based
on measured results.

end insert

begin delete SEC. 8. end delete
begin insert SEC. 18. end insert   

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

399.11.  

The Legislature finds and declares all of the following:

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

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

(1) Displacing fossil fuel consumption within the state.

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

(3) Reducing air pollution in the state.

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

(5) Promoting stable retail rates for electric service.

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

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

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

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

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

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

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

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

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

begin delete SEC. 9. end delete
begin insert SEC. 19. end insert   

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

399.12.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(A) A corporation or person employing cogeneration technology
or producing electricity consistent with subdivision (b) of Section
218.

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

(C) A local publicly owned electric utility.

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

begin delete SEC. 10. end delete
begin insert SEC. 20. end insert   

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

399.13.  

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

(2) Every electrical corporation that owns electrical transmission
facilities shall annually prepare, as part of the Federal Energy
Regulatory Commission Order 890 process, and submit to the
commission, a report identifying any electrical transmission
facility, upgrade, or enhancement that is reasonably necessary to
achieve the renewables portfolio standard procurement
requirements of this article. Each report shall look forward at least
five years and, to ensure that adequate investments are made in a
timely manner, shall include a preliminary schedule when an
application for a certificate of public convenience and necessity
will be made, pursuant to Chapter 5 (commencing with Section
1001), for any electrical transmission facility identified as being
reasonably necessary to achieve the renewable energy resources
procurement requirements of this article. Each electrical
corporation that owns electrical transmission facilities shall ensure
that project-specific interconnection studies are completed in a
timely manner.

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

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

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

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

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

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

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

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

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

(iv) Workforce recruitment, training, and retention efforts,
including the employment growth associated with the construction
and operation of eligible renewable energy resources and goals
for recruitment and training of women, minorities, and disabled
veterans.

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

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

begin insert

(vi) Consideration of any statewide greenhouse gas emissions
limit established pursuant to the California Global Warming
Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code).

end insert begin insert

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

end insert

(B) Rules permitting retail sellers to accumulate, beginning
January 1, 2011, excess procurement in one compliance period to
be applied to any subsequent compliance period. The rules shall
apply equally to all retail sellers. In determining the quantity of
excess procurement for the applicable compliance period, the
commission shall begin delete deduct from actual procurement quantities the
total amount of procurement associated with contracts of less than
10 years in duration and electricity products meeting the portfolio
content of paragraph (3) of subdivision (b) of Section 399.16. end delete
begin insert retain the rules adopted by the commission and in effect as of
January 1, 2015, for the compliance period specified in
subparagraphs (A) to (C), inclusive, of paragraph (1) of
subdivision (b) of Section 399.15. For any subsequent compliance
period, the rules shall allow the following: end insert

begin insert

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

end insert begin insert

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

end insert begin insert

(iii) If a retail seller notifies the commission that it will comply
with the provisions of subdivision (b) of Section 399.13 for the
compliance period beginning January 1, 2017, the provisions of
clauses (i) and (ii) shall take effect for that retail seller for that
compliance period.

end insert

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

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

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

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

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

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

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

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

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

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

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

begin insert

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

end insert

(b) A retail seller may enter into a combination of long- and
short-term contracts for electricity and associated renewable energy
credits. begin delete The commission may authorize a retail seller to enter into
a contract of less than 10 years’ duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources
to be procured through contracts of at least 10 years’ duration. end delete
begin insert Beginning January 1, 2021, at least 65 percent of the procurement
a retail seller counts toward the renewables portfolio standard
requirement of each compliance period shall be from its contracts
of 10 years or more in duration. end insert

(c) The commission shall review and accept, modify, or reject
each begin delete electrical corporation’s end delete begin insert retail seller’s end insert renewable energy
resource procurement plan prior to the commencement of
renewable energy procurement pursuant to this article by begin delete an
electrical corporation. end delete begin insert a retail seller. The commission shall assess
adherence to the approved renewable energy resource procurement
plans in determining compliance with the obligations of this article. end insert

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

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

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

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

begin delete

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

end delete

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

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

begin delete SEC. 11. end delete
begin insert SEC. 21. end insert   

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

399.15.  

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

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

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

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

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

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

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

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

(F) January 1, 2028, to December 31, 2030, inclusive.

(2) (A) No later than January 1, 2017, the commission shall
establish the quantity of electricity products from eligible
renewable energy resources to be procured by the retail seller for
each compliance period. These quantities shall be established in
the same manner for all retail sellers and result in the same
percentages used to establish compliance period quantities for all
retail sellers. begin insert For purposes of calculating renewables portfolio
standard procurement requirements, electricity production used
to serve onsite load from a resource located behind a customer’s
meter shall reduce the retail sales of the retail seller serving that
customer. end insert

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

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

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

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

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

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

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

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

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

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

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

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

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

(C) Unanticipated curtailment of eligible renewable energy
resources if the waiver would not result in an increase in
greenhouse gas emissions.

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

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

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

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

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

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

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

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

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

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

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

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

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

(f) The establishment of a renewables portfolio standard shall
not constitute implementation by the commission of the federal
Public Utility Regulatory Policies Act of 1978 (Public Law
95-617).

begin delete SEC. 12. end delete
begin insert SEC. 22. end insert   

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

399.16.  

(a) Various electricity products from eligible renewable
energy resources located within the WECC transmission network
service area shall be eligible to comply with the renewables
portfolio standard procurement requirements in Section 399.15.
These electricity products may be differentiated by their impacts
on the operation of the grid in supplying electricity, as well as
meeting the requirements of this article.

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

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

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

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

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

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

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

(1) Not less than 50 percent for the compliance period ending
December 31, 2013, 65 percent for the compliance period ending
December 31, 2016, and 75 percent for begin delete the compliance period
ending December 31, 2020, end delete begin insert each compliance period thereafter, end insert
of the eligible renewable energy resource electricity products
associated with contracts executed after June 1, 2010, shall meet
the product content requirements of paragraph (1) of subdivision
(b). begin delete Each retail seller shall continue to satisfy the product content
requirements applicable to procurement quantities associated with
the compliance period ending December 31, 2020, and ensure that,
for compliance periods ending after December 31, 2020, not less
than 75 percent of the incremental renewable procurement
requirements in each compliance period shall be satisfied with
eligible renewable energy resource electricity products meeting
the requirements of paragraph (1) of subdivision (b). end delete

(2) Not more than 25 percent for the compliance period ending
December 31, 2013, 15 percent for the compliance period ending
December 31, 2016, and 10 percent for begin delete the compliance period
ending December 31, 2020, end delete begin insert each compliance period thereafter, end insert
of the eligible renewable energy resource electricity products
associated with contracts executed after June 1, 2010, shall meet
the product content requirements of paragraph (3) of subdivision
(b). begin delete For the compliance periods ending after December 31, 2020,
not more than 10 percent of the incremental renewable procurement
requirements in each compliance period shall be satisfied with
eligible renewable energy resource electricity products meeting
the requirements of paragraph (3) of subdivision (b). end delete

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

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

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

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

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

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

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

begin delete SEC. 13. end delete
begin insert SEC. 23. end insert   

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

399.18.  

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

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

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

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

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

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

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

begin delete SEC. 14. end delete
begin insert SEC. 24. end insert   

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

399.21.  

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

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

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

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

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

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

begin insert

(6) Beginning January 1, 2021, renewable energy credits shall
not be created for any electricity generated by an eligible
renewable energy resource located behind a customer’s meter that
operates in parallel with the electrical grid and is used to offset
onsite loads.

end insert begin delete

(6)

end delete

begin insert (7) end insert  A renewable energy credit shall not be eligible for
compliance with a renewables portfolio standard procurement
requirement unless it is retired in the tracking system established
pursuant to subdivision (c) of Section 399.25 by the retail seller
or local publicly owned electric utility within 36 months from the
initial date of generation of the associated electricity.

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

begin delete SEC. 15. end delete
begin insert SEC. 25. end insert   

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

399.30.  

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

begin insert

(2)   Beginning January 1, 2019, a local publicly owned electric
utility subject to Section 9621 shall incorporate the renewable
energy resources procurement plan required by this section as
part of a broader integrated resource plan developed and adopted
pursuant to Section 9621.

end insert

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

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

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

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

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

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

(6) January 1, 2028, to December 31, 2030, inclusive.

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

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

(2) The quantities of eligible renewable energy resources to be
procured for all other compliance periods reflect reasonable
progress in each of the intervening years sufficient to ensure that
the procurement of electricity products from eligible renewable
energy resources achieves 25 percent of retail sales by December
31, 2016, 33 percent by December 31, 2020, 40 percent by
December 31, 2024, 45 percent by December 31, 2027, and 50
percent by December 31, 2030. The Energy Commission shall
establish appropriate multiyear compliance periods for all
subsequent years that require the local publicly owned electric
utility to procure not less than 50 percent of retail sales of
electricity products from eligible renewable energy resources. begin insert For
purposes of calculating renewables portfolio standard procurement
requirements, electricity production used to serve onsite load from
a resource located behind a customer’s meter shall reduce the
retail sales of the local publicly owned electric utility serving that
customer. end insert

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

begin delete

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

end delete begin insert

(4) Beginning January 1, 2014, in calculating the procurement
requirements under this article, a local publicly owned electric
utility may exclude from its total retail sales the kilowatthours
generated by an eligible renewable energy resource that is credited
to a participating customer pursuant to a voluntary green pricing
or shared renewable generation program. Any exclusion shall be
limited to electricity products that do not meet the portfolio content
criteria set forth in paragraph (2) or (3) of subdivision (b) of
Section 399.16. Any renewable energy credits associated with
electricity credited to a participating customer shall not be used
for compliance with procurement requirements under this article,
shall be retired on behalf of the participating customer, and shall
not be further sold, transferred, or otherwise monetized for any
purpose. To the extent possible for generation that is excluded
from retail sales under this subdivision, a local publicly owned
electric utility shall seek to procure those eligible renewable energy
resources that are located in reasonable proximity to program
participants.

end insert begin insert

(d) (1) The governing board of a local publicly owned electric
utility shall adopt procurement requirements consistent with
subparagraph (B) of paragraph (4) of subdivision (a) of, and
subdivision (b) of, Section 399.13.

end insert begin delete

(d)

end delete

begin insert (2) end insert  The governing board of a local publicly owned electric utility
may adopt the following measures:

begin delete

(1) Rules permitting the utility to apply excess procurement in
one compliance period to subsequent compliance periods in the
same manner as allowed for retail sellers pursuant to Section
399.13.

end delete begin delete

(2)

end delete

begin insert (A) end insert  Conditions that allow for delaying timely compliance
consistent with subdivision (b) of Section 399.15.

begin delete

(3)

end delete

begin insert (B) end insert  Cost limitations for procurement expenditures consistent
with subdivision (c) of Section 399.15.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

begin insert

(l) (1) (A) For purposes of this subdivision, “large
hydroelectric generation” means electricity generated from a
hydroelectric facility that is not an eligible renewable energy
resource and provides electricity to a local publicly owned electric
utility from facilities owned by the federal government as a part
of the federal Central Valley Project or a joint powers agency
formed and created pursuant to Chapter 5 (commencing with
Section 6500) of Division 7 of Title 1 of the Government Code.

end insert begin insert

(B) Large hydroelectric generation does not include any
resource that meets the definition of hydroelectric generation set
forth in subdivision (k).

end insert begin insert

(2) If, during a year within a compliance period set forth in
subdivision (b), a local publicly owned electric utility receives
greater than 50 percent of its retail sales from large hydroelectric
generation, it is not required to procure eligible renewable energy
resources that exceed the lesser of the following for that year:

end insert begin insert

(A) The portion of the local publicly owned electric utility retail
sales unsatisfied by the local publicly owned electric utility’s large
hydroelectric generation.

end insert begin insert

(B) The soft target adopted by the Energy Commission for the
intervening year of the relevant compliance period.

end insert begin insert

(3) Except for an existing agreement effective as of January 1,
2015, or extension or renewal of that agreement, any new
procurement commitment shall not be eligible to count towards
the determination that the local publicly owned electric utility
receives more than 50 percent of its retail sales from large
hydroelectric generation in any year.

end insert begin insert

(4) The Energy Commission shall adjust the total quantities of
eligible renewable energy resources to be procured by a local
publicly owned electric utility for a compliance period to reflect
any reductions required pursuant to paragraph (2).

end insert begin insert

(5) This subdivision does not modify the compliance obligation
of a local publicly owned electric utility to satisfy the requirements
of subdivision (c) of Section 399.16.

end insert begin insert

(m) (1) (A) For purposes of this subdivision, “unavoidable
long-term contracts and ownership agreements” means
commitments for electricity from a coal-fired powerplant, located
outside the state, originally entered into by a local publicly owned
electric utility before June 1, 2010, that is not subsequently
modified to result in an extension of the duration of the agreement
or result in an increase in total quantities of energy delivered
during any compliance period set forth in subdivision (b).

end insert begin insert

(B) The governing board of a local publicly owned electric
utility shall demonstrate in its renewable energy resources
procurement plan required pursuant to subdivision (f) that any
cancellation or divestment of the commitment would result in
significant economic harm to its retail customers that cannot be
substantially mitigated through resale, transfer to another entity,
early closure of the facility, or other feasible measures.

end insert begin insert

(2) For the compliance period set forth in paragraph (4) of
subdivision (b), a local publicly owned electric utility meeting the
requirement of subparagraph (B) of paragraph (1) may adjust its
renewable energy procurement targets to ensure that the
procurement of additional electricity from eligible renewable
energy resources, in combination with the procurement of
electricity from unavoidable long-term contracts and ownership
agreements, does not exceed the total retail sales of the local
publicly owned electric utility during that compliance period. The
local publicly owned electric utility may limit its procurement of
eligible renewable energy resources for that compliance period
to no less than an average of 33 percent of its retail sales.

end insert begin insert

(3) The Energy Commission shall approve any reductions in
procurement targets proposed by a local publicly owned electric
utility if it determines that the requirements of this subdivision are
satisfied.

end insert begin delete

(l)

end delete

begin insert (n) end insert  A local publicly owned electric utility shall retain discretion
over both of the following:

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

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

begin delete

(m)

end delete

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

begin delete

(n)

end delete

begin insert (p) end insert  (1) Upon a determination by the Energy Commission that
a local publicly owned electric utility has failed to comply with
this article, the Energy Commission shall refer the failure to comply
with this article to the State Air Resources Board, which may
impose penalties to enforce this article consistent with Part 6
(commencing with Section 38580) of Division 25.5 of the Health
and Safety Code. Any penalties imposed shall be comparable to
those adopted by the commission for noncompliance by retail
sellers.

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

begin delete SEC. 16. end delete
begin insert SEC. 26. end insert   

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

 

Article 17.  Clean Energy and Pollution Reduction

 

400.  

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

(a) Take into account the use of distributed generation to the
extent that it provides economic and environmental benefits in
disadvantaged communities as identified pursuant to Section 39711
of the Health and Safety Code.

(b) Take into account the opportunities to decrease costs and
increase benefits, including pollution reduction and grid integration,
using technologies with zero begin insert or lowest feasible emissions of
greenhouse gases, criteria pollutant emissions, and toxic air
contaminants end insert onsite begin delete greenhouse gas emissions end delete in proceedings
associated with meeting the objectives.

(c) Where feasible, authorize procurement of resources to
provide grid reliability services that minimize reliance on system
power and fossil fuel resources and, where feasible, begin delete cost-effective, end delete
begin insert cost effective, end insert and consistent with other state policy objectives,
increase the use of large- and small-scale energy storage with a
variety of technologies, targeted energy efficiency, demand
response, begin insert including, but not limited to, automated demand
response, end insert eligible renewable energy resources, or other
technologies with zero begin insert or lowest feasible emissions of greenhouse
gases, criteria pollutant emissions, and toxic air contaminants end insert
onsite begin delete greenhouse gas emissions end delete to protect system reliability.

(d) Review technology incentive, research, development,
deployment, and market facilitation programs overseen by the
commission and the Energy Commission and make
recommendations to advance state clean energy and pollution
reduction objectives and provide benefits to disadvantaged
communities as identified pursuant to Section 39711 of the Health
and Safety Code.

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

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

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

begin delete SEC. 17. end delete
begin insert SEC. 27. end insert   

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

begin delete

454.51.  

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

end delete

begin insert

begin insert 454.51. end insert   

end insert begin insert

The commission shall do all of the following:

end insert begin insert

(a) Identify a diverse and balanced portfolio of resources needed
to ensure a reliable electricity supply that provides optimal
integration of renewable energy in a cost-effective manner. The
portfolio shall rely upon zero carbon-emitting resources to the
maximum extent reasonable and be designed to achieve any
statewide greenhouse gas emissions limit established pursuant to
the California Global Warming Solutions Act of 2006 (Division
25.5 (commencing with Section 38500) of the Health and Safety
Code) or any successor legislation.

end insert begin insert

(b) Direct each electrical corporation to include, as part of its
proposed procurement plan, a strategy for procuring best-fit and
least-cost resources to satisfy the portfolio needs identified by the
commission pursuant to subdivision (a).

end insert begin insert

(c) Ensure that the net costs of any incremental renewable
energy integration resources procured by an electrical corporation
to satisfy the need identified in subdivision (a) are allocated on a
fully nonbypassable basis consistent with the treatment of costs
identified in paragraph (2) of subdivision (c) of Section 365.1.

end insert begin insert

(d) Permit community choice aggregators to submit proposals
for satisfying their portion of the renewable integration need
identified in subdivision (a). If the commission finds this need is
best met through long-term procurement commitments for
resources, community choice aggregators shall also be required
to make long-term commitments for resources. The commission
shall approve those proposals if it finds all of the following:

end insert begin insert

(1) The resources proposed by a community choice aggregator
will provide equivalent integration of renewable energy.

end insert begin insert

(2) The resources proposed by a community choice aggregator
will promote the efficient achievement of state energy policy
objectives, including reductions in greenhouse gas emissions.

end insert begin insert

(3) Bundled customers of an electrical corporation will be
indifferent from the approval of the community choice aggregator
proposals.

end insert begin insert

(4) All costs resulting from nonperformance will be borne by
the electric corporation, electric service provider, or community
choice aggregator responsible for them.

end insert

begin insert

begin insert SEC. 28. end insert   

end insert

begin insert Section 454.52 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 454.52. end insert   

(a) (1) Commencing in 2017, and to be updated
regularly thereafter, the commission shall adopt a process for each
load-serving entity, as defined in Section 380, to file an integrated
resource plan, and a schedule for periodic updates to the plan, to
ensure that load-serving entities do the following:

(A) Meet the greenhouse gas emissions reduction targets
established by the State Air Resources Board, in coordination with
the commission and the Energy Commission, for the electricity
sector and each load-serving entity that reflect the electricity
sector’s role in achieving economywide greenhouse gas emissions
reductions of 40 percent from 1990 levels by 2030.

(B) Procure at least 50 percent eligible renewable energy
resources by December 31, 2030, consistent with Article 16
(commencing with Section 399.11) of Chapter 2.3.

(C) Enable each electrical corporation to fulfill its obligation
to serve its customers at just and reasonable rates.

(D) Minimize impacts on ratepayers’ bills.

(E) Ensure system and local reliability.

(F) Strengthen the diversity, sustainability, and resilience of
the bulk transmission and distribution systems, and local
communities.

(G) Enhance distribution systems and demand-side energy
management.

(H) Minimize localized air pollutants and other greenhouse gas
emissions, with early priority on disadvantaged communities
identified pursuant to Section 39711 of the Health and Safety Code.

(2) (A) The commission may authorize all source procurement
that includes various resource types including demand-side
resources, supply side resources, and resources that may be either
demand-side resources or supply side resources to ensure that
each load-serving entity meets the goals set forth in paragraph
(1).

(B) The commission may approve procurement of resource types
that will reduce overall greenhouse gas emissions from the
electricity sector and meet the other goals specified in paragraph
(1), but due to the nature of the technology or fuel source may not
compete favorably in price against other resources over the time
period of the integrated resource plan.

(b) (1) Each load-serving entity shall prepare and file an
integrated resource plan consistent with paragraph (2) of
subdivision (a) on a time schedule directed by the commission and
subject to commission review.

(2) Each electrical corporation’s plan shall be consistent with
Section 454.5.

(3) The plan of a community choice aggregator or an electric
service provider, consistent with paragraph (5) of subdivision (a)
of Section 366.2, shall achieve the following:

(A) Economic, reliability, environmental, security, and other
benefits and performance characteristics that are consistent with
the goals set forth in paragraph (1) of subdivision (a).

(B) A diversified procurement portfolio consisting of both
short-term and long-term electricity and electricity-related and
demand reduction products.

(C) The resource adequacy requirements established pursuant
to Section 380.

(c) To the extent that additional procurement is authorized for
the electrical corporation in the integrated resource plan or the
procurement process authorized pursuant to Section 454.5, the
commission shall ensure that the renewable integration costs are
allocated in a fair and equitable manner to all customers consistent
with 454.51, that there is no cost-shifting among customers of
load-serving entities, and that community choice aggregators may
self provide these resources consistent with Section 454.51.

(d) The process adopted pursuant to subdivision (a) shall
incorporate, and not duplicate, any other planning processes of
the commission.

end insert

begin insert

begin insert SEC. 29. end insert   

end insert

begin insert Section 454.55 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

454.55.  

begin insert (a) end insert begin insert   end insert The commission, in consultation with the begin delete State
Energy Resources Conservation and Development end delete begin insert Energy end insert
Commission, shall identify all potentially achievable cost-effective
electricity efficiency savings and establish efficiency targets for
an electrical corporation to begin delete achieve end delete begin insert achieve, end insert pursuant to Section
begin delete 454.5. end delete begin insert 454.5, consistent with the targets established pursuant to
subdivision (c) of Section 25310 of the Public Resources Code. end insert

begin insert

(1) By July 1, 2018, and every four years thereafter, each
electrical corporation shall report on its progress toward achieving
the targets established pursuant to subdivision (a).

end insert begin insert

(2) By July 1, 2019, and every four years thereafter, the
commission shall, pursuant to Section 9795 of the Government
Code, report to the Legislature on the progress toward achieving
the targets established pursuant to subdivision (a). The commission
shall include specific strategies for, and an update on, progress
toward maximizing the contribution of electricity efficiency savings
in disadvantaged communities identified pursuant to Section 39711
of the Health and Safety Code.

end insert begin insert

(b) (1) By December 31, 2023, the commission shall, in a new
or existing proceeding, undertake a comprehensive review of the
feasibility, costs, barriers, and benefits of achieving a cumulative
doubling of energy efficiency savings and demand reduction by
2030 pursuant to subdivision (c) of Section 25310 of the Public
Resources Code.

end insert begin insert

(2) Notwithstanding subdivision (c) of Section 25310 of the
Public Resources Code, if the commission concludes the targets
established for electrical corporations to achieve pursuant to
subdivision (a) are not cost effective, feasible, or pose potential
adverse impacts to public health and safety, the commission shall
revise the targets to the level that optimizes the amount of energy
efficiency savings and demand reduction and shall modify, revise,
or update its policies as needed to address barriers preventing
achievement of those targets.

end insert

begin insert

begin insert SEC. 30. end insert   

end insert

begin insert Section 454.56 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

454.56.  

(a) The commission, in consultation with the begin delete State
Energy Resources Conservation and Development end delete begin insert Energy end insert
Commission, shall identify all potentially achievable cost-effective
natural gas efficiency savings and establish efficiency targets for
the gas corporation to begin delete achieve. end delete begin insert achieve, consistent with the targets
established pursuant to subdivision (c) of Section 25310 of the
Public Resources Code. end insert

(b) A gas corporation shall first meet its unmet resource needs
through all available natural gas efficiency and demand reduction
resources that are cost effective, reliable, and feasible.

begin insert

(c) By July 1, 2018, and every four years thereafter, each natural
gas corporation shall report on its progress toward achieving the
targets established pursuant to subdivision (a).

end insert begin insert

(d) By July 1, 2019, and every four years thereafter, the
commission shall, pursuant to Section 9795 of the Government
Code, report to the Legislature on the progress toward achieving
the targets establish pursuant to subdivision (a). The commission
shall include specific strategies for, and an update on, progress
toward maximizing the contribution of energy efficiency savings
in disadvantaged communities identified pursuant to Section 39711
of the Health and Safety Code.

end insert begin insert

(e) Notwithstanding subdivision (c) of Section 25310 of the
Public Resources Code, if the commission concludes in its review
pursuant to paragraph (1) of subdivision (b) of Section 454.55
that the targets established for gas corporations to achieve
pursuant to subdivision (a) are not cost effective, feasible, or pose
potential adverse impacts to public health and safety, the
commission shall revise the targets to the level that maximizes the
amount of energy efficiency savings and demand reduction and
shall modify, revise, or update its policies as needed to address
barriers preventing achievement of those targets.

end insert

begin insert

begin insert SEC. 31. end insert   

end insert

begin insert Section 636 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 636. end insert   

In a procurement plan adopted by an electrical
corporation or a local publicly owned electric utility, the electrical
corporation or local publicly owned electric utility shall give
consideration to both of the following:

(a) Any statewide greenhouse gas emissions limit established
pursuant to the California Global Warming Solutions Act of 2006
(Division 25.5 (commencing with Section 38500) of the Health
and Safety Code).

(b) Capacity and system reliability to ensure grid reliability.

end insert

begin delete SEC. 18. end delete
begin insert SEC. 32. end insert   

Section 701.1 of the Public Utilities Code is amended
to read:

701.1.  

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

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

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

(c) In calculating the begin delete cost effectiveness end delete begin insert cost-effectiveness end insert of
energy resources, including conservation and load management
options, the commission shall include, in addition to other ratepayer
protection objectives, a value for any costs and benefits to the
environment, including air quality. The commission shall ensure
that any values it develops pursuant to this section are consistent
with values developed by the State Energy Resources Conservation
and Development Commission pursuant to Section 25000.1 of the
Public Resources Code. However, if the commission determines
that a value developed pursuant to this subdivision is not consistent
with a value developed by the State Energy Resources
Conservation and Development Commission pursuant to
subdivision (c) of Section 25000.1 of the Public Resources Code,
the commission may nonetheless use this value if, in the
appropriate record of its proceedings, it states its reasons for using
the value it has selected.

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

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

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

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

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

(2) Further, the environmental values determined pursuant to
subdivision (c) shall not be used by the commission in a manner
which, when those values are aggregated, will result in advancing
an electric utility’s need for new powerplant capacity by more than
15 months.

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

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

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

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

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

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

(g) This section does not require an electric utility to alter the
dispatch of its powerplants for environmental purposes.

(h) This section does not preclude an electric utility from
submitting to the commission any combination of alternatives to
meet a commission-identified need for new capacity, if the
submission is otherwise authorized by the commission.

(i) This section does not change or alter any provision of
commission decision 92-04-045, dated April 22, 1992.

begin delete SEC. 19. end delete
begin insert SEC. 33. end insert   

Section 740.8 of the Public Utilities Code is amended
to read:

740.8.  

As used in Section begin delete 740.3, end delete begin insert 740.3 or 740.12, end insert “interests”
of ratepayers, short- or long-term, mean direct benefits that are
specific to begin delete ratepayers in the form of any of the following: end delete
begin insert ratepayers, consistent with both of the following: end insert

(a) Safer, more reliable, or less costly gas or electrical service,
consistent with Section begin delete 451. end delete begin insert 451, including electrical service that
is safer, more reliable, or less costly due to either improved use
of the electric system or improved integration of renewable energy
generation. end insert

begin delete

(b) More efficient use of the electric system.

end delete begin delete

(c) Improve integration of renewable energy generation.

end delete begin delete

(d) Activities that both directly benefit ratepayers and that
promote at least

end delete

begin insert (b) end insert begin insert   end insert begin insert Any end insert one of the following:

begin delete

(1) Energy efficiency.

end delete begin insert

(1) Improvement in energy efficiency of travel.

end insert

(2) Reduction of health and environmental impacts from air
pollution.

(3) Reduction of greenhouse gas emissions related to electricity
and natural gas production and use.

(4) Increased use of alternative fuels.

begin insert

(5) Creating high-quality jobs or other economic benefits,
including in disadvantaged communities identified pursuant to
Section 39711 of the Health and Safety Code.

end insert

begin delete SEC. 20. end delete
begin insert SEC. 34. end insert   

Section 740.12 is added to the Public Utilities Code,
to read:

740.12.  

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

(A) Advanced clean vehicles and fuels are needed to reduce
petroleum use, to meet air quality standards, to improve public
health, and to achieve greenhouse gas emissions reduction goals.

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

begin insert

(C) Widespread transportation electrification requires increased
access for disadvantaged communities, low- and moderate-income
communities, and other consumers of zero-emission and
near-zero-emission vehicles, and increased use of those vehicles
in those communities and by other consumers to enhance air
quality, lower greenhouse gases emissions, and promote overall
benefits to those communities and other consumers.

end insert begin delete

(C)

end delete

begin insert (D) end insert  Reducing emissions of greenhouse gases to 40 percent below
1990 levels by 2030 and to 80 percent below 1990 levels by 2050
will require widespread transportation electrification.

begin delete

(D)

end delete

begin insert (E) end insert  Widespread transportation electrification requires electrical
corporations to increase access to the use of electricity as a
transportation fuel.

begin insert

(F) Widespread transportation electrification should stimulate
innovation and competition, attract private capital investments,
and create high-quality jobs for Californians, where
technologically feasible.

end insert begin delete

(E)

end delete

begin insert (G) end insert  Deploying electric vehicles should assist in begin insert grid
management, end insert integrating generation from eligible renewable energy
begin delete resources and reduce end delete begin insert resources, and reducing end insert fuel costs for vehicle
drivers who charge in a manner consistent with electrical grid
conditions.

begin delete

(F)

end delete

begin insert (H) end insert  Deploying electric vehicle charging infrastructure should
facilitate increased sales of electric vehicles by making charging
easily accessible and should provide the opportunity to access
electricity as a fuel that is cleaner begin insert and less costly end insert than gasoline or
other fossil begin delete fuels. end delete begin insert fuels in public and private locations. end insert

begin delete

(G)

end delete

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

(2) It is the policy of the state and the intent of the Legislature
to encourage transportation electrification as a means to achieve
ambient air quality standards and the state’s climate goals.
Agencies designing and implementing regulations, guidelines,
plans, and funding programs to reduce greenhouse gas emissions
begin delete should end delete begin insert shall end insert take the begin delete finding end delete begin insert findings end insert described in begin delete subparagraph
(G) of end delete paragraph (1) into account.

(b) The commission, in consultation with the State Air Resources
Board and the Energy Commission, shall direct electrical
corporations to begin delete propose multiyear end delete begin insert file applications for end insert programs
and investments to accelerate widespread transportation
electrification to reduce dependence on petroleum, meet air quality
standards, achieve the goals set forth in the Charge Ahead
California Initiative (Chapter 8.5 (commencing with Section 44258)
of Part 5 of Division 26 of the Health and Safety Code), and reduce
emissions of greenhouse gases to 40 percent below 1990 levels by
2030 and to 80 percent below 1990 levels by 2050. begin insert Programs
proposed by electrical corporations shall seek to minimize overall
costs and maximize overall benefits. end insert The commission shall begin delete approve end delete
begin insert approve, or modify and approve, end insert programs and investments begin insert in
transportation electrification, including those end insert that deploy charging
begin delete infrastructure, as distribution system costs, end delete begin insert infrastructure via a
reasonable cost recovery mechanism, end insert if they are consistent with
this begin delete section and end delete begin insert section, do not unfairly compete with nonutility
enterprises as required under Section 740.3, include performance
accountability measures, and are in the interests of ratepayers as
defined in end insert Section begin delete 740.3. end delete begin insert 740.8. end insert

(c) The commission shall review data concerning current and
future electric transportation adoption begin delete rates end delete and charging
infrastructure utilization begin delete rates no less than every three years and end delete
prior to begin delete any further authorization for end delete begin insert authorizing end insert an electrical
corporation to collect begin delete additional end delete new program costs related to
transportation electrification in begin delete ratepayer end delete begin insert customer end insert rates. If market
barriers unrelated to the investment made by an electric corporation
prevent electric transportation from adequately utilizing available
charging infrastructure, the commission shall not permit additional
investments in transportation electrification without begin delete adequate
assurance end delete begin insert a reasonable showing end insert that the investments would not
result in begin insert long-term end insert stranded costs recoverable from ratepayers.

begin insert

(d) This section applies to an application to the commission for
transportation electrification programs and investments if one of
the following conditions is met:

end insert begin insert

(1) The application is filed on or after January 1, 2016.

end insert begin insert

(2) The application is filed before January 1, 2016, but has an
evidentiary hearing scheduled on or after July 1, 2016.

end insert

begin insert

begin insert SEC. 36. end insert   

end insert

begin insert Section 9505 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

9505.  

(a) By March 15, 2013, and by March 15 of each year
thereafter, each local publicly owned electric utility shall report
to the Energy Commission and to its customers all of the following:

(1) Its investments in energy efficiency and demand reduction
programs.

(2) A description of each energy efficiency and demand
reduction program, program expenditures, begin insert the end insert cost-effectiveness
of each program, and expected and actual energy efficiency savings
and demand reduction results that reflect the intent of the
Legislature to encourage energy savings and reductions in
emissions of greenhouse gases resulting from providing service
to existing residential and nonresidential buildings, while taking
into consideration the effect of the program on rates, reliability,
and financial resources.

(3) The sources for funding of its energy efficiency and demand
reduction programs.

(4) The methodologies and input assumptions used to determine
the cost-effectiveness of its energy efficiency and demand reduction
programs.

begin insert

(5) A comparison of the local publicly owned electric utility’s
annual targets established pursuant to subdivision (b) and the
local publicly owned electric utility’s reported electricity efficiency
savings and demand reductions.

end insert

(b) By March 15, 2013, and by March 15 of every fourth year
thereafter, each local publicly owned electric utility shall identify
all potentially achievable cost-effective electricity efficiency
savings and shall establish annual targets for energy efficiency
savings and demand reduction for the next 10-year begin delete period. end delete begin insert period,
consistent with the annual targets established by the Energy
Commission pursuant to subdivision (c) of Section 25310 of the
Public Resources Code. end insert A local publicly owned electric utility’s
determination of potentially achievable cost-effective electricity
efficiency savings shall be made without regard to previous
minimum investments undertaken pursuant to Section 385. A local
publicly owned electric utility shall treat investments made to
achieve energy efficiency savings and demand reduction targets
as procurement investments.

(c) Within 60 days of establishing annual targets pursuant to
subdivision (b), each local publicly owned electric utility shall
report those targets to the Energy Commission, and the basis for
establishing those targets.

(d) Each local publicly owned electric utility shall make
available to its customers and to the Energy Commission the results
of any independent evaluation that measures and verifies the energy
efficiency savings and the reduction in energy demand achieved
by its energy efficiency and demand reduction programs.

begin insert

begin insert SEC. 37. end insert   

end insert

begin insert Section 9620 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

9620.  

(a) Each local publicly owned electric utility serving
end-use customers, shall prudently plan for and procure resources
that are adequate to meet its planning reserve margin and peak
demand and operating reserves, sufficient to provide reliable
electric service to its customers. Customer generation located on
the customer’s site or providing electric service through
arrangements authorized by Section 218, shall not be subject to
these requirements if the customer generation, or the load it serves,
meets one of the following criteria:

(1) It takes standby service from the local publicly owned
electric utility on a rate schedule that provides for adequate backup
planning and operating reserves for the standby customer class.

(2) It is not physically interconnected to the electric transmission
or distribution grid, so that, if the customer generation fails, backup
power is not supplied from the electricity grid.

(3) There is physical assurance that the load served by the
customer generation will be curtailed concurrently and
commensurately with an outage of the customer generation.

(b) Each local publicly owned electric utility serving end-use
customers shall, at a minimum, meet the most recent minimum
planning reserve and reliability criteria approved by the Board of
Trustees of the Western Systems Coordinating Council or the
Western Electricity Coordinating Council.

(c) Each local publicly owned electric utility shall prudently
plan for and procure energy storage systems that are adequate to
meet the requirements of Section 2836.

(d) A local publicly owned electric utility serving end-use
customers shall, upon request, provide the Energy Commission
with any information the Energy Commission determines is
necessary to evaluate the progress made by the local publicly
owned electric utility in meeting the requirements of this begin delete section. end delete
begin insert section, consistent with the annual targets established pursuant
to subdivision (c) of Section 25310 of the Public Resources Code. end insert

(e) The Energy Commission shall report to the Legislature, to
be included in each integrated energy policy report prepared
pursuant to Section 25302 of the Public Resources Code, regarding
the progress made by each local publicly owned electric utility
serving end-use customers in meeting the requirements of this
section.

begin insert

begin insert SEC. 38. end insert   

end insert

begin insert Section 9621 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 9621. end insert   

(a) This section shall apply to a local publicly owned
electric utility with an annual electrical demand exceeding 700
gigawatthours, as determined on a three-year average commencing
January 1, 2013.

(b) On or before January 1, 2019, the governing board of a
local publicly owned electric utility shall adopt an integrated
resource plan and a process for updating the plan at least once
every five years to ensure the utility achieves all of the following:

(1) Meets the greenhouse gas emissions reduction targets
established by the State Air Resources Board, in coordination with
the commission and the Energy Commission, for the electricity
sector and each local publicly-owned electric utility that reflect
the electricity sector’s role in achieving economywide greenhouse
gas emissions reductions of 40 percent from 1990 levels by 2030.

(2) Ensures procurement of at least 50 percent eligible
renewable energy resources by 2030 consistent with Article 16
(commencing with Section 399.11) of Chapter 2.3.

(3) Meets the goals specified in subparagraphs (C) to (H),
inclusive, of paragraph (1) of subdivision (a) of Section 454.52.

(c) (1) The integrated resource plan shall address procurement
for the following:

(A) Energy efficiency and demand response resources pursuant
to Section 9615.

(B) Energy storage requirements pursuant to Chapter 7.7
(commencing with Section 2835) of Part 2 of Division 1.

(C) Transportation electrification.

(D) A diversified procurement portfolio consisting of both
short-term and long-term electricity, electricity-related, and
demand response products.

(E) The resource adequacy requirements established pursuant
to Section 9620.

(2) (A) The governing board of the local publicly owned electric
utility may authorize all source procurement that includes various
resource types, including demand-side resources, supply side
resources, and resources that may be either demand-side resources
or supply side resources, to ensure that the local publicly owned
electric utility procures the optimum resource mix that meets the
objectives of subdivision (b).

(B) The governing board may authorize procurement of resource
types that will reduce overall greenhouse gas emissions from the
electricity sector and meet the other goals specified in paragraph
(1) of subdivision (a) of Section 454.52, but due to the nature of
the technology or fuel source may not compete favorably in price
against other resources over the time period of the integrated
resource plan.

(d) A local publicly owned electric utility shall satisfy the notice
and public disclosure requirements of subdivision (f) of Section
399.30 with respect to any integrated resource plan or plan update
it considers.

end insert

begin insert

begin insert SEC. 39. end insert   

end insert

begin insert Section 9622 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 9622. end insert   

(a) Integrated resource plans and plan updates adopted
pursuant to Section 9621 shall be submitted to the Energy
Commission.

(b) The Energy Commission shall review the integrated resource
plans and plan updates. If the Energy Commission determines an
integrated resource plan or plan update is inconsistent with the
requirements of Section 9621, the Energy Commission shall
provide recommendations to correct the deficiencies.

(c) The Energy Commission may adopt guidelines to govern the
submission of information and data and reports needed to support
the Energy Commission’s review of the utility’s integrated resource
plan pursuant to this section at a publicly noticed meeting offering
all interested parties an opportunity to comment. The Energy
Commission shall provide written public notice of not less than
30 days for the initial adoption of guidelines and not less than 10
days for the subsequent adoption of substantive changes.
Notwithstanding any other law, any guidelines adopted pursuant
to this section shall be exempt from the requirements of Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code.

end insert

begin delete SEC. 21. end delete
begin insert SEC. 40. end insert   

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

begin insert

begin insert SEC. 41. end insert   

end insert begin insert

The provisions of this act are severable. If any
provision of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.

end insert