BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 350 (De León) - Clean Energy and Pollution Reduction Act of
2015.
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|Version: February 24, 2015 |Policy Vote: E., U., & C. 8 - |
| | 3, E.Q. 5 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 18, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: This bill would direct a 50% reduction in petroleum
use, require that 50% of electricity come from renewable
resources, and require a doubling of the energy efficiency of
existing buildings.
Fiscal
Impact:
First year costs of $440,000 and $400,000 ongoing from various
special funds to the Air Resources Board to create a petroleum
use baseline and to implement necessary measures to reduce
use.
Unknown cost pressures to current programs from various
special funds to achieve a 50% petroleum reduction.
Annual costs of $7.24 million from the General Fund for the
CEC for ongoing updates of its energy efficiency plans for
existing buildings and to implement the plans.
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Annual costs of $900,000 from the Energy Resources Program
Account (General Fund) for the CEC for new responsibilities
ensuring compliance with RPS standards by the POUs
Annual costs of $2.3 million for five years to the Public
Utilities Reimbursement Account (special) for CPUC contract
needs
Annual costs of $471,000 for two years and $157,000 in the
third year. the Public Utilities Reimbursement Account
(special) for CPUC proceedings to adjust existing RPS and Long
Term Procurement Plan (LTPP) programs.
Ongoing staffing needs of $350,000 annually to the Public
Utilities Reimbursement Account (special) for CPUC staffing
needs for ongoing enforcement of the higher RPS standards.
Unknown ratepayer costs to the General Fund and various
special funds to the state as a ratepayer of electricity to
the extent that electricity prices may be affected by
increasing the RPS standard.
Unknown cost pressures to the Public Utilities Reimbursement
Account (special) and the Energy Resources Program Account
(General Fund) to the CPUC and the CEC to review renewable
integration needs and to consider grid integration in
proceedings implementing RPS requirements.
Background: Existing law requires the Air Resources Board (ARB) to 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.
Existing law requires the California Energy Commission (CEC) to
develop and implement a comprehensive program to achieve greater
energy savings in California's existing residential and
nonresidential building stock (Public Resources Code §25943 et
seq.).
Existing law requires all retail sellers of electricity -
investor-owned utilities (IOU), community choice aggregators
(CCAs), and energy service providers (ESPs) - and publicly-owned
utilities (POU) to increase purchases of renewable energy such
that at least 33 percent of retail sales are procured from
renewable energy resources by December 31, 2020. This is known
as the Renewable Portfolio Standard (RPS). The CPUC is
explicitly authorized to require retail sellers of electricity
to procure renewable energy resources in excess of the
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33-percent RPS requirement. (Public Utilities Code §399.11 et
seq.). The CPUC oversees RPS compliance with IOUs while the CEC
oversees POUs.
Existing law also establishes the Electric Program Investment
Charge (EPIC) Fund, to fund projects that benefit electricity
ratepayers and lead to technological advancement and
breakthroughs to overcome the barriers that prevent the
achievement of the state's statutory energy goals. (PUC §25710
et seq.)
Proposed Law:
This bill would enact the Clean Energy and Pollution Reduction
Act of 2015, which creates or expands three related clean-energy
goals to be achieved by 2030: (1) a 50 percent reduction in
petroleum used in motor vehicles; (2) generating 50 percent of
total retail sales of electricity from renewable resources; and
(3) a doubling of the energy efficiency of existing buildings.
Specifically in regards to the petroleum reduction goal, this
bill would:
Require that the ARB's implementation of motor vehicle
emission standards, in-use performance standards, and motor
vehicle fuel specifications to also further the state's goal
in reducing petroleum use in motor vehicles by 50% by January
1, 2030.
Require that the state transportation energy policy would also
be required to be in furtherance of reducing petroleum use in
the transportation sector by 50% by January 1, 2030.
Specifically in regards to the energy efficiency goal, this bill
would require the CEC, by January 1, 2017, and at least once
every three years thereafter, to adopt and update its
comprehensive program to achieve greater energy savings in
California's existing residential and nonresidential building
stock - known as the California Existing Buildings Energy
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Efficiency Action Plan - in order to achieve a doubling of the
energy efficiency of existing buildings by January 1, 2030.
Specifically in regards to the renewable energy goal, this bill
would:
Declare that it is the intent of the Legislation that the CEC
and the CPUC implement the California Renewable Portfolio
Standard Program to achieve 50% of the total retail sales of
electricity in California come from renewable sources by
December 31, 2030.
Require that all retail sellers of electricity submit to the
CPUC a renewable energy procurement plan, not just IOUs. Allow
the CPUC to enforce this requirement on all electrical
corporations. Penalties assessed for failure to comply with
adopting a procurement plan shall be deposited into the
Electric Program Investment Charge Fund.
Set minimum RPS requirements so that 40% of resources are from
eligible renewable sources by the end of 2024, 45% by the end
of 2027, and 50% by the end of 2030.
Require that at least 75% of the renewable energy procurement
be from Californian's resources
Establish the following RPS compliance periods and renewable
energy goals for retail sellers and POUs: January 1, 2021, to
December 31, 2024 - 40 percent; January 1, 2025, to December
31, 2027 - 45 percent; and January 1, 2028, to December 31,
2030 - 50 percent.
Directs the CPUC to establish limitations for each IOU on
procurement expenditures for RPS compliance at a level that
prevents disproportionate rate impacts and deletes provisions
of existing law requiring the CPUC to report to the
Legislature, by January 1, 2016, on the ability of each IOU to
meet and maintain the 33 percent 2020 target within existing
cost limitations.
Authorizes the CPUC to assess penalties against a retail
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seller, and the CEC to assess penalties against a POU, for
noncompliance with an RPS interim goal and, in the case of an
IOU, prohibits the IOU from collecting the cost of the
penalties in rates.
Directs penalties collected from a retail seller or a POU to
the EPIC Fund, to be used for renewable energy programs and
research, development, and demonstration programs.
Directs the CPUC and the CEC to consider the benefits of
distributed generation; allow for consideration of costs and
benefits of grid integration in RPS proceedings; minimize
system power and fossil fuel purchases; recommend how to
better align state incentive programs with the state's clean
energy and pollution reduction goals and provide benefits to
disadvantaged communities; and give preference to the
manufacture and deployment of clean energy and pollution
reduction technologies that create jobs and investment in the
state.
Staff
Comments: In regards the petroleum reduction goals, ARB would
need to do the following:
Develop a baseline of petroleum use,
Determine the best methods to assist with meeting the goal,
Potentially develop amendments to current motor vehicle
emissions standards, in-use performance standards, and motor
vehicle fuel specifications, and
Monitor progress relative to the 50% target.
ARB anticipates needing approximately $440,000 in the first year
and $400,000 ongoing from various special funds to achieve these
efforts.
Staff notes that these costs are just for staffing costs.
Modifying existing programs to achieve the reductions may
require significant additional investments to implement the
larger programs, including incentives such as through the Carl
Moyer Program. As such, this bill would create unknown cost
pressures for various programs.
In regards to the energy efficiency of existing buildings, the
CEC has been updating its Building Energy Efficiency Program
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approximately every three years, with the next update to be
adopted in 2016 and with a January 1, 2017 effective date. These
updates have occurred as part of the implementation of AB 758
(Skinner) Chapter 470, Statutes of 2009. To continue this
effort, the CEC would redirect all of the resources it currently
receives to just update the plan on a continuous basis. The CEC
would then need additional funds to implement the plan, which is
estimated to be $3.5 million annually in contract funds plus
$3.7 million in workload for the CEC.
In regards to the renewable energy goal, this bill would give
the CEC new regulatory authority over POUs by allowing it to
impose penalties for noncompliance on POUs.
The CEC estimates that it would need six additional positions at
an approximate cost of $900,000 to support the collection of
additional data from the POUs for additional renewable energy
procurement and to enforce the requirements.
The CPUC additionally anticipates needing significant funds for
consultants and IT needs. For the RPS and LTPP changes required
by this bill, the CPUC estimates it will need $2.3 million
annually in contract funds for five years. In addition, the CPUC
anticipates it will have one-time proceeding cost of $471,000
annually for two years and $157,000 for the third year. Ongoing
staffing needs of $350,000 annually would be needed to oversee
the implementation of the higher RPS standards, such as
increased review of procurement contracts.
Staff notes that this bill would require that penalties for
noncompliance of RPS standards to be deposited into the electric
Program Investment Charge Fund. Under existing law, penalties
assessed by the CPUC would be deposited into the General Fund.
However, as there have never been any penalties collected for
RPS non-compliance, this change is likely to have a minor impact
on the General Fund.
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