BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 350


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          SENATE THIRD READING


          SB  
          350 (De León and Leno)


          As Amended  September 4, 2015


          Majority vote


          SENATE VOTE:  24-14


           -------------------------------------------------------------------- 
          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Utilities       |9-5  |Rendon, Bonilla,       |Patterson,           |
          |                |     |Burke, Eggman,         |Achadjian, Hadley,   |
          |                |     |Cristina Garcia,       |Roger Hernández,     |
          |                |     |Quirk, Santiago, Ting, |Obernolte            |
          |                |     |Williams               |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Natural         |6-2  |Williams, Cristina     |Hadley, Harper       |
          |Resources       |     |Garcia, McCarty,       |                     |
          |                |     |Rendon, Mark Stone,    |                     |
          |                |     |Wood                   |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Appropriations  |12-5 |Gomez, Bloom, Bonta,   |Bigelow, Chang,      |
          |                |     |Calderon, Nazarian,    |Gallagher, Jones,    |
          |                |     |Eggman,                |Wagner               |
          |                |     |                       |                     |








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          |                |     |                       |                     |
          |                |     |Eduardo Garcia,        |                     |
          |                |     |Holden, Quirk, Rendon, |                     |
          |                |     |Weber, Wood            |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
           -------------------------------------------------------------------- 


          SUMMARY:  This bill establishes the Clean Energy and Pollution  
          Reduction Act of 2015 to direct a 50% reduction in motor vehicle  
          petroleum use, a 50% increase sales of renewable electricity,  
          and a doubling of the energy efficiency in buildings, all to be  
          achieved by 2030. Specifically, this bill: 


          The amendments make the following changes to the bill (organized  
          by subject area):


          Renewable Portfolio Standard (RPS):


          1)Applies RPS requirements to all retail sellers, including  
            community choice aggregators (CCAs) and direct access  
            providers.
          2)Allows contracts, after January 1, 2015, meeting Product  
            Content Category 1 (delivered renewable energy), of any  
            duration, to count as excess procurement.


          3)Specifies that beginning January 1, 2021, 65% of procurement  
            is to be from contracts of 10 years or more in duration.


          4)Specifies that costs shifting cannot occur between customers  
            of electrical corporations and CCAs and that the California  
            Public Utilities Commission (CPUC) shall ensure that departing  
            load does not experience cost increase as a result in an  








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            allocation of costs not incurred on behalf of or for the  
            benefit of departing load.


          5)Specifies CPUC must consider greenhouse gas (GHG) emission  
            reductions and a balanced resource mix.


          6)Adds intent language with regard to establishing a western  
            regional bulk electricity market.


          7)Specifies that electricity production used to serve onsite  
            load will reduce the retail sales of the retail seller serving  
            that customer.


          8)Specifies that beginning January 1, 2021, renewable energy  
            credits will not be created for electricity generated behind a  
            customer's meter that is used to offset onsite loads.


          9)Provides that for publicly-owned utilities (POUs) it may  
            exclude, from total retail sales, generation that is produced  
            through a voluntary green pricing or shared renewable  
            generation program.  Prohibits use of any renewable energy  
            credits associated with electricity credited to a customer to  
            be counted toward procurement requirements.


          10)Allows compliance flexibility for those POUs that satisfy 50%  
            or more of their retail sales from specified, large  
            hydroelectric power.


          11)Makes accommodations for publicly owned utilities that have  
            coal contracts, entered into prior to June 1, 2010, in their  
            electricity resource mix.









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          Transportation electrification and freight efficiency: 


          1)Transportation Electrification:  makes clarifying amendments.


          2)Freight efficiency:  directs the Air Resources Board (ARB) to  
            develop a plan to improve freight efficiency, and increase  
            competitiveness of California's freight system.


          3)Various clarifying amendments.


          Energy Efficiency:


          1)Applies goal to achieve a cumulative doubling of energy  
            efficiency savings to all customers rather than only existing  
            buildings.


          2)Defines energy savings and end uses.


          3)Directs California Energy Commission (CEC) to specify energy  
            efficiency targets to meet the goal, and specifies programs  
            that may be used to achieve the goal.


          4)Specifies how the goals will be measured and counted; makes  
            clarifying changes.


          5)Requires assessments of the effects of energy efficiency on  
            electricity demand statewide and locally, hourly, and  
            seasonally.









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          6)Directs the CPUC to authorize energy efficiency programs to  
            meet the 50% energy efficiency goal.


          7)Specifies CPUC energy efficiency procurement and reporting  
            requirements.


          8)Directs POUs to meet the energy efficiency targets specified  
            by the CEC.


          9)Directs the CEC to establish consumer protection guidelines  
            for energy efficiency products, and directs the CEC to promote  
            greater project penetration in disadvantaged communities, and  
            to use workforce development and job training for residents in  
            disadvantaged communities.


          10)Directs the CEC to evaluate "negative therm interaction"  
            effects generated as a result of electricity efficiency  
            improvements.


          Studies on barriers for low-income customers to access solar  
          photovoltaics, energy efficiency, and zero-emission/near  
          zero-emission vehicles.  Makes findings and declarations, and  
          requires the CEC to prepare studies on barriers to implementing  
          solar photovoltaic generation and access to other renewable  
          energy and energy efficiency for low-income customers.  Directs  
          the ARB to publish a study on barriers for low-income customers  
          to zero-emission and near zero-emission vehicles.  All studies  
          are to be completed by January 1, 2017.


          Clean energy and pollution reduction:  










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          1)Modifies definition of zero onsite emissions to include "or  
            lowest feasible emissions of greenhouse gases, criteria  
            pollutant emissions, and toxic air contaminants."  
           2)Include automated demand response in a list of technologies  
            and measures that the CPUC may authorize to be procured to  
            provide grid reliability services.  


           3)Requires the CPUC to identify a diverse and balanced portfolio  
            of resources to ensure renewable integration and grid  
            reliability, and direct electrical corporations to include  
            best-fist and least-cost resources to satisfy the portfolio  
            needs identified by the CPUC.  


           4)Permits community choice aggregators (CCA) to submit proposals  
            for satisfying their own renewable integration needs, and  
            allow the CPUC to require CCAs to make these through long-term  
            commitments if specified conditions are met.  


           Reduction in petroleum use:  Specifies that the ARB shall ensure  
          updates to regional GHG emission reduction targets are  
          consistent with achieving a 50% reduction in petroleum use.


          Regional bulk electricity market:  States Legislative intent to  
          enact legislation to provide for an evolution of the Independent  
          System Operator into a regional organization where it is in the  
          best interests of California ratepayers.


          Integrated Resource Plans:


          1)Requires CEC to review integrated resource plans prepared by  
            POUs.
          2)Permits the CEC to adopt guidelines for integrated resource  
            plans. 








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          3)Requires the CPUC to adopt a process for load serving entities  
            to file an integrated resource plan and a schedule for period  
            updates to ensure that load serving entities meet GHG  
            reduction targets, procure 50% eligible renewable resources,  
            provide just and reasonable rates, minimize impacts on  
            ratepayer bills, ensure system and local reliability, enhance  
            distribution system and demand side energy management, and  
            minimize local air pollutants with priority on disadvantaged  
            communities. 


          Electricity procurement:  Adds a requirement that procurement  
          plans adopted by electrical corporations or POUs to give  
          consideration to statewide GHG limits and capacity and system  
          reliability needs to ensure grid reliability.


          Public Works:  Specifies construction, alteration, demotion,  
          installation , or repair work on the electric transmission  
          system in California is a public works project.


          Severability:  Provides that the provisions of the Act are  
          severable, and that if any provision is held invalid, it will  
          not affect the other provisions.


          FISCAL EFFECT:


          According to Assembly Appropriations Committee:


          1)Ongoing annual costs of $5.6 million for staffing and one-time  
            costs of $3.5 million in contracts (General Fund and special  
            fund) for the California Energy Commission (CEC) to implement  
            the requirements of the bill.








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          2)Ongoing annual costs of $1.65 million for personnel services  
            and $2.3 million in operating expenses (special fund) for the  
            CPUC to fulfill the requirements of the bill.


          3)Ongoing annual costs of up to $1.25 million (various special  
            funds) for the Air Resources Board (ARB) to implement the  
            petroleum reduction goal.


          4)Ongoing annual costs of up to $275,000 (various special funds)  
            for ARB to develop policies to remove regulatory disincentives  
            and facilitate GHG reductions through transportation  
            electrification.


          5)Unknown costs pressures to current programs from various  
            special funds to achieve a 50% petroleum reduction.


          6)Unknown ratepayer costs to the General Fund and various  
            special funds to the state, as an electricity user and  
            ratepayer, to the extent electricity prices are affected by  
            increasing the RPS standard.


          7)Unknown costs pressures (special fund) for the CPUC and CEC to  
            review renewable integration needs and consider grid  
            integration in RPS implementation proceedings.


          COMMENTS:


          1)Purpose.  According to the author, this bill enacts policies  
            that build on our economic growth by strengthening incentives  
            for energy efficiency and clean energy technology.  The Golden  








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            State Standards are as follows: 


             a)   50% less petroleum use; 


             b)   50% of electricity coming from renewable sources; and 


             c)   50% better efficiency in our buildings.


            The author contends these standards will send a strong signal  
            to California's businesses, and drive innovation and  
            investment, resulting in more jobs and state revenue.


            This bill codifies goals announced by the Governor in January  
            in his inaugural address.


          2)Background.  Current law requires the 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.
            The CEC is required to develop and implement a comprehensive  
            program to achieve greater energy savings in California's  
            existing residential and nonresidential building stock.


            All retail sellers of electricity - investor-owned utilities  
            (IOUs), CCAs, energy service providers (ESPs), and POUs - are  
            required to increase purchases of renewable energy such that  
            at least 33% of retail sales are procured from renewable  
            energy resources by December 31, 2020.  This is known as the  
            RPS.  The CPUC is explicitly authorized to require retail  
            sellers of electricity to procure renewable energy resources  
            in excess of the 33% RPS requirement.  The CPUC oversees RPS  
            compliance with IOUs, while the CEC oversees POUs.








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            Existing law also establishes the Electric Program Investment  
            Charge 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.


          3)Stakeholder Discussions.  The authors regularly met with the  
            numerous stakeholder groups on the detailed provisions of this  
            bill.  Topics included:  a) addressing RPS concerns of small  
            POUs; b) revisions to transportation electrification  
            provisions; c) revisions to the existing RPS framework; d)  
            ensuring the fair treatment of all retail sellers in RPS  
            enforcement; e) revising provisions within the existing RPS  
            regarding banking, and short- and long-term contracts; and f)  
            adjustments to the petroleum reduction provisions.  The  
            amendments address the issues raised by stakeholders.


          Analysis Prepared by:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:  
          0002205