BILL ANALYSIS Ó
SB 350
Page 1
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 |
| | | | |
SB 350
Page 2
| | | | |
| | |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
SB 350
Page 3
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.
SB 350
Page 4
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.
SB 350
Page 5
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:
SB 350
Page 6
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.
SB 350
Page 7
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.
SB 350
Page 8
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
SB 350
Page 9
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.
SB 350
Page 10
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