BILL ANALYSIS Ó
SB 350
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Date of Hearing: September 10, 2015
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
SB
350 (De León) - As Proposed to be Amended
SENATE VOTE: 24-14
SUBJECT: Clean Energy and Pollution Reduction Act of 2015
SUMMARY: Enacts the "Clean Energy and Pollution Reduction Act
of 2015," which establishes targets to increase retail sales of
renewable electricity to 50% by 2030 and double the energy
efficiency savings in electricity and natural gas end uses by
2030.
EXISTING LAW:
1)The California Renewables Portfolio Standard (RPS) requires
"retail sellers" of electricity, i.e., investor-owned
utilities (IOUs), energy service providers (ESPs) and
community choice aggregators (CCAs), as well as publicly owned
utilities (POUs), to procure eligible renewable energy
resources to meet the following portfolio targets:
a) 20% on average from January 1, 2011 to December 31,
2013.
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b) 25% by December 31, 2016.
c) 33% by December 31, 2020 and each year thereafter.
2)Authorizes the Public Utilities Commission (PUC) to require
retail sellers to procure eligible renewable energy resources
in excess of these targets.
3)Provides that eligible renewable generation facilities must
use biomass, solar thermal, photovoltaic, wind, geothermal,
renewable fuel cells, small hydroelectric, digester gas,
limited non-combustion municipal solid waste conversion,
landfill gas, ocean wave, ocean thermal or tidal current.
4)Establishes "balanced portfolio" requirements for procurement
based on the following three categories of renewable energy
products:
a) Renewable energy interconnected to the grid within,
scheduled for direct delivery into, or dynamically
transferred to, a California balancing authority (i.e.,
real renewable energy supplied to the California grid,
located within or proximate to the state). Of the total
renewable energy contracts executed after June 1, 2010, the
following percentages must fall into this category:
i) At least 50% for the 2011-2013 compliance period.
ii) At least 65% for the 2014-2016 compliance period.
iii) At least 75% thereafter.
b) Renewable energy where substitute non-renewable energy
is used to provide a reliable delivery schedule into a
California balancing authority (i.e., firmed and shaped
energy where substitute energy is used to compensate for
delivery problems due to intermittent generation or
inadequate transmission capacity from a remote renewable
resource).
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c) Renewable energy products not meeting either condition
above, including unbundled renewable energy credits (RECs)
(i.e., the original source of renewable energy must be
located within the western grid, but otherwise need not be
delivered to the California grid). Of the total renewable
energy contracts executed after June 1, 2010, the following
percentages may fall into this category:
i) Not more than 25% for the 2011-2013 compliance
period.
ii) Not more than 15% for the 2014-2016 compliance
period.
iii) Not more than 10% thereafter.
5)Requires the CEC to:
a) Certify eligible renewable energy resources according to
the criteria in the statute.
b) Design and implement an accounting system to verify
compliance, to ensure that electricity generated by an
eligible renewable energy resource is counted only once for
the purpose of meeting the RPS of this state or any other
state, to certify RECs produced by eligible renewable
energy resources, and to verify retail product claims in
this state or any other state.
c) Establish a system for tracking and verifying RECs that,
through the use of independently audited data, verifies the
generation of electricity associated with each REC and
protects against multiple counting of the same REC.
6)Requires the PUC to establish a cost limit for each IOU
according to specified criteria, requires the PUC to report to
the Legislature by 2016 regarding whether IOUs can achieve 33%
within the adopted cost limit, authorizes the PUC to revise
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the cost limit once after 2016 if necessary, and authorizes
IOUs to stop procuring renewable energy beyond the cost limit,
unless additional renewable energy can be procured without
exceeding a de minimis increase in rates.
7)Permits retail sellers to take credit for compliance surpluses
by requiring the PUC to adopt "banking" rules permitting
retail sellers to apply excess procurement to subsequent
compliance periods. Prohibits banking of procurement
associated with contracts of less than 10 years, as well as
RECs and other undelivered products.
8)Excuses retail sellers from enforcement for failure to meet
targets if the retail seller demonstrates that any of the
following conditions are beyond its control and will prevent
compliance:
a) Inadequate transmission capacity for delivery of
sufficient renewable energy.
b) Permitting, interconnection or other delays for
renewable energy projects, or an insufficient supply of
available renewable energy.
c) Unanticipated curtailment of renewable energy necessary
to address the needs of a balancing authority (e.g., the
Independent System Operator).
9)Requires the CEC to establish regulations to develop and
implement a comprehensive program to achieve greater energy
savings in California's existing residential and
nonresidential building stock [AB 758 (Skinner), Chapter 470,
Statutes of 2009]. The AB 758 program is targeted at
buildings that "fall significantly below" the current Title 24
energy efficiency standards.
THIS BILL:
1)Establishes a RPS target of 50% by December 31, 2030 and
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thereafter for retail sellers and POUs, including interim
targets of 40% by the end of the 2021-2024 compliance period,
45% by the end of the 2025-2027 compliance period, and 50% by
the end of the 2028-2030 compliance period.
2)Authorizes unlimited banking of "bucket 1" resources,
regardless of contract length, beginning in 2021. Requires at
least 65% of RPS procurement be from contracts of 10 years or
more or ownership of eligible renewable energy resources.
Applies these standards uniformly to all retail sellers and
POUs.
3)Requires the PUC to direct each IOU 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.
Requires the net capacity costs of those resources to be
allocated on a fully nonbypassable basis.
4)Removes specified criteria and reporting requirement from the
RPS cost limit, instead directing the PUC to set the cost
limit at a level that prevents disproportionate rate impacts.
5)Limits the RPS eligibility of a facility engaged in the
combustion of municipal solid waste located in Stanislaus
County to energy generated before January 1, 2017.
6)Permits a POU to 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.
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7)Allows compliance flexibility for those POUs that satisfy 50%
or more of their retail sales from specified, large
hydroelectric power, as well as POUs that have coal contracts,
entered into prior to June 1, 2010, in their electricity
resource mix.
8)Specifies that costs shifting cannot occur between customers
of electrical corporations and CCAs or ESPs and requires the
PUC to ensure that departing load does not experience cost
increase as a result in an allocation of costs not incurred on
behalf of departing load.
9)Includes the following provisions in furtherance of doubling
the energy efficiency savings in electricity and natural gas
end uses by 2030:
a) Directs CEC to adopt an update to the AB 758 program, by
January 1, 2017 and every three years thereafter.
b) Defines energy savings and end uses.
c) Directs the CEC to specify energy efficiency targets to
meet the goal, and specifies programs that may be used to
achieve the goal.
d) Specifies how the goals will be measured and counted;
makes clarifying changes.
e) Requires assessments of the effects of energy efficiency
on electricity demand statewide and locally, hourly, and
seasonally.
f) Directs the PUC to authorize energy efficiency programs
to meet the 50% energy efficiency goal.
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g) Specifies PUC energy efficiency procurement and
reporting requirements.
h) Directs POUs to meet the energy efficiency targets
specified by the CEC.
i) 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.
j) Directs the CEC to evaluate "negative therm interaction"
effects generated as a result of electricity efficiency
improvements.
10)Establishes the following "transportation electrification"
provisions:
a) Requires ARB to identify and adopt appropriate policies
to remove regulatory disincentives facing retail sellers
from facilitating the achievement of GHG emission
reductions in other sectors through increased investments
in transportation electrification, including an allocation
of GHG emissions allowances to retail sellers to account
for increased emissions in the electric sector from
transportation electrification.
b) Requires the PUC, in consultation with the ARB and CEC,
to direct IOUs to propose multiyear programs and
investments to accelerate widespread transportation
electrification to reduce dependence on petroleum, meet air
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quality standards, achieve the goals set forth in the
Charge Ahead California Initiative, and reduce emissions of
greenhouse gases to 40% below 1990 levels by 2030 and to
80% below 1990 levels by 2050. Requires the PUC to approve
programs and investments that deploy charging
infrastructure as distribution system costs.
c) Requires the PUC to review data concerning current and
future electric transportation adoption rates and charging
infrastructure utilization rates no less than every three
years and prior to any further authorization to collect
additional new program costs related to transportation
electrification in ratepayer rates. If market barriers
unrelated to the investment prevent electric transportation
from adequately utilizing available charging
infrastructure, the PUC shall not permit additional
investments without adequate assurance that the investments
would not result in stranded costs recoverable from
ratepayers.
d) Establishes a new RPS compliance "offramp" for
unanticipated increases in retail sales due to
transportation electrification, if the waiver would not
result in an increase in GHG emissions. In making a
finding, the PUC must consider whether transportation
electrification significantly exceeded forecasts in that
retail seller's service territory and whether the retail
seller has taken reasonable measures to procure sufficient
resources to account for the unanticipated increases.
11)Requires the PUC and CEC to do all of the following in
furtherance of meeting the state's clean energy and pollution
reduction objectives:
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a) Take into account the use of distributed generation to
the extent that it provides economic and environmental
benefits in disadvantaged communities.
b) Take into account the opportunities to decrease costs
and increase benefits, including pollution reduction and
grid integration.
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,
cost-effective, 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, eligible renewable
energy resources, or other technologies to protect system
reliability.
d) Review technology incentive, research, development,
deployment, and market facilitation programs overseen by
the PUC and CEC and make recommendations to advance state
clean energy and pollution reduction objectives and provide
benefits to disadvantaged communities.
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.
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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 to review
and advise on programs proposed to achieve clean energy and
pollution reduction and determine whether those proposed
programs will be effective and useful in disadvantaged
communities.
12)Requires the PUC to permit community choice aggregators to
submit proposals for satisfying their portion of the renewable
integration need.
13)Requires the PUC to adopt a process for IOUs, CCAs, and ESPs
to file an integrated resource plan (IRP) to:
a) Meet the greenhouse gas emissions reduction targets
established by the ARB for the electricity sector and each
load-serving entity that reflect the electricity sector's
percentage in achieving economy-wide greenhouse gas
emissions reductions of 40% from 1990 levels by 2030.
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b) Procure at least 50% eligible renewable energy resources
by December 31, 2030, consistent with the RPS.
c) Enable each IOU 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.
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h) Minimize localized air pollutants and other greenhouse
gas (GHG) emissions.
14)Requires POUs to adopt IRPs according to similar standards,
subject to review by the CEC.
15)Requires the California Independent System Operator (ISO) to
prepare proposed governance modifications to facilitate the
transformation of the ISO into a regional organization,
requires the ISO to study specified issues, the PUC, CEC and
ARB to hold a joint workshop to review the ISO's proposed
modifications, and provides that the proposed governance
modifications do not take effect unless the Legislature enacts
a statute implementing them.
16)Requires the CEC to study barriers for low-income customers
to access solar photovoltaic, other renewable energy, energy
efficiency, and weatherization investments.
17)Requires ARB to study barriers for low-income customers to
access zero-emission and near zero-emission transportation
options.
18)Amends the public works provision of the Labor Code to
specify that construction, alteration, demolition,
installation, or repair work on the electric transmission
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system located in California constitutes a public works
project, subjecting these projects to prevailing wage.
FISCAL EFFECT: According to the 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 (GF) and
special fund] for the CEC to implement the requirements of the
bill.
2)Ongoing annual costs of $1.65 million for personnel services
and $2.3 million in operating expenses (special fund) for the
PUC to fulfill the requirements of the bill.
3)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.
4)Unknown ratepayer costs to the GF 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.
5)Unknown costs pressures (special fund) for the PUC and CEC to
review renewable integration needs and consider grid
integration in RPS implementation proceedings.
COMMENTS:
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1)Governor's goals. In his January 5, 2015 Inaugural Address,
Governor Brown announced the following "objectives for 2030
and beyond":
Toward that end, I propose three ambitious goals to be
accomplished within the next 15 years:
Increase from one-third to 50% our electricity
derived from renewable sources;
Reduce today's petroleum use in cars and
trucks by up to 50%; and,
Double the efficiency of existing buildings
and make heating fuels cleaner.
We must also reduce the relentless release of methane,
black carbon and other potent pollutants across industries.
And we must manage farm and rangelands, forests and
wetlands so they can store carbon. All of this is a very
tall order. It means that we continue to transform our
electrical grid, our transportation system and even our
communities.
I envision a wide range of initiatives: more distributed
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power, expanded rooftop solar, micro-grids, an energy
imbalance market, battery storage, the full integration of
information technology and electrical distribution and
millions of electric and low-carbon vehicles. How we
achieve these goals and at what pace will take great
thought and imagination mixed with pragmatic caution. It
will require enormous innovation, research and investment.
And we will need active collaboration at every stage with
our scientists, engineers, entrepreneurs, businesses and
officials at all levels.
Taking significant amounts of carbon out of our economy
without harming its vibrancy is exactly the sort of
challenge at which California excels. This is exciting, it
is bold and it is absolutely necessary if we are to have
any chance of stopping potentially catastrophic changes to
our climate system.
1)RPS. The RPS is the centerpiece of California's effort to
develop a clean energy system and reduce pollution and GHG
emissions associated with electricity consumption. The
original RPS bill, SB 1078 (Sher), Chapter 516, Statutes of
2002, set a goal of 20% by 2017. SB 107 (Simitian), Chapter
464, Statutes of 2006, accelerated the deadline for 20% to
2010. SBX1 2 (Simitian), Chapter 1, Statutes of 2011-12 First
Extraordinary Session, codified the current 33% by 2020 RPS
target and also established product content categories (or
"buckets"), which place the highest value (Bucket 1) on
renewable energy that is directly delivered into California
because it has the greatest economic, environmental and
reliability benefits.
Since the RPS was enacted, IOUs have advanced beyond their
2002 average starting point of 12% renewables. According to
the PUC's RPS reports, IOUs' actual RPS procurement in 2013
was 23.8% for Pacific Gas and Electric (PG&E), 21.6% for
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Southern California Edison (SCE), and 23.6% for San Diego Gas
& Electric (SDG&E). The PUC reports also show that the IOUs
are on track to meet the RPS requirement of 25% renewables by
2016 and are well-positioned to meet the 33% requirement by
2020. RPS procurement currently under contract for 2020 is
31.3% for PG&E, 23.5% for SCE, and 38.8% for SDG&E.
REGISTERED SUPPORT / OPPOSITION:
Support
Calpine Corporation
Insurance Commissioner Dave Jones
Los Angeles County Board of Supervisors
Prior version:
American Academy of Pediatrics - California
American Cancer Society Cancer Action Network, California
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American Lung Association in California
Asthma Coalition of Los Angeles County
Audubon California
Autodesk
Baz Allergy, Asthma and Sinus Center
Ben & Jerry's
Bonnie J. Adario Lung Cancer Foundation
BOSCH
Breathe California
Business for Innovative Climate & Energy Policy
CALSTART
California Association of Electrical Workers
California Biodiesel Alliance
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California Black Health Network
California Catholic Conference
California Conference of Directors of Environmental Health
California Energy Efficiency Industry Council
California League of Conservation Voters
California Energy Storage Alliance
California Nurses Association
California Pan Ethnic Health Network
California Public Health Association - North
California State Pipe Trades Council
California Thoracic Society
California Voices for Progress
Californians Against Waste
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Center for Climate Change and Health; Public Health Institute
Central California Asthma Collaborative
Ceres
ChargePoint
Clean Tech San Diego
Clean Power Campaign
Clean Water Action
Climate Action
Climate Parents
Climate Ready Solutions
Coalition for Clean Air
Coalition of California Utility Employees
Coastal Environmental Rights Foundation
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Code REDD
Consumer Attorneys of California
Consumers Union
Dignity Health
Doctors for Climate Health
Eagle Creek
Environment California
Environmental Defense Fund
Gaia Development Services
Gap
Green Star Solution
Health Care Without Harm
Iberdrola Renewables
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Large-Scale Solar Association
Levi Strauss & Co.
Medical Advocates for Healthy Air
Mercury Press International
Mountain Rider's Alliance
National Parks Conservation Association
Natural Resources Defense Council
New Moon Girl Media
Nextgen Climate
North Face
Pacific Forest Trust
Physicians for Social Responsibility - Los Angeles
Physicians for Social Responsibility - San Francisco Bay Area
Chapter
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Planning and Conservation League
Proof Lab Surf Shop
Public Health Institute
Quest
Refill Shoppe
Regional Asthma Management and Prevention (RAMP)
Rio Theater
San Francisco Asthma Task Force
Santa Clara County Medical Society
Sierra Business Council
Sierra Club California
Sirius Mac Solutions
SmartWool
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Sonoma County Asthma Coalition
Solar Energy Industries Association
South Coast Air Quality Management District
State Building and Construction Trades Council of California
Sungevity
Thinkshift Communications
Transform
Trust for Public Lands
U.S. Green Building Council
Union of Concerned Scientists
Voices for Progress
West Marin Environmental Action Committee
Western States Sheet Metal Workers
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31 individuals
Opposition
California Manufacturers & Technology Association
CalTax
(prior version)
Agricultural Council of California
American Alliance Authority & Compliance
American Alliance Drug Testing
Associated Builders and Contractors of California
Associated General Contractors
Building Owners and Managers Association
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California Association of Nurseries and Garden Centers
California Business Properties Association
California Chamber of Commerce
California Concrete Bumpers Alliance
California Construction Trucking Association
California Cotton Ginners Association
California Cotton Growers Association
California Dairies
California Farm Bureau Federation
California Fresh Fruit Association
California Independent Oil Marketers Association
California Independent Petroleum Association
California Metals Coalition
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California Retailers Association
Chemical Industry Council of California
Coalition of American-Latino Truckers
Family Business Association
Far West Equipment Dealers Association
Food 4 Less/Rancho San Miguel
Foster Farms
Fullerton Chamber of Commerce
Harris Farms
Heavy Haul Conference
Industrial Environmental Association
International Council of Shopping Centers
Kern County Board of Supervisors
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NAOIP - Commercial Real Estate Development Association
National Federation of Independent Business
National Tank Truck Carriers
Orange County Business Council
San Joaquin County Hispanic Chamber of Commerce
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Torrance Chamber of Commerce
United
Valley Industry and Commerce Association (VICA)
West Coast Lumber and Building Material Association
Western Aerosol Information Bureau
Western Agricultural Processors Association
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Western Growers Association
Western Plant Health Association
Western States Petroleum Association
Western Trucking Alliance
Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)
319-2092