BILL ANALYSIS Ó
SB 350
Page A
(Without Reference to File)
SENATE THIRD READING
SB
350 (De León)
As Amended September 10, 2015
Majority vote
SENATE VOTE: 24-14
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Utilities |9-5 |Rendon, Bonilla, |Patterson, |
| | |Burke, Eggman, |Achadjian, Hadley, |
| | |Cristina Garcia, |Roger Hernández, |
| | |Quirk, Santiago, |Obernolte |
| | |Ting, Williams | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Natural |6-2 |Williams, Cristina |Hadley, Harper |
|Resources | |Garcia, McCarty, | |
| | |Rendon, Mark Stone, | |
| | |Wood | |
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| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Natural |5-2 |Williams, Cristina |Dahle, Harper |
|Resources | |Garcia, McCarty, | |
| | |Rendon, Mark Stone | |
| | | | |
| | | | |
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SUMMARY: Enacts the "Clean Energy and Pollution Reduction Act
of 2015" and 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. Specifically, this bill:
1)Establishes a Renewable Portfolio Standard (RPS) target of 50%
by December 31, 2030, and thereafter, for retail sellers and
publicly-owned utilities (POUs), including interim targets of
40% by the end of the 2021 to 2024 compliance period, 45% by
the end of the 2025 to 2027 compliance period, and 50% by the
end of the 2028 to 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.
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3)Requires the California Public Utilities Commission (CPUC) to
direct each investor-owned utility (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, and
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 CPUC 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.
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 community choice aggregators
(CCAs) or energy service providers (ESPs), and requires the
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CPUC 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 California Energy Commission (CEC) to adopt an
update to the AB 758 [(Skinner), Chapter 470, Statutes of
2009] 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 CPUC to authorize energy efficiency programs
to meet the 50% energy efficiency goal.
g) Specifies CPUC energy efficiency procurement and
reporting requirements.
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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, 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 Air Resources Board (ARB) to identify and adopt
appropriate policies to remove regulatory disincentives
facing retail sellers from facilitating the achievement of
greenhouse gas (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 CPUC, 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
quality standards, achieve the goals set forth in the
Charge Ahead California Initiative, and reduce emissions of
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GHGs to 40% below 1990 levels by 2030, and to 80% below
1990 levels by 2050. Requires the CPUC to approve programs
and investments that deploy charging infrastructure as
distribution system costs.
c) Requires the CPUC 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 CPUC 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 CPUC 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 CPUC and CEC to 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.
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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 CPUC 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.
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.
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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 CPUC to permit CCAs to submit proposals for
satisfying their portion of the renewable integration need.
13)Requires the CPUC 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 GHG emissions
reductions of 40% from 1990 levels by 2030.
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
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local communities.
g) Enhance distribution systems and demand-side energy
management.
h) Minimize localized air pollutants and other 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 CPUC, 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
system located in California constitutes a public works
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project, subjecting these projects to prevailing wage.
EXISTING LAW:
1)Directs the CEC to continually assess energy consumption
trends and to analyze the social, economic, and environmental
consequences of these trends; carry out energy conservation
measures; and recommend to the Governor and the Legislature
new and expanded energy conservation measures. (Public
Resources Code Section 25200, et seq.)
2)Requires the 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 Section 25943, et seq.)
3)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. (Public Utilities Code Section 25710, et seq.)
4)Requires retail sellers of electricity - IOUs, CCAs, ESPs, and
POUs - 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 establishes the RPS for retail sellers and ensures
they progress in achieving it, and levies penalties for
failure. The governing board of each POU establishes its own
RPS. The CEC may issue a notice of violation against a POU
for failure to adequately progress in meeting RPS targets and
refer the POU to the ARB, which may assess penalties against
it. The RPS provides numerous cost containment provisions and
exceptions to compliance obligations. (Public Utilities Code
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Section 99.11, et seq.)
5)Requires all renewable electricity products to meet the
requirements of a "loading order" that mandates minimum and
maximum quantities of three product categories (or "buckets"),
which includes renewable resources directly connected to a
California balancing authority or provided in real time
without substitution from another energy source, energy not
connected or delivered in real time yet still delivering
electricity, and unbundled renewable energy credits (RECs).
(Public Utilities Code Section 399.16.)
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
this bill.
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 $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.
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5)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)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.
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I envision a wide range of initiatives: more
distributed 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)Regional energy market. This bill sets in motion a process
for allowing the California ISO to expand its wholesale
electricity market programs to include out-of-state
transmission owners. While there may be benefits to
regionalizing the wholesale electricity market, there are a
number of issues that are not understood about this effort,
specifically:
a) How will this affect California's efforts to expand
energy efficiency, demand response, and distributed
generation if the wholesale market operator projects and
determines that electricity, reliability, or other services
shall be fulfilled through transmission and generation
projects?
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b) How will this affect other Balancing Authorities
operating in California with respect to having equal access
and address interactions between participants and
non-participants in the new market?
c) How will transmission costs be allocated to ensure that
California ratepayers do not bear a disproportionate
burden?
d) How will California's greenhouse gas goals be honored?
2)Integrated Resource Planning. According to a recent survey<1>
by Lawrence Berkeley Labs of the utilities in the Western
States, the IRP they have prepared are done inconsistently.
All utilities in the Western State have formal IRP reporting
processes, except for California, which has a Long Term
Procurement Planning Process. One issue that was raised in
this study is that there are significant data inconsistencies
between IRPs. One issue discovered in this survey is that
load-serving entities "rarely reported additions (or
improvements) to transmission interconnections, fuel delivery
systems, and energy storage facilities. Furthermore, there are
numerous examples of resource plans that do not provide
sufficient clarity on units of measurement related to
important risks (e.g., short tons vs. long tons of GHGs;
carbon price vs. CO2e price; hub vs. delivered natural gas
price)."
The CPUC may need to ensure that all of the IRPs that are
prepared pursuant to this new statute are done consistently
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<1>
http://emp.lbl.gov/sites/all/files/lbnl-6545e.pdf
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and in coordination with POUs to ensure that the results of
the effort are usable.
Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083
FN: 0002409