BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 539|
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THIRD READING
Bill No: SB 539
Author: Hueso (D)
Amended: 4/27/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 9-0, 4/21/15
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire,
Pavley, Wolk
NO VOTE RECORDED: Fuller, Morrell
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Renewable energy resources: geothermal
SOURCE: Author
DIGEST: This bill deletes a provision of existing law that
authorizes the California Public Utilities Commission (CPUC) to
prohibit an investor-owned utility (IOU) from curtailing the
generation, production, or transmission of electricity from a
geothermal powerplant operated by the IOU.
ANALYSIS:
Existing law:
1)Grants, via the California Constitution, the CPUC authority to
fix rates charged by public utilities under its jurisdiction.
(Article XII, Section 6, California Constitution.)
2)Authorizes the CPUC, upon request of a geothermal energy
producer, to prohibit any IOU from curtailing the generation,
production, or transmission of electricity from a geothermal
powerplant operated by the IOU, if the CPUC deems that such
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curtailment is not in the public interest.
This bill deletes a provision of existing law that authorizes
the CPUC, upon a complaint by a geothermal energy producer, to
prohibit an IOU from curtailing the generation, production, or
transmission of electricity from a geothermal powerplant
operated by the IOU, if the CPUC deems that such curtailment is
not in the public interest.
Background
Geothermal energy is heat from the Earth. It is considered a
renewable resource because the heat emanating from the interior
of the Earth is practically limitless. To develop electricity
from geothermal resources, wells are drilled into a geothermal
reservoir. The wells bring the geothermal water to the surface,
where its heat energy is converted into electricity at a
geothermal power plant. Geothermal generation currently meets
approximately 25 percent of the state's renewable portfolio.
However, several contracts in the generation portfolios of
Southern California Edison and Pacific Gas & Electric will
expire in the next five years. San Diego Gas & Electric has no
geothermal in its portfolio.
Last year, the author, in response to the likely relative
decline in geothermal's role as a source of power in California,
carried a bill - SB 1139. That bill would have required
electric utilities to procure specified percentages of their
electricity from geothermal resources. In support of that bill,
the author provided the following statement to the Senate
Committee on Energy, Utilities and Communications:
California and the Western United States have uniquely high
quality solar and geothermal resources. California
utilities are dramatically increasing their utilization of
solar resources, but not effectively increasing utilization
of geothermal resources. In fact, only a fraction of the
geothermal resources that could be supplying California
consumers are currently being tapped, and there has been
very little increase in geothermal generation capacity
during the past decade?This is a wasted opportunity of such
a valuable resource. The long term electric supply
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portfolio serving California consumers should include much
greater reliance on geothermal resources so that we have a
balanced portfolio as we move toward a carbon-free
generation supply.
The bill passed the Senate but did not pass the Assembly.
The author continues his belief that California should achieve
its climate goals through greater reliance on geothermal
resources - and baseload renewable resources, in general. This
bill deletes a provision of existing law that authorizes the
CPUC, upon a complaint by a geothermal energy producer, to
prohibit an IOU from curtailing the generation, production, or
transmission of electricity from a geothermal powerplant
operated by the IOU, if the CPUC deems that such curtailment is
not in the public interest. The author reports that he, during
his efforts to promote geothermal resources, learned that (1)
this decades-old provision of law has never been used and (2) it
may violate the federal government's authority over wholesale
electricity. The author expresses concern that this provision,
seemingly protective of geothermal energy resources, may
discourage their development. This is because, according to the
author, the protection that seems to be granted to geothermal
may lead utilities to view the resource as constraining their
operational flexibility, thereby discouraging their procurement
of it.
The author is correct that the federal government retains
exclusive authority overall aspects of wholesale electricity
sales. Specifically, the Federal Power Act, 16 USC 824(b)
grants Federal Energy Regulatory Commission exclusive
jurisdiction over the "transmission of electric energy in
interstate commerce," and over the "sale of electric energy at
wholesale in interstate commerce," and over "all facilities for
such transmission or sale of electric energy." Whether the
provision the author seeks to delete hampers geothermal
development is an open question; its conflict with federal law
is not.
Prior Legislation
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SB 1139 (Hueso, 2014) would have required the IOUs and all other
retail sellers of electricity, by 2024, to procure a
proportionate share of a statewide total of 500 megawatts of
electricity generated by baseload geothermal powerplants that
began being constructed after January 1, 2015. The bill died on
the Assembly Third Reading File.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified5/5/15)
None received
OPPOSITION: (Verified5/5/15)
None received
ARGUMENTS IN SUPPORT: According to the author, existing law,
while seemingly protective of geothermal resources, may actually
make their procurement less likely. California should remove
unnecessary barriers to ensure geothermal plays a greater role
in achievement of the state's renewable energy and climate
change goals.
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
5/6/15 16:16:27
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