Amended in Senate April 27, 2015

Senate Bill No. 728

Introduced by Senator Morrell

(Coauthor: Senator Fuller)

February 27, 2015

An act to amend Section 399.15 of the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

SB 728, as amended, Morrell. California Renewables Portfolio Standard Program.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. The Public Utilities Act imposes various duties and responsibilities on the commission with respect to the purchase of electricity and requires the commission to review and adopt a procurement plan and a renewable energy procurement plan for each electrical corporation pursuant to the California Renewables Portfolio Standard Program (RPS program). The RPS program requires the commission to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, at specified percentages of the total kilowatthours sold to their retail end-customers during specified compliance periods. Existing law authorizes the commission to require a retail seller to procure eligible renewable energy resources in excess of the specified quantities.

This bill would require that the commission evaluate the begin delete economic impacts end delete begin insert benefits and costs to the California economy, including end insert upon low- and middle-income individuals and families begin insert and disadvantaged communities, end insert before exercise of its authority to increase the procurement of eligible renewable energy resources in excess of the specified quantities. The bill would require the commission, in performing its evaluation, to conduct duly noticed public workshops throughout the state to allow for public comment and consideration of the economic findings.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 399.15 of the Public Utilities Code is
amended to read:

399.15.  

(a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all retail sellers to procure a minimum quantity of
electricity products from eligible renewable energy resources as
a specified percentage of total kilowatthours sold to their retail
end-use customers each compliance period to achieve the targets
established under this article. For any retail seller procuring at least
14 percent of retail sales from eligible renewable energy resources
in 2010, the deficits associated with any previous renewables
portfolio standard shall not be added to any procurement
requirement pursuant to this article.

(b) The commission shall implement renewables portfolio
standard procurement requirements only as follows:

(1) Each retail seller shall procure a minimum quantity of
eligible renewable energy resources for each of the following
compliance periods:

(A) January 1, 2011, to December 31, 2013, inclusive.

(B) January 1, 2014, to December 31, 2016, inclusive.

(C) January 1, 2017, to December 31, 2020, inclusive.

(2) (A) No later than January 1, 2012, the commission shall
establish the quantity of electricity products from eligible
renewable energy resources to be procured by the retail seller for
each compliance period. These quantities shall be established in
the same manner for all retail sellers and result in the same
percentages used to establish compliance period quantities for all
retail sellers.

(B) In establishing quantities for the compliance period from
January 1, 2011, to December 31, 2013, inclusive, the commission
shall require procurement for each retail seller equal to an average
of 20 percent of retail sales. For the following compliance periods,
the quantities shall reflect reasonable progress in each of the
intervening years sufficient to ensure that the procurement of
electricity products from eligible renewable energy resources
achieves 25 percent of retail sales by December 31, 2016, and 33
percent of retail sales by December 31, 2020. The commission
shall require retail sellers to procure not less than 33 percent of
retail sales of electricity products from eligible renewable energy
resources in all subsequent years.

(C) Retail sellers shall be obligated to procure no less than the
quantities associated with all intervening years by the end of each
compliance period. Retail sellers shall not be required to
demonstrate a specific quantity of procurement for any individual
intervening year.

(3) The commission may require the procurement of eligible
renewable energy resources in excess of the quantities specified
in paragraph (2). The commission shall evaluate the begin delete economic
impacts end delete begin insert benefits and costs to the California economy, including end insert
upon low- and middle-income individuals and families begin insert and
disadvantaged communities, end insert before exercise of its authority
pursuant to this paragraph to increase the procurement of eligible
renewable energy resources. In performing its evaluation, the
commission shall conduct duly noticed public workshops
throughout the state to allow for public comment and consideration
of the economic findings. These workshops shall be completed
not less than 60 days prior to consideration by the commission of
a rule that would require procurement of eligible renewable energy
resources in excess of the quantities specified in paragraph (2).

(4) Only for purposes of establishing the renewables portfolio
standard procurement requirements of paragraph (1) and
determining the quantities pursuant to paragraph (2), the
commission shall include all electricity sold to retail customers by
the Department of Water Resources pursuant to Division 27
(commencing with Section 80000) of the Water Code in the
calculation of retail sales by an electrical corporation.

(5) The commission shall waive enforcement of this section if
it finds that the retail seller has demonstrated any of the following
conditions are beyond the control of the retail seller and will
prevent compliance:

(A) There is inadequate transmission capacity to allow for
sufficient electricity to be delivered from proposed eligible
renewable energy resource projects using the current operational
protocols of the Independent System Operator. In making its
findings relative to the existence of this condition with respect to
a retail seller that owns transmission lines, the commission shall
consider both of the following:

(i) Whether the retail seller has undertaken, in a timely fashion,
reasonable measures under its control and consistent with its
obligations under local, state, and federal laws and regulations, to
develop and construct new transmission lines or upgrades to
existing lines intended to transmit electricity generated by eligible
renewable energy resources. In determining the reasonableness of
a retail seller’s actions, the commission shall consider the retail
seller’s expectations for full-cost recovery for these transmission
lines and upgrades.

(ii) Whether the retail seller has taken all reasonable operational
measures to maximize cost-effective deliveries of electricity from
eligible renewable energy resources in advance of transmission
availability.

(B) Permitting, interconnection, or other circumstances that
delay procured eligible renewable energy resource projects, or
there is an insufficient supply of eligible renewable energy
resources available to the retail seller. In making a finding that this
condition prevents timely compliance, the commission shall
consider whether the retail seller has done all of the following:

(i) Prudently managed portfolio risks, including relying on a
sufficient number of viable projects.

(ii) Sought to develop one of the following: its own eligible
renewable energy resources, transmission to interconnect to eligible
renewable energy resources, or energy storage used to integrate
eligible renewable energy resources. This clause shall not require
an electrical corporation to pursue development of eligible
renewable energy resources pursuant to Section 399.14.

(iii) Procured an appropriate minimum margin of procurement
above the minimum procurement level necessary to comply with
the renewables portfolio standard to compensate for foreseeable
delays or insufficient supply.

(iv) Taken reasonable measures, under the control of the retail
seller, to procure cost-effective distributed generation and allowable
unbundled renewable energy credits.

(C) Unanticipated curtailment of eligible renewable energy
resources necessary to address the needs of a balancing authority.

(6) If the commission waives the compliance requirements of
this section, the commission shall establish additional reporting
requirements on the retail seller to demonstrate that all reasonable
actions under the control of the retail seller are taken in each of
the intervening years sufficient to satisfy future procurement
requirements.

(7) The commission shall not waive enforcement pursuant to
this section, unless the retail seller demonstrates that it has taken
all reasonable actions under its control, as set forth in paragraph
(5), to achieve full compliance.

(8) If a retail seller fails to procure sufficient eligible renewable
energy resources to comply with a procurement requirement
pursuant to paragraphs (1) and (2) and fails to obtain an order from
the commission waiving enforcement pursuant to paragraph (5),
the commission shall exercise its authority pursuant to Section
2113.

(9) Deficits associated with the compliance period shall not be
added to a future compliance period.

(c) The commission shall establish a limitation for each electrical
corporation on the procurement expenditures for all eligible
renewable energy resources used to comply with the renewables
portfolio standard. In establishing this limitation, the commission
shall rely on the following:

(1) The most recent renewable energy procurement plan.

(2) Procurement expenditures that approximate the expected
cost of building, owning, and operating eligible renewable energy
resources.

(3) The potential that some planned resource additions may be
delayed or canceled.

(d) In developing the limitation pursuant to subdivision (c), the
commission shall ensure all of the following:

(1) The limitation is set at a level that prevents disproportionate
rate impacts.

(2) The costs of all procurement credited toward achieving the
renewables portfolio standard are counted towards the limitation.

(3) Procurement expenditures do not include any indirect
expenses, including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, transmission
upgrades, or the costs associated with relicensing any utility-owned
hydroelectric facilities.

(e) (1) No later than January 1, 2016, the commission shall
prepare a report to the Legislature assessing whether each electrical
corporation can achieve a 33-percent renewables portfolio standard
by December 31, 2020, and maintain that level thereafter, within
the adopted cost limitations. If the commission determines that it
is necessary to change the limitation for procurement costs incurred
by any electrical corporation after that date, it may propose a
revised cap consistent with the criteria in subdivisions (c) and (d).
The proposed modifications shall take effect no earlier than January
1, 2017.

(2) Notwithstanding Section 10231.5 of the Government Code,
the requirement for submitting a report imposed under paragraph
(1) is inoperative on January 1, 2021.

(3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

(f) If the cost limitation for an electrical corporation is
insufficient to support the projected costs of meeting the
renewables portfolio standard procurement requirements, the
electrical corporation may refrain from entering into new contracts
or constructing facilities beyond the quantity that can be procured
within the limitation, unless eligible renewable energy resources
can be procured without exceeding a de minimis increase in rates,
consistent with the long-term procurement plan established for the
electrical corporation pursuant to Section 454.5.

(g) (1) The commission shall monitor the status of the cost
limitation for each electrical corporation in order to ensure
compliance with this article.

(2) If the commission determines that an electrical corporation
may exceed its cost limitation prior to achieving the renewables
portfolio standard procurement requirements, the commission shall
do both of the following within 60 days of making that
determination:

(A) Investigate and identify the reasons why the electrical
corporation may exceed its annual cost limitation.

(B) Notify the appropriate policy and fiscal committees of the
Legislature that the electrical corporation may exceed its cost
limitation, and include the reasons why the electrical corporation
may exceed its cost limitation.

(h) The establishment of a renewables portfolio standard shall
not constitute implementation by the commission of the federal
Public Utility Regulatory Policies Act of 1978 (Public Law
95-617).