BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 728            Hearing Date:    4/21/2015
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          |Author:    |Morrell                                              |
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          |Version:   |2/27/2015    As Introduced                           |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Jay Dickenson                                        |
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          SUBJECT: California Renewables Portfolio Standard Program

            DIGEST:    This bill requires the California Public Utilities  
          Commission (CPUC), before it exercises its authority in existing  
          law to increase renewable energy procurement requirements beyond  
          33 percent, to evaluate the economic impacts of the increase on  
          low- and middle-income individuals and families.

          ANALYSIS:
          
          Existing law requires retail sellers of electricity -  
          investor-owned utilities (IOU), community choice aggregators  
          (CCAs), and energy service providers (ESPs) - and publicly-owned  
          utilities (POU) to increase purchases of renewable energy such  
          that at least 33 percent of retail sales are procured from  
          renewable energy resources by December 31, 2020. This is known  
          as the Renewable Portfolio Standard (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 the adequately  
          progress in meeting RPS targets and refer the POU to the  
          California Air Resources Board (ARB), which may assess penalties  
          against it.  The RPS provides numerous cost containment  
          provisions and exceptions to compliance obligations.   Existing  
          law authorizes the CPUC to require retail sellers of electricity  
          to procure renewable energy resources in excess of the  
          33-percent RPS requirement. (Public Utilities Code §399.11 et  
          seq.)

          This bill requires the CPUC, before it exercises its authority  







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          in existing law to increase renewable energy procurement  
          requirements applicable to retail sellers beyond 33 percent, to  
          evaluate the economic impacts of the increase on low- and  
          middle-income individuals and families.
          




          Background
          
          Current law establishes the RPS, which requires retail sellers  
          of electricity and POUs to procure at least 33 percent of retail  
          electricity sales from renewable energy resources by the year  
          2020.  Existing law establishes a compliance schedule of  
          increasing procurement obligations and authorizes the CPUC to  
          require retail sellers to procure more than 33 percent of retail  
          electricity sales from eligible renewable energy resources. 

           Consider the Costs, and the Benefits  . This bill requires the  
          CPUC, before it exercises its authority in existing law to  
          increase renewable energy procurement requirements beyond 33  
          percent, to evaluate the economic impacts of the increase on  
          low- and middle-income individuals and families.  This seems a  
          reasonable requirement.  The statute that created the RPS  
          implicitly acknowledges that requiring retail sellers to procure  
          greater quantities of electricity from renewable resources than  
          they would otherwise procure might increase costs.  The  
          Legislature anticipated the possibility of such cost increases  
          when it considered the RPS legislation.  For this reason,  
          statute includes "off ramps" that allow retail sellers to be  
          excused from their RPS procurement obligations, should the CPUC  
          make certain findings.   Additionally, existing law requires the  
          CPUC annually to report to the Legislature on the costs of all  
          electricity procurement contracts for eligible renewable energy  
          resources.
            
          Presumably, pushing the RPS requirements beyond 33 percent  
          similarly has the potential to increase electricity costs.  It  
          makes sense that the CPUC consider the potential for such costs  
          before expanding the RPS requirements pursuant to existing  
          statutory authority. As noted above, existing law requires the  
          CPUC annually to report on costs of procurement of renewable  
          energy resources.  That report differs from this bill in that  
          the CPUC reports actual costs in the aggregate, not the  








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          potential economic impacts to specific socioeconomic subsets, as  
          does this bill.  The author and committee may wish to amend the  
          bill to require CPUC to consider the economic impacts of an  
          expanded RPS - both costs and benefits - to the California  
          economy in general, and to low- and middle-income individuals  
          and families and disadvantaged communities specifically.
          
          Prior/Related Legislation
          
          SB 836 (Padilla, Chapter 600, Statutes of 2011) requires the  
          CPUC annually to report on the costs of all electricity  
          procurement contracts for eligible renewable energy resources.

          SB 2 x1 (Simitian, Chapter 1, Statutes of 2011) requires retail  
          sellers of electricity and POUs to procure at least 33 percent  
          of their electricity from renewable resources by 2020.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            SUPPORT:  

          None received

          OPPOSITION:

          Large-Scale Solar Association
          The Utility Reform Network, unless amended

          ARGUMENTS IN SUPPORT:    The author contends it's important the  
          CPUC consider the effects of an RPS beyond the existing 33  
          percent requirement on low- and middle-income individuals and  
          families because they are particularly susceptible to cost  
          increases.
          
          ARGUMENTS IN OPPOSITION:    Opponents argue this bill is  
          redundant of existing statutory requirements that obligate the  
          CPUC to report on RPS costs and that it adds costs to the CPUC's  
          RPS-related processes.

          

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