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 ----------------------------------------------------------------- |Author: |Morrell | |-----------+-----------------------------------------------------| |Version: |2/27/2015 As Introduced | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Jay Dickenson | | | | ----------------------------------------------------------------- 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 SB 728 (Morrell) Page 2 of ? 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 SB 728 (Morrell) Page 3 of ? 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. -- END -- SB 728 (Morrell) Page 4 of ?