BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 728 (Morrell) - California Renewables Portfolio Standard
Program
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|Version: April 27, 2015 |Policy Vote: E., U., & C. 10 - |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 4, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 728 would require the California Public Utilities
Commission (CPUC) to evaluate the economic costs and benefits to
the California economy before it raises the renewable energy
procurement requirements beyond 33 percent.
Fiscal
Impact:
One-time costs of $600,000 to $800,000 over two years and
potential ongoing costs of $100,000 thereafter from the Public
Utilities Reimbursement Account (special) to contract out an
economic analysis.
Annual costs of $360,000 for at least two years, and
potentially ongoing, from the Public Utilities Reimbursement
Account (special) to the CPUC for proceeding costs.
SB 728 (Morrell) Page 1 of
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Background: Existing law requires all 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 is
explicitly authorized 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.)
Proposed Law:
This bill would require the CPUC to evaluate the economic
costs and benefits to the California economy, including to low-
and middle-income families, before it exercises its authority to
raise the renewable energy procurement requirements beyond 33
percent.
Related
Legislation: AB 327 (Perea) Chapter 611, Statutes of 2013
specified that the CPUC has the authority to raise the RPS
standard above 33 percent.
Staff
Comments: This bill would require the CPUC to do a
macro-economic analysis, an analysis which they currently do not
do for RPS or any other issue. As they have no internal
capacity, they would contract out the analysis. The CPUC
estimates that the contract would cost between $600,000 and
$800,000 to develop the methodology and to vet the analysis with
stakeholders. Staff notes that these contract costs seem in line
with contracts made the Air Resources Board (ARB) for the
economic analysis of the AB 32 scoping plans, which cost
approximately $500,000 with the ARB handling some of the
analysis internally.
The CPUC believes that the economic analysis will increase the
complexity, and contentiousness, of the proceeding necessary to
increase the RPS procurement requirements. Thus, for increased
staffing costs for the proceeding, the CPUC anticipates needing
an additional $360,000 annually for two years.
SB 728 (Morrell) Page 2 of
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Staff notes that the bill is unclear as to whether the economic
analysis is only required the first time the RPS standard is
raised above 33% threshold or every time the RPS standard is
raised so long as the standard is greater than 33%. In other
words, the bill clearly requires an economic analysis if the RPS
standard is raised from 33% to 40%, but is ambiguous as to
whether another analysis would be required if the CPUC was
raising the standard from 40% to 50%. If the requirement is the
former, given that the current RPS program increases program
requirements in two year compliance periods, the CPUC estimates
that it would have ongoing contract costs of $100,000 annually
to update the economic analysis and its staffing costs would
become ongoing. However, if the author's intent is that the
economic analysis only be conducted for the first time the RPS
standard is raised above the 33% threshold, that intent should
be clarified to avoid ongoing these ongoing costs
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