BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 793 Hearing Date: 4/21/2015
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|Author: |Wolk |
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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: Green Tariff Shared Renewables Program
DIGEST: This bill requires an investor-owned utility (IOU)
that offers a Green Tariff Shared Renewables (GTSR) Program to
permit a participating customer to subscribe to the program and
receive a predictable bill credit and bill charge for a period
of up to 20 years. The bill also deletes a January 2019 program
sunset.
ANALYSIS:
Existing law:
1. Requires the electrical IOUs to permit customers to
subscribe to the GTSR Program until there is statewide 600
megawatts (MW) of customer participation, with each utility
responsible for its proportionate share of GTSR
participation. Statute also sets aside the following GTSR
Program components: (a) 100 MW for facilities 1 MW or less
located in areas identified by the California Environmental
Protection Agency (CalEPA) as the most impacted and
disadvantaged communities; (b) 100 MW for residential
customers; and (c) 20 MW for the City of Davis. Statute
declares the intent of the Legislature that implementation
of the GTSR Program not affect nonparticipating ratepayers.
Statue further requires the California Public Utilities
Commission (CPUC), by July 1, 2014, to issue a decision to
approve or disapprove each IOU's GTSR Program, with or
without modification. (Public Utilities Code §2831 et seq.)
The California Constitution grants CPUC authority to fix
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rates charged by public utilities under its jurisdiction.
(Article XII, Section 6, California Constitution.)
2. 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).
(Public Utilities Code §399.11 et seq.)
This bill requires an IOU to allow a customer participating in
its GTSR Program to subscribe to the program and receive a
predictable bill credit and bill charge for a period of up to 20
years.
Background
Growing Demand for Access to Renewable Energy . Distributed
electricity generation is not for everyone. For example, not
every home or business can install solar panels on its roof, for
a variety of reasons - structural limitations, directional
alignment and ownership limitations, to name a few. Yet, as the
state's distributed generation incentives - such as the
California Solar Initiative (CSI) - led to increasing
installation of renewable energy resources in the close of last
decade, interest in expanding access to renewable resources
grew.
By 2012, the state's largest electrical IOUs -Pacific Gas and
Electric (PG&E), Southern California Edison (SCE), and San Diego
Gas and Electric (SDG&E) - had proposed to offer their customers
"green" options that would provide greater access to renewable
energy. Many individuals and organizations supported the
proposal that "green" energy become more available to IOU
customers.
Several parties, however, expressed criticisms and concerns with
the IOU proposals while they were under consideration at the
CPUC.
SB 43 and the Green Tariff Shared Renewables Program . In 2013,
the Legislature approved a bill - SB 43 (Wolk) - that requires
the IOUs to allow customers to subscribe to a GTSR Program,
which was to expand access to renewable energy resources to all
SB 793 (Wolk) PageC of?
ratepayers who are unable to access the benefits of onsite
generation. The IOUs were to implement the 600 MW program
proportionately. The bill also set aside portions of the
program for specific customer classes, including disadvantaged
communities, residential customers and the City of Davis, which
had operated a community solar pilot project prior to
introduction of SB 43.
The bill codified numerous findings and statements of intent.
Among those statements was that IOU ratepayers not participating
in the GTSR Program be unaffected by implementation of the
program.
The bill directs the IOUs each to submit a GTSR Program plan to
the CPUC. The bill requires the CPUC, by July 1, 2014, to issue
a decision to approve each of the plans if it determines the
plan is reasonable and meets the bill's declarations and
statements of intent. The bill also gives the CPUC the power to
modify the IOUs' GTSR Program plans.
CPUC Proposes GTSR Program Plan Decision - Limits Contracts to
One Year . On January 29 of this year, the CPUC released a
decision to approve the GTSR Program plans.<1> The CPUC
decision, in interpreting the bill, understands the bill to
require implementation of two, distinct programs: (a) a green
tariff (Green Tariff) option, in which customers may purchase
energy with a greater share of renewables, and (b) an enhanced
community renewables (ECR) option, which allows customers to
purchase renewable energy from community-based projects.
Among the decision's provisions was a discussion of customer
subscription terms for both components of the GTSR Program. As
described in the decision, the IOUs had submitted plans that
offered various subscription terms. SDG&E had proposed that
customers be able to participate with a one-year minimum
commitment or with long-term commitments of two, three, five or
10 years. PG&E proposed customers commit to a one-year
contract, moving to month-to-month participation thereafter.
SCE, in contrast, proposed month-to-month participation.
The CPUC's proposed decision, in discussing the IOUs' proposals,
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<1> A.12-01-008 et al
(http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M145/K819/1
45819809.PDF).
SB 793 (Wolk) PageD of?
declared a number of benefits to one-year GTSR Program
contracts. First, the CPUC opined, one-year contracts provide
the IOUs some certainty around program participation in the
coming year. Second, the CPUC continued, a one-year commitment
was long enough to allow participants to test the program
without being locked in to the program for a longer duration.
The proposed decisions also offered a number of drawbacks to
longer-term contracts, such as those proposed by SDG&E, calling
such contract terms "not viable." As support for its position,
CPUC noted that program rates would automatically adjust to
match changes in commodity prices; therefore, long-term
contracts provided no value as a hedge against future cost
increases.
In the end, the proposed decision requires GTSR Program (both
Green Tariff and ECR) subscription terms of one year.
Bill Requires Terms, and Predictable Credits, for Up to Twenty
Years . As described above, this bill requires the IOUs to offer
GTSR Program subscription of 20 years duration. The bill also
requires the subscriber to receive a predictable bill credit and
bill charge for a period of up to 20 years.
SB 43 requires customers participating in the GTSR Program to
receive bill credits, in large part, for the generation of a
participating eligible renewable energy resource using the class
average retail generation cost.<2> This means that the credit
is based upon the market prices of electricity, natural gas and
other factors of generation. The market prices of such factors
change frequently. Therefore, it is likely impossible to square
the requirements with the bill - predictable bill credit and
bill charge for a period of up to 20 years - with existing law.
What's more, were the IOUs to implement the provisions of this
bill, despite its inconsistency with existing law, it is likely
implementation would result in costs to nonparticipating
ratepayers, again contrary to existing law. This is because,
should retail price factors increase, the terms of the GTRS
subscription required by this bill would prevent the bill credit
from reflecting the price change. In effect, should such a
situation come to pass, nonparticipating ratepayers would
shoulder the costs of program participants. To avoid such a
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<2> Public Utilities Code Section 2833(k).
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cost shift, the author and committee may wish to amend the bill
to remove the requirement that a program participant receive a
predictable bill credit and bill charge for a period of up to 20
years; instead the bill would require a reasonably estimated
bill credit and bill charge, as determined by the CPUC, for a
period of up to 20 years.
Over So Soon ? The bill also deletes the program sunset of
January 1, 2019. The sunset would end the statutory requirement
that the IOUs offer the GTSR Program to customers.
It is not clear what has changed since passage, in 2013, of SB
43, which includes the sunset. In any case, the CPUC would be
free to continue the GTSR Program, even with the sunset in
statute. The sunset would allow also for an evaluation of the
program, which the CPUC could continue if successful and still
needed, or modify if warranted. Or, the Legislature could pass
new legislation extending the program, should it wish.
Prior/Related Legislation
SB 43 (Wolk, Chapter 88, Statutes of 2013) requires the IOUs to
offer the GTSR Program to ratepayers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
Borrego Solar
California Environmental Justice Alliance
California Solar Energy Industries Association
Environmental Defense Fund
Large-Scale Solar Association, if amended
Sierra Club California
Solar Energy Industries Association, if amended
Vote Solar
CONCERN:
Pacific Gas and Electric Company
OPPOSITION:
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Office of Ratepayer Advocates, unless amended
Southern California Edison
The Utility Reform Network, unless amended
ARGUMENTS IN SUPPORT: The author and proponents contend the
bill removes a barrier to participation in the GTSR Program by
allowing longer-term contracts and providing predictable stable
rates to those participating in it.
ARGUMENTS IN OPPOSITION: Opponents argue that the bill would
result in a cost shift to ratepayers who do not participate in
the program. SCE also objects that the bill inappropriately
prevents the CPUC from completing its work on implementing the
GTSR Program, in which the agency will resolve the question of
subscription terms.
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