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  









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          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,  
          ---------------------------
          <1> A.12-01-008 et al  
          (http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M145/K819/1 
          45819809.PDF).









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          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  



          ---------------------------
          <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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