BILL ANALYSIS Ó SB 1453 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1453 (De León) - As Introduced February 19, 2016 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|10 - 4 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill eliminates the ability of an electrical corporation that provides electricity service to 75,000 or fewer California customers to file a proposal with the California Public Utilities Commission (PUC) for alternative compliance with the state's greenhouse gas (GHG) emission performance standard (EPS). The bill also requires PUC to review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the state's GHG EPS and prohibits the PUC from allowing those costs to be recovered if it finds the SB 1453 Page 2 any of the following: 1)The proposed capital expenditure would materially extend the service life of the baseload generation. 2)Cost-effective alternative resources would provide superior long-term value to customers and satisfy the GHG EPS. 3)The accelerated retirement of the baseload generation unit would promote state and regional GHG emissions reduction goals. FISCAL EFFECT: Increased annual PUC administrative costs of approximately $131,000 (Utilities Reimbursement Account). COMMENTS: 1)Purpose. This bill eliminates the alternative compliance option, and requires all electrical corporations operating in California to comply with PUC's established GHG EPS. This will result in prohibiting one company, PacifiCorp, from extending or renewing contracts for coal-fired electricity. Additionally, this bill ensures costs associated with extending the life of coal-fired powerplants are not borne by ratepayers. 2)The Greenhouse Gas Emission Performance Standard. In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California. Following the SB 1453 Page 3 passage of SB 1368 (Perata), Chapter 598, Statutes of 2006, the California Energy Commission (CEC) and the PUC adopted an EPS of 1,100 pounds of carbon dioxide per megawatt-hour for baseload generation. This was, according to the agencies' calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368. The effect of the EPS was to prevent the state's retail sellers of electricity and publicly-owned utilities (POUs) from entering into new contracts, or from renewing contracts, for coal-fired generation of electricity. 3)PacifiCorp allowed alternative EPS. SB 1368 allowed an electrical corporation meeting certain criteria to file a proposal for alternative compliance with the PUC. PacifiCorp is a large electric utility serving 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately 45,000 customers in Northern California. PacifiCorp is the only electrical corporation that qualifies for the alternative compliance provisions. The rationale for PacifiCorp's special treatment is that it has a much smaller customer base over which to spread the costs of compliance than do the state's other electrical corporations. In addition, a large portion of PacifiCorp's California customers are low-income. This bill eliminates the alternative compliance option. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 SB 1453 Page 4