BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1453


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          SENATE THIRD READING


          SB  
          1453 (De León)


          As Introduced  February 19, 2016


          Majority vote


          SENATE VOTE:  26-10


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Utilities &     |10-4 |Gatto, Burke, Eggman, |Patterson, Chávez,  |
          |Commerce        |     |                      |Dahle, Obernolte    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Roger Hernández,      |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Ting, Williams        |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |14-6 |Gonzalez, Bloom,      |Bigelow, Chang,     |
          |                |     |Bonilla, Bonta,       |Gallagher, Jones,   |








                                                                    SB 1453


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          |                |     |Calderon, Daly,       |Obernolte, Wagner   |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood, Chau     |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  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 (CPUC) for alternative compliance with the  
          state's greenhouse gas (GHG) emission performance standard  
          (EPS).  Requires the CPUC 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  
          CPUC from allowing those costs to be recovered if it finds the  
          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:  According to the Assembly Appropriations  
          Committee, increased annual CPUC administrative costs of  
          approximately $131,000 (Utilities Reimbursement Account). 


          COMMENTS:








                                                                    SB 1453


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          1)Purpose.  This bill eliminates the alternative compliance  
            option, and requires all electrical corporations operating in  
            California to comply with CPUC'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  
            passage of SB 1368 (Perata), Chapter 598, Statutes of 2006,  
            the California Energy Commission (CEC) and the CPUC 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 CPUC.  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  








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            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:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:   
          0003847