BILL ANALYSIS                                                                                                                                                                                                             1
         1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 64 -  Krekorian/Bass                           Hearing Date:   
          June 30, 2009                   A
          As Amended:         June 23, 2009            FISCAL       B
                                                                        
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                                      DESCRIPTION
           
          33% RPS
           Current law  requires investor-owned utilities (IOUs) and energy  
          service providers (ESPs) (also defined as retail sellers) to  
          increase their existing purchases of renewable energy by 1  
          percent of sales per year such that 20 percent of their retail  
          sales, as measured by usage, are procured from eligible renewable  
          resources by December 31, 2010.  This is known as the Renewable  
          Portfolio Standard (RPS).  

           Current law  exempts publicly owned utilities (POUs) from the RPS  
          program and instead requires these utilities to implement and  
          enforce their own renewable energy purchase programs that  
          recognize the intent of the Legislature to encourage increasing  
          use of renewable resources.

           This bill  requires IOUs, POUs and ESPs to increase purchases of  
          renewable energy such that at least 23 percent of electricity  
          delivered to retail customers is from a renewable energy resource  
          by 2014; 27 percent by 2017; and 33 percent by 2020.   IOUs and  
          ESPs would still be required to meet the 20 percent by 2010  
          mandate.  A new firm requirement of 20 percent by 2010 would be  
          required of the POUs.

           This bill  generally requires that the IOUs follow existing  
          planning, procurement, and cost containment laws (PUC Sections  
          399.11 et seq) until each IOU reaches its 20 percent RPS goal, at  
          which time new provisions would trigger (proposed PUC Sections  
          950 et seq).

          Cost Containment
           Current law  requires the CPUC to develop, by rulemaking, a  











         procurement process for renewable resources by IOUs which  
         includes the determination of a benchmark for the market price  
         (market price referent or MPR) of electric generation against  
         which renewable contracts are evaluated for reasonableness in  
         price.  If the generation costs of those contracts exceed the MPR  
         those costs are collectively measured against specified  
         thresholds which if exceeded relieve the IOU's of contracting for  
         additional renewable generation at costs above the MPR (aka cost  
         cap).

          This bill  modifies the calculation of the MPR, now cast as the  
         "benchmark price," to also include the value of reducing  
         emissions of greenhouses gases and the value of increasing the  
         diversity of electricity generation.  This bill prohibits the  
         CPUC from presuming an RPS contract is reasonable if its cost is  
         less than the benchmark price and is the sole basis for  
         determining whether a contract is just and reasonable.

          This bill  suspends a retail seller's obligation to procure  
         renewable resources if the costs of contracts above the benchmark  
         price collectively exceed 5 percent of the retail sellers "total  
         system annual revenue requirements."  Procurement above benchmark  
         prices could continue at the option the retail seller subject to  
         CPUC approval.

         Delivery/RECs
          Current law  requires renewable resources to be generated in, or  
         delivered to, the California grid.

          This bill defines delivery and delivered to mean that electricity  
         from a renewable resource is used to serve California customers  
         or is simultaneously scheduled to meet anticipated in-state load.

          Current law  defines electric generation resources that are  
         eligible to be counted toward the 20 percent RPS mandate.

          This bill  defines an eligible renewable resource to include an  
         unlimited number of renewable energy credits for resources if  
         procured prior to January 1, 2010 and were previously determined  
         as eligible by the California Energy Commission (CEC).

         Enforcement
          Current law  requires the CPUC to assess penalties on a retail  
         seller which fails to reach its RPS obligations but allows waiver  










          of the penalties under certain conditions.

           This bill  permits the CPUC to waive compliance penalties if it  
          determines that the retail seller has made a reasonable effort to  
          meets its RPS obligations or has made investments in energy  
          efficiency that have resulted in significantly less demand for  
          electricity.

          Miscellaneous
           This bill  directs the CPUC to provide a preference to contracts  
          for eligible renewable resources for California Suppliers.

           This bill  requires the CPUC to report to the Legislature every  
          two years on the status and progress of achieving the 33 percent  
          RPS.

           This bill  directs the CEC to implement the RPS law so that it is  
          compatible with and does not preclude the installation of 4,000  
          MW electrical generation from combined heat and power systems

          POUs
           This bill  requires POUs to adopt a program to procure 33 percent  
          of retail electric sales from renewable resources and to disclose  
          to the public and the CEC when it will deliberate its RPS  
          procurement plan, its status and further plans under specified  
          timelines and with specified details.  An additional annual  
          report is required to its customers and the CEC on the  
          expenditures, resource mix and progress toward meeting the RPS.

           This bill  suspends the requirement of a POU to procure additional  
          renewable resources in any 3-year period that the POU's costs  
          exceed its total system annual revenue requirements.

           This bill  exempts the Trinity Public Utility District from  
          compliance with the RPS and makes specific accommodations for the  
          Truckee Donner Public Utility District.

           This bill  directs the CEC, if it determines that a POU has failed  
          to comply with the RPS, to refer a POU to the California Air  
          Resources Board (CARB) so that it may impose penalties for  
          failure to comply. 

          Transmission/Siting
           This bill  creates the Energy Planning and Infrastructure  










         Coordinating Committee (EPIC) comprised of the President of the  
         CPUC, Chair of the CEC, Secretaries of the Environmental  
         Protection and Resources agencies, and Chair of the Independent  
         System Operator (ISO) as voting members and other specified  
         nonvoting members.  Its charge would be to develop a strategic  
         plan to meet the RPS goals of the bill.

          Current law  charges the CEC with siting authority for all thermal  
         power plants with a capacity of 50 megawatts (MW) or more.

          This bill  expands the authority of the CEC to site renewable  
         energy resource plants of 5 MW or more which would include wind,  
         solar technologies, geothermal, biomass, and others. 

          Current law  requires a certificate of public convenience and  
         necessity (CPCN) from the CPUC to construct a transmission line.

          This bill  requires the CPUC to approve an application for a CPCN  
         for a line that will facilitate the transmission of renewable  
         generation within one year of the filing of a completed CPCN.   
         The CPUC could also accept a determination of need from the ISO  
         as a rebuttable presumption with concurrence by the Division of  
         Ratepayer Advocates.
          
                                     BACKGROUND
          
         In 2002 legislation was enacted to require the IOUs (e.g. Pacific  
         Gas & Electric, Southern California Edison, San Diego Gas and  
         Electric Company) and the private companies that compete with the  
         utilities to increase their annual purchases of electricity from  
         renewable resources by at least 1 percent so that 20 percent of  
         their sales would come from renewable sources by 2017.  In 2006  
         legislation was enacted to accelerate the 20 percent requirement  
         to the end of 2010 (SB 107, Simitian).  

         The RPS program does not require renewable energy purchases  
         irrespective of cost.  Each contract for the development and  
         purchase of renewable energy is submitted to the CPUC for review.  
          Any contract below the market price is deemed per se reasonable.  
          Any contract above the market price is submitted to a  
         procurement review group to consider the reasonableness of costs.  
          To address the overall costs of the RPS, an above-market cost  
         cap was determined for each IOU.  If the IOUs costs reach that  
         cap in any given year, then the requirement for additional  










          renewable energy purchases at above-market costs is waived.   
          However, an IOU can still, voluntarily, propose to procure  
          renewable resources at above-market prices outside of the cost  
          cap (referred to as bi-lateral contracts) which calls into  
          question whether a cost cap really exists.  The cost cap has not  
          been triggered and the IOUs continue to pursue renewable  
          contracts to meet the 2010 goal.

          Since the initial adoption of the RPS program, the necessity of  
          bringing more renewable resources to the grid has been heightened  
          as a result of the mandate that the state reduce its greenhouse  
          gas (GHG) emissions to 1990 levels by 2020.  In fact the CARB  
          scoping plan adopts a statewide 33 percent by 2020 renewable  
          energy mix in order to achieve the GHG goals. 

           Progress toward 2010 goal  - The CPUC reports that, for 2007, the  
          IOUs have achieved varying levels of progress toward the 20  
          percent goal: PG&E - 11.4%; SCE - 15.7%; SDG&E - 5.2%.  The  
          numbers actually declined from 2006 due primarily to load growth.  
           All agencies and stakeholders agree that the IOUs will not meet  
          the 2010 deadline.  However, the CPUC reported in October, 2008  
          that an evaluation of the IOUs progress, including generation  
          developed and contracted for, would result in compliance in or  
          around 2013.
           
          How much do we need?  - The CPUC also reported that 31,000  
          gigawatt hours (GWh) of renewable generation is in existence  
          today.  An additional 29,000 GWh is necessary to reach the 20  
          percent RPS goal for a total of 60,000 GWh.  To reach 33 percent  
          an additional 41,000 GWh would be needed for a total of 101,000  
          GWh.  Is it available?  Yes.  The Phase 1B Report of the Regional  
          Energy Transmission Initiative indicates that more than 208,000  
          GWh of "cost-effective large scale" renewable resources are  
          available in concentrated areas (identified as Competitive  
          Renewable Energy Zones [CREZ]) within the State of California and  
          immediately adjacent areas in bordering states, thus identifying  
          resource areas to bring renewable resources far in excess of  
          California needs.  

           Implementation of RPS  - This month the CPUC released preliminary  
          results on analyzing the feasibility and costs of advancing the  
          RPS targets from 20 percent to 33 percent by 2020. According to  
          the report, "achieving 33% RPS by the year 2020 is highly  
          ambitious, given the magnitude of the infrastructure buildout  










         required."  The report also looked at the costs of achieving a 33  
         percent RPS.  Under the CPUC's analysis, the incremental cost of  
         moving from the current 20 percent RPS mandate to a 33 percent  
         RPS would result in a 7.1 percent increase in utility costs. The  
         increased cost include the costs of more expensive generation  
         resources, new transmission, and other resources that will be  
         needed to provide back up generation when renewable electricity  
         is not available.  The cost increases assumes the utility will  
         continue the same balance of renewable technologies that they are  
         perusing today, which includes a large reliance on wind and solar  
         energy.  The cost increases also assume the direct costs of  
         building new renewable facilities remains unchanged over time and  
         do not take into account potential decreases in technology costs  
         overtime. 

          Siting New Generation  - It is important to recognize that the  
         scale of renewable development being pursued by California is  
         unprecedented.  It is more aggressive than any other state in the  
         union and perhaps the world.  To put this into context, the  
         committee is aware of only two significantly sized, concentrated  
         solar thermal energy sources in the country - Southern California  
         Edison's 640 MW SEGS units which came on line in the late 1980s  
         and the Nevada Solar One unit near Boulder City, Nevada at 64 MW  
         which came on line in 2007.  The CEC now has six solar thermal  
         projects in permitting totaling more than 2,500 MW and impacting  
         more than 21,000 acres of land.  The CEC is in uncharted  
         territory.  The demands of staff, careful agency coordination  
         (e.g. State Department of Fish & Game, Federal Bureau of Land  
         Management, and Department of Defense), CEQA implications and  
         other planning challenges are only just now coming to the fore.

          The RETI  - The Renewable Energy Transmission Initiative (RETI) is  
         a statewide initiative to help identify the transmission projects  
         needed to accommodate these renewable energy goals, support  
         future energy policy, and facilitate transmission corridor  
         designation and transmission and generation siting and  
         permitting. RETI is intended to be an open and transparent  
         collaborative process in which all interested parties are  
         encouraged to participate. 

         RETI has assessed all competitive renewable energy zones in  
         California and some in neighboring states that can provide  
         significant electricity to California consumers by the year 2020.  
         RETI has also identified those zones that can be developed in the  










          most cost effective and environmentally benign manner and will  
          prepare detailed transmission plans for those zones identified  
          for development. 

          The RETI effort is supervised by a coordinating committee  
          comprised of California entities responsible for ensuring the  
          implementation of the state's renewable energy policies and  
          development of electric infrastructure, namely: 

                 California Public Utilities Commission
                 California Energy Commission
                 California Independent System Operator
                 Publicly-Owned Utilities (SCPPA, SMUD, and NCPA) 

           Transmission Progress  - Three new transmission lines have been  
          approved for California or are nearing approval - Tehachapi,  
          Sunrise, Devers-Palo Verde 2.  The CPUC's October 2008 RPS status  
          report indicates that two new transmission lines are necessary to  
          meet the 20 percent goal.  An additional five lines would be  
          needed to achieve 33 percent by 2020.

                                        COMMENTS
           
              1.   Cost Containment (IOUs)  - The current above above-market  
               cost of renewable electricity is determined by the CPUC  
               based on forecasts of the estimated cost of running a  
               natural gas fired power plant plus the cost of carbon  
               emissions from a natural gas facility.  The market price is  
               referred to as the market price referent (MPR) and it allows  
               the cost of an RPS contract to be measured against the MPR  
               to show the incremental costs of renewable resources also  
               referred to as the above market costs.

               This bill eliminates the MPR and directs the CPUC to develop  
               a "benchmark price" for renewable generation based on  
               specified elements, none of which relate to the costs of a  
               new natural gas plant, and all of which relate to the price  
               of fixed contracts in existence for renewable generation.   
               The benchmark price proposed in this bill is not used to  
               measure the reasonableness of an RPS contract and in fact is  
               prohibited.  

               If cost containment is the goal, then the problem with the  
               new benchmark price is that it effectively establishes a  










              green rate for new RPS contracts and eliminates any  
              connection between the market costs of new traditional  
              generation and new renewable generation instead comparing  
              the price of renewable contracts previously consummated, but  
              not necessarily online, and a new renewable contract. 

              Under this structure, if the cost of an RPS contract comes  
              in higher than the benchmark price then the difference  
              between the two is counted as an "above-market cost."  The  
              above market costs are aggregated and when those costs reach  
              more than five percent of the annual revenue requirement  
              (which is defined) of an IOU, the obligation to procure  
              renewable electricity is suspended.  It is not clear by the  
              terms of the bill whether the cost cap is an annual amount  
              or a one-time calculation meant to last until the 33 percent  
              target is reached.  

              The result is not the tracking of true above market costs  
              but the tracking of the increase in renewable contracts over  
              time.  Given that the benchmark price is a green rate, the  
              effectiveness of a cost cap seems to be minimal and more  
              like a continual growth allowance for renewable contracts  
              from year to year.  Additionally the benchmark price could  
              stymie competition among renewable resources.  The IOUs  
              primarily rely on competitive solicitations for renewable  
              procurement.  Bidders are aware of last year's MPR but not  
              the current year MPR calculation.  Nevertheless bidders know  
              that their RPS proposals will be measured against the MPR  
              which acts as a tether on RPS prices.  Anecdotal reports  
              indicate that RPS solicitations come in below, at, and above  
              the MPR.  Replacing the MPR with a green benchmark price may  
              drive the costs of renewable contracts up as bidders realize  
              that see a much higher benchmark price for renewables.

             2.   Cost Containment - ESPs & POUs  - This author attempts to  
              put into place a cost cap for POUs and ESPs to limit the  
              costs of renewable procurement.  However, the defined cap  
              uses calculations that are unique to IOUs regulated by the  
              CPUC and have no relation to ESPs.  Under this provision  
              contracting by ESPs may also be subject to some level of  
              regulation by the CPUC which would not be appropriate.  It  
              is not clear to the committee at this time whether POUs have  
              a revenue requirement.  The effort to afford these parties  
              with a cost cap just as there is for IOUs is warranted but  










               should be clarified. 

              3.   Delivery  - To count toward a retail seller's RPS  
               obligation, a renewable facility must meet several  
               requirements including that the facility be located in  
               California or deliver its electricity to California. The  
               definition of "deliver" in current law was written to allow  
               an out-of-state renewable generator that wants to serve  
               California load to comply with ISO rules that require  
               out-of-state electricity to be scheduled into California at  
               specific times and amounts. Since renewable resources like  
               wind and solar are intermittent, they cannot be scheduled at  
               specific times and amounts. The intent of the language was  
               for the renewable energy to come to California at some point  
               and then offset the need for fossil fuel generation within  
               California. However, the CEC, which sets the eligibility  
               rules, interpreted the statutory language to allow for  
               transactions where the renewable electricity never comes to  
               California to count toward the RPS as an eligible resource.

               It appears that the author intended to address this issue by  
               restricting the delivery requirement to that which is  
               simultaneous with the generation of the renewable  
               electricity but this is not clear.  Additionally, the  
               trigger date for the new delivery requirement is not clear  
               (see comment 6 below.)  In the meantime the author has also  
               repealed the current delivery requirement in Public  
               Resources Code Section 25741 but left in tact all other  
               current RPS program rules until retail sellers reach the 20  
               percent RPS goal.  It appears that there is no delivery  
               requirement in effect until at least January 1, 2011 and  
               perhaps not until each retail seller reaches the 20 percent  
               goal leaving the delivery requirement for RPS generation in  
               limbo.

              4.   Renewable Energy Credits and Deliverability  - A Renewable  
               Energy Credit (REC) generally represents the environmental  
               and renewable attributes of renewable electricity as a  
               separate commodity from the energy itself. In concept and  
               under current law, a REC can be sold either "bundled" with  
               the underlying energy or "unbundled" into a separate REC  













              trading market.<1>  In general, RECs can be traded in  
              voluntary markets or compliance markets.  In the voluntary  
              market, any company (e.g. a grocery store chain) that wishes  
              to claim that it is powered by clean energy may buy  
              non-renewable power from its local energy provider and also  
              buy an equivalent amount of RECs that have been "unbundled"  
              from renewable energy produced elsewhere.  In some RPS  
              compliance markets, the load serving entities can use  
              unbundled RECs, rather than actual renewable energy, to  
              comply with their RPS goals. In either case, once the RECs  
              are unbundled from the energy, the energy is considered  
              non-renewable power.

              In the Western region of the U.S., RECs (both voluntary and  
              compliance) are tracked using the Western Renewable Energy  
              Generation Information System (WREGIS) as called for under  
              current law. WREGIS was launched in mid-2007. 

              The author of the legislation which permitted the trading of  
              RECs has stated that the intent was to only allow the  
              trading of RECs - bundled or unbundled - within the state.   
              However, an attenuated interpretation of the definition of  
              "delivered" under current law by the CEC (see comment 3  
              above), has resulted in contracts for renewable generation  
              from as far away as Montana.  This out of state generation  
              can never be physically delivered to the California grid  
              because of its remote location and the fact that the ISO has  
              no ability to monitor, control or schedule the generation.   
              The consequence is that the renewable resource would be  
              generated out of state at one time and sold to a third  
              party, not delivered to California and might be referred to  
              as a bait and switch.  The third party would later deliver  
              "system power" to the California grid when scheduled by the  
              IOU and ISO.  In its review of this practice The Utility  
              Reform Network (TURN) notes "since a significant amount of  
              firm imports into California are from coal plants, it is now  
              likely that utilities and load serving entities will be  
              getting RPS credit for importing coal power."  Coal  
              contracts of greater than five years duration are prohibited  
              under state law.  System power contracts are not prohibited.  
                
              --------------------------
          <1> The CPUC has not issued a final rulemaking for the use of  
          RECs.  Consequently they are authorized                                          under state law but the  
          trading process is not yet available to IOUs or ESPs.










               Additionally, a pending rulemaking by the CPUC couples the  
               CEC's attenuated definition of "delivery" with the REC  
               authority resulting in a pending decision to permit the  
               trading of unlimited RECs to achieve RPS compliance from  
               anywhere in the WECC.<2>

               This bill does not authorize the use of unbundled RECs but  
               it does reference them.  This bill allows RECs but does not  
               clearly or definitively address the delivery issue (see  
               comment 3 above).  Consequently, the ability of an IOU, POU,  
               or ESP to use RECs from in-state or out-of-state renewable  
               resources is not clear.  These parties have all argued for  
               the use of RECs, particularly out of state RECs for  
               compliance with the RPS, with some support from  
               environmental and ratepayer groups along with the CPUC.

              5.   Enforcement & Flexible Compliance  - Current law requires  
               the CPUC to enforce a retail seller's compliance with the  
               RPS.  The PUC may fine a retail seller that fails to meet  
               its year-to-year RPS target.  The PUC has set the penalties  
               at 5 cents for each kilowatt hour a retail seller falls  
               short of its RPS target. The PUC has capped the total amount  
               of penalties that can be charged in a year at $25 million.

               The CPUC is also required to adopt flexible rules for RPS  
               compliance, which include situations of insufficient  
               transmission, including rules permitting the application of  
               excess procurement from one year to subsequent years, or to  
               makeup inadequate procurement in one year within no more  
               than the following three years. 

               This bill retains the CPUC's fining authority but eliminates  
               what has become more commonly known as the "transmission  
               offramp" and other flexible compliance mechanisms.  Instead  
               the CPUC would be permitted to waive penalties if a retail  
               seller in two instances.  First if they could show a  
               reasonable effort to procure renewable resources and were  
               unable to do so as a result of circumstances beyond their  
               control.  Second, if the commission determines that they  
               -------------------------
          <2> The WECC works with regional transmission operators to ensure  
          the reliability and market efficiencies of the bulk power system  
          in 14 western states, Alberta and British Columbia.  It does not  
          schedule or control power on California's transmission lines.










              have made investments in energy efficiency that resulted in  
              significantly less demand for electricity.

              Many parties express concern and opposition to what they see  
              as vague standard of reasonableness to measure RPS  
              compliance efforts.  Some opine that the retail seller  
              should be required to provide clear and convincing evidence  
              of the effort to comply with the RPS and also include  
              specific qualifying circumstances for a waiver of penalties  
              such as insufficient transmission.

              There is also substantial concern with the introduction of  
              energy efficiency investments into the RPS program.  Energy  
              efficiency (EE) is first in California's loading order and  
              is similar in effect to RPS since both programs are designed  
              to reduce the air emissions of electrical generation.   
              However the IOUs are operating under a clear and distinct  
              separate mandate to achieve specified levels of energy  
              savings from EE technologies and tools.  Since this  
              obligation exists, some opine that counting EE savings  
              toward the RPS creates a loophole in the program and  
              undermines its goals.  Additionally, ESPs to which this  
              provision would also apply in addition to IOUs, are not  
              regulated by the CPUC and are not in the energy efficiency  
              business

             6.   Implementation Trigger - This bill institutes significant  
              changes in the RPS program by making wholesale changes in  
              fundamental program provisions as outlined above.  However  
              it also continues the current program laws and rules until  
              each retail seller reaches its 20 percent RPS goal.  The  
              result will be that the CPUC will continue to apply the  
              rules it has developed over six years of rulemakings and  
              decisions to procurement to reach 20 percent but at the same  
              time adopt new rules which would apply to those retail  
              sellers at some future date (likely 2013 - 2014) which would  
              be triggered as each retail seller reaches its 20 percent  
              goal.  There will also likely be confusion as to which rules  
              apply in certain situations.  The new RPS provisions have  
              two operative dates for each IOU - at January 1, 2011 and  
              when each IOU reaches its 20 percent goal, calling into  
              question which rules apply where and when and leaving gaps  
              in some areas.











              7.   Transmission  - This bill establishes for the first time  
               the "Energy Planning and Infrastructure Coordinating  
               Committee" (EPIC) which would be comprised of the CPUC, CEC,  
               ISO and other agency heads and parties.  The author is  
               clearly responding to the reported challenges of getting new  
               transmission to remote renewable resources.  Sufficient  
               transmission has been approved to meet the 20 percent RPS  
               goal.  An additional 5 lines are reported to be needed to  
               reach the 33 percent goal.  Planning for those lines is  
               underway.

               Most of the specified planning and duties required of EPIC  
               already exist in law, regulation or practice by the  
               participating entities.  There is significant concern that  
               the creation of EPIC would do little more than place a  
               bureaucratic hurdle in the way of reach the RPS goals that  
               duplicates the work already underway by other entities and  
               be disruptive and time-consuming.

               The CPUC would also be directed in this bill to complete its  
               review of an application for a new transmission line within  
               one year of receiving the completed application.  This would  
               rarely be possible.  It is not uncommon for a transmission  
               line to traverse great distances over land controlled by  
               many different agencies at the local, state and federal  
               level as well as private parties and sovereign nations.  The  
               lines require full review under the California Environmental  
               Quality Act which typically must evaluate the affected  
               geography across all four seasons - a full year before an  
               analysis could even be completed.  Additionally most lines  
               touch federal lands requiring review under the National  
               Environmental Policy Act (NEPA).  The CPUC has successfully  
               negotiated a joint review with the federal agencies but,  
               still, more than one year is required.

               Finally this bill requires the CPUC, if concurred in by the  
               Division of Ratepayer Advocates, to accept as a rebuttable  
               presumption, a determination by the ISO that a transmission  
               line is "needed" to connect renewable generation.  

               According to the CPUC "this evaluation considers  
               reliability, economic, and operational benefits of proposed  
               transmission upgrades" to ratepayers and runs parallel to  
               the CEQA process.  Because it runs parallel, time savings  










              for CPCN approval are not apparent.  More significantly, the  
              needs evaluation done by the CPUC is done in a  
              quasi-judicial and public venue with participants from the  
              affected communities, ratepayers and other parties that are  
              not part of the ISO's private transmission  planning  
              process.  The ISO is a non-profit entity and not subject to  
              open meetings laws.  A transmission line that can cost  
              ratepayers billions of dollars requires a thorough and  
              public vetting of its need.

             8.   Siting of Renewable Resources  - The CEC currently sites  
              all thermal electric generation resources which are sized  
              over 50 MW.  This bill would transfer to the CEC all siting  
              authority of all eligible renewable resources of 5 MW or  
              more.  Some opine that this change would make it more  
              difficult for local parties to participate in the planning  
              process; some parties generally report that the local  
              process is working well and they see no need for the change.

              Additionally, due to the elimination of a definition of an  
              eligible renewable resource in Public Resources Code Section  
              25741, the CEC has no direction as to what resources it  
              would be charged with siting under this new authority.<3>

             9.   Combined Heat & Power (CHP)  - The CEC is charged in this  
              bill with implementing the provisions of the RPS program in  
              such a way that the RPS is compatible with achieving 4,000  
              MW of combined heat and power electrical generation.  In its  
              Scoping Plan to implement AB 32, CARB has identified 4,000  
              MW of CHP as a potential strategy to reduce GHG emissions.   
              However, in this instance, the CEC has minimal authority  
              over RPS procurement and has limited obligations under the  
              RPS program.  It is not clear that the CEC has any ability  
              to facilitate this provision.

             10.    Preference for California Suppliers  - This bill  
              requires that the CPUC provide preference to contracts for  
              eligible renewable energy resources that are from a  
              California supplier.  In practice preference provisions are  
              not enforceable and may have little effect on IOU or CPUC  
            ---------------------------
         <3> A new definition of eligible renewable resource is contained  
         in provisions of this bill which become effective January 1, 2011  
         but are not triggered until a retails seller reaches its 20  
         percent RPS goal.









               actions.  Moreover if this section was implemented a  
               particular renewable resource could be chosen based on the  
               geographic location of a company headquarters rather than  
               the efficiency and deliverability characteristics of the  
               generation and price to ratepayers.
           
             11.    Similar Legislation  - A similar bill, SB 14 (Simitian,  
               et al) passed this committee in March and is scheduled to be  
               heard in the Assembly Utilities and Communications Committee  
               on June 29th.

              12.    Double Referral  - This bill has been double referred to  
               the Senate Rules Committee. Due to time constraints, if  
               amendments are proposed in Committee these amendments must  
               be taken in the Rules Committee.

                                     ASSEMBLY VOTES
           
          Assembly Floor                     (44-31)
          Assembly Appropriations Committee  (12-5)
          Assembly Natural Resources Committee                            
          (6-3)
          Assembly Utilities and Commerce Committee                       
          (8-5)

                                       POSITIONS
           
           Sponsor:
           
          Author

           
          Support:
           
          BP America Inc. (if amended)*
          City of Los Angeles Department of Water and Power (if amended)*
          Natural Resources Defense Council (if substantially amended)
          Planning and Conservation League (if amended)
          Union of Concerned Scientists (if amended)

           Oppose:
           
          Alliance for Retail Energy Markets (unless amended)
          California Farm Bureau Federation*










         California Large Energy Consumers Association (unless amended)
         California Manufacturers & Technology Association
         California Wind Energy Association (unless amended)*
         County of Santa Barbara* 
         Direct Energy (unless amended)
         Independent Energy Producers Association
         Sanitation Districts of Los Angeles County
         Solid Waste Association of North America*
         The Utility Reform Network (unless amended)

         *Received prior to June 23rd amendments





















         Kellie Smith 
         AB 64 Analysis
         Hearing Date:  June 30, 2009