BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
64 (Krekorian)
Hearing Date: 8/27/2009 Amended: 6/23/2009
Consultant: Bob Franzoia Policy Vote: E,U&C 6-5
_________________________________________________________________
____
BILL SUMMARY: AB 64 would do the following:
- Recast the Renewables Portfolio Standard (RPS) Program to be
operative on January 1, 2011 and which the Public Utilities
Commission (PUC) would enforce.
- Require a retail seller and a local publicly owned electricity
utility (POU) to procure at least 23, 27, and 33 percent of the
electricity delivered to its retail customers from eligible
renewable energy resources (ERERs) by December 31, 2014, 2017,
and 2020 respectively.
- Require the PUC to establish procurement targets for retail
sellers that are sufficient to reach the above stated
requirements and require an electrical corporation's renewable
energy plan to include a process that provides criteria for the
rank ordering and selection of ERERs to that the corporation's
total renewables portfolio benefits ratepayers.
- Require the PUC to annually adopt a benchmark price for
electricity generated by an ERER and would prohibit the PUC from
requiring a retail seller to procure additional electricity from
ERERs if the net annualized costs expended above the benchmark
price exceeds five percent of the retail sellers total system
annual revenue requirements.
- Require the governing board of a POU to implement a similar
location for the utility thereby imposing a state mandated local
program.
- Revise exiting law with respect to the use of renewable energy
credits to meet RPS procurement requirements.
- Authorize the PUC to modify certain requirements for an
electrical corporation with 60,000 or fewer customers in the
state that serve retail end-use customers outside the state and
provide that a public utility district that receives all of its
electricity from hydroelectric generation pursuant to a
preference right created by a specified federal law is in
compliance with the RPS.
- Revise Renewable Energy Resources Program definitions to
incorporate the definition of an ERER from the RPS Program and
define what is a "new" and "existing" ERER.
- Establish the Energy Planning and Infrastructure Coordinating
(EPIC) Committee that would be required to use existing
resources and the authority of the state agencies represented to
coordinate the actions of the state, make policy
recommendations, and develop a strategic plan to achieve the RPS
percentages noted above.
- Require the strategic plan to designate renewable energy
development (RED) zones with high concentrations of ERERs, to
designate transmission corridors, and include a timetable of
stages required to meet the 25 and 33 percent RPS requirements.
- Authorize the EPIC Committee to incorporate in the strategic
plan the Renewable Energy Transmission Initiative (RETI) process
and to require the committee to facilitate coordinated permit
and certification review agreements with entities responsible
for environmental review.
- Require the EPIC Committee to direct the CEC to prepare a
program environmental impact report (PEIR) for each RED zone and
require the committee approve the report before the CEC may
certify completion of the PEIR.
- Require the CEC to adopt a strategic plan for the state's
transmission grid.
Page 2
AB 64 (Krekorian)
- Authorize the CEC to separately adopt a strategic plan to
facilitate achieving the RPS requirements. This plan would be
required to be consistent with the strategic plan adopted by the
EPIC committee.
- Require the CEC to confer with the Federal Energy Regulatory
Commission (FERC) on transmission corridors.
- Grant the CEC exclusive authority to certify an ERER, as
specified.
- Make the issuance of a certificate by the CEC for an ERER
conclusive when the PUC is determining whether to issue a
certificate of public convenience.
- Authorize the PUC, with the concurrence of the Division of
Ratepayer Advocates, to accept as a rebuttal presumption that a
transmission project is needed to connect to renewable
generation and require the PUC to produce a decision on whether
to issue a certificate of public convenience, or refuse to issue
it, within one year of receiving the completed application.
- Impose a state mandated local program by placing additional
requirements upon POUs, which are entities of local government,
and new requirements on city and county governments.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
PUC workload Estimated annual costs of up to
$1,664Special*
CEC workload Estimated annual costs of up to
$9,750 Special**
Contract costs of $3,500
State energy costs Unknown cumulative
increase potentially General/
$558,000
annually statewide beginning Special***
2010 to 2013 to meet new RPS
threshold.
See Staff Comments
State mandate on POUs Unknown major costs ongoing
General
* Utilities Reimbursement Account
** Energy Resources and Programs Account (one-tenth of a mill
($0.0001) surcharge per kilowatt hour)
*** Service Revolving Fund, other special funds (total estimated
on IOU usage)
_________________________________________________________________
____
STAFF COMMENTS: SUSPENSE FILE.
Chapter 516/2002 (SB 1078, Sher) and Chapter 464/2006 (SB 107,
Simitian) established and revised the RPS program which requires
IOUs to increase procurement from eligible renewable energy
resources by at least one percent of retail sales annually,
until they reach 20 percent by 2010. The 20 percent threshold
in Chapter 516 was accelerated from 2017 to 2010 by Chapter 464.
Executive Order S-14-08 ordered that all retail sellers of
electricity shall serve 33
Page 3
AB 64 (Krekorian)
percent of their load with renewable energy by 2020. The order
directed state agencies to take all appropriate actions to
implement this target in all regulatory proceedings, inlcuding
siting, permitting, and procurement for renewable energy power
plants and transmission lines.
A retail seller means an entity engaged in the retail sale of
electricity to end use customers located within the state
(Public Utilities Code 39912).
An electrical corporation includes every corporation or person
owning, controlling, operating, or managing any electrical plant
for compensation within this state, except where electricity is
generated on or distributed by the producer through private
property solely for its own use or the use of its tenants and
not for sale or transmission to others (Public Utilities Code
218).
PUC costs
PUC implementation will require an estimated fourteen positions
for an annual cost of $1,663,506. This included two public
utilities regulatory analyst IIIs, three public utilities
regulatory analyst Vs, one administrative law judge and one
attorney working full-time for the RPS team to implement the RPS
mandates as directed by this bill. Five public utilities
regulatory analysts, one attorney and one administrative law
judge full-time would be needed for the transmission permitting
team to maintain current transmission permitting efficiencies
under this bill's one-year permitting deadline and increased RPS
target.
CEC costs
CEC implementation will require an estimated $3.5 million in
contracts and 75 positions to process new project applications
and prepare program EIRs. Workload assumptions are:
- The CEC will assume jurisdiction over numerous new projects.
The volume of incoming project applications is unknown; however,
the CEC assumes that 25 new project applications may be received
and would be processed annually. Based on inquires received, a
large number of solar, small wind, and bio-fuel application
applications and projects would result from passage of this
measure.
- The CEC will require an estimated three staff per project to
process the application. Currently, the CEC requires six to
seven staff per project; however, it is assumed these new
projects will be smaller in scope and require fewer resources
per project. As a result, the CEC estimates it will require 75
staff (three staff per project x 25 new projects) to process the
increased number of applications for smaller projects which may
also require Environmental Assessments or Mitigated Negative
Declarations.
- The CEC would be required to prepare PEIRs and other
assessments and planning documents. These efforts would be
completed through the use of contract dollars versus hiring
permanent staff.
State Energy Costs
Page 4
AB 64 (Krekorian)
The state is a retail energy customer appropriating General
Funds for entities like the University of California, the
California State University, and the California Department of
Corrections and Rehabilitation, and K-14 education in a less
direct manner. The Department of General Services allocates
Service Revolving Funds, a fund used for the purchase and sale
of materials, supplies and equipment and the rendering of
services, including energy used by special fund entities.
California is served by about 75 load-serving entities (LSEs).
There are:
IOUs - 6
POU - 48
Rural Electricity Cooperatives - 4
Native American Utilities - 3
Other Electricity Service Providers - 14
The five largest utilities and total electricity consumption
(2007) are:
1. Southern California Edison Company (SCE) - 88,208
million kWh
2. Pacific Gas and Electric Company (PG&E) - 85,057 million
kWh
3. Los Angeles Department of Water and Power - 24,317
million kWh
4. San Diego Gas & Electric (SDG&E) - 20,300 million kWh
5. Sacramento Municipal Utility District - 10,917 million
kWh
In 2008, within the SCE and SDG&E service territories, state
entities consume 739,651,000 (state), 428,876,000 (colleges and
universitites) and 1,930,848,000 (K-12) and 62,650,000 (state),
244,836,000 (colleges and universities) and 375,976,000 (K-12)
kWh, respectively. Per kWH rates range from $0.096 for colleges
and universities to $0.16 for K-12 and from $0.07 for colleges
and universitites to nearly $0.17 for K-12, respectively.
Within the PG&E service terrritory, state entities consume
1,169,420 megaWatt hours (MWh) (16 percent of use by all
governmental activity (federal, state, county, city, district,
city/county, and foreign). (At this time, K-12 consumption
within the PG&E service territory is an estimate of 50 percent
of total "district" govermental activity or 1,362,520 MWh. This
varies total state PG&E consumption between 3 and 4.5 percent.)
Total state entity consumption within these IOU service
territories is estimated at approximately 6,315,000,000 kWh (10
to 11 percent of all consumption within these service
territoires). IOUs deliver approximately two thirds (64.3
percent in 2007) of state systemwide electricity. Adding POUs,
total state entity consumption is estimated at 15 to 16 percent
of all consumption in the state. If the cost in 2020 to achieve
a 33 percent RPS threshold is $1.8 billion to all ratepayers,
state costs would increase by an estimated $279 million annually
(15.5 percent of $1,800,000,000) based on 2007 and 2008
electricity consumption data.
Other non General Fund entities may be affected. For example,
though the provisions of the bill relate to retail rates, and
the State Water Project (SWP) is a wholesale purchaser, to the
extent that there are new costs associated with new transmission
lines, SWP costs may increase. Currently, SWP
transmission-related costs are several million dollars annually.
Page 5
AB 64 (Krekorian)
Changes in energy usage, climate changes including changes in
rainfall, regulatory changes, efficiencies in renewable energy
production, and changes in the cost and availability of fossil
fuels will impact these costs.
A joint PUC/CEC greenhouse gas proceeding estimated statewide
RPS revenue requirements in 2020 depending on one of three
scenarios. The PUC analysis estimates achieving a 33 percent
RPS threshold in 2020 will cost $8.9 billion in generation and
transmission costs but will save $6.3 billion in avoided costs
(the cost of building and operating conventional fossil fueled
generation) resulting in a net cost to ratepayers of $2.6
billion annually. That is, the cost to the ratepayer when the
RPS threshold is increased from 20 percent to 33 percent is
slightly more than one half cent per kWh. An updated PUC
estimate of total costs and net costs indicates the cost to
ratepayers is approximately one cent per kWh.