BILL NUMBER: AB 915 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Logue
FEBRUARY 26, 2009
An act to amend Section 25740 of the Public Resources Code, and to
amend Sections 399.11, 399.12, 399.14, and 399.15 of the Public
Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 915, as introduced, Logue. Renewable energy resources.
The Public Utilities Act imposes various duties and
responsibilities on the Public Utilities Commission (PUC) with
respect to the purchase of electricity and requires the PUC to review
and adopt a procurement plan and a renewable energy procurement plan
for each electrical corporation, as defined, pursuant to the
California Renewables Portfolio Standard (RPS) Program. The RPS
program requires that a retail seller of electricity, as defined,
purchase a specified minimum percentage of electricity generated by
eligible renewable energy resources, as defined, in any given year as
a specified percentage of total kilowatthours sold to retail end-use
customers each calendar year. The RPS program requires each retail
seller to increase its total procurement of electricity generated by
eligible renewable energy resources by at least an additional 1% of
retail sales per year so that 20% of its total retail sales of
electricity are procured from eligible renewable energy resources no
later than December 31, 2010.
This bill would instead require that each retail seller increase
its total procurement of electricity generated by eligible renewable
energy resources by at least an additional 1% of net program retail
sales, as defined, per year so that 20% of its net program retail
sales of electricity are procured from eligible renewable energy
resources no later than December 31, 2010. The bill would define net
program retail sales of electricity as being total retail sales of
electricity by the retail seller within California, minus those
retail sales where the load was met by noneligible hydroelectric
generation.
The existing Warren-Alquist State Energy Resources Conservation
and Development Act establishes the State Energy Resources
Conservation and Development Commission (Energy Commission). Existing
law establishes the Renewable Resource Trust Fund in the State
Treasury and requires that certain moneys collected to support
renewable energy resources are deposited into the fund and authorizes
the Energy Commission to expend the moneys pursuant to the Renewable
Energy Resources Program. The program states the intent of the
Legislature to increase the amount of electricity generated from
eligible renewable energy resources per year so that amount equals at
least 20% of total retail sales of electricity in California per
year by December 31, 2010.
This bill would revise the Renewable Energy Resources Program to
state the intent of the Legislature to increase the amount of
electricity generated from eligible renewable energy resources per
year so that amount equals at least 20% of net program retail sales
of electricity in California per year by December 31, 2010.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25740 of the Public Resources Code is amended
to read:
25740. It is the intent of the Legislature in establishing this
program, to increase the amount of electricity generated from
eligible renewable energy resources per year, so that it equals at
least 20 percent of total net program
retail sales of electricity in California per year by December 31,
2010. Net program retail sales are total retail sales of
electricity, minus those retail sales where the load was met by
noneligible hydroelectric generation.
SEC. 2. Section 399.11 of the Public Utilities Code is amended to
read:
399.11. The Legislature finds and declares all of the following:
(a) In order to attain a target of generating 20 percent of
total net program retail sales of
electricity in California from eligible renewable energy resources by
December 31, 2010, and for the purposes of increasing the diversity,
reliability, public health and environmental benefits of the energy
mix, it is the intent of the Legislature that the commission and the
State Energy Resources Conservation and
Development Commission implement the California Renewables
Portfolio Standard Program described in this article.
(b) Increasing California's reliance on eligible renewable energy
resources may promote stable electricity prices, protect public
health, improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce
reliance on imported fuels.
(c) The development of eligible renewable energy resources and the
delivery of the electricity generated by those resources to
customers in California may ameliorate air quality problems
throughout the state and improve public health by reducing the
burning of fossil fuels and the associated environmental impacts and
by reducing in-state fossil fuel consumption.
(d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the State Energy
Resources Conservation and Development Commission and
established pursuant to Chapter 8.6 (commencing with Section 25740)
of Division 15 of the Public Resources Code.
(e) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.
SEC. 3. Section 399.12 of the Public Utilities Code is amended to
read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) "Conduit hydroelectric facility" means a facility for the
generation of electricity that uses only the hydroelectric potential
of an existing pipe, ditch, flume, siphon, tunnel, canal, or other
manmade conduit that is operated to distribute water for a beneficial
use.
(b) "Delivered" and "delivery" have the same meaning as provided
in subdivision (a) of Section 25741 of the Public Resources Code.
(c) "Eligible renewable energy resource" means an electric
generating facility that meets the definition of "in-state renewable
electricity generation facility" in Section 25741 of the Public
Resources Code, subject to the following limitations:
(1) (A) An existing small hydroelectric generation facility of 30
megawatts or less shall be eligible only if a retail seller or local
publicly owned electric utility owned or procured the electricity
from the facility as of December 31, 2005. A new hydroelectric
facility is not an eligible renewable energy resource if it will
cause an adverse impact on instream beneficial uses or cause a change
in the volume or timing of streamflow.
(B) Notwithstanding subparagraph (A), a conduit hydroelectric
facility of 30 megawatts or less that commenced operation before
January 1, 2006, is an eligible renewable energy resource. A conduit
hydroelectric facility of 30 megawatts or less that commences
operation after December 31, 2005, is an eligible renewable energy
resource so long as it does not cause an adverse impact on instream
beneficial uses or cause a change in the volume or timing of
streamflow.
(2) A facility engaged in the combustion of municipal solid waste
shall not be considered an eligible renewable resource unless it is
located in Stanislaus County and was operational prior to September
26, 1996.
(d) "Net program retail sales" of electricity means the total
retail sales of electricity by the retail seller within California,
minus those retail sales where the load was met by noneligible
hydroelectric generation.
(d)
(e) "Procure" means that a retail seller or local
publicly owned electric utility receives delivered electricity
generated by an eligible renewable energy resource that it owns or
for which it has entered into an electricity purchase agreement.
Nothing in this article is intended to imply that the purchase of
electricity from third parties in a wholesale transaction is the
preferred method of fulfilling a retail seller's obligation to comply
with this article or the obligation of a local publicly owned
electric utility to meet its renewables portfolio standard
implemented pursuant to Section 387.
(e)
(f) "Renewables portfolio standard" means the specified
percentage of electricity generated by eligible renewable energy
resources that a retail seller is required to procure pursuant to
this article or the obligation of a local publicly owned electric
utility to meet its renewables portfolio standard implemented
pursuant to Section 387.
(f)
(g) (1) "Renewable energy credit" means a certificate
of proof, issued through the accounting system established by the
Energy Commission pursuant to Section 399.13, that one unit of
electricity was generated and delivered by an eligible renewable
energy resource.
(2) "Renewable energy credit" includes all renewable and
environmental attributes associated with the production of
electricity from the eligible renewable energy resource, except for
an emissions reduction credit issued pursuant to Section 40709 of the
Health and Safety Code and any credits or payments associated with
the reduction of solid waste and treatment benefits created by the
utilization of biomass or biogas fuels.
(3) No electricity generated by an eligible renewable energy
resource attributable to the use of nonrenewable fuels, beyond a de
minimis quantity, as determined by the Energy Commission, shall
result in the creation of a renewable energy credit.
(g)
(h) "Retail seller" means an entity engaged in the
retail sale of electricity to end-use customers located within the
state, including any of the following:
(1) An electrical corporation , as defined in Section 218
.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
program subject to the same terms and conditions applicable to an
electrical corporation.
(3) An electric service provider , as defined in Section
218.3, for all sales of electricity to customers beginning
January 1, 2006. The commission shall institute a rulemaking to
determine the manner in which electric service providers will
participate in the renewables portfolio standard program. The
electric service provider shall be subject to the same terms and
conditions applicable to an electrical corporation pursuant to this
article. Nothing in this paragraph shall impair a contract entered
into between an electric service provider and a retail customer prior
to the suspension of direct access by the commission pursuant to
Section 80110 of the Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing electricity consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electric utility.
SEC. 4. Section 399.14 of the Public Utilities Code is amended to
read:
399.14. (a) (1) The commission shall direct each electrical
corporation to prepare a renewable energy procurement plan that
includes the matter in paragraph (3), to satisfy its obligations
under the renewables portfolio standard. To the extent feasible, this
procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary.
(2) The commission shall adopt, by rulemaking, all of the
following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make specific
determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable energy
resources to comply with the annual California Renewables Portfolio
Standard Program obligations on a total cost basis. This process
shall consider estimates of indirect costs associated with needed
transmission investments and ongoing utility expenses resulting from
integrating and operating eligible renewable energy resources.
(C) (i) Flexible rules for compliance, including rules permitting
retail sellers to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years. The flexible rules for compliance shall apply
to all years, including years before and after a retail seller
procures at least 20 percent of total net
program retail sales of electricity from eligible renewable
energy resources.
(ii) The flexible rules for compliance shall address situations
where, as a result of insufficient transmission, a retail seller is
unable to procure eligible renewable energy resources sufficient to
satisfy the requirements of this article. Any rules addressing
insufficient transmission shall require a finding by the commission
that the retail seller has undertaken all reasonable efforts to do
all of the following:
(I) Utilize flexible delivery points.
(II) Ensure the availability of any needed transmission capacity.
(III) If the retail seller is an electric corporation, to
construct needed transmission facilities.
(IV) Nothing in this subparagraph shall be construed to revise any
portion of Section 454.5.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall, at a minimum, include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of eligible renewable energy
resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission may authorize a retail seller to enter into a
contract of less than 10 years' duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources to
be procured either through contracts of at least 10 years' duration
or from new facilities commencing commercial operations on or after
January 1, 2005.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of renewable procurement pursuant to this article by
an electrical corporation.
(d) The commission shall review the results of an eligible
renewable energy resources solicitation submitted for approval by an
electrical corporation and accept or reject proposed contracts with
eligible renewable energy resources based on consistency with the
approved renewable energy procurement plan. If the commission
determines that the bid prices are elevated due to a lack of
effective competition among the bidders, the commission shall direct
the electrical corporation to renegotiate the contracts or conduct a
new solicitation.
(e) If an electrical corporation fails to comply with a commission
order adopting a renewable energy procurement plan, the commission
shall exercise its authority pursuant to Section 2113 to require
compliance. The commission shall enforce comparable penalties on any
other retail seller that fails to meet annual procurement targets
established pursuant to Section 399.15.
(f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
deliveries of eligible renewable energy resources to satisfy annual
renewables portfolio standard obligations. The commission may not
require any person or corporation to act as a procurement entity or
require any party to purchase eligible renewable energy resources
from a procurement entity.
(2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
(g) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article and approved by
the commission shall be deemed reasonable per se, and shall be
recoverable in rates.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives is "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
SEC. 5. Section 399.15 of the Public Utilities Code is amended to
read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of electricity generated by eligible renewable energy resources as a
specified percentage of total kilowatthours sold to their retail
end-use customers each calendar year, subject to limits on the total
amount of costs expended above the market prices determined in
subdivision (c), to achieve the targets established under this
article.
(b) The commission shall implement annual procurement targets for
each retail seller as follows:
(1) Each retail seller shall, pursuant to subdivision (a),
increase its total procurement of eligible renewable energy resources
by at least an additional 1 percent of retail sales per year so that
20 percent of its net program retail sales are procured
from eligible renewable energy resources no later than December 31,
2010. A retail seller with 20 percent of net program
retail sales procured from eligible renewable energy resources in any
year shall not be required to increase its procurement of renewable
energy resources in the following year.
(2) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each retail seller
based on the actual percentage of net program retail
sales procured from eligible renewable energy resources in 2001, and
to the extent applicable, adjusted going forward pursuant to Section
399.12.
(3) Only for purposes of establishing these targets, the
commission shall include all electricity sold to retail customers by
the Department of Water Resources pursuant to Section 80100 of the
Water Code in the calculation of net program retail sales
by an electrical corporation.
(4) In the event that a retail seller fails to procure sufficient
eligible renewable energy resources in a given year to meet any
annual target established pursuant to this subdivision, the retail
seller shall procure additional eligible renewable energy resources
in subsequent years to compensate for the shortfall, subject to the
limitation on costs for electrical corporations established pursuant
to subdivision (d).
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with eligible renewable energy resources, in consideration
of the following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation's general
procurement activities as authorized by the commission.
(2) The long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities.
(3) The value of different products including baseload, peaking,
and as-available electricity.
(d) The commission shall establish, for each electrical
corporation, a limitation on the total costs expended above the
market prices determined in subdivision (c) for the procurement of
eligible renewable energy resources to achieve the annual procurement
targets established under this article.
(1) The cost limitation shall be equal to the amount of funds
transferred to each electrical corporation by the Energy Commission
pursuant to subdivision (b) of Section 25743 of the Public Resources
Code and the 51.5 percent of the funds which would have been
collected through January 1, 2012, from the customers of the
electrical corporation based on the renewable energy public goods
charge in effect as of January 1, 2007.
(2) The above-market costs of a contract selected by an electrical
corporation may be counted toward the cost limitation if all of the
following conditions are satisfied:
(A) The contract has been approved by the commission and was
selected through a competitive solicitation pursuant to the
requirements of subdivision (d) of Section 399.14.
(B) The contract covers a duration of no less than 10 years.
(C) The contracted project is a new or repowered facility
commencing commercial operations on or after January 1, 2005.
(D) No purchases of renewable energy credits may be eligible for
consideration as an above-market cost.
(E) The above-market costs of a contract do not include any
indirect expenses including imbalance energy charges, sale of excess
energy, decreased generation from existing resources, or transmission
upgrades.
(3) If the cost limitation for an electrical corporation is
insufficient to support the total costs expended above the market
prices determined in subdivision (c) for the procurement of eligible
renewable energy resources satisfying the conditions of paragraph
(2), the commission shall allow the electrical corporation to limit
its procurement to the quantity of eligible renewable energy
resources that can be procured at or below the market prices
established in subdivision (c).
(4) Nothing in this section prevents an electrical corporation
from voluntarily proposing to procure eligible renewable energy
resources at above-market prices that are not counted toward the cost
limitation. Any voluntary procurement involving above-market costs
shall be subject to commission approval prior to the expense being
recovered in rates.
(e) The establishment of a renewables portfolio standard shall not
constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
(f) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.