BILL NUMBER: AB 1348 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 27, 2009
An act to amend Section 399.13 of 399.15
of, and to add Article 2 (commencing with Section 2846) to Chapter 8
of Part 2 of Division 1 of, the Public Utilities Code, relating
to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1348, as amended, Blakeslee. Renewable energy
resources. resources: combined heat and power systems.
Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations, as defined. The Public Utilities Act imposes
various duties and responsibilities on the Public Utilities
Commission commission with respect to the
purchase of electricity and requires the commission to review and
adopt a procurement plan and a renewable energy procurement plan for
each electrical corporation pursuant to the California Renewables
Portfolio Standard Program (RPS program) .
Existing law requires the State Energy Resources Conservation and
Development Commission (Energy Commission) to (1) certify eligible
renewable energy resources, (2) design and implement an accounting
system to verify compliance with the renewables portfolio standard by
retail sellers, (3) establish a system for tracking and verifying
renewable energy credits (RECs) that verifies the generation and
delivery of electricity associated with RECs, and (4) certify the
eligibility of RECs associated with deliveries of electricity to a
local publicly owned electric utility The RPS program
requires, in order to fulfill unmet long-term resource needs, that
the commission establi sh 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 certain cost
limitations, so that 20% of its retail sales are procured from
eligible renewable energy resources no later than December 31, 2010
.
This bill would make technical, nonsubstantive changes to the
provision that requires the Energy Commission to design and implement
an accounting system to verify compliance with the renewables
portfolio standard by retail sellers.
This bill would require, in order to fulfill unmet long-term
resource needs and to achieve the reductions in emissions of
greenhouse gases required by the California Global Warming Solutions
Act of 2006, that the commission 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 weighted kilowatthours
sold to their retail end-use customers each calendar year, subject to
certain cost limitations, so that 20% of its retail sales are
procured from eligible renewable energy resources no later than
December 31, 2010. The bill would require that total kilowatthours
sold to retail end-use customers that are generated using fossil
fuels be weighted linearly based upon a rating of the emissions of
greenhouse gases per megawatthour with a base, used for comparison,
based upon the greenhouse gases emission performance standard. The
bill would provide a methodology for weighting of electricity
generated by a combined heat and power system that is an eligible
facility, as defined.
The bill would require the commission to credit electricity
generated by an eligible facility for onsite use as energy efficiency
for the purposes of an electrical corporation's procurement plan.
The bill would require the commission to prohibit the imposition of
certain charges on (1) the electricity generated by an eligible
facility to meet an eligible customer-generator's onsite electrical
load, if the eligible facility commences operation after January 1,
2010, and (2) the increased amount of electricity generated as a
result of efficiency improvements to meet an eligible
customer-generator's onsite electrical load, undertaken after January
1, 2010, on an eligible facility that commenced operation prior to
that date. The bill would authorize an eligible customer-generator to
construct and operate private electrical distribution facilities
that are owned and operated by the eligible customer-generator and to
sell excess electricity from an eligible facility to up to three
other corporations within a 3-mile radius of the eligible facility
without subjecting the eligible facility and the distribution system
to regulation as a public utility, and would require the commission
to accord the distribution facilities the same treatment for safety,
zoning, land use, and other legal privileges as apply or would apply
to the facilities of the electrical corporation, with certain
exceptions. The bill would require the commission to prohibit an
electrical corporation from imposing certain charges on the
electricity generated by the eligible facility and sold to other
corporations. The bill would require that any standby rates or
charges maintained by the commission for customers receiving
electricity from an eligible facility, are based only upon
assumptions that are supported by factual data.
Under existing law, a violation of any order, decision, rule,
direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill require action by the
commission to implement its requirements, a violation of these
provisions would impose a state-mandated local program by creating a
new crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Combined heat and power systems are recognized by the state,
the nation, and across the world as clean energy resources that
greatly reduce emissions of greenhouse gases through the efficient
use of fuel to produce thermal energy and electricity.
(b) The State Air Resources Board acknowledges that combined heat
and power systems will substantially contribute to reducing emissions
of greenhouse gases and recommends an additional 4,000 megawatts of
installed combined heat and power capacity by 2020, in order to
achieve 6.7 million metric tons of emissions reductions.
(c) The Economic and Technology Advancement Advisory Committee
concluded that California has yet to tap the full potential of
combined heat and power facilities to decrease emissions of
greenhouse gases and that, while combined heat and power is not a new
technology, barriers exist that prevent full deployment of
cost-effective combined heat and power into the industrial and
commercial sectors.
(d) The Energy Commission supports combined heat and power
projects because they offer low levels of greenhouse gas emissions
for electricity generation, taking advantage of fuel that is already
being used for other purposes and recommends the state adopt measures
to reduce emissions of greenhouse gases and regulations that fully
reflect the benefits of combined heat and power.
(e) The Public Utilities Commission and the Energy Commission
jointly advocate that new combined heat and power applications could
play a large part in avoiding future emissions of greenhouse gases
due to the combined efficiency of the heat and power portions of the
systems.
(f) Despite broad support by public and private entities, the
development of new combined heat and power resources has slowed
dramatically over the past decade, and existing resources may
terminate their operations in the next few years absent improvements
to existing policy.
(g) In the absence of legislative action to encourage the
retention and expansion of combined heat and power systems,
commercial and industrial energy requirements may be served using
less efficient, separate thermal and electricity production
facilities resulting in greater emissions of greenhouse gases.
SEC. 2. Section 399.15 of the Public
Utilities Code is amended to read:
399.15. (a) (1) In order to fulfill unmet
long-term resource needs and to achieve the reductions in
emissions of greenhouse gases required by the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code , 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 weighted 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.
(2) The total kilowatthours sold to retail end-use customers that
are generated using fossil fuels shall be weighted linearly based
upon a rating of the emissions of greenhouse gases per megawatthour.
The greenhouse gases emission performance standard established
pursuant to Section 8341 shall serve as the base, or point for
comparison, for calculating the total weighted megawatthours.
(3) For a combined heat and power system that is an eligible
facility, as defined in Section 2846, emissions of greenhouse gases
associated with the thermal output of the combined heat and power
system, determined by calculating the rate of emissions of greenhouse
gases per British thermal unit for an 85 percent boiler, multiplying
the thermal output of the combined heat and power system by this
rate, and subtracting the result from the total emissions of
greenhouse gases produced by the combined heat and power system,
shall not be counted for the purposes of paragraph (2).
(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 retail sales are procured from eligible renewable
energy resources no later than December 31, 2010. A retail seller
with 20 percent of 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 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 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.
SEC. 2. Article 2 (commencing with Section 2846)
is added to Chapter 8 of Part 2 of Division 1 of the
Public Utilities Code , to read:
Article 2. Fuel Consumption Efficiency
2846. For purposes of this article, the following terms have the
following meanings:
(a) "Eligible customer-generator" means a customer of an
electrical corporation that uses a combined heat and power system
with a generating capacity of at least 20 megawatts.
(b) "Eligible facility" means a combined heat and power system
that produces both electricity and thermal energy from a single fuel
input that meets both of the following:
(1) Is interconnected to the electrical transmission and
distribution grid.
(2) Is sized to meet the onsite thermal load.
2847. The Legislature finds and declares all of the following:
(a) Efficient combined heat and power generation is a form of
energy efficiency that can benefit the state by:
(1) Reducing greenhouse gas emissions and natural gas use.
(2) Reducing the need for transmission and distribution
investment.
(3) Reducing transmission line losses on the state's electricity
grid.
(4) Providing a stable and reliable source of in-state baseload
generation.
(5) Enabling commercial and industrial consumers to control their
energy costs.
(6) Supporting the economy with in-state investment and jobs.
(b) The state has encouraged the use of combined heat and power
technology since the enactment of the Warren-Alquist State Energy
Resources Conservation and Development Act and assumed an early
leadership position nationally in promoting these and other efficient
resources.
(c) The State Air Resources Board has determined that the
widespread development of efficient combined heat and power systems
would help displace the need to develop new, or expand existing,
power plants and has set a target of an additional 4,000 megawatts of
installed combined heat and power generation capacity by 2020,
enough to displace approximately 30,000 gigawatthours of generation
from other generation resources.
2848. (a) It is the intent of the Legislature to enact policies
that incorporate the recommendations of the state's energy and
environmental agencies, commissions, and departments to more fully
capture the energy efficiency and greenhouse gases emissions benefits
of combined heat and power systems.
(b) It is the intent of the Legislature to encourage the addition
of new combined heat and power facilities and the repowering of
existing combined heat facilities to achieve greater efficiencies
wherever cost-effective, technologically feasible, and
environmentally beneficial.
(c) It is the intent of the Legislature to support and facilitate
both customer-owned and utility-owned combined heat and power
systems.
2849. (a) The commission shall credit electricity generated by an
eligible facility for onsite use as energy efficiency for the
purposes of Section 454.5 and shall prohibit the imposition of
departing load charges on either of the following:
(1) Electricity generated by an eligible facility that commences
operation after January 1, 2010, to meet an eligible
customer-generator's onsite electrical load.
(2) Electricity generated by an eligible facility that commenced
operation prior to January 1, 2010, the increased amount of
electricity generated as a result of efficiency improvements to meet
an eligible customer-generator's onsite electrical load.
(b) The commission shall adopt or maintain standby rates or
charges for eligible facilities that are based only upon assumptions
that are supported by factual data, and shall not assume that forced
outages or other reductions in electricity generation by combined
heat and power systems will occur simultaneously on multiple systems,
or during periods of peak electrical system demand, or both.
2849.5. (a) Notwithstanding subdivision (b) of Section 218, an
eligible customer-generator may construct and operate private
electrical distribution facilities to be owned and operated by the
customer-generator to sell excess electricity from an eligible
facility to up to three other corporations within a three-mile radius
of the eligible facility without subjecting the project to
regulation as a public utility, and according the distribution
facilities the same treatment for safety, zoning, land use, and other
legal privileges as apply or would apply to the facilities of the
utility, subject to both of the following:
(1) There shall be no grant of any power of eminent domain to take
or cross private property for the facilities.
(2) The facilities shall be physically segregated and not
interconnected with any portion of the electrical transmission and
distribution system of the electrical corporation, except on the
customer side of the revenue meter of the utility and in a manner
that precludes any possible export of electricity onto the electrical
corporation's electrical transmission and distribution system, or
disruption of the system.
(b) The commission shall prohibit the imposition of departing load
charges on a corporation for electricity purchased from an eligible
customer-generator pursuant to paragraph (a).
(c) The commission shall adopt or maintain standby rates or
charges for corporations that purchase electricity from an eligible
customer-generator pursuant to paragraph (a) that are based only upon
assumptions that are supported by factual data, and shall not assume
that forced outages or other reductions in electricity generation by
combined heat and power systems will occur simultaneously on
multiple systems, or during periods of peak electrical system demand,
or both.
SEC. 3. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
SECTION 1. Section 399.13 of the Public
Utilities Code is amended to read:
399.13. The Energy Commission shall do all of the following:
(a) Certify eligible renewable energy resources that it determines
meet the criteria described in subdivision (b) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that electricity generated by an eligible renewable energy resource
is counted only once for the purpose of meeting the renewables
portfolio standard of this state or any other state, to certify
renewable energy credits produced by eligible renewable energy
resources, and to verify retail product claims in this state or any
other state. In establishing the guidelines governing this accounting
system, the Energy Commission shall collect data from electricity
market participants that it deems necessary to verify compliance of
retail sellers, in accordance with the requirements of this article
and the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). The
Energy Commission shall, in seeking data for electrical corporations,
request data from the commission. The commission shall collect data
from electrical corporations and remit the data to the Energy
Commission within 90 days of the request.
(c) Establish a system for tracking and verifying renewable energy
credits that, through the use of independently audited data,
verifies the generation and delivery of electricity associated with
each renewable energy credit and protects against multiple counting
of the same renewable energy credit. The Energy Commission shall
consult with other western states and with the Western Electricity
Coordinating Council in the development of this system.
(d) Certify, for purposes of compliance with the renewable
portfolio standard requirements by a retail seller, the eligibility
of renewable energy credits associated with deliveries of electricity
by an eligible renewable energy resource to a local publicly owned
electric utility, if the Energy Commission determines that the
following conditions have been satisfied:
(1) The local publicly owned electric utility that is procuring
the electricity is in compliance with the requirements of Section
387.
(2) The local publicly owned electric utility has established an
annual renewables portfolio standard target comparable to those
applicable to an electrical corporation, is procuring sufficient
eligible renewable energy resources to satisfy the targets, and will
not fail to satisfy the targets in the event that the renewable
energy credit is sold to another retail seller.