BILL NUMBER: AB 1348 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 4, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 27, 2009
An act to amend Section 399.15 of, and to add Article 2
(commencing with Section 2846) to Chapter 8 of Part 2 of Division 1
of, An act to amend Section 454.5 of, and
to add Section 454.51 to, the Public Utilities Code, relating
to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1348, as amended, Blakeslee. Renewable energy
resources: combined heat and power systems. Electrical
corporation procurement of electricity.
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 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
that an electrical corporation's proposed procurement plan include
certain elements, including a showing that the electrical corporation
will, in order to fulfill its unmet resource needs, until a 20%
renewable resources portfolio is achieved, procure renewable energy
resources with the goal of ensuring that at least an additional 1%
per year of the electricity sold by the electrical
corporation is generated from eligible renewable energy resources,
provided sufficient funds are made available to cover certain
above-market costs. The RPS program requires, in order to
fulfill unmet long-term resource needs, 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 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 require than an electrical corporation's proposed
procurement plan include a showing that the electrical corporation
will, in order to fulfill its unmet resource needs, procure resources
from eligible renewable energy resources in an amount sufficient to
meet its procurement requirements pursuant to the renewables
portfolio standard. The bill would additionally require that an
electrical corporation's proposed procurement plan include a showing
that the electrical corporation will, in order to fulfill its unmet
resource needs, procure resources in a manner that complies with the
requirements for reducing emissions of greenhouse gases adopted by
the State Air Resources Board pursuant to the California Global
Warming Solutions Act of 2006. The bill would require each electrical
corporation to file with the commission a proposed fossil fuel
procurement plan that complies with the requirements for reducing
emissions of greenhouse gases adopted by the State Air Resources
Board pursuant to the California Global Warming Solutions Act of
2006, require the commission to review and accept, modify, or reject
each electrical corporation's fossil fuel procurement plan, and
require each electrical corporation to review and update its fossil
fuel procurement plan as the commission determines to be necessary.
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 the Public Utilities Act
or of any order, decision, rule, direction, demand, or
requirement of the commission is a crime.
Because the provisions of this bill are within the act and
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: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 454.5 of the Public
Utilities Code is amended to read:
454.5. (a) The commission shall specify the allocation of
electricity, including quantity, characteristics, and duration of
electricity delivery, that the Department of Water Resources shall
provide under its power purchase agreements to the customers of each
electrical corporation, which shall be reflected in the electrical
corporation's proposed procurement plan. Each electrical corporation
shall file a proposed procurement plan with the commission not later
than 60 days after the commission specifies the allocation of
electricity. The proposed procurement plan shall specify the date
that the electrical corporation intends to resume procurement of
electricity for its retail customers, consistent with its obligation
to serve. After the commission's adoption of a procurement plan, the
commission shall allow not less than 60 days before the electrical
corporation resumes procurement pursuant to this section.
(b) An electrical corporation's proposed procurement plan shall
include, but not be limited to, all of the following:
(1) An assessment of the price risk associated with the electrical
corporation's portfolio, including any utility-retained generation,
existing power purchase and exchange contracts, and proposed
contracts or purchases under which an electrical corporation will
procure electricity, electricity demand reductions, and
electricity-related products and the remaining open position to be
served by spot market transactions.
(2) A definition of each electricity product, electricity-related
product, and procurement related financial product, including support
and justification for the product type and amount to be procured
under the plan.
(3) The duration of the plan.
(4) The duration, timing, and range of quantities of each product
to be procured.
(5) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services,
including the format and criteria of that procurement process.
(6) An incentive mechanism, if any incentive mechanism is
proposed, including the type of transactions to be covered by that
mechanism, their respective procurement benchmarks, and other
parameters needed to determine the sharing of risks and benefits.
(7) The upfront standards and criteria by which the acceptability
and eligibility for rate recovery of a proposed procurement
transaction will be known by the electrical corporation prior to
execution of the transaction. This shall include an expedited
approval process for the commission's review of proposed contracts
and subsequent approval or rejection thereof. The electrical
corporation shall propose alternative procurement choices in the
event a contract is rejected.
(8) Procedures for updating the procurement plan.
(9) A showing that the procurement plan will achieve the
following:
(A) The electrical corporation will, in order to fulfill its unmet
resource needs and in furtherance of Section 701.3, until a
20 percent renewable resources portfolio is achieved, procure
renewable energy resources with the goal of ensuring that at least an
additional 1 percent per year of the electricity sold by the
electrical corporation is generated from renewable energy resources,
provided sufficient funds are made available pursuant to Sections
399.6 and 399.15, to cover the above-market costs for new renewable
energy resources needs, procure resources from
eligible renewable energy resources in an amount sufficient to meet
its procurement requirements pursuant to the renewables portfolio
standard adopted pursuant to Article 16 (commencing with Section
399.11) of Chapter 2.3 .
(B) The electrical corporation will create or maintain a
diversified procurement portfolio consisting of both short-term and
long-term electricity and electricity-related and demand reduction
products.
(C) The electrical corporation will first meet its unmet resource
needs through all available energy efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
(D) The electrical corporation will meet its unmet resource needs
in a manner that complies with the requirements for reducing
emissions of greenhouse gases adopted by the State Air Resources
Board pursuant to the California Global Warming Solutions Act of 2006
(Division 25.5 (commencing with Section 38500) of the Health and
Safety Code).
(10) The electrical corporation's risk management policy,
strategy, and practices, including specific measures of price
stability.
(11) A plan to achieve appropriate increases in diversity of
ownership and diversity of fuel supply of nonutility electrical
generation.
(12) A mechanism for recovery of reasonable administrative costs
related to procurement in the generation component of rates.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's procurement plan. The commission's review
shall consider each electrical corporation's individual procurement
situation, and shall give strong consideration to that situation in
determining which one or more of the features set forth in this
subdivision shall apply to that electrical corporation. A procurement
plan approved by the commission shall contain one or more of the
following features, provided that the commission may not approve a
feature or mechanism for an electrical corporation if it finds that
the feature or mechanism would impair the restoration of an
electrical corporation's creditworthiness or would lead to a
deterioration of an electrical corporation's creditworthiness:
(1) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services. The
commission shall specify the format of that procurement process, as
well as criteria to ensure that the auction process is open and
adequately subscribed. Any purchases made in compliance with the
commission-authorized process shall be recovered in the generation
component of rates.
(2) An incentive mechanism that establishes a procurement
benchmark or benchmarks and authorizes the electrical corporation to
procure from the market, subject to comparing the electrical
corporation's performance to the commission-authorized benchmark or
benchmarks. The incentive mechanism shall be clear, achievable, and
contain quantifiable objectives and standards. The incentive
mechanism shall contain balanced risk and reward incentives that
limit the risk and reward of an electrical corporation.
(3) Upfront achievable standards and criteria by which the
acceptability and eligibility for rate recovery of a proposed
procurement transaction will be known by the electrical corporation
prior to the execution of the bilateral contract for the transaction.
The commission shall provide for expedited review and either approve
or reject the individual contracts submitted by the electrical
corporation to ensure compliance with its procurement plan. To the
extent the commission rejects a proposed contract pursuant to this
criteria, the commission shall designate alternative procurement
choices obtained in the procurement plan that will be recoverable for
ratemaking purposes.
(d) A procurement plan approved by the commission shall accomplish
each of the following objectives:
(1) Enable the electrical corporation to fulfill its obligation to
serve its customers at just and reasonable rates.
(2) Eliminate the need for after-the-fact reasonableness reviews
of an electrical corporation's actions in compliance with an approved
procurement plan, including resulting electricity procurement
contracts, practices, and related expenses. However, the commission
may establish a regulatory process to verify and assure that each
contract was administered in accordance with the terms of the
contract, and contract disputes which may arise are reasonably
resolved.
(3) Ensure timely recovery of prospective procurement costs
incurred pursuant to an approved procurement plan. The commission
shall establish rates based on forecasts of procurement costs adopted
by the commission, actual procurement costs incurred, or combination
thereof, as determined by the commission. The commission shall
establish power procurement balancing accounts to track the
differences between recorded revenues and costs incurred pursuant to
an approved procurement plan. The commission shall review the power
procurement balancing accounts, not less than semiannually, and shall
adjust rates or order refunds, as necessary, to promptly amortize a
balancing account, according to a schedule determined by the
commission. Until January 1, 2006, the commission shall ensure that
any overcollection or undercollection in the power procurement
balancing account does not exceed 5 percent of the electrical
corporation's actual recorded generation revenues for the prior
calendar year excluding revenues collected for the Department of
Water Resources. The commission shall determine the schedule for
amortizing the overcollection or undercollection in the balancing
account to ensure that the 5 percent threshold is not exceeded. After
January 1, 2006, this adjustment shall occur when deemed appropriate
by the commission consistent with the objectives of this section.
(4) Moderate the price risk associated with serving its retail
customers, including the price risk embedded in its long-term supply
contracts, by authorizing an electrical corporation to enter into
financial and other electricity-related product contracts.
(5) Provide for just and reasonable rates, with an appropriate
balancing of price stability and price level in the electrical
corporation's procurement plan.
(e) The commission shall provide for the periodic review and
prospective modification of an electrical corporation's procurement
plan.
(f) The commission may engage an independent consultant or
advisory service to evaluate risk management and strategy. The
reasonable costs of any consultant or advisory service is a
reimbursable expense and eligible for funding pursuant to Section
631.
(g) The commission shall adopt appropriate procedures to ensure
the confidentiality of any market sensitive information submitted in
an electrical corporation's proposed procurement plan or resulting
from or related to its approved procurement plan, including, but not
limited to, proposed or executed power purchase agreements, data
request responses, or consultant reports, or any combination,
provided that the Office of Ratepayer Advocates and other consumer
groups that are nonmarket participants shall be provided access to
this information under confidentiality procedures authorized by the
commission.
(h) Nothing in this section alters, modifies, or amends the
commission's oversight of affiliate transactions under its rules and
decisions or the commission's existing authority to investigate and
penalize an electrical corporation's alleged fraudulent activities,
or to disallow costs incurred as a result of gross incompetence,
fraud, abuse, or similar grounds. Nothing in this section expands,
modifies, or limits the State Energy Resources Conservation and
Development Commission's existing authority and responsibilities as
set forth in Sections 25216, 25216.5, and 25323 of the Public
Resources Code.
(i) An electrical corporation that serves less than 500,000
electric retail customers within the state may file with the
commission a request for exemption from this section, which the
commission shall grant upon a showing of good cause.
(j) (1) Prior to its approval pursuant to Section 851 of any
divestiture of generation assets owned by an electrical corporation
on or after the date of enactment of the act adding this section, the
commission shall determine the impact of the proposed divestiture on
the electrical corporation's procurement rates and shall approve a
divestiture only to the extent it finds, taking into account the
effect of the divestiture on procurement rates, that the divestiture
is in the public interest and will result in net ratepayer benefits.
(2) Any electrical corporation's procurement necessitated as a
result of the divestiture of generation assets on or after the
effective date of the act adding this subdivision shall be subject to
the mechanisms and procedures set forth in this section only if its
actual cost is less than the recent historical cost of the divested
generation assets.
(3) Notwithstanding paragraph (2), the commission may deem
proposed procurement eligible to use the procedures in this section
upon its approval of asset divestiture pursuant to Section 851.
SEC. 2. Section 454.51 is added to the
Public Utilities Code , to read:
454.51. (a) Each electrical corporation shall file with the
commission a proposed fossil fuel procurement plan that complies with
the requirements for reducing emissions of greenhouse gases adopted
by the State Air Resources Board pursuant to the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code). To the extent feasible, the
fossil fuel procurement plan shall be proposed as part of the
electrical corporation's proposed procurement plan filed with the
commission pursuant to Section 454.5. The fossil fuel procurement
plan shall encompass all facilities that use fossil fuels for the
generation of electricity, including short-term and long-term
electricity procurement contracts, baseload generation, peaking
generation, and generation resources owned by the electrical
corporation.
(b) The commission shall review and accept, modify, or reject each
electrical corporation's fossil fuel procurement plan. The
commission shall, by rulemaking or other appropriate proceeding,
adopt criteria for the rank ordering and selection of the least-cost
and best-fit fossil fuel powered generation resources to facilitate
compliance with the requirements for reducing emissions of greenhouse
gases adopted by the State Air Resources Board pursuant to the
California Global Warming Solutions Act of 2006. This process shall
consider estimates of indirect costs associated with needed
transmission investments and ongoing expenses incurred by the
electrical corporation for emissions of greenhouse gases resulting
from the operation of generating resources utilizing fossil fuels. To
the extent feasible, the commission shall review and accept, modify,
or reject the electrical corporation's fossil fuel procurement plan
as part of the commission's consideration of the electrical
corporation's proposed procurement plan filed pursuant to Section
454.5.
(c) The commission shall require each electrical corporation to
review and update its fossil fuel procurement plan as the commission
determines to be necessary.
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.