BILL ANALYSIS �
AB 1990
Page 1
ASSEMBLY THIRD READING
AB 1990 (Fong)
As Amended May 25, 2012
Majority vote
UTILITIES & COMMERCE 9-4
APPROPRIATIONS 12-5
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|Ayes:|Bradford, Buchanan, Fong, |Ayes:|Fuentes, Blumenfield, |
| |Fuentes, Gordon, Huffman, | |Bradford, Charles |
| |Ma, Skinner, Swanson | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Garrick, Gorell, Knight, |Nays:|Harkey, Donnelly, |
| |Valadao | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Establishes a small-scale renewable generation program
in the state's most impacted and disadvantaged communities.
Specifically, this bill :
1)Establishes a small-scale renewable generation program with
the goal of installing 375 megawatts of electrical in most
impacted and disadvantaged communities in the state.
2)Limits per project size to 500 kilowatts.
3)Requires the California Public Utilities Commission (PUC), in
consultation with interested stakeholders, to develop program
elements that achieve certain objectives that encourage the
hiring of employees from the state's most impacted and
disadvantaged communities.
4)Requires investor-owned utilities (IOUs) to file a standard
tariff for electricity purchased pursuant to a clean energy
contract with a small-scale renewable generation facility
owner or operator.
5)Requires the PUC to establish a schedule of standard rates for
electricity that IOUs are required to purchase through clean
energy contracts with a small-scale renewable generation
facility owner or operator.
6)Allows the PUC to provide separate rates for developers who
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cannot use federal tax credit benefits.
7)Requires local publicly owned electric utilities to establish
a schedule of standard tariff rates for electricity purchased
through clean energy contracts from small-scale renewable
generation facilities pursuant to a small-scale generation
program for the utility.
8)Requires the PUC to allocate procurement targets for each
electrical corporation with the goal of procuring 375
megawatts of electrical generating capacity from small-scale
renewable generation facilities statewide by December 31,
2012.
9)Limits the cost of the program to no more than 0.375% of the
total cost of each IOUs forecast retail sales for 2020.
10)Requires the PUC to require IOUs to begin offering these
contracts by January 1, 2014.
11)Requires each public owned utility (POU) to establish a
procurement target for the utility with the goal of procuring
375 megawatts of electrical generating capacity from
small-scale renewable generation facilities statewide by
December 31, 2012.
12)Requires each IOU and POU to post maps on their Internet Web
sites, updated information on the program.
EXISTING LAW :
1)Requires all investor-owned utilities (IOUs) and
publicly-owned utilities (POUs), that serve more than 75,000
retail customers, to develop a standard contract or tariff
(aka feed-in-tariff or FIT) available for renewable energy
facilities up to three megawatts (MWs). Statewide
participation is capped at 750 MWs.
2)Requires FIT contract price for IOUs to include all current
and anticipated environmental compliance costs, including but
not limited to, mitigation of emissions of greenhouse gases
and air pollution offsets associated with the operation of new
generating facilities in the local air pollution control or
air quality management district where the electric generation
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facility is located.
3)Requires the contract price for electricity purchased through
a FIT, adopted by specified POUs, include the value of avoided
costs of distribution and transmission upgrades, the offset of
peak demand and all current and anticipated environmental and
greenhouse gas reduction compliance costs and avoided costs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, ongoing special fund costs to the PUC of about
$180,000 for a utility analyst and a half-time administrative
law judge to implement the new program. �Public Utilities
Reimbursement Account]
COMMENTS : According to the author, "California's most
vulnerable communities - those that have suffered first and
worst from pollution - have not benefited much from renewable
energy policy. This legislation will create jobs and build
cleaner, safer, and healthier neighborhoods. This bill
establishes a FIT for small scale renewable energy projects of
up to 500 kilowatts to spur rooftop solar on commercial
buildings including multifamily buildings, and residential
buildings and to create local green jobs in disadvantaged
communities with high unemployment.
This bill also fills a gap in the green economy where the most
impacted and disadvantaged communities rarely see renewable
energy systems in local communities and who undergo green jobs
training programs, yet often cannot access green jobs."
Background : A feed in tariff is jargon that means a standard
power purchase contract, over a standard period of time, with a
standard payment for each kilowatthour of electricity produced
over the life of the contract. What makes a feed in tariff
unusual from other types of power purchase contracts is that any
project owner or developer can use this contract to enter into
an agreement with a utility because the terms of the contract
and the price are known in advance. This standard form of the
contract allows an owner or a developer to determine the revenue
stream from the project ahead of time. Most power contracts
negotiate the terms and the price or have limiting criteria that
prevent owners or developers from placing bids to provide power.
Distributed generation programs : The PUC is currently in charge
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of several programs to
encourage greater levels of distributed generation. These
include the 3MW FIT that was authorized by SB 32 (Negrete
McLeod), Chapter 328, Statutes of 2009, which is not yet
available, the Reverse Auction Mechanism (RAM), the California
Solar Initiative, Self Generation Incentive Program (SGIP), Net
Metering, Virtual Net Metering, Solar PV programs at Southern
California Edison (SCE) and Pacific Gas and Energy (PG&E), and
the interconnection rule known as Rule 21.
The SB 32 FIT may preclude small generator projects due to the
complexity of the proposed contract. Small generators may not
have the possible revenue associated with a small project to
afford the extensive requirements associated with this FIT. As
a result, SB 32 FIT may be easier for larger developers who
cannot effectively compete to build projects through the other
programs. RAM is a low-bid wins auction that is administered by
IOUs. Restrictions on eligibility limit the number of bidders.
The California Solar Initiative (CSI) and SGIP are for
self-generation only that is not wholesale sale of electricity.
Both of these programs have restrictions on the size of the
project.
As a result, there may be limitations on the structure of the
available programs that prevent these projects from being
constructed. Yet, small projects in a load center are also
recognized to have a potential to have a higher value, as
described in a recently published PUC consultant report:
Local distributed photovoltaics (LDPV) is defined as
photovoltaics (PV) sized such that its output will be
consumed by load on the feeder or substation where it
is interconnected. This distinguishes LDPV from other
characterizations of "distributed PV," which has
typically been defined as 20 MW or less. We focus
the study on local distributed PV because compared to
distributed PV that is located remotely from load,
local PV has the potential for less expensive and
faster interconnection. In addition, it may target
higher value locations on the grid, and may better
achieve other policy goals such as reducing
environmental impact, creating local jobs, enhancing
energy awareness, and promoting redevelopment. In
contrast, some distributed systems of 20 MW or less
that are not "local" may export power to serve remote
loads without providing these advantages.
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Small FIT : This bill establishes a small-scale renewable
generation program with the goal of installing 375 megawatts of
electrical generating capacity from small-scale renewable
generation facilities in the state's most impacted and
disadvantaged communities.
The PUC would be required to open a proceeding no later than
January 31, 2013, to ensure that electrical corporations begin
offering clean energy contracts pursuant to a small FIT by
January 1, 2014.
Each POU would be required to establish 375 megawatts of
electrical generating capacity procurement target by December
31, 2012, in proportion to each utility's percentage share of
the state's total peak demand. However, the governing body of
POU with fewer than 75,000 service
connections may modify or adjust the requirements of this bill
to account for demographic distribution of population meeting
the environmental justice screening method, or as individual
circumstances merit.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0003957