BILL ANALYSIS �
AB 2187
Page 1
Date of Hearing: April 9, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2187 (Bradford) - As Amended: March 26, 2012
SUBJECT : Renewable energy resources.
SUMMARY : Allows renewable energy contracts executed after
January 13, 2011 to fully count towards the Renewable Portfolio
Standard (RPS) mandate.
EXISTING LAW :
1)States the California Renewables Portfolio Standard program
requires investor owned utilities, local publicly owned
utilities and energy service providers to increase purchases
of renewable energy such that at least 33% of retail sales are
procured from a renewable energy resource by December 31,
2020.
2)States RPS eligibility requirements are in part determined
upon whether the contract for eligible renewable energy
resources was executed after June 1, 2010.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, this bill seeks to change
the renewable energy contract "grandfathering" date to coincide
with the California Public Utilities Commission (PUC) rules that
governed the RPS program that were in effect through January 13,
2011.
1)Background : In April 2012, the Legislature passed SB 2 X1
(Simitian, Chapter 1, Statutes of 2011-12 First Extraordinary
Session) which recast the State's annual renewable energy goal
from 20% to 33% of a retail energy service provider's retail
sales.
It also conditioned certain eligibility requirements upon
whether the contract for electricity products from eligible
renewable energy resources was executed after June 1, 2010.
2)Compliance gap : Prior to the enactment of SB 2 X1, the state
set an annual renewable energy goal of 20% by December 31,
AB 2187
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2010 of a retail energy service provider's retail sales.
Certain energy service providers made a number of renewable
energy purchases between October 2010 and January 13, 2011 in
an effort to comply with the 20% annual procurement target.
Under current law, SB 2 X1 renewable energy contract
"grandfathering" date creates a RPS compliance gap whereby
retail energy service providers that purchased renewable
energy under the PUC rules at the time of the contract are now
in a situation whereby these purchases may be "stranded" for
compliance purposes. This situation potentially exposes the
retail energy service provider to market losses for those
purchases and/or the probability for penalties from the PUC
for RPS noncompliance. This may be perceived as retail energy
service providers being penalized for making renewable energy
purchases between June 2010 and January 13, 2011 to meet the
State's energy goals which were in accordance with the PUC
policy at that time.
3)AB 2187 modifies the "grandfathering" date from June 1, 2010
to January 14, 2011, but also alters the product category
limitation and adjusts the limits on Tradable Renewable Energy
Certificates (TRECs). Altering the product category limitation
could y eliminate the need for ESPs, IOUs and Publicly Owned
Utilities to buy any additional resources to satisfy the First
Product Category for the foreseeable future. The author may
wish to consider amendments to limit the purpose of the bill
to the grandfathering issue to ensure other elements of the
RPS remain intact.
Suggested amendments:
On Page 5 line 26: Any contract or ownership agreement
originally executed prior to January 14 2011 shall count in
full toward the procurement toward meeting any of the product
content requirements established pursuant to this article
subdivision (c) of this section, for any of the compliance
periods established in subdivision (b) of Section 399.15, if
all the following conditions are met:
On Page 6, after line 12, insert new paragraph: (4) For
retail sellers any contract with eligible renewable energy
resources must also include a supply of electricity that is
scheduled or delivered into a California balancing authority .
AB 2187
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REGISTERED SUPPORT / OPPOSITION :
Support
California Manufacturers & Technology Association (CMTA)
Noble Americas Energy Solutions (Sponsor)
Opposition
The Utility Reform Network (TURN)
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083