BILL ANALYSIS �
AB 2187
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Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2187 (Bradford) - As Amended: April 17, 2012
SUBJECT : Renewable energy resources
SUMMARY : Changes the "grandfathering" deadline for existing
contracts under the Renewables Portfolio Standard (RPS) from
June 1, 2010 to January 13, 2011.
EXISTING LAW :
1)The RPS, amended by SBX1 2 (Simitian) in 2011, requires
investor-owned utilities (IOUs), publicly-owned utilities
(POUs) and certain other retail sellers of electricity,
including electric service providers (ESPs), to achieve the
following renewable energy portfolio targets:
a) 20 percent on average from January 1, 2011 to December
31, 2013.
b) 25 percent by December 31, 2016.
c) 33 percent by December 31, 2020 and each year
thereafter.
2)Establishes "balanced portfolio" requirements for contracts
executed after June 1, 2010 based on the following three
categories of renewable energy products:
a) Renewable energy interconnected to the grid within,
scheduled for direct delivery into, or dynamically
transferred to, a California balancing authority (i.e.,
real renewable energy supplied to the California grid,
located within or directly proximate to the state). Of the
total renewable energy contracts executed after June 1,
2010, the following percentages must fall into this
category:
i) At least 50 percent for the 2011-2013 compliance
period.
ii) At least 65 percent for the 2014-2016 compliance
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period.
iii) At least 75 percent thereafter.
b) Renewable energy where substitute non-renewable energy
is used to provide a reliable delivery schedule into a
California balancing authority (i.e., firmed and shaped
energy where substitute energy is used to compensate for
delivery problems due to intermittent generation or
inadequate transmission capacity from a remote renewable
resource).
c) Renewable energy products not meeting either condition
above, including unbundled renewable energy credits (RECs)
(i.e., the original source of renewable energy must be
located within the western grid, but otherwise need not
have a physical connection to California). Of the total
renewable energy contracts executed after June 1, 2010, the
following percentages may fall into this category:
i) Not more than 25 percent for the 2011-2013
compliance period.
ii) Not more than 15 percent for the 2014-2016
compliance period.
iii) Not more than 10 percent thereafter.
3)Provides that any contract or ownership agreement originally
executed prior to June 1, 2010 is not subject to the balanced
portfolio requirements, but shall count in full if the
renewable energy was eligible under the rules in place at the
time the contract was executed.
THIS BILL changes the "grandfathering" date from June 1, 2010 to
January 13, 2011.
FISCAL EFFECT : Unknown
COMMENTS :
The RPS is the centerpiece of the California's effort to develop
a clean energy system and reduce pollution and greenhouse gas
emissions associated with electricity consumption. Over the
past 10 years, the RPS statutes have evolved to include very
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specific eligibility conditions and limits for various renewable
electricity technologies and products. The 2011 legislation
which codified the current 33 percent by 2020 RPS goal (SBX1 2)
also established product content categories (or "buckets"),
which place the highest value on renewable energy that is
directly delivered into California because it has the greatest
economic, environmental and reliability benefits. Though SBX1 2
was approved by the Legislature in March 2011, the bill was
identical to SB 722 from the prior session, which was amended in
June 2010 to, among other things, establish the June 1, 2010
deadline for contracts to be exempt from the proposed balanced
portfolio requirements.
However, several ESPs executed contracts between June 1, 2010
and January 14, 2011 that do not meet the criteria of the first
bucket and are therefore subject to the limitations of the third
bucket, making the contracts less valuable and potentially
unusable for RPS compliance. The history of the RPS legislation
and related proceedings at the PUC suggests the ESPs were
gambling that the date would change between SB 722 and the final
version of SBX1 2. The effect of the date changes in the bill
is broader than necessary to address the narrow ESP issue and
could apply to an unknown amount of IOU procurement as well,
which would have the effect of weakening the requirements of the
current RPS. The author has proposed amendments, reflecting a
compromise with opponents, to limit application of the bill to
ESPs for the limited purpose of applying the product content
restrictions to contracts executed after January 13, 2011 .
REGISTERED SUPPORT / OPPOSITION :
Support
Noble Americas Energy Solutions (sponsor)
California Manufacturers & Technology Association
Opposition
Large-scale Solar Association
The Utility Reform Network (TURN)
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Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092