BILL ANALYSIS �
SB 1122
Page 1
SENATE THIRD READING
SB 1122 (Rubio)
As Amended August 24, 2012
Majority vote
SENATE VOTE :38-0
UTILITIES & COMMERCE 13-0 NATURAL
RESOURCES 9-0
-----------------------------------------------------------------
|Ayes:|Bradford, Fletcher, |Ayes:|Chesbro, Knight, |
| |Buchanan, Fong, Fuentes, | |Brownley, Dickinson, |
| |Gorell, Roger Hern�ndez, | |Grove, Halderman, |
| |Huffman, Ma, Nestande, | |Huffman, Monning, Skinner |
| |Skinner, Swanson, Valadao | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 12-0
-----------------------------------------------------------------
|Ayes:|Gatto, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Fuentes, Hall, Hill, | | |
| |Cedillo, Mitchell, | | |
| |Solorio | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Requires statewide procurement of up to 250 megawatts
(MW) of renewable energy from small biomass or biogas
technologies that utilize low emission technologies.
Specifically, this bill :
1)Requires the California Public Utilities Commission (PUC), by
June 1, 2013, to allocate 250 MW of biomass/biogas procurement
by the state's three major investor owned utilities (IOUs).
2)Limits each project to no larger than three MW.
3)Allocates procurement by technology as follows:
SB 1122
Page 2
a) Dairy and other biogas from wastewater treatment,
municipal organic waste diversion, food processing and
codigestion, 110 MW.
b) Agricultural bioenergy 90 MW.
c) Bioenergy using byproducts of sustainable forest
management, 50 MW.
1)Defines, for purposes of this section, bioenergy to mean
biogas or biomass.
2)Specifies that any incentive or subsidy program for these
projects shall be used to reduce contract prices.
3)Deletes provisions prioritizing those projects that would
result in "the most greenhouse gas emissions."
4)Deletes provisions allocating costs proportionally to the
electric service provider and community choice aggregators.
5)Specifies that the PUC shall encourage gas and electrical
corporations to develop and offer programs that facilitate
in-state biogas development.
6)Directs the PUC to work with the California Energy Commission,
the Air Resources Board, the Department of Forestry and Fire
Protection, the Department of Food and Agriculture, and the
Department of Resources Recycling and Recovery to determine if
the technology-specific MW allocations should be reallocated
among the categories.
COMMENTS :
Author's statement . This bill establishes a statewide
procurement requirement of 250 MW from small (less than three
MW) renewable biomass or biogas projects that utilize
low-emission technologies from landfills and organic waste
diversion facilities, waste water treatment plants, food and
agricultural processing facilities, animal waste facilities, and
farms. It requires PUC to allocate the 250 MW among the state's
three major IOUs. PUC's Decision revising the Feed-in Tariff
Program ignores market considerations for small renewable
biomass or biogas projects and fails to promote diversity in
resource technologies. Without differentiating small renewable
SB 1122
Page 3
biomass and biogas projects from other renewable distributed
generation technologies, opportunities for methane pollution
reduction and clean energy generation will not be realized.
Unless and until PUC accounts for benefits to ratepayers and the
environment from reducing air pollution and global warming
emissions by generating electricity from small renewable biomass
and biogas, a separate procurement requirement for these
technologies is necessary.
What is a Feed-in-Tariff (FIT) ? A FIT should be a simplified
contracting mechanism for small renewable generators to sell
power to a utility at predefined terms and conditions, without
contract negotiations. For IOUs, FIT operates as a "must-take"
contract in its portfolio. If the participant generates the
power, IOU must take it and pay for generation from the facility
according to the terms of FIT contract.
Federal law regulates wholesale electricity rates . The Federal
Power Act grants the Federal Energy Regulatory Commission (FERC)
jurisdiction over wholesale electric sales in interstate
commerce, including sales made entirely intrastate and sales
delivered locally to a distribution system. In FERC's ruling
found, among other things that the PUC "may take into account
obligations imposed by the state that, for example, utilities
purchase energy from particular sources of energy or for a long
duration." (FERC Order 133 FERC Section 61,059, October 21,
2010, Ordering Paragraph 26).
FIT procurement contracts . Prior legislation (AB 1969 (Yee),
Chapter 731, Statues of 2006) provided a small renewable
generator FITs in the territories of the three largest IOUs and
provide a 10, 15, or 20-year fixed-price, non-negotiable
contract for systems sized up to 1.5 MW. PUC has a rulemaking
open to implement the terms of SB 32 (Negrete McLeod), Chapter
328, Statutes of 2009, and expand IOU FIT to 3 MWs. The total
program allocation between the three IOUs is approximately 500
MWs.
On May 24, 2012, PUC approved a Decision on the SB 32 FIT which
provide price adjustments and separates FIT into three product
types: as available, peaking, and non-peaking as available.
Stakeholders in PUC proceeding requested a set-aside for
specific technologies, particularly biogas. PUC declined to
adopt a technology specific set-aside because the Legislature
did not did not provide statutory direction to do so. However,
SB 1122
Page 4
the three categories established in PUC do recognize the
attributes of the technologies via the three categories of
procurement. Solar is generally a peaking technology, wind is
generally an as available technology, and biogas/biomass are
generally as available technologies.
If enacted, the 250 MW authorized by SB 1122 would be in
addition to those MW authorized pursuant to SB 32 and would be
limited to biogas and biomass technologies.
Carve out for bioenergy ? Opponents to this bill oppose a carve
out for bioenergy because they prevent fair competition among
renewable energy technologies. Supporter point out that
bioenergy provides baseload renewable energy and that the
program is small and will not impose undue costs on ratepayers.
PUC's report on California's Renewable Portfolio Standards (RPS)
shows that there is significant growth in contracts with solar
photovoltaic and wind technologies while biogas is at best,
tepid growth. Baseload technologies can address issues with
intermittency that have been raised about wind (only generates
when the wind is blowing) and solar (only generates when the sun
shines).
Bioenergy fuels, particularly biogas, can provide a range of
energy services, not limited to generation. Biogas can also be
used to power natural gas vehicles and new efforts are underway
to provide conditioning that will allow biogas to be safely
injected into natural gas pipelines.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0005616