BILL ANALYSIS �
AB 1763
Page 1
ASSEMBLY THIRD READING
AB 1763 (Perea)
As Amended May 5, 2014
Majority vote
UTILITIES & COMMERCE 11-0 NATURAL
RESOURCES 8-0
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|Ayes:|Bradford, Patterson, |Ayes:|Chesbro, Dahle, Bigelow, |
| |Bonilla, Ch�vez, Dahle, | |Garcia, Muratsuchi, |
| |Fong, Beth Gaines, | |Patterson, Stone, |
| |Roger Hern�ndez, Mullin, | |Williams |
| |Quirk, Rendon | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Holden, Jones, | | |
| |Linder, Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the California Energy Commission (CEC) to
prepare a state energy plan for 2030 and 2050. Specifically,
this bill :
1)Requires the CEC to prepare a plan that assures its
electricity and transportation fuel needs will be met in 2030
and 2050, in a manner that complements the state's air
quality, water quality, climate change, energy efficiency, and
renewable energy resources goals as part of its November 2015
Integrated Energy Policy Report (IEPR).
2)Requires the CEC to consider all of the following:
a) Energy forecasts based upon California's current and
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future energy supply mix forecast to 2030 and 2050.
b) An analysis of California's energy infrastructure needs,
including a review of current and new infrastructure needed
for an evolving supply mix forecast to 2030 and 2050.
c) Recommendations on ensuring long-term energy supply
reliability and affordability through 2030 and 2050.
3)States that the report is intended to assist in establishing
state policy and does not independently change any statute,
regulation, or regulatory decision.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, absorbable costs for the CEC to add this plan to its
next scheduled IEPR
COMMENTS :
1)Author's Statement "Over the last fifteen years we have seen
major changes to California's energy system. We have the most
progressive energy policies in the nation and have implemented
some of the most innovative environmental programs to help
curb carbon emissions and improve air quality.
"However, to stay on the forefront of energy policy, we must
have a focused energy plan to guide our policy-making moving
forward. AB 1763 would require the creation of a plan that
will consider California's current and future energy supply
mix, infrastructure needs, and include recommendations to
ensure long-term supply reliability and affordability through
2030 and 2050.
"Balancing our current policies with our long-term needs and
ensuring all Californians, especially those in our
disadvantaged communities, have access to an affordable and
reliable energy supply will be a key component of this plan.
AB 1763 would not change any existing policy or regulation
currently in place, but would build from our current
understanding of energy policy to create a strategic energy
plan for the future."
2)State Lacks Overarching Energy Plan In 2013, the Little
Hoover Commission issued a report titled, Rewiring California:
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Integrating Agendas for Energy Reforms. The key findings of
the report are:
a) "In a short period, the state has adopted a series of
transformative policy initiatives, any of which taken
individually would take years of careful planning to
implement. The policies were adopted one at a time without
the benefit of a cohesive design. Now they are being
implemented simultaneously without an overarching plan."
b) "The state has not produced a comprehensive assessment
of the total cost of implementing this group of policies,
inhibiting consumers and businesses in their ability to
plan for this new future."
c) "The state lacks the ability to impose order on the
multitude of proceedings that determine how these policies
unfold, order which is essential to ensuring the state
maximizes progress toward each of its policies goals."
1)Recent Assessment for Californians for Affordable Energy
(CARE) An August 2013 study by Navigant Consulting,
commissioned by CARE, states that:
Regulatory requirements to lower the carbon intensity
of fuels in California will also introduce
uncertainties associated with additional costs in the
production of transportation fuels, as well as the
associated costs of infrastructure development and/or
modifications needed for compliance. Specifically,
there are substantial levels of uncertainties
associated with:
The ability of industry to significantly reduce
the carbon intensity ("CI") values of alternative
fuels, and to produce, distribute, and dispense them
at an adequate retail scale to support compliance
consistent with the current Low Carbon Fuel Standard
("LCFS") compliance schedule;
The ability of fuel providers to adapt to
reduced demand for gasoline and diesel fuels;
The pace at which California drivers will
purchase and use flexible-fuel vehicles, and the
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ability of industry to manufacture and integrate the
needed engine technologies capable of running on
alternative fuels;
The rate at which compliance credits associated
with alternative fuel consumption and sales can be
generated to offset the deficits that will be
incurred when consuming and selling (i.e. replacing)
conventional gasoline and diesel; and
Overall economic impacts to the fuels industry.
The report goes on to review its preliminary examination of
potential cost impacts:
The 33% RPS [Renewable Portfolio Standard]
requirement will likely lead to increased prices and
rates as utilities attempt to incrementally phase
renewable energy into their portfolios. These
incremental adjustments have already created
challenges in the industry's ability to provide
reliable electric service (e.g. integration;
source-to-load transmission connections; etc.).
Implementation has added to electricity prices
attributable to the "carbon component" of energy
costs. The California Independent System Operator
("CAISO") has indicated that wholesale bids of
gas-fired capacity in 2013 are reflecting the
additional costs of carbon. At current carbon
prices, this can increase bids into the wholesale
market between $6 and $10/MWh [Mega Watt hour],
depending on the efficiency of the plant. The
impact that these carbon prices will have on
electricity bills will differ for end-use consumers
due to procedural rules regarding recycling of
allowance auction revenue.
The California Air Resources Board ("CARB") has
assumed that full and rapid compliance with the LCFS
will result in negligible increases in the price of
gasoline and diesel. However, there appears to be
considerable uncertainty on the eventual cost
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impacts as well as considerable litigation to date
regarding the legality of the rule. This is
compounded by uncertainty regarding the potential
supply of alternative fuels and associated
infrastructure required for compliance."
1)Related Legislation
AB 1779 (Gaines) of the current legislative session, would
require the CEC to prepare a report that assesses the effect
in the aggregate of specified state policies on electricity
reliability and rates and whether these policies are achieving
the stated environmental and economic goals of these policies.
AB 1257 (Bocanegra), Chapter 749, Statutes of 2013, directed
the CEC to analyze natural gas use in the state. The
legislation only focused on natural gas use and was not
directed at all energy sources.
SB 1389 (Bowen), Chapter 568, Statutes of 2002, consolidated
and updated the CEC's reporting requirements into one
integrated report and requires the reporting of the energy
data from all entities that participate in the state energy
markets.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0003470