BILL ANALYSIS �
AB 2363
Page 1
ASSEMBLY THIRD READING
AB 2363 (Dahle)
As Amended May 6, 2014
Majority vote
UTILITIES & COMMERCE 13-0
APPROPRIATIONS 17-0
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|Ayes:|Bradford, Patterson, |Ayes:|Gatto, Bigelow, |
| |Bonilla, Buchanan, | |Bocanegra, Bradford, Ian |
| |Ch�vez, Dahle, Fong, Beth | |Calderon, Campos, |
| |Gaines, Garcia, | |Donnelly, Eggman, Gomez, |
| |Roger Hern�ndez, Jones, | |Holden, Jones, Linder, |
| |Quirk, Rendon | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the California Public Utilities Commission
(PUC) to adopt a nonzero integration cost adder methodology to
use when approving procurement of eligible renewable resources
by a retail seller in excess of the minimum quantities required
by the renewables portfolio standard. Specifically, this bill :
1)Requires the PUC to adopt, by rulemaking, by October 1, 2015,
a nonzero integration cost adder methodology that reflects a
reasonable estimate of the costs of procuring capacity and
energy required to accommodate the electrical generation of
the particular eligible renewable energy resource.
2)Requires the PUC to consider nonzero integration cost adders
prior to approving procurement of eligible renewable energy
resources by a retail seller in excess of the minimum
quantities of electricity products required to be purchased
pursuant to the renewables portfolio standard.
3)Requires the PUC to direct electrical corporations to include
nonzero integration cost adders in their proposed procurement
plans.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, increased costs to the PUC in the $300,000 to
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$600,000 range.
COMMENTS :
1)Purpose. According to the author, despite the PUC's
longstanding interest in integration cost adders that
accurately reflect the differing integration costs associated
with particular renewable technologies, the PUC has failed to
take action to level the playing field. As a result, biomass
and geothermal projects with low integration costs but high
operational and capital costs cannot compete with intermittent
renewables that have relatively lower operational and capital
costs but much higher integration costs that are simply
ignored.
This bill requires the PUC to determine appropriate
integration cost adders that accurately reflect the total
costs, both direct and indirect, of particular renewable
resources.
2)Background. California's Renewable Portfolio Standard (RPS)
mandates that electrical corporations and public utilities
must meet or exceed a target of 33% renewable generation in
their electricity supply portfolios by 2020.
A wide variety of renewable resources are available, and each
has different operating characteristics and costs. Solar and
wind energy are classified as intermittent renewables and
require additional generation to be available as a backup.
The costs of backup generation are referred to as "integration
costs" and are a necessary element of integrating intermittent
renewable resources into the grid.
Other renewable energy resources, such as geothermal and
biopower facilities, are classified as baseload facilities and
are able to operate 24 hours per day without backup
generation.
Integration costs are the costs of backup generation.
Baseload facilities may have lower integration costs than
intermittent resources such as solar and wind.
3)PUC requirements. Electricity procurement plans and renewable
energy contracts proposed by investor owned-utilities (IOUs)
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are subject to the PUC's least cost best fit (LCBF)
requirements. Currently, the PUC does not include integration
costs in its LCBF analysis. Therefore, all renewables are
considered to have no integration costs even though certain
renewable resources have higher integration costs than others.
In the first year of the RPS program (2004), the PUC
recognized that integration costs for intermittent renewables
needed to be captured in a cost adder so that these costs
could inform and improve renewable procurement decisions.
At the time, with limited renewables and low associated
integration costs, the PUC approved an adder of zero. Today,
estimates of integration costs for intermittent renewables
have suggested that this value is no longer zero, but the PUC
has not determined whether a nonzero integration cost adder is
appropriate for such resources.
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083
FN: 0003703