Amended in Senate January 6, 2014

Senate Bill No. 674

Introduced by Senator Corbett

February 22, 2013

begin delete An act to amend Section 399.20 of the Public Utilities Code, relating to energy. end delete begin insert An act to amend Section 21159.24 of the Public Resources Code, relating to environmental quality. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 674, as amended, Corbett. begin delete Energy: renewable energy. end delete begin insert California Environmental Quality Act: exemption: residential infill projects. end insert

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(1) The California Environmental Quality Act, commonly referred to as CEQA, requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.

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CEQA exempts from these requirements residential infill projects meeting specified criteria, including, among other things, that a community-level environmental review was adopted or certified within 5 years of the date that the application for the project is deemed complete and the project promotes higher density infill housing. For the purposes of this exemption, CEQA defines “residential” to include a use consisting of residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 15% of the total floor area of the project.

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This bill would instead exempt as “residential” a use consisting of residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 25% of the total building square footage of the project.

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(2) Because this bill would require a lead agency to determine whether a project meets the above criteria to qualify for an exemption from CEQA, the bill would impose a state-mandated local program.

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(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Under existing law, the Public Utilities Commission has regulatory authority over public utilities. Existing law requires every electrical corporation to file with the commission a standard tariff for electricity generated by an electric generation facility, as defined, that qualifies for the tariff, is owned and operated by a retail customer of the electrical corporation, and is located within the service territory of, and developed to sell electricity to, the electrical corporation. Existing law requires an electrical corporation to make the tariff available to the owner or operator of an electric generation facility within the service territory of the electrical corporation, as specified, until the electrical corporation meets its proportionate share of a statewide cap of 750 megawatts, as specified.

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This bill would require the commission to adjust the payment rate for electricity purchased from electrical generation facility projects that integrate energy storage to adequately compensate for the additional value that energy storage system provides.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 21159.24 of the end insert begin insert Public Resources Code end insert
begin insert is amended to read: end insert

21159.24.  

(a) Except as provided in subdivision (b), this
division does not apply to a project if all of the following criteria
are met:

(1) The project is a residential project on an infill site.

(2) The project is located within an urbanized area.

(3) The project satisfies the criteria of Section 21159.21.

(4) Within five years of the date that the application for the
project is deemed complete pursuant to Section 65943 of the
Government Code, community-level environmental review was
certified or adopted.

(5) The site of the project is not more than four acres in total
area.

(6) The project does not contain more than 100 residential units.

(7) Either of the following criteria are met:

(A) (i) At least 10 percent of the housing is sold to families of
moderate income, or not less than 10 percent of the housing is
rented to families of low income, or not less than 5 percent of the
housing is rented to families of very low income.

(ii) The project developer provides sufficient legal commitments
to the appropriate local agency to ensure the continued availability
and use of the housing units for very low, low-, and
moderate-income households at monthly housing costs determined
pursuant to paragraph (3) of subdivision (h) of Section 65589.5 of
the Government Code.

(B) The project developer has paid or will pay in-lieu fees
pursuant to a local ordinance in an amount sufficient to result in
the development of an equivalent number of units that would
otherwise be required pursuant to subparagraph (A).

(8) The project is within one-half mile of a major transit stop.

(9) The project does not include any single level building that
exceeds 100,000 square feet.

(10) The project promotes higher density infill housing. A
project with a density of at least 20 units per acre shall be
conclusively presumed to promote higher density infill housing.
A project with a density of at least 10 units per acre and a density
greater than the average density of the residential properties within
1,500 feet shall be presumed to promote higher density housing
unless the preponderance of the evidence demonstrates otherwise.

(b) Notwithstanding subdivision (a), this division shall apply
to a development project that meets the criteria described in
subdivision (a), if any of the following occur:

(1) There is a reasonable possibility that the project will have
a project-specific, significant effect on the environment due to
unusual circumstances.

(2) Substantial changes with respect to the circumstances under
which the project is being undertaken that are related to the project
have occurred since community-level environmental review was
certified or adopted.

(3) New information becomes available regarding the
circumstances under which the project is being undertaken and
that is related to the project, that was not known, and could not
have been known, at the time that community-level environmental
review was certified or adopted.

(c) If a project satisfies the criteria described in subdivision (a),
but is not exempt from this division as a result of satisfying the
criteria described in subdivision (b), the analysis of the
environmental effects of the project in the environmental impact
report or the negative declaration shall be limited to an analysis
of the project-specific effect of the projects and any effects
identified pursuant to paragraph (2) or (3) of subdivision (b).

(d) For the purposes of this section, “residential” means a use
consisting of either of the following:

(1) Residential units only.

(2) Residential units and primarily neighborhood-serving goods,
services, or retail uses that do not exceed begin delete 15 end delete begin insert 25 end insert percent of the total
begin delete floor area end delete begin insert building square footage end insert of the project.

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begin insert SEC. 2. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
a local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.

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SECTION 1.  

Section 399.20 of the Public Utilities Code is
amended to read:

399.20.  

(a) It is the policy of this state and the intent of the
Legislature to encourage electrical generation from eligible
renewable energy resources.

(b) As used in this section, “electric generation facility” means
an electric generation facility located within the service territory
of, and developed to sell electricity to, an electrical corporation
that meets all of the following criteria:

(1) Has an effective capacity of not more than three megawatts.

(2) Is interconnected and operates in parallel with the electrical
transmission and distribution grid.

(3) Is strategically located and interconnected to the electrical
transmission and distribution grid in a manner that optimizes the
deliverability of electricity generated at the facility to load centers.

(4) Is an eligible renewable energy resource.

(c) Every electrical corporation shall file with the commission
a standard tariff for electricity purchased from an electric
generation facility. The commission may modify or adjust the
requirements of this section for any electrical corporation with less
than 100,000 service connections, as individual circumstances
merit.

(d) (1) The tariff shall provide for payment for every
kilowatthour of electricity purchased from an electric generation
facility for a period of 10, 15, or 20 years, as authorized by the
commission. The payment shall be the market price determined
by the commission pursuant to paragraph (2) and shall include all
current and anticipated environmental compliance costs, including,
but not limited to, mitigation of emissions of greenhouse gases
and air pollution offsets associated with the operation of new
generating facilities in the local air pollution control or air quality
management district where the electric generation facility is
located.

(2) The commission shall establish a methodology to determine
the market price of electricity for terms corresponding to the length
of contracts with an electric generation facility, in consideration
of the following:

(A) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation’s general
procurement activities as authorized by the commission.

(B) The long-term ownership, operating, and fixed-price fuel
costs associated with fixed-price electricity from new generating
facilities.

(C) The value of different electricity products including
baseload, peaking, and as-available electricity.

(3) The commission may adjust the payment rate to reflect the
value of every kilowatthour of electricity generated on a
time-of-delivery basis.

(4) The commission shall ensure, with respect to rates and
charges, that ratepayers that do not receive service pursuant to the
tariff are indifferent to whether a ratepayer with an electric
generation facility receives service pursuant to the tariff.

(5) The commission shall adjust the payment rate for electricity
purchased from electrical generation facility projects that integrate
energy storage to adequately compensate for the additional value
that energy storage system provides. The adjustment shall reflect
all the benefits that the energy storage system provides to the
electrical corporation and the grid.

(e) An electrical corporation shall provide expedited
interconnection procedures to an electric generation facility located
on a distribution circuit that generates electricity at a time and in
a manner so as to offset the peak demand on the distribution circuit,
if the electrical corporation determines that the electric generation
facility will not adversely affect the distribution grid. The
commission shall consider and may establish a value for an electric
generation facility located on a distribution circuit that generates
electricity at a time and in a manner so as to offset the peak demand
on the distribution circuit.

(f) (1) An electrical corporation shall make the tariff available
to the owner or operator of an electric generation facility within
the service territory of the electrical corporation, upon request, on
a first-come-first-served basis, until the electrical corporation meets
its proportionate share of a statewide cap of 750 megawatts
cumulative rated generation capacity served under this section and
Section 387.6. The proportionate share shall be calculated based
on the ratio of the electrical corporation’s peak demand compared
to the total statewide peak demand.

(2) By June 1, 2013, the commission shall, in addition to the
750 megawatts identified in paragraph (1), direct the electrical
corporations to collectively procure at least 250 megawatts of
cumulative rated generating capacity from developers of bioenergy
projects that commence operation on or after June 1, 2013. The
commission shall, for each electrical corporation, allocate shares
of the additional 250 megawatts based on the ratio of each electrical
corporation’s peak demand compared to the total statewide peak
demand. In implementing this paragraph, the commission shall do
all of the following:

(A) Allocate the 250 megawatts identified in this paragraph
among the electrical corporations based on the following
categories:

(i) For biogas from wastewater treatment, municipal organic
waste diversion, food processing, and codigestion, 110 megawatts.

(ii) For dairy and other agricultural bioenergy, 90 megawatts.

(iii) For bioenergy using byproducts of sustainable forest
management, 50 megawatts. Allocations under this category shall
be determined based on the proportion of bioenergy that sustainable
forest management providers derive from sustainable forest
management in fire threat treatment areas, as designated by the
Department of Forestry and Fire Protection.

(B) Direct the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process.

(C) Coordinate, to the maximum extent feasible, any incentive
or subsidy programs for bioenergy with the agencies listed in
subparagraph (A) of paragraph (3) in order to provide maximum
benefits to ratepayers and to ensure that incentives are used to
reduce contract prices.

(D) The commission shall encourage gas and electrical
corporations to develop and offer programs and services to facilitate
development of in-state biogas for a broad range of purposes.

(3) (A) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, the State
Air Resources Board, the Department of Forestry and Fire
Protection, the Department of Food and Agriculture, and the
Department of Resources Recycling and Recovery, may review
the allocations of the 250 additional megawatts identified in
paragraph (2) to determine if those allocations are appropriate.

(B) If the commission finds that the allocations of the 250
additional megawatts identified in paragraph (2) are not
appropriate, the commission may reallocate the 250 megawatts
among the categories established in subparagraph (A) of paragraph
(2).

(4) For the purposes of this subdivision, “bioenergy” means
biogas and biomass.

(g) The electrical corporation may make the terms of the tariff
available to owners and operators of an electric generation facility
in the form of a standard contract subject to commission approval.

(h) Every kilowatthour of electricity purchased from an electric
generation facility shall count toward meeting the electrical
corporation’s renewables portfolio standard annual procurement
targets for purposes of paragraph (1) of subdivision (b) of Section
399.15.

(i) The physical generating capacity of an electric generation
facility shall count toward the electrical corporation’s resource
adequacy requirement for purposes of Section 380.

(j) (1) The commission shall establish performance standards
for any electric generation facility that has a capacity greater than
one megawatt to ensure that those facilities are constructed,
operated, and maintained to generate the expected annual net
production of electricity and do not impact system reliability.

(2) The commission may reduce the three megawatt capacity
limitation of paragraph (1) of subdivision (b) if the commission
finds that a reduced capacity limitation is necessary to maintain
system reliability within that electrical corporation’s service
territory.

(k) (1) Any owner or operator of an electric generation facility
that received ratepayer-funded incentives in accordance with
Section 379.6 of this code, or with Section 25782 of the Public
Resources Code, and participated in a net metering program
pursuant to Sections 2827, 2827.9, and 2827.10 of this code prior
to January 1, 2010, shall be eligible for a tariff or standard contract
filed by an electrical corporation pursuant to this section.

(2) In establishing the tariffs or standard contracts pursuant to
this section, the commission shall consider ratepayer-funded
incentive payments previously received by the generation facility
pursuant to Section 379.6 of this code or Section 25782 of the
Public Resources Code. The commission shall require
reimbursement of any funds received from these incentive
programs to an electric generation facility, in order for that facility
to be eligible for a tariff or standard contract filed by an electrical
corporation pursuant to this section, unless the commission
determines ratepayers have received sufficient value from the
incentives provided to the facility based on how long the project
has been in operation and the amount of renewable electricity
previously generated by the facility.

(3) A customer that receives service under a tariff or contract
approved by the commission pursuant to this section is not eligible
to participate in any net metering program.

(l) An owner or operator of an electric generation facility
electing to receive service under a tariff or contract approved by
the commission shall continue to receive service under the tariff
or contract until either of the following occurs:

(1) The owner or operator of an electric generation facility no
longer meets the eligibility requirements for receiving service
pursuant to the tariff or contract.

(2) The period of service established by the commission pursuant
to subdivision (d) is completed.

(m) Within 10 days of receipt of a request for a tariff pursuant
to this section from an owner or operator of an electric generation
facility, the electrical corporation that receives the request shall
post a copy of the request on its Internet Web site. The information
posted on the Internet Web site shall include the name of the city
in which the facility is located, but information that is proprietary
and confidential, including, but not limited to, address information
beyond the name of the city in which the facility is located, shall
be redacted.

(n) An electrical corporation may deny a tariff request pursuant
to this section if the electrical corporation makes any of the
following findings:

(1) The electric generation facility does not meet the
requirements of this section.

(2) The transmission or distribution grid that would serve as the
point of interconnection is inadequate.

(3) The electric generation facility does not meet all applicable
state and local laws and building standards and utility
interconnection requirements.

(4) The aggregate of all electric generating facilities on a
distribution circuit would adversely impact utility operation and
load restoration efforts of the distribution system.

(o) Upon receiving a notice of denial from an electrical
corporation, the owner or operator of the electric generation facility
denied a tariff pursuant to this section shall have the right to appeal
that decision to the commission.

(p) In order to ensure the safety and reliability of electric
generation facilities, the owner of an electric generation facility
receiving a tariff pursuant to this section shall provide an inspection
and maintenance report to the electrical corporation at least once
every other year. The inspection and maintenance report shall be
prepared at the owner’s or operator’s expense by a
California-licensed contractor who is not the owner or operator of
the electric generation facility. A California-licensed electrician
shall perform the inspection of the electrical portion of the
generation facility.

(q) The contract between the electric generation facility
receiving the tariff and the electrical corporation shall contain
provisions that ensure that construction of the electric generating
facility complies with all applicable state and local laws and
building standards, and utility interconnection requirements.

(r) (1) All construction and installation of facilities of the
electrical corporation, including at the point of the output meter
or at the transmission or distribution grid, shall be performed only
by that electrical corporation.

(2) All interconnection facilities installed on the electrical
corporation’s side of the transfer point for electricity between the
electrical corporation and the electrical conductors of the electric
generation facility shall be owned, operated, and maintained only
by the electrical corporation. The ownership, installation, operation,
reading, and testing of revenue metering equipment for electric
generating facilities shall only be performed by the electrical
corporation.

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