Amended in Senate April 21, 2014

Amended in Senate April 2, 2014

Senate Bill No. 1139

Introduced by Senator Hueso

(Principal coauthor: Assembly Member V. Manuel Pérez)

February 20, 2014

An act to add Section 399.35 to the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1139, as amended, Hueso. California Renewables Portfolio Standard Program.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined, while local publicly owned electric utilities, as defined, are under the direction of their governing begin delete board. end delete begin insert boards. end insert The Public Utilities Act imposes various duties and responsibilities on the commission with respect to the purchase of electricity and requires the commission to review and adopt a renewable energy procurement plan for each electrical corporation pursuant to the California Renewables Portfolio Standard Program. The California Renewables Portfolio Standard Program requires a retail seller, as defined, and local publicly owned electric utilities to purchase specified minimum quantities of electricity products from eligible renewable energy resources, as defined, for specified compliance periods. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to certify eligible renewable energy resources that it determines meet specified statutory criteria. A violation of the Public Utilities Act is a crime.

This bill would require, no later than December 24, 2024, each retail seller begin insert of electricity end insert and local publicly owned electric utility to procure a proportionate share, as determined by the Energy Commission, of a statewide total of 500 megawatts of electricity generated by specified baseload geothermal powerplants. begin insert The bill would exempt a local publicly owned electric utility serving fewer than 75,000 customers from the procurement requirement. end insert The bill would require, no later than January 1, 2016, each retail seller to file with the Public Utilities Commission, and each local publicly owned electric utility to file with the Energy Commission, a plan for complying with begin delete this end delete begin insert the end insert procurement requirement. The bill would provide that the electricity procured by retail sellers and local publicly owned electric utilities from these baseload geothermal powerplants does not count towards meeting their begin delete requirements end delete begin insert obligations end insert under the California Renewables Portfolio Standard Program to purchase specified minimum quantities of electricity products from eligible renewable energy resources. Because a violation of these provisions would be a crime under the Public Utilities Act, the bill would impose a state-mandated local program.

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.

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

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

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begin insert SECTION 1. end insert   

end insert begin insert

The Legislature finds and declares all of the
following:

end insert begin insert

(a) The California Global Warming Solutions Act of 2006 (AB
32) established a policy to reduce emissions of greenhouse gases
to 1990 levels by 2020 and to continue reductions of emissions of
greenhouse gases beyond 2020.

end insert begin insert

(b) Executive Order S-3-05 set a policy to reduce emissions of
greenhouse gases by 80 percent from 1990 levels by 2050.
Decarbonizing the electrical generation sector is a key part of
achieving California’s policy goals for reducing emissions of
greenhouse gases.

end insert begin insert

(c) California’s electrical supply portfolio must move from
merely increasing the proportion of generation from eligible
renewable energy resources to a portfolio of resources that supply
all types of needed generation, including baseload generation,
ramping generation, and peak load generation.

end insert begin insert

(d) Recent shortages in the supply of natural gas and the historic
price volatility of natural gas provide additional confirmation of
the need to reduce reliance on natural gas for electrical generation.

end insert begin insert

(e) California and the western United States have unique,
high-quality solar and geothermal resources. California utilities
are dramatically increasing their utilization of solar resources to
generate electricity, but not effectively increasing utilization of
geothermal resources. California’s long-term electrical supply
portfolio should include much greater reliance on geothermal
resources.

end insert begin insert

(f) Only a fraction of the geothermal resources that could be
supplying California consumers are currently being utilized, and
there has been very little increase in geothermal generation
capacity during the past decade.

end insert begin insert

(g) The current process used to procure new energy resources
eligible under the California Renewables Portfolio Standard
Program does not adequately value the diverse types of renewable
resources needed to supply California with mostly carbon-free
electricity after 2020 while maintaining reliability. Almost no new
baseload eligible renewable energy resources have been procured
during the past decade.

end insert begin insert

(h) To maintain electrical system reliability relying on
generation that, for the most part, emits no greenhouse gases, that
generation must be deliverable to retail customers in real time.

end insert begin insert

(i) California’s electrical corporations should add at least 500
megawatts of electricity from new baseload geothermal generation
by the end of 2024.

end insert begin insert

(j) Many geothermal resources have the additional benefit of
supplying lithium and other strategic minerals. Currently, the
United States is dependent on foreign supplies for these minerals.
Lithium is needed for electric vehicle batteries. The State Air
Resources Board has identified increasing electric vehicles as a
California and national priority as part of implementing AB 32
and reaching goals for reducing emissions of greenhouse gases.
Thus, increasing production of lithium and other strategic minerals
as a co-benefit of increased production of baseload geothermal
power is in the national interest of the United States.

end insert begin insert

(k) To provide for just and reasonable rates, contracts to
procure electricity generated from baseload geothermal power
pursuant to Section 399.35 of the Public Utilities Code should be
based on the cost of generating the electricity, including
environmental mitigation costs, a reasonable rate of return on
investment, and the costs of financing the powerplant.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 399.35 is added to the Public Utilities Code,
to read:

399.35.  

(a) No later than December 31, 2024, each retail seller
and local publicly owned electric utility shall procure a
proportionate share of a statewide total of 500 megawatts of
electricity generated by baseload geothermal powerplants that
began being constructed after January 1, 2015, and that meet the
requirements of paragraph (1) of subdivision (b) of Section 399.16.
begin insert A local publicly owned electric utility serving fewer than 75,000
customers shall not be required to procure a proportionate share. end insert

(b) No later than June 30, 2015, the Energy Commission shall
determine the proportionate share of the 500 megawatts of
electricity that each retail seller and local publicly owned electric
utility is required to procure pursuant to subdivision (a). For
purposes of this section, “proportionate share” shall be based on
the forecast retail sales for the year 2018.

(c) No later than January 1, 2016, each retail seller shall file
with the commission, and each local publicly owned electric utility
shall file with the Energy Commission, a plan for complying with
subdivision (a). Those plans shall require each retail seller and
local publicly owned electric utility to procure at least one-half of
its proportionate share by December 31, 2019. begin insert Those plans may
authorize a retail seller or local publicly owned electric utility to
aggregate its proportionate share with the proportionate share of
another retail seller or local publicly owned electric utility in order
to minimize administrative and contracting costs. end insert The commission
shall review and approve, modify, or reject plans filed by retail
sellers. The Energy Commission shall review and approve, modify,
or reject plans filed by local publicly owned electric utilities.

(d) The electricity procured pursuant to this section shall not
count towards meeting the requirements specified in subparagraph
(B) of paragraph (2) of subdivision (b) of Section 399.15 or
paragraph (2) of subdivision (c) of Section 399.30.

(e) The electricity procured pursuant to this section shall be
procured to reasonably minimize costs. begin insert A contract entered into
pursuant to subdivision (a) by a retail seller or local publicly
owned electric utility for the electricity generated by a baseload
geothermal powerplant that meets the requirements of this section
shall take into account the costs of generating the electricity,
including environmental mitigation costs, a reasonable rate of
return on investment, and the costs of financing the powerplant,
and the costs of the contract shall be recoverable in rates. end insert
Subdivision (c) of Section 399.15 shall not apply to electricity
procured pursuant to this section.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.