Amended in Assembly August 22, 2014

Amended in Assembly August 19, 2014

Amended in Assembly July 2, 2014

Amended in Senate May 27, 2014

Amended in Senate May 6, 2014

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. 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, to purchase specified minimum quantities of electricity products from eligible renewable energy resources, as defined, for specified compliance periods. begin delete 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. end delete A violation of the Public Utilities Act is a crime.

This bill would require, no later than December 31, 2024, each retail seller of electricity to procure a proportionate share, as determined by the begin delete Energy Commission, end delete begin insert commission, end insert of a statewide total of 500 megawatts of electricity generated by specified baseload geothermal powerplants. The bill would require, no later than January 1, 2016, each retail seller to file with the begin delete Public Utilities Commission end delete begin insert commission end insert a plan for complying with the procurement requirement. The bill would authorize the begin delete Public Utilities Commission end delete begin insert commission end insert to determine whether the electricity procured by retail sellers from these baseload geothermal powerplants shall count towards meeting their obligations under the California Renewables Portfolio Standard Program to purchase specified minimum quantities of electricity products from eligible renewable energy resources. The bill would prohibit the commission from approving a power purchase agreement to procure electricity pursuant to the above-described requirement that would result in a cumulative increase in the average rate for electricity paid by the ratepayers of the retail seller of 1% or more. The bill would require projects generating electricity procured pursuant to the bill’s requirements to demonstrate an environmental benefit to California. 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 bill would require the commission, no later than July 1, 2015, to issue an order instituting an investigation to examine the expiration of power purchase agreements between retail sellers and existing geothermal generation facilities.

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:

SECTION 1.  

The Legislature finds and declares all of the
following:

(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.

(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.

(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 peakload generation.

(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.

(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 the utilization
of geothermal resources. California’s long-term electrical supply
portfolio should include much greater reliance on geothermal
resources.

(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.

(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.

(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.

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

(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 cobenefit of increased production of baseload geothermal
power is in the national interest of the United States.

(k) It is the intent of the Legislature that the procurement
expenditure limitations described in subdivision (c) of Section
399.15 of the Public Utilities Code apply to electricity procured
pursuant to Section 399.35 of the Public Utilities Code.

SEC. 2.  

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

399.35.  

(a) No later than December 31, 2024, each retail seller
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.

(b) No later than June 30, 2015, the begin delete Energy Commission end delete
begin insert commission end insert shall determine the proportionate share of the 500
megawatts of electricity that each retail seller 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 a plan for complying with subdivision (a).
Those plans shall require each retail seller to procure at least
one-half of its proportionate share by December 31, 2019. Those
plans may authorize a retail seller to aggregate its proportionate
share with the proportionate share of another retail seller in order
to minimize administrative and contracting costs. The commission
shall review and approve, modify, or reject plans filed by retail
sellers.

(d) The commission may determine whether electricity procured
pursuant to this section shall count towards meeting the
requirements specified in subparagraph (B) of paragraph (2) of
subdivision (b) of Section 399.15.

(e) The electricity procured pursuant to this section shall be
procured to reasonably minimize costs. The commission shall not
approve a power purchase agreement to procure electricity pursuant
to this section that would result in a cumulative increase in the
average rate for electricity paid by the ratepayers of the retail seller
of 1 percent or more.

(f) No later than July 1, 2015, the commission shall issue an
order instituting an investigation to examine the expiration of
power purchase agreements between retail sellers and existing
geothermal generation facilities. The commission shall investigate
the particular circumstances of those expiring agreements and the
value of renewing those agreements. The investigation shall
include, but not be limited to, the cost-effective value of facilities
for system reliability, achieving greenhouse gas emissions
reduction goals, the local economy and creation of good jobs, and
evaluation of appropriate allocation of reliability costs for any new
or renewed power purchase agreements. The commission shall
revise its procurement review process to ensure the value of an
existing facility is properly accounted for when compared to
alternative renewable and conventional resources and ensure that
facilities with expiring contracts are not disadvantaged by new
procurement of new baseload generation when expiring contracts
are considered for renewal.

(g) Projects generating electricity procured under this section
shall demonstrate an environmental benefit to California, such as
reducing air pollution from fugitive dust, recycling treated
wastewater, or enabling the production of lithium for electric
vehicle batteries.

SEC. 3.  

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.