BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1139 (Hueso) - California Renewables Portfolio Standard
Program.
Amended: May 6, 2014 Policy Vote: EU&C 6-2
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: May 19, 2014 Consultant: Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1139 would require that retail sellers and
local publically owned electric utilities (POUs) procure a
statewide total of 500 megawatts (MW) of electricity generated
by new geothermal powerplants by December 31, 2024.
Fiscal Impact:
Ongoing costs of $155,000 annually from the Public
Utilities Commission Utilities Reimbursement Account
(special) to the California Public Utilities Commission
(CPUC) for staff to review and approve geothermal
procurement plants for retail sellers and to oversee
compliance.
Onetime costs of $272,000 annually from the General Fund to
the California Energy Commission (CEC) for at least one year
for the development of regulations to determine
proportionate shares of the procurement requirement.
Ongoing costs in the low millions of dollars from the
General Fund and various special funds for increased
electricity costs for electricity used by the state.
Background: Under California's Renewables Portfolio Standard
(RPS) (Public Utilities Code �399.11 et seq.), investor-owned
utilities (IOUs), community choice aggregators (CCAs), and
energy service providers (ESPs), collectively defined as retail
sellers, and POUs are required to increase purchases of
renewable energy such that at least 33% of the total retail
sales are procured from renewable energy resources by December
31, 2020.
RPS eligible resources are electricity from biomass, solar
thermal, photovoltaic, wind, geothermal, fuel cells using
renewable fuels, small hydroelectric generation (less than
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30MWs), digester gas, landfill gas, ocean wave, ocean thermal,
tidal current, and municipal solid waste conversion that uses a
non-combustion thermal process to convert solid waste to a
clean-burning fuel (Public Resources Code �25741).
Section 399.20 of the Public Utilities Code also requires IOUs
to procure renewable generating capacity from: bioenergy
projects including wastewater treatment, municipal organic waste
diversion, food processing and codigestion; dairy and other
agriculture bioenergy; and generation using byproducts of
sustainable forest management.
Proposed Law: This bill would require retail sellers and POUs to
procure 500 MW of electricity generated from baseload geothermal
powerplants that began construction after January 1, 2015.
The CEC would be required to determine each retail seller and
POU's proportionate share of this procurement requirement based
on forecast retail sales for 2018 by June 30, 2015. POUs with
less than 75,000 customers would be exempt and POUs would be
allowed to meet their obligation collectively.
By January 1, 2016, retailer sellers would be required to file
with the CPUC a plan for complying with this procurement
requirement. The CPUC would be required to review and approve,
modify, or reject plans filed by retail sellers. POUs would be
required to file with the CEC, though the CEC would not be
required to take any action with POU's plan. Each entity would
be required to procure at least half of its proportionate share
by December 31, 2019, and its entire share by December 31, 2024.
This bill would expressly exclude these procurements from
counting towards its RPS requirements.
Staff Comments: The CEC would be responsible for determining the
proportionate share of the procurement requirement for each of
the retail sellers and the eight POUs with more than 75,000
customers. To make this determination, the CEC would need to
develop regulations that involve activities including holding
workshops with stakeholders and developing program rules and
guidelines. Based on the CEC's experience in developing RPS
compliance standards for POUs, the CEC anticipates needing two
Energy Commission Specialist I positions at a cost of $272,000
annually. While the bill requires the CEC to determine
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proportionate shares by June 30, 2015, the CEC notes that a
longer time may be needed.
Staff notes that the required CEC activities under this bill do
not fit within the statutorily allowable uses of the CEC's
existing special funds. As such, the CEC would likely need
General Fund monies to pay for its activities.
The CPUC would be responsible to review and approve, modify, or
reject reports filed by retail sellers regarding their plans to
meet their procurement requirements. To complete this review and
approval, as well as to provide compliance oversight, the CPUC
would need one full-time public utilities regulatory analyst as
well as a small increase in workload for an administrative law
judge for a total annual staffing cost of approximately
$150,000.
This bill would also have impacts to the state as electricity
customer. According to the CPUC, in the 2013 RPS solicitations
for the IOUs, the average geothermal price was $103.58/MWh
($86.12/MWh for existing geothermal and $155.96/MWh for new
geothermal). For comparison, the average price for photovoltaic
solar was $73.17/MWh and the price of electricity from a new
combined cycle gas turbine is approximately $100/MWh. Given that
the state is the customer for approximately one percent of the
electricity usage in the state, the state would essentially be
the customer for 5 MW of this bill's procurement requirement.
Estimating that the geothermal price would be roughly $50 more
expensive than non-RPS electricity, the cost to the state as a
customer would be approximately $1.8 million a year in higher
electricity bills.
This bill creates a new crime as a violation of the procurement
and reporting requirements is a crime under the Public Utilities
Act. As such, this bill imposes a state-mandated local program;
however the costs are not reimbursable pursuant to Section 6 of
Article XIII B of the California constitution.