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STATE OF CALIFORNIA

    Public Utilities Commission

San Francisco

 

M e m o r a n d u m

Date:

April 17, 2008

   

To:

The Commission

(Meeting of April 24, 2008)

     

From:

Pamela Loomis, Deputy Director

Office of Governmental Affairs (OGA) - Sacramento

   

Subject:

AB 1807 (Fuentes) - Renewable electric generation facilities: feed-in tariffs.

As amended: March 28, 2008

 

· Qualified Facilities (QF) Program:

· Distributed Generation and Net Energy Metering Programs:

· Existing Small Renewables Feed-In Tariff Enacted by AB 1969 (Yee, 2006):

· Long-Term Procurement and Resource Adequacy:

PROGRAM BACKGROUND:

· Public Utilities Code (PU Code) Section 399.20 requires that FiTs be offered by electrical corporations to an electric generation facility with generation capacity up to 1.5 MW for PG&E and SDG&E and up to 1 MW for all other electrical corporations. Section 399.20 requires that the electric generation facility be owned by a public water or wastewater agency. Participants of the tariff pursuant to Section 399.20 are ineligible to receive benefits through ratepayer funded incentive programs. Pursuant to D.07-07-027 PG&E and SCE are required, and SDG&E is able, to offer tariffs adopted in the implementation of §399.20 for non-water and non-wastewater facilities.

· Commission decision (D.) 07-09-040 adopts future pricing and policy for qualifying facilities. Qualifying facilities are able to form standard contracts at a set price for power delivery of renewable resources, which essentially mimics a FiT.

· Currently, CPUC policy is that only the energy purchased by the electrical corporation counts toward that corporation's RPS goals. Likewise, the electrical corporation receives the RECs only for purchased energy, while the customer retains the RECs for energy used onsite. AB 1807 would allow all of the energy produced, including what is used onsite by the customer, to count toward the electrical corporation's RPS. It would also allow the customer to retain the RECs for any energy used onsite. This would effectively allow for double counting of the RPS energy, and allow an unbundling of RPS generation and RECs. Currently, RECs are not allowed to be unbundled from RPS generation. The CPUC currently considers such unbundling as creating "brown power" which is not applicable toward RPS.

LEGISLATIVE HISTORY:

· AB 1969 (Yee, Ch. 731, Statutes of 2006) led to implementation of PU Code Section 399.20. As aforementioned, this Code Section provides California's only FiT to date.

FISCAL IMPACT:

Due to the complexity involved in creating such a program, the Commission would require 2 new permanent senior analysts and 1 permanent junior analyst with a cost of $324,860 to:

· Develop and approve a feed-in tariff for each electrical corporation.

· Develop a methodology for determining a base rate for the feed-in tariff.

· Determine how the base rate would be adjusted over time to reflect improvements in technology and operational practices.

· Establish a reduced tariff rate to reflect federal and state tax and other credits, subsidies, or other incentives received for a renewable electric generation facility.

STATUS:

AB 1807 is currently pending in the Assembly Committee on Utilities and Commerce.

SUPPORT/OPPOSITION:

STAFF CONTACTS:

Bryan Crabb, PURA V brd@cpuc.ca.gov

Office of Governmental Affairs (916) 322-8858

Date: April 17, 2008

BILL LANGUAGE:

BILL NUMBER: AB 1807 AMENDED

INTRODUCED BY Assembly Member Fuentes

JANUARY 16, 2008

An act to add Section Sections 387.2 and

399.21 to the Public Utilities Code, relating to energy.

AB 1807, as amended, Fuentes. Renewable electric generation

facilities: feed-in tariffs.

Under existing law, the Public Utilities Commission is vested with

regulatory authority over public utilities, including electrical

corporations. The Public Utilities Act imposes various duties and

responsibilities on the commission with respect to the purchase of

electricity by electrical corporations and requires the commission to

review and adopt a procurement plan and a renewable energy

procurement plan for each electrical corporation pursuant to the

California Renewables Portfolio Standard Program. The program

requires that a retail seller of electricity, including electrical

corporations, purchase a specified minimum percentage of electricity

generated by eligible renewable energy resources, as defined, in any

given year as a specified percentage of total kilowatthours sold to

retail end-use customers each calendar year (renewables portfolio

standard).

Existing law requires every electrical corporation to file with

the commission a standard tariff for renewable energy output produced

at an electric generation facility, as defined, that is an eligible

renewable energy resource and meets other size, deliverability, and

interconnection requirements. Existing law requires the electrical

corporation to make this tariff available to public water or

wastewater agencies that own and operate an electric generation

facility within the service territory of the electrical corporation,

upon request, on a first-come, first-served basis, until the combined

statewide cumulative rated generating capacity of those electric

generation facilities equals 250 megawatts. Existing law requires

that the electric generation facility be located on property owned or

under the control of the public water or wastewater agency and be

sized to offset part or all of the generator's electricity demand.

Existing law provides that the renewable energy output of an electric

generation facility counts toward the electrical corporation's

renewables portfolio standard and resource adequacy requirements.

This bill would require every electrical corporation to file with

the commission a standard feed-in tariff , as

defined, for the electricity delivered to the grid that

is generated by a renewable electric generation facility, as

defined, that is an eligible renewable energy resource and meets

other size, deliverability, and interconnection requirements. The

bill would require the commission to consult with the Energy

Commission and the Independent System Operator in approving feed-in

tariffs develop a methodology for determining a base

rate to be paid for electricity that is generated by a renewable

electric generation facility and to adjust the base rate

to be paid in future years so that the base rate declines over time

to reflect improvements in technology and operational practices. The

bill would authorize an electrical corporation to make adjustments to

the base rate to incentivize the generation of electricity to meet

load within the electrical corporation ' s

individual service territory, including generation of electricity to

match peak demand and regional adjustments to match deliverability of

electricity to load centers. The bill would require the commission

to reduce the tariff rate to reflect federal and state tax

and other credits, subsidies, or other incentives receive

d for a renewable electric generation facility . The bill would

require the electrical corporation to make the feed-in tariff

available to any customer of the electrical corporation, upon

request, on a first-come, first-served basis, until the electrical

corporation meets its renewables portfolio standard. The

The bill would require the commission to ensure that a

customer's eligibility to receive service pursuant to the feed-in

tariff is determined in advance so that a customer can invest in a

renewable electric generation facility knowing that the customer will

be eligible to receive service pursuant to the feed-in tariff and

the market tariff price that will be

applicable to that customer. The bill would authorize the commission

to place time limitations upon a customer for completion of the

renewable electric generation facility to remain eligible for the

feed-in tariff at the applicable market

tariff price and to establish reasonable operation and

reliability standards for a renewable electric generation facility to

remain eligible for the feed-in tariff at the applicable

market tariff price. The

The bill would provide that any renewable energy

credit, as defined, for electricity delivered to the grid and

purchased by the electrical corporation belongs to the electrical

corporation, and that any renewable energy credit associated with

electricity generated by the customer that is utilized by the

customer and not delivered to the grid remains the property of the

customer. The bill would provide that the electricity generated

by the renewable electric generation facility, including generation

used to offset the customer's own usage of electricity, counts toward

the electrical corporation's renewables portfolio standard and

resource adequacy requirements. The bill would authorize

prohibit a customer receiving electrical service

pursuant to an alternative net metering program, as defined,

to elect from electing to receive

service pursuant to the feed-in tariff filed by an electrical

corporation pursuant to the bill's requirements and would provide

that a customer electing to receive receiving

service pursuant to the feed-in tariff waives any right the

customer otherwise has to thereafter receive service pursuant to an

alternative net metering program.

This bill would require the commission, in consultation

with the Energy Commission, to develop feed-in tariffs for eligible

renewable energy resources of more than 20 megawatts that value a

diverse mix of sources of renewable energy based upon the most

successful feed-in tariffs utilized in Europe. The bill

would require the commission, in consultation with the Independent

System Operator, to establish tariff provisions that facilitate both

the renewables portfolio standard program and the reliable operation

of the grid.

Under existing law, a violation of the Public Utilities Act or an

order or direction of the commission is a crime. Because this bill

would require an order or other action of the commission to implement

its provisions and a violation of that order or action would be a

crime, the bill would impose a state-mandated local program by

creating a new crime.

Existing law requires the State Energy Resources Conservation and

Development Commission (Energy Commission), beginning November 1,

2003, and every 2 years thereafter, to adopt an integrated energy

policy report which includes an assessment and forecast of system

reliability and the need for resource additions, efficiency, and

conservation.

This bill would require the Energy Commission to study the

feasibility and desirability of implementing a feed-in tariff for

eligible renewable energy resources of more than 20 megawatts, based

upon the most successful feed-in tariffs utilized in Europe, in order

to advance the state's energy goals and needs and to report its

findings to the Legislature in the next integrated energy policy

report.

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. Section 387.2 is added to the

Public Utilities Code , to read:

387.2. (a) It is the policy of this state and the intent of the

Legislature to encourage energy production from renewable resources

in an amount commensurate with electricity demand. Utilization of

feed-in tariffs for electricity generated by renewable energy

resources can help the state achieve its goals and assist the utility

in achieving its renewables portfolio standard.

(b) The governing board of each local publicly owned electric

utility is encouraged to develop and implement a feed-in tariff for

the utility that provides for payment for every kilowatthour of

electricity generated by a renewable electric generation facility at

the tariff price approved by the governing board for a period of 10,

15, or 20 years.

SECTION 1. SEC. 2. Section 399.21 is

added to the Public Utilities Code, to read:

399.21. (a) It is the policy of this state and the intent of the

Legislature to encourage energy production from renewable

resources in an amount commensurate with electricity demand.

Legislature, through implementation of a feed-in

tariff for electricity generated by renewable electric generation

facilities, to achieve all of the following:

(1) The generation of electricity from eligible renewable energy

resources in an amount and location commensurate with the growth of

electrical load within each load area.

(2) The deployment of eligible renewable energy resources in a

timely manner in order to eliminate, to the greatest extent possible,

the need for additional powerplants using fossil fuels to generate

electricity.

(3) The growth of green-collar jobs in California by developing

industries that build and deploy eligible renewable energy resources.

(4) The lending of capital for eligible renewable electric

generation facilities by ensuring a stable revenue stream for project

developers.

(5) The adoption of just and reasonable payments for electricity

generated by renewable electric generation facilities that protect

electrical corporations and ratepayers from inflated generation costs

resulting from the exercise of market power arising from future

renewable energy attainment targets and that protect electrical

corporations from receiving insufficient bids through the competitive

bidding process to meet their renewables portfolio standard

purchasing requirements.

(6) To increase the diversity of technologies that are eligible

renewable energy resources.

(b) As used in this section the following terms have the following

meanings:

(1) "Alternative net metering program" means any program that

requires an electrical corporation to purchase or credit electricity

generated by a subscriber pursuant to Article 3 (commencing with

Section 2821) of Chapter 7 of Part 2.

(2) "Eligible renewable energy resource" has the same meaning as

defined in Section 399.12.

(3) "Feed-in tariff" means the schedule detailing the rates,

rules, and terms of service that is filed by an electrical

corporation and approved by the commission that is applicable to the

purchase of electricity generated by a renewable electric generation

facility by the electrical corporation pursuant to this section.

(2)

(4) "Renewable electric generation facility" means a

facility for the generation of electricity that is owned and operated

by a customer of an electrical corporation and that meets all of the

following criteria:

(A) Has an effective generating capacity of more than one and

one-half and not more than 20 megawatts and is located on

property owned or under the control of the customer.

(B) Is interconnected and operates in parallel with the electric

transmission and distribution grid.

(C) Is strategically located and interconnected to the electric

transmission system in a manner that optimizes the deliverability of

electricity generated at the facility to load centers.

(D) Is an eligible renewable energy resource , as defined

in Section 399.12 .

(c) Every electrical corporation shall file with the commission a

standard feed-in tariff for the electricity generated by a renewable

electric generation facility. The commission shall consult with the

Energy Commission and the Independent System Operator in approving

feed-in tariffs.

(d) The feed-in tariff shall provide for payment for every

kilowatthour of electricity generated at a renewable electric

generation facility at the market price as determined by the

commission pursuant to Section 399.15 for a period of 10, 15, or 20

years, as authorized by the commission.

(c) (1) The commission shall develop and approve a feed-in tariff

for each electrical corporation that provides for payment for every

kilowatthour of electricity generated by a renewable electric

generation facility that is delivered to the grid, at the tariff

price approved by the commission for a period of 10, 15, or 20 years.

(2) By June 1, 2010, the commission shall develop both of the

following for each eligible renewable energy resource:

(A) A methodology for determining a base rate to be paid for

electricity that is generated by a renewable electric generation

facility. A separate base rate shall apply for each technology that

is an eligible renewable energy resource. The base rate shall be

calculated based upon the cost of generation, using best available

practices for the individual technology, plus a reasonable profit as

determined by the commission.

(B) A methodology for adjusting the base rate to be paid for

electricity generated by renewable electric generation facilities in

future years so that the base rate declines over time to reflect

improvements in technology and operational practices.

(3) The commission shall, upon development of the methodology

pursuant to paragraph (2), require each electrical corporation to

file a feed-in tariff for approval by the commission. An electrical

corporation may adjust the base rate of its feed-in tariff to

incentivize the generation of electricity to meet load within the

electrical corporation's individual service territory, including

generation of electricity to match peak demand and regional

adjustments to match deliverability of electricity to load areas. Any

adjustment to the base rate shall be based upon future projections

of electricity demand within its service territory or a load area.

(4) The commission shall reduce the tariff rate to reflect federal

and state tax and other credits, subsidies, or other incentives

received for a renewable electric generation facility. The commission

shall review tariff rates at least annually to ensure that the rate

is reduced to reflect federal and state tax and other credits,

subsidies, or other incentives received for a renewable electric

generation facility.

(5) The commission shall annually adjust the feed-in tariff rates

paid for electricity generated by a renewable electric generation

facility for inflation and component price in light of current market

conditions.

(d) Upon adoption of the feed-in tariff by the commission, any

renewable energy credit, as defined in Section 399.12, for

electricity delivered to the grid and purchased by the electrical

corporation shall belong to the electrical corporation. Any renewable

energy credit associated with electricity generated by the customer

that is utilized by the customer and not delivered to the grid shall

remain the property of the customer.

(e) Every electrical corporation shall make the feed-in tariff

available to customers that own and operate a renewable 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 renewables portfolio standard.

An electrical corporation may make the terms of the feed-in tariff

available to customers in the form of a standard contract subject to

commission approval. An electrical corporation shall only be required

to offer service or contracts under this section until that

electrical corporation meets its renewables portfolio standard, as

determined by the commission.

(f) The commission shall ensure that a customer's eligibility to

receive service pursuant to the feed-in tariff is determined in

advance so that a customer can invest in a renewable electric

generation facility knowing that the customer will be eligible to

receive service pursuant to the feed-in tariff and the

market tariff price that will be applicable to

that customer. The commission may place time limitations upon a

customer for completion of the renewable electric generation facility

to remain eligible for the feed-in tariff at the applicable

market tariff price. The commission may

establish reasonable operation and reliability standards for a

renewable electric generation facility to remain eligible for the

feed-in tariff at the applicable market

tariff price.

(g) Every kilowatthour of the electricity generated by the

renewable electric generation facility, including generation used to

offset the customer's own usage of electricity, shall count toward

the electrical corporation's renewables portfolio standard annual

procurement targets for purposes of paragraph (1) of subdivision (b)

of Section 399.15.

(h) The physical generating capacity of a renewable electric

generation facility shall count toward the electrical corporation's

resource adequacy requirement for purposes of Section 380.

(i) (1) A customer receiving electrical service pursuant to an

alternative net metering program may not elect to receive

service pursuant to the feed-in tariff filed by an electrical

corporation pursuant to this section.

(2) A customer that elects to receive

receives electrical service pursuant to the feed-in tariff

filed by an electrical corporation pursuant to this section waives

any right that the customer otherwise has to thereafter receive

service pursuant to an alternative net metering program.

(j) The commission, in consultation with the Energy Commission,

shall develop feed-in tariffs for eligible renewable energy resources

of more than 20 megawatts that value a diverse mix of sources of

renewable energy based upon the most successful feed-in tariffs

utilized in Europe.

(k)

(j) The commission shall, in consultation with the

Independent System Operator, establish tariff provisions that

facilitate both the provisions of this chapter and the reliable

operation of the grid.

SEC. 2. The State Energy Resources Conservation

and Development Commission shall study the feasibility and

desirability of implementing a feed-in tariff for eligible renewable

energy resources of more than 20 megawatts, based upon the most

successful feed-in tariffs utilized in Europe, in order to advance

the state's energy goals and needs. The commission shall report its

findings to the Legislature in the next integrated energy policy

report prepared pursuant to Section 25302 of the Public Resources

Code.

SEC. 2. 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.


1 See the CPUC's current list of CPUC approved and pending RPS contracts available at http://www.cpuc.ca.gov/PUC/energy/electric/RenewableEnergy/rpsprojects.htm

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