STATE OF CALIFORNIA |
PUBLIC UTILITIES COMMISSIONSan Francisco | ||
M e m o r a n d u m | |||
Date: |
APRIL 1, 2005 | ||
To: |
The Commission (Meeting of April 7, 2005) | ||
From: |
Delaney L. Hunter, Director Office of Governmental Affairs (OGA) - Sacramento | ||
Subject: |
AB 1585 (Blakeslee) Renewable energy resources: California Renewables Portfolio StandardAs Introduced February 22, 2005 | ||
LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: Support in concept
SUMMARY: This bill would make several changes to the existing Renewables Portfolio Standard (RPS) Program. Principal changes include: accelerating the 20% renewable energy target from 2017 to 2010; requiring municipal utilities to increase annual renewable procurement by 1% per year, to reach 20% by 2017; directing the CEC and CPUC to develop a system of Tradable Renewable Energy Certificates (TRECs) as a means of compliance with RPS goals (effectively, the purchasing of the social benefits of renewable energy without purchasing the energy itself). The CPUC and CEC would be granted authority to limit the utilization of TRECs in RPS procurement, and to set goals for renewable energy beyond the 2010 timeframe.
DIGEST: Existing law, (Public Utilities Act) requires the Commission to review and adopt a procurement plan and a renewable energy procurement plan for each electrical corporation pursuant to the RPS program. The RPS requires each electrical corporation to increase its total procurement of eligible renewable energy resources by at least an additional 1% of retail sales per year so that 20% of its retail sales are procured from eligible renewable energy resources no later than December 31, 2017.
This bill would revise the target of the RPS to achieve an increase in the amount of electricity procured from eligible renewable energy resources, so that it equals 20% of the total electricity sold to retail customers in California per year by the year 2010. The Energy Commission would be required to review the feasibility of increasing the target to 33% by the year 2020. The bill would authorize the Commission to set procurement targets for any year beginning 2011, in excess of 20% and to vary procurement targets among electrical corporations. The bill would require the Commission adopt flexible rules that permit an electrical corporation to purchase TRECs. The bill would authorize the Commission to limit the quantity of TRECs that an electrical corporation is authorized to procure in meeting its annual renewable energy procurement targets.
This bill adds P.U. Code sec. 399.17 which would authorize an ESP or CCA to meet its obligations under the RPS program through procurement of TRECs. This new code section would also make an ESP or CCA ineligible to receive supplemental energy payments unless it is in compliance with its obligations under the RPS program.
Under existing P.U. Code sec. 387, a local publicly owned electric utility is responsible for implementing and enforcing a renewables portfolio standard the recognizes the intent of the Legislature to encourage renewable energy resources.
This bill would amend P.U. Code sec. 387 to require that a local publicly owned electric utility increase its total procurement of eligible renewable energy resources by at least 1% per year from 2004 procurement levels, so that at least 20% of the utility's retail sales of electricity are procured by 2017. This bill would allow a local publicly owned electric utility to meet its annual procurement target through the procurement of TRECs.
DIVISION ANALYSIS (DSP): The bill is consistent with ongoing Commission efforts to develop the RPS program. The bill encourages the continued collaboration between the CPUC and CEC on renewable energy issues. The CEC is charged with doing the following under the proposed legislation:
· Reporting to the Legislature regarding the feasibility of increasing the RPS target to 33% by 2020.
· Contracting for an accounting system to track TREC activity.
· Developing a renewable energy report regarding proposed funding activity for the period 2007-2012. Existing law requires that the CEC prepare an "investment plan," which must subsequently be approved by the Legislature. This bill eliminates this Legislative authorization requirement.
· Establishing an aggregate "baseline" assessment of present renewable energy procurement by the municipal utilities in total, and establishing an "annual procurement target' (APT) for the municipal utilities as a whole.
Certain relatively insignificant aspects of Commission oversight of the RPS program are limited via this bill.
· In describing the contents of the required RPS procurement plan, the phrase "but is not limited to" is struck, suggesting that the Commission could not add other planning requirements. However, the stipulated planning requirements are quite expansive, and nothing in this bill would prohibit the Commission from requiring other elements in, for example, the general long-term procurement planning process.
· Similarly, the phrase "but not limited to" is struck from the Code section that describes the flexible compliance mechanisms the Commission can allow for electrical corporations. The TREC option is added here, in addition to the provisions the Commission has previously implemented, resulting in no new restrictions on present Commission activity.
RECOMMENDED AMENDMENTS:
The bill exhibits one inconsistency that should be pursued before the bill reaches its final form, but which does not present a fatal flaw:
· P.U. Code sec. 399.15 (g) would add a requirement that the Commission and CEC "evaluate regional trading of renewable energy certificates" (emphasis added) to determine if any barriers to RPS success are being created. The language directing the Commission and CEC to develop the TREC system, however, emphasizes the continued deployment of statutorily defined "eligible renewable energy resources," which must be delivered in state under present law. This language creates ambiguity as to whether the TREC program would encompass generation that is not delivered in California, and is therefore of no benefit to the state's goals for resource adequacy.
LEGISLATIVE HISTORY
SB 1078 and SB 1038 (Stats. 2002) established the RPS program. SB 1478 (Stats. 2004) would have established a TREC system, but was vetoed by the Governor.
STATUS:
Set for hearing in the Assembly Utilities & Commerce Committee on April 18, 2005.
SUPPORT/OPPOSITION:
Support: Schwarzenegger Administration (sponsor)
Opposition: None on file.
STAFF CONTACTS:
Tom Flynn trf@cpuc.ca.gov
OGA (916) 324-8689
Dan Adler dpa@cpuc.ca.gov
DSP (415) 355-5586
Date: April 1, 2005
BILL LANGUAGE:
BILL NUMBER: AB 1585 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 22, 2005
An act to amend Sections 25740, 25746, 25747, and 25750 of, to add
Section 25752 to, and to repeal Section 25749 of, the Public
Resources Code, to amend Sections 385, 387, 399.6, 399.12, 399.13,
399.14, and 399.15 of, and to add Section 399.17 to, the Public
Utilities Code, relating to renewable energy resources, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1585, as introduced, Blakeslee. Renewable energy resources:
California Renewables Portfolio Standard.
(1) Existing law expresses the intent of the Legislature, in
establishing the Renewable Energy Resources Program, to increase the
amount of renewable electricity generated per year, so that it equals
at least 17% of the total electricity generated for consumption in
California per year by 2006.
This bill would declare the additional intent of the Legislature
to increase the amount of electricity generated per year from
renewable sources, so that it equals 20% of the total electricity
sold to retail customers in California per year by the year 2010.
(2) The Public Utilities Act imposes various duties and
responsibilities on the Public Utilities Commission (CPUC) with
respect to the purchase of electricity and requires the CPUC 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, community choice aggregators, and electric service
providers, but not including local publicly owned electric utilities,
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). The
renewables portfolio standard requires each electrical corporation to
increase its total procurement of eligible renewable energy
resources by at least an additional 1% of retail sales per year so
that 20% of its retail sales are procured from eligible renewable
energy resources no later than December 31, 2017.
Existing law requires the State Energy Resources Conservation and
Development Commission (Energy Commission) to certify eligible
renewable energy resources, to design and implement an accounting
system to verify compliance with the renewables portfolio standard by
retail sellers, and to allocate and award supplemental energy
payments to cover above-market costs of renewable energy.
This bill would revise the target of the renewables portfolio
standard to achieve an increase in the amount of electricity procured
from eligible renewable energy resources, so that it equals 20% of
the total electricity sold to retail customers in California per year
by the year 2010. The Energy Commission would be required to review
the feasibility of increasing the target to 33% by the year 2020, and
to report the results of the review to the Governor and Legislature
by July 1, 2007. The bill would authorize the CPUC to set procurement
targets for any year beginning 2011, in excess of 20% and to vary
procurement targets among electrical corporations. The bill would
require the CPUC to adopt flexible rules that permit an electrical
corporation to purchase tradeable renewable energy certificates, as
defined, from an eligible renewable energy resource. The bill would
authorize the CPUC, in consultation with the Energy Commission, to
limit the quantity of tradeable renewable energy certificates that an
electrical corporation is authorized to procure in meeting its
annual renewable energy procurement targets. The bill would authorize
an electric service provider or community choice aggregator to meet
its obligations under the renewables portfolio standard program
through procurement of tradeable renewable energy certificates. The
bill would authorize the Energy Commission, notwithstanding any other
law, to contract for services to develop and implement an accounting
system to verify compliance with the renewables portfolio standard.
The bill would make an electric service provider or community choice
aggregator ineligible to receive supplemental energy payments unless
it is in compliance with its obligations under the renewables
portfolio standard program.
(3) Under the Public Utilities Act, the CPUC requires electrical
corporations to identify a separate rate component to fund programs
that enhance system reliability and provide in-state benefits. This
rate component is a nonbypassable element of local distribution and
collected on the basis of usage. The funds are collected to support
cost-effective energy efficiency and conservation activities, public
interest research and development not adequately provided by
competitive and regulated markets, and renewable energy resources
(renewable energy public goods charge). Existing law requires the
Energy Commission to transfer funds collected by electrical
corporations for in-state operation and development of existing and
new and emerging renewable resources technologies into the Renewable
Resource Trust Fund, to fund specified programs.
Under the Reliable Electric Service Investments Act, the Energy
Commission was required to hold moneys collected for renewable energy
and deposited in the Renewable Resource Trust Fund until further
action by the Legislature. The act requires the Energy Commission to
create an initial investment plan, in accordance with specified
objectives, to govern the allocation of funds in the Renewable
Resource Trust Fund collected between January 1, 2002, and January 1,
2007, in order to ensure a fully competitive and self sustaining
California renewable energy supply. Existing law requires the Energy
Commission, on or before March 31, 2006, to prepare an investment
plan proposing the application of moneys collected between January 1,
2007, and January 1, 2012.
This bill would delete the requirement that moneys collected for
renewable energy and deposit in the Renewal Resource Trust fund be
held until further action by the Legislature. The bill would require
the Energy Commission, on or before March 31, 2006, to prepare a
report, rather than an investment plan, describing the application of
moneys collected between January 1, 2007, and January 1, 2012, and
to describe the use of any funds applied toward program activities
during the period January 1, 2002, through the date of the report.
(4)Under existing law, 1% of the money collected as part of the
renewable energy public goods charge is required to be deposited into
the Renewable Resource Consumer Education Account, which is
continuously appropriated to support dissemination of information on
renewable energy technologies and to help develop a consumer market
for renewable energy and for small-scale emerging renewable energy
technologies.
This bill would additionally authorize that moneys in the account
be used to verify compliance with the renewables portfolio standard
program. By expanding the purposes for which moneys in a continuously
appropriated fund may be spent, the bill would make an
appropriation.
(5) Under existing law, the governing board of a local publicly
owned electric utility is responsible for implementing and enforcing
a renewables portfolio standard that recognizes the intent of the
Legislature to encourage renewable energy resources, while taking
into consideration the effect of the standard on rates, reliability,
and financial resources and the goal of environmental improvement.
Existing law requires the governing board of a local publicly owned
electric utility to annually report certain information relative to
renewable energy resources to its customers. Existing law requires
each local publicly owned electric utility to establish a
nonbypassable usage based charge to fund investments in specified
public purpose programs, including energy efficiency and
conservation, investment in renewable energy resources, research,
development and demonstration programs, and providing services for
low-income electricity customers. The charge is required to be not
less than the lowest expenditure of the 3 largest electrical
corporations in California based on a percentage of revenue.
This bill would require that a local publicly owned electric
utility increase its total procurement of eligible renewable energy
resources by at least 1% per year from 2004 procurement levels, so
that at least 20% of the utility's retail sales of electricity are
procured from eligible renewable energy resources by the year 2017.
The bill would authorize a local publicly owned electric utility to
meets its annual procurement target through the procurement of
tradeable renewable energy certificates. The bill would require the
governing board of a local publicly owned electric utility to report
annually to the Energy Commission, the information relative to
renewable energy resources that is annually reported to the utility's
customers. By placing additional requirements upon local publicly
owned electric utilities, the bill would impose a state-mandated
local program. The bill would require that the nonbypassable usage
based charge established by a local publicly owned electric utility
be set in an amount sufficient to ensure compliance by the utility
with the renewables portfolio standard.
(6) Under existing law, the Energy Commission was required to
prepare and submit to the Legislature by December 1, 2003, a
comprehensive renewable electricity generation resource plan.
This bill would delete that requirement.
(7) Under existing law, a violation of the Public Utilities Act or
an order or direction of the CPUC is a crime.
Certain provisions of this bill would be part of the act and an
order or other action of the CPUC would be required to implement
certain of the provisions. Because a violation of the bill's
provisions or of an implementing order or action of the CPUC would be
a crime, this bill would impose a state-mandated local program by
creating new crimes.
(8)
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 specified reasons.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25740 of the Public Resources Code is amended
to read:
25740. It is the intent of the Legislature in establishing this
program, to increase the amount of renewable
electricity generated per year from eligible renewable energy
resources , so that it equals at least 17 percent of the total
electricity generated for consumption in California per year by 2006
, and equals 20 percent of the total electricity sold to retail
customers in California per year by the year 2010 .
SEC. 2. Section 25746 of the Public Resources Code is amended to
read:
25746. One percent of the money collected pursuant to the
renewable energy public goods charge shall be used in accordance with
the report to promote renewable energy and disseminate information
on renewable energy technologies, including emerging renewable
technologies, and to help develop a consumer market for renewable
energy and for small-scale emerging renewable energy technologies
, and to verify compliance with the renewables portfolio
standard program .
SEC. 3. Section 25747 of the Public Resources Code is amended to
read:
25747. (a) The commission shall adopt guidelines governing the
funding programs authorized under this chapter, at a publicly noticed
meeting offering all interested parties an opportunity to comment.
Substantive changes to the guidelines may not be adopted without at
least 10 days' written notice to the public. The public notice of
meetings required by this subdivision may not be less than 30 days.
Notwithstanding any other provision of law, any guidelines adopted
pursuant to this chapter or Section 399.13 of the Public Utilities
Code, shall be exempt from the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. The Legislature declares that the changes made
to this subdivision by the act amending this section during the 2002
portion of the 2001-02 Regular Session are declaratory of, and not a
change in existing law.(b) Funds to further the purposes of this
chapter may be committed for multiple years.
(c) Awards made pursuant to this chapter are grants, subject to
appeal to the commission upon a showing that factors other than those
described in the guidelines adopted by the commission were applied
in making the awards and payments. Any actions taken by an applicant
to apply for, or become or remain eligible and registered to receive,
payments or awards, including satisfying conditions specified by the
commission, shall not constitute the rendering of goods, services,
or a direct benefit to the commission.
(d) Notwithstanding subdivision (c), the commission may contract
for services to develop and implement an accounting system to verify
compliance with the renewables portfolio standard program pursuant to
Section 399.13 of the Public Utilities Code.
SEC. 4. Section 25749 of the Public Resources Code is repealed.
25749. The commission shall, by December 1, 2003, prepare and
submit to the Legislature a comprehensive renewable electricity
generation resource plan that describes the renewable resource
potential available in California, and recommendations for a plan for
development to achieve the target of increasing the amount of
electricity generated from renewable sources per year, so that it
equals 17 percent of the total electricity generated for consumption
in California by 2006. The commission shall consult with the Public
Utilities Commission, electrical corporations, and the Independent
System Operator, in the development and preparation of the plan.
SEC. 5. Section 25750 of the Public Resources Code is amended to
read:
25750. (a) The commission shall participate
in proceedings at the Public Utilities Commission that relate to or
affect efforts to stimulate the development of electricity generated
from renewable sources, in order to obtain coordination of the state'
s efforts to achieve the target of increasing the amount of
electricity generated procured from
renewable sources per year eligible renewable
energy resources , so that it equals 17
20 percent of the total electricity generated for
consumption sold to retail customers in
California by 2006 per year by the year 2010
. (b) For purposes of this section, "procured" means that
a retail seller may acquire the electricity generated by an eligible
renewable energy resource that it owns or with which it has
contracted or may acquire tradeable renewable energy certificates.
Nothing in this section is intended to imply that the purchase of
electricity from third parties in a wholesale transaction is the
preferred method of fulfilling a retail seller's obligation to comply
with this section.
SEC. 6. Section 25752 is added to the Public Resources Code , to
read:
25752. The commission shall review the feasibility of increasing
the target for electricity to be procured from eligible renewable
energy resources to 33 percent by the year 2020, and to report to the
Governor and the Legislature by July 1, 2007, with the results of
the review. The review shall consider and report on all of the
following:(a) Deliverability of electricity from eligible renewable
energy resources to end users and any needed additions or upgrades to
the transmission grid system.
(b) Dispatchability of electricity from eligible renewable energy
resources and the consequences for the reliability of the electrical
system.
(c) Long-term planning requirements identified in the 2006
procurement plans for electrical corporations approved by the Public
Utilities Commission pursuant to Section 454.5 of the Public
Utilities Code.
(d) Potential impacts upon the rates of electrical corporations
and whether or not a renewable energy public goods charge is
necessary to fund the above-market costs of electricity generated
from eligible renewable energy resources.
(e) The progress made by electrical corporations toward meeting
the goal of procuring 20 percent of the electricity sold to retail
customers per year by the year 2010, and the results of electrical
corporation bid solicitations pursuant to a renewable energy
procurement plan approved by the Public Utilities Commission pursuant
to Section 399.14 of the Public Utilities Code.
(f) The progress made by all load serving entities other than
electrical corporations, including the progress made by local
publicly owned electric utilities as defined in subdivision (d) of
Section 9604 of the Public Utilities Code, toward meeting the goal of
procuring 20 percent of the electricity sold to retail customers per
year by the year 2010.
SEC. 7. Section 385 of the Public Utilities Code is amended to
read:
385. (a) Each local publicly owned electric utility shall
establish a nonbypassable, usage based charge on local distribution
service of not less than the lowest expenditure level of the three
largest electrical corporations in California on a percent of revenue
basis, calculated from each utility's total revenue requirement for
the year ended December 31, 1994, and each utility's total annual
expenditure under paragraphs (1), (2), and (3) of subdivision (c) of
Section 381 and Section 382, to fund investments by the utility and
other parties in any or all of the following:(1) Cost-effective
demand-side management services to promote energy efficiency and
energy conservation.
(2) New investment in renewable energy resources and technologies
consistent with existing statutes and regulations which promote those
resources and technologies , and in an amount sufficient to
ensure compliance with the California Renewables Portfolio
Standard program.
(3) Research, development and demonstration programs for the
public interest to advance science or technology which is not
adequately provided by competitive and regulated markets.
(4) Services provided for low-income electricity customers,
including, but not limited to, energy efficiency services, education,
weatherization, and rate discounts.
(b) Each local publicly owned electric utility that has not
implemented programs for low-income electricity customers including
targeted energy efficiency services and rate discounts based upon the
income level of the customer, or completed an assessment of need for
those programs, on or before December 31, 2000, shall perform a
needs assessment for the programs described in paragraph (4) of
subdivision (a) and shall hold one or more public meetings, after
notice, to review the findings of the needs assessment. Following the
public meetings, the governing body of the local publicly owned
electric utility shall determine the amount of the total funds
collected pursuant to this section to be allocated to low-income
programs, including, but not limited to, targeted energy efficiency
services, education, weatherization, and rate discounts. In making
its decision on the need for the programs, the governing body shall
consider all of the following:
(1) The number and income level of low-income customers that
reside in the service area of the utility.
(2) The availability of home weatherization services to low-income
customers pursuant to Section 2790.
(3) The availability of in-home energy efficiency education in the
utility's service area.
(4) Other factors that may indicate a need for low-income
services.
(c) Following a determination pursuant to subdivision (b) that
low-income services are needed, the local publicly owned utility
shall promptly implement or expand those programs. The local publicly
owned electric utility shall work with existing weatherization
providers to implement energy efficiency, education, and
weatherization programs.
SEC. 8. Section 387 of the Public Utilities Code is amended to
read:
387. (a) Each governing body of a local publicly owned electric
utility, as defined in Section 9604, shall be responsible for
implementing and enforcing a renewables portfolio standard
that recognizes the intent of the Legislature to encourage renewable
resources, while taking into consideration the effect of the standard
on rates, reliability, and financial resources and the goal of
environmental improvement . A local publicly owned
electric utility shall increase its total procurement of eligible
renewable energy resources by at least 1 percent per year from 2004
procurement levels, so that at least 20 percent of the utility's
retail sales of electricity are procured from eligible
renewable energy resources by the year 2017. (b)
A local publicly owned electric utility may meet its
annual procurement target through the procurement of tradeable
renewable energy certificates.
(b)
(c) Each local publicly owned electric
utility shall report, on an annual basis, to the State Energy
Resources Conservation and Development Commission and
its customers, the following:
(1) Expenditures of public goods funds collected pursuant to
Section 385 for renewable energy resource development. Reports shall
contain a description of programs, expenditures, and expected or
actual results.
(2) The resource mix used to serve its customers by fuel type.
Reports shall contain the contribution of each type of renewable
energy resource with separate categories for those fuels considered
eligible renewable energy resources as defined by Section 399.12.
(d) The State Energy Resources Conservation and Development
Commission shall use the data supplied pursuant to subdivision (c) to
calculate the total retail electrical load served by all local
publicly owned electric utilities and the baseline amount of
electricity delivered to retail end-use customers by local publicly
owned electric utilities that was generated by eligible renewable
energy resources during the 2004 calendar year. The commission shall
determine a collective annual procurement target for electricity to
be procured from eligible renewable energy resources by local
publicly owned electric utilities. Each local publicly owned electric
utility shall be responsible for meeting the annual procurement
target for electricity to be procured from eligible renewable energy
resources for that portion of the collective annual procurement
target equal to the utility's share of overall electrical load
collectively served by all local publicly owned electric utilities.
For purposes of this section, "procure" and "procurement" means that
a local publicly owned electric utility may acquire the electricity
generated by an eligible renewable energy resource that it owns or
with which it has contracted or may acquire tradeable renewable
energy certificates. Nothing in this section is intended to imply
that the purchase of electricity from third parties in a wholesale
transaction is the preferred method of fulfilling the utility's
renewables portfolio standard procurement targets.
(e) For purposes of this section, the following terms have the
following meanings:
(1) "Eligible renewable energy resource" means an eligible
renewable energy resource as defined in Section 399.12.
(2) "Tradeable renewable energy certificate" means a tradeable
renewable energy certificate as defined in Section 399.12.
SEC. 9. Section 399.6 of the Public Utilities Code is amended to
read:
399.6. (a) In order to optimize public investment and ensure that
the most cost-effective and efficient investments in renewable
resources are vigorously pursued, the Energy Commission shall create
an investment plan as set forth in paragraphs (1) to (3), inclusive,
to govern the allocation of funds provided pursuant to this article.
The Energy Commission's long-term goal shall be a fully competitive
and self-sustaining California renewable energy supply. The
investment plan shall be in accordance with all of the following:(1)
The investment plan's objective shall be to increase, in the near
term, the quantity of California's electricity generated by in-state
renewable energy resources, while protecting system reliability,
fostering resource diversity, and obtaining the greatest
environmental benefits for California residents.
(2) An additional objective of the plan shall be to identify and
support emerging renewable energy technologies that have the greatest
near-term commercial promise and that merit targeted assistance.
(3) The investment plan shall contain specific numerical targets,
reflecting the projected impact of the plan, for both of the
following:
(A) Increased quantity of California electrical generation
produced from emerging technologies and from overall renewable
resources.
(B) Increased supply of renewable generation available from
facilities other than those selling to investor-owned utilities under
contracts entered into prior to 1996 under the federal Public
Utilities Regulatory Policies Act of 1978 (P.L. 95-617).
(b) The Energy Commission shall, on an annual basis, evaluate
progress on meeting the targets set forth in subparagraphs (A) and
(B) of paragraph (3) of subdivision (a), or any substitute provisions
adopted by the Legislature upon review of the investment plan, and
assess the impact of the investment plan on reducing the cost to
Californians of renewable energy generation.
(c) In preparing these investment plans, the Energy Commission
shall recommend allocations among all of the following:
(1) (A) Except as provided in subparagraph (B), production
incentives for new renewable energy, including repowered or
refurbished renewable energy.
(B) Allocations may not be made for renewable energy that is
generated by a project that remains under a power purchase contract
with an electrical corporation originally entered into prior to
September 24, 1996, whether amended or restated thereafter.
(C) Notwithstanding subparagraph (B), production incentives for
incremental new, repowered, or refurbished renewable energy from
existing projects under a power purchase contract with an electrical
corporation originally entered into prior to September 24, 1996,
whether amended or restated thereafter, may be allowed in any month,
if all of the following occur:
(i) The project's power purchase contract provides that all energy
delivered and sold under the contract is paid at a price that does
not exceed commission-approved short-run avoided cost of energy.
(ii) Either of the following:
(I) The power purchase contract is amended to provide that the
kilowatthours used to determine the capacity payment in any
time-of-delivery period in any month under the contract shall be
equal to the actual kilowatthour production, but no greater than the
five-year average of the kilowatthours delivered for the
corresponding time-of-delivery period and month, in the years 1994 to
1998, inclusive.
(II) If a project's installed capacity as of December 31, 1998, is
less than 75 percent of the nameplate capacity as stated in the
power purchase contract, the power purchase contract is amended to
provide that the kilowatthours used to determine the capacity payment
in any time-of-delivery period in any month under the contract shall
be equal to the actual kilowatthour production, but no greater than
the product of the five-year average of the kilowatthours delivered
for the corresponding time-of-delivery period and month, in the years
1994 to 1998, inclusive, and the ratio of installed capacity as of
December 31 of the previous year, but not to exceed contract
nameplate capacity, to the installed capacity as of December 31,
1998.
(iii) The production incentive is payable only with respect to the
kilowatthours delivered in a particular month that exceeds the
corresponding five-year average calculated pursuant to clause (ii).
(2) Rebates, buydowns, or equivalent incentives for emerging
renewable technologies.
(3) Customer credits for renewables not under contract with a
utility.
(4) Customer education.
(5) Incentives for reducing fuel costs that are confirmed to the
satisfaction of the Energy Commission at solid fuel biomass energy
facilities in order to provide demonstrable environmental and public
benefits, including, but not limited to, air quality.
(6) Solar thermal generating resources that enhance the
environmental value or reliability of the electrical system and that
require financial assistance to remain economically viable, as
determined by the Energy Commission. The Energy Commission may
require financial disclosure from applicants for purposes of this
paragraph.
(7) Specified fuel cell technologies, if the Energy Commission
makes all of the following findings:
(A) The specified technologies have similar or better air
pollutant characteristics than renewable technologies in the
investment plan.
(B) The specified technologies require financial assistance to
become commercially viable by reference to wholesale generation
prices.
(C) The specified technologies could contribute significantly to
the infrastructure development or other innovation required to meet
the long-term objective of a self-sustaining, competitive supply of
renewable energy.
(8) Existing wind-generating resources, if the Energy Commission
finds that the existing wind-generating resources are a
cost-effective source of reliable and environmental benefits compared
with other eligible sources, and that the existing wind-generating
resources require financial assistance to remain economically viable,
as determined by the Energy Commission. The Energy Commission may
require financial disclosure from applicants for the purposes of this
paragraph.
(d) The commission shall establish a cap on the aggregate amount
of funds that may be awarded to public entities from the program that
provides customer credits for renewables. The intent of the cap is
to assure adequate funding of credits for residential and small
commercial customers.
(e) Notwithstanding any other provision of law, moneys
Moneys collected for renewable energy pursuant
to this article shall be transferred to the Renewable Resource Trust
Fund of the Energy Commission , to be held until further
action by the Legislature . The Energy Commission shall
prepare and submit to the Legislature, on or before March 31, 2001,
an initial investment plan for these moneys, addressing the
application of moneys collected between January 1, 2002, and January
1, 2007. The initial investment plan shall also include an evaluation
of and report to the Legislature regarding the appropriateness and
structure of a mandatory state purchase of renewable energy. On or
before March 31, 2006, the Energy Commission shall prepare
an investment plan proposing a report to the
Legislature describing the application of moneys collected
between January 1, 2007, and January 1, 2012. No moneys may
be expended in the years covered by these plans without further
legislative action. The report shall describe the use
of moneys applied toward program activities during the
period commencing January 1, 2002, through the date of the report.
SEC. 10. Section 399.12 of the Public Utilities Code is amended
to read:
399.12. For purposes of this article, the following terms have
the following meanings:(a) "Eligible renewable energy resource" means
an electric generating facility that is one of the following:
(1) The facility meets the definition of "in-state renewable
electricity generation facility" in Section 25741 of the Public
Resources Code.
(2) A geothermal generation facility originally commencing
operation prior to September 26, 1996, shall be eligible for purposes
of adjusting a retail seller's baseline quantity of eligible
renewable energy resources except for output
electricity certified as incremental geothermal production by
the Energy Commission, provided that the incremental output
geothermal production was not sold to an
electrical corporation under contract entered into prior to September
26, 1996. For each facility seeking certification, the Energy
Commission shall determine historical production trends and establish
criteria for measuring incremental geothermal production that
recognizes the declining output of existing steamfields and the
contribution of capital investments in the facility or wellfield.
(3) The output of electricity generated by
a small hydroelectric generation facility of 30 megawatts or
less procured or owned by an electrical corporation as of the date of
enactment of this article shall be eligible only for purposes of
establishing the baseline of an electrical corporation pursuant to
paragraph (3) of subdivision (a) of Section 399.15. A new
hydroelectric facility is not an eligible renewable energy resource
if it will require a new or increased appropriation or diversion of
water under Part 2 (commencing with Section 1200) of Division 2 of
the Water Code.
(4) A facility engaged in the combustion of municipal solid waste
shall not be considered an eligible renewable resource unless it is
located in Stanislaus County and was operational prior to September
26, 1996. Output from such facilities
Electricity generated by a facility meeting these requirements
shall be eligible only for the purpose of adjusting a retail seller's
baseline quantity of eligible renewable energy resources.
(b) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(c) "Retail seller" means an entity engaged in the retail sale of
electricity to end-use customers, including any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
subject to the same terms and conditions applicable to an electrical
corporation.
(3) An electric service provider, as defined in Section 218.3
subject to the following conditions:
(A) An electric service provider shall be considered a retail
seller under this article for sales to any customer acquiring service
after January 1, 2003.
(B) An electric service provider shall be considered a retail
seller under this article for sales to all its customers beginning on
the earlier of January 1, 2006, or the date on which a contract
between an electric service provider and a retail customer expires.
Nothing in this subdivision may require an electric service provider
to disclose the terms of the contract to the commission.
(C) The commission shall institute a rulemaking to determine the
manner in which electric service providers will participate in the
renewables portfolio standard. The electric service provider shall be
subject to the same terms and conditions applicable to an electrical
corporation pursuant to this article. Nothing in this paragraph
shall impair a contract entered into between an electric service
provider and a retail customer prior to the suspension of direct
access by the commission pursuant to Section 80110 of the Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power electricity consistent
with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electrical
electric utility as defined in subdivision (d) of Section 9604.
(d) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller is required to procure pursuant to Sections 399.13
and 399.15.
(e) "Tradeable renewable energy certificate" means a certificate
of proof, issued through the accounting system established by the
Energy Commission pursuant to Section 399.13, that one unit of
electricity was generated by
an eligible renewable energy resource. The Energy
Commission shall ensure that the tradeable renewable energy
certificate includes all renewable and environmental attributes
associated with the production of electricity from the eligible
renewable energy resource.
SEC. 11. Section 399.13 of the Public Utilities Code is amended
to read:
399.13. The Energy Commission shall do all of the following:(a)
Certify eligible renewable energy resources that it determines meet
the criteria described in subdivision (a) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that electricity generated by an eligible renewable energy
output resource is counted only once
for the purpose of meeting the renewables portfolio standard of this
state or any other state, and for verifying retail product claims in
this state or any other state. The cost to design and implement
the accounting system shall be funded through the Renewable Resources
Consumer Education Account of the Renewable Resource Trust Fund,
established pursuant to Section 25751 of the Public Resources Code.
In establishing the guidelines governing this accounting
system, the Energy Commission shall collect data from
electricity market participants that it deems necessary to verify
compliance of retail sellers, in accordance with the requirements of
this article and the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code). In seeking data from electrical corporations, the
Energy Commission shall request data from the commission. The
commission shall collect data from electrical corporations and remit
the data to the Energy Commission within 90 days of the request.
(c) Allocate and award supplemental energy payments pursuant to
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code, to eligible renewable energy resources to
cover above-market costs of renewable energy.
SEC. 12. Section 399.14 of the Public Utilities Code is amended
to read:
399.14. (a) The commission shall direct each electrical
corporation to prepare a renewable energy procurement
plans plan as described in paragraph
(3) to satisfy its obligations under the renewables portfolio
standard. To the extent feasible, this procurement plan shall be
proposed, reviewed, and adopted by the commission as part of, and
pursuant to, a general procurement plan process. The commission shall
require each electrical corporation to review and update its
renewable energy procurement plan as it determines to be necessary.
(1) (A) The commission shall not require an electrical corporation to
conduct procurement to fulfill the renewables portfolio standard
until the commission determines either of the following:
(i) The electrical corporation has attained an investment grade
credit rating as determined by at least two major rating agencies.
(ii) The electrical corporation is able to procure eligible
renewable energy resources on reasonable terms, those resources can
be financed if necessary, and the procurement will not impair the
restoration of an electrical corporation's creditworthiness. This
provision shall not apply before April 1, 2004, for any electrical
corporation that on June 30, 2003, is in federal court under Chapter
11 of the federal bankruptcy law Bankruptcy
Code (11 U.S.C. Sec. 1101 et seq.) .
(B) Within 90 days of the commission's determination as provided
in subparagraph (A), an electrical corporation shall conduct
solicitations to implement a renewable energy procurement plan. The
determination required by this paragraph shall apply only to the
requirements established pursuant to this article. The requirements
established for an electrical corporation pursuant to Section 454.5
shall be governed by that section.
(2) Not later than six months after the effective date of
this section, the The commission shall adopt,
by rule, for all electrical corporations, all of the following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make specific
determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources. In order to ensure that the
market price established by the commission pursuant to subdivision
(c) of Section 399.15 does not influence the amount of a bid
submitted through the competitive solicitation in a manner that would
increase the amount ratepayers are obligated to pay for
electricity generated by eligible renewable energy
resources , and in order to ensure that the bid price does not
influence the establishment of the market price, the electrical
corporation shall not transmit or share the results of any
competitive solicitation for eligible renewable energy resources
until the commission has established market prices pursuant to
subdivision (c) of Section 399.15.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable
energy resources to comply with the annual California
Renewables Portfolio Standard Program obligations on a total cost
basis. This process shall consider estimates of indirect costs
associated with needed transmission investments and ongoing utility
expenses resulting from integrating and operating eligible renewable
energy resources.
(C) Flexible rules for compliance including , but not
limited to, both of the following:
(i) Rules permitting electrical
corporations to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years.
(ii) Rules permitting electrical corporations to purchase
tradeable renewable energy certificates from an eligible renewable
energy resource.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
, but is not limited to, all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of renewable generation resources
with deliverability characteristics that may include peaking,
dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for renewable
generation of each deliverability characteristic, required online
dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement
plan 90 days prior to the commencement of renewable procurement
pursuant to this article by the electrical corporation.
(c) The commission shall review the results of a renewable energy
resources solicitation submitted for approval by an electrical
corporation and accept or reject proposed contracts with eligible
renewable energy resources based on consistency with the approved
renewable energy procurement plan. If the commission
determines that the bid prices are elevated due to a lack of
effective competition amongst the bidders, the commission shall
direct the electrical corporation to renegotiate such
the contracts or conduct a new solicitation.
(d) If an electrical corporation fails to comply with a commission
order adopting a renewable energy procurement plan, the
commission shall exercise its authority pursuant to Section 2113 to
require compliance.
(e) Upon application by an electrical corporation, the commission
may authorize another entity to enter into contracts on behalf of
customers of the electrical corporation for deliveries of eligible
renewable energy resources to satisfy the annual renewables
portfolio standard obligations, subject to similar terms and
conditions applicable to an electrical corporation. The commission
shall allow the procurement entity to recover reasonable costs
through retail rates subject to review and approval.
(f) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article, at or below the
market price determined by the commission pursuant to subdivision (c)
of Section 399.15, shall be deemed reasonable per se, and shall be
recoverable in rates.
(g) For purposes of this article, "procure" means that a
utility an electrical corporation may acquire
the renewable output of electric generation facilities
electricity generated by an eligible renewable energy
resource that it owns or for which it has contracted. Nothing
in this article is intended to imply that the purchase of electricity
from third parties in a wholesale transaction is the preferred
method of fulfilling a retail seller's obligation to comply with this
article.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives or supplemental energy payments pursuant to
Sections 25742 and 25743 of the Public Resources Code, including
, but not limited to, work performed to qualify,
receive, or maintain production incentives or supplemental energy
payments is "public works" for the purposes of Chapter 1 (commencing
with Section 1720) of Part 7 of Division 2 of the Labor Code.
SEC. 13. Section 399.15 of the Public Utilities Code is amended
to read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of output from electricity generated by
eligible renewable energy resources , or an equivalent quantity
of tradeable renewable energy certificates, as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year, if sufficient funds are made available
pursuant to paragraph (2), and Section 399.6 and Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code, to cover the above-market costs of eligible
renewables, and subject to all of the following:(1) An electric
corporation shall not be required to enter into long-term contracts
with eligible renewable energy resources that exceed the market
prices established pursuant to subdivision (c) of this section.
(2) The Energy Commission shall provide supplemental energy
payments from funds in the New Renewable Resources Account in the
Renewable Resource Trust Fund to eligible renewable energy resources
pursuant to Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, consistent with this article, for
above-market costs. Indirect costs associated with the purchase of
eligible renewable energy resources, such as imbalance energy
charges, sale of excess energy, decreased generation from existing
resources, or transmission upgrades shall not be eligible for
supplemental energy payments, but shall be recoverable by an
electrical corporation in rates, as authorized by the commission.
(3) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and, to the extent
applicable, adjusted going forward pursuant to subdivision (a) of
Section 399.12.
(b) The commission shall implement annual procurement targets for
each electrical corporation as follows:
(1) Beginning on January 1, 2003, each electrical corporation
shall, pursuant to subdivision (a), increase its total procurement of
eligible renewable energy resources by at least an additional 1
percent of retail sales per year so that 20 percent of its retail
sales are procured from eligible renewable energy resources no later
than December 31, 2017 2010 . An
electrical corporation with 20 percent of retail sales procured from
eligible renewable energy resources in any year prior to 2010
shall not be required to increase its procurement of such
resources in the following year. The commission, in consultation
with the Energy Commission, may set procurement targets for any year
beginning 2011, in excess of 20 percent. The commission may vary
procurement targets among electrical corporations.
(2) Only for purposes of establishing these targets, the
commission shall include all power
electricity sold to retail customers by the Department of Water
Resources pursuant to Section 80100 of the Water Code in the
calculation of retail sales by an electrical corporation.
(3) In the event that an electrical corporation fails to procure
sufficient eligible renewable energy resources in a given year to
meet any annual target established pursuant to this subdivision, the
electrical corporation shall procure additional eligible renewable
energy resources in subsequent years to compensate for the shortfall
if sufficient funds are made available pursuant to paragraph (2), and
Section 399.6 and Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code, to cover the above-market
costs of eligible renewables renewable energy
resources .
(4) If supplemental energy payments from the Energy Commission, in
combination with the market prices approved by the commission, are
insufficient to cover the above-market costs of eligible renewable
energy resources, the commission shall allow an electrical
corporation to limit its annual procurement obligation to the
quantity of eligible renewable energy resources that can be procured
with available supplemental energy payments.
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with renewable generators, in consideration of the
following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to the electrical corporation's
general procurement activities as authorized by the commission.
(2) The long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities.
(3) The value of different products including baseload, peaking,
and as-available output electricity .
(d) The establishment of a renewables portfolio standard shall not
constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
(e) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.
(f) In approving an electrical corporation's renewable energy
procurement plan, the commission, in consultation with the Energy
Commission, may limit the quantity of tradeable renewable energy
certificates that the electrical corporation is authorized to procure
in meeting annual renewable energy procurement targets.
(g) The commission, in consultation with the Energy Commission,
shall evaluate regional trading of renewable energy certificates to
determine if trading of renewable energy certificates is creating any
barriers to the goal of the California Renewables Portfolio Standard
program to incentivize the generation of electricity from eligible
renewable energy resources.
SEC. 14. Section 399.17 is added to the Public Utilities Code ,
to read:
399.17. (a) An electric service provider or community choice
aggregator may meet its obligations under the renewables portfolio
standard program through procurement of tradeable renewable energy
certificates.(b) An electric service provider or community choice
aggregator shall not be eligible to receive supplemental energy
payments pursuant to Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code, unless it is in compliance
with its obligations under the renewables portfolio standard program.
SEC. 15.
No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because certain 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.
With regard to any other mandates, 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.
