Bill Text: CA SB14 | 2009-2010 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Utilities: renewable energy resources.

Spectrum: Partisan Bill (Democrat 13-0)

Status: (Vetoed) 2010-01-19 - Stricken from Senate file. [SB14 Detail]

Download: California-2009-SB14-Introduced.html

---

BILL NUMBER: SB 14	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senators Simitian, Kehoe, Padilla, and Steinberg
   (Coauthor: Senator Leno)

                        DECEMBER 1, 2008

   An act to amend Sections 25740 and 25741 of the Public Resources
Code, to amend Sections 305, 306, 307, 308, 327, 382, 399.11, 399.12,
399.13, 454.5, and 739.1 of, to amend, repeal, and add Sections
399.14 and 399.15 of, to add Sections 399.22, 739.9, 745, and 1005.1
to, and to repeal Section 387 of, the Public Utilities Code, and to
amend Section 80110 of the Water Code, relating to utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 14, as introduced, Simitian. Utilities: Public Utilities
Commission: energy: renewable energy resources: rates.
   (1) Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations and gas corporations. The California Constitution grants
the PUC certain general powers over all public utilities, subject to
control by the Legislature, and authorizes the Legislature,
unlimited by the other provisions of the Constitution, to confer
additional authority and jurisdiction upon the PUC, that is cognate
and germane to the regulation of public utilities. Existing law
requires the Governor to designate the president of the PUC from
among its members and requires the president to direct the executive
director, the attorney, and other staff of the PUC, except for the
Division of Ratepayer Advocates.
   This bill would require the Governor to appoint, subject to the
approval of the Senate, a president of the PUC from among its
members. The bill would repeal the requirement that the president
direct PUC staff.
   (2) Existing law requires the office of the PUC to be in the City
and County of San Francisco and that, with certain exceptions, the
office always be open. Existing law requires the PUC to hold its
sessions at least once in each calendar month in that city and
county, and authorizes the PUC to also meet at such other times and
in such other places as may be expedient and necessary for the proper
performance of its duties.
   This bill would additionally require the PUC to hold at least one
session in each calendar month in the City of Sacramento.
   (3) Existing law authorizes the attorney for the PUC, if directed
to do so by the president, except as otherwise directed by vote of
the PUC, to intervene, if possible, in any action or proceeding
involving any question arising pursuant to the Public Utilities Act.
Existing law requires the attorney for the PUC to commence,
prosecute, and expedite the final determination of all actions and
proceedings, and to generally perform all duties and services as
attorney to the PUC, as directed or authorized by the president,
except as otherwise directed or authorized by vote of the PUC.
   This bill would authorize the attorney for the PUC, if directed to
do so by the PUC, to intervene, if possible, in any action or
proceeding involving any question arising pursuant to the Public
Utilities Act. This bill would require the attorney for the PUC to
commence, prosecute, and expedite the final determination of all
actions and proceedings, and to generally perform all duties and
services as attorney to the PUC, as directed or authorized by the
PUC.
   (4) Existing law requires the executive director for the PUC to
keep a full and true record of all proceedings of the PUC, issue all
necessary process, writs, warrants, and notices, and perform such
other duties as the president, or vote of the PUC, prescribes.
Existing law provides that the president may authorize the executive
director to dismiss complaints or applications when all parties are
in agreement thereto, in accordance with rules that the PUC may
prescribe.
   This bill would require the executive director to keep a full and
true record of all proceedings of the PUC, issue all necessary
process, writs, warrants, and notices, and perform the other duties
the PUC prescribes. The bill would provide that the PUC may authorize
the executive director to dismiss complaints or applications when
all parties are in agreement thereto, in accordance with rules that
the PUC may prescribe.
   (5) Existing law authorizes the PUC to fix the rates and charges
for every public utility, and requires that those rates and charges
be just and reasonable.
   This bill would prohibit the PUC from requiring or permitting an
electrical corporation to employ dynamic pricing for residential
customers, but would authorize the PUC to authorize an electrical
corporation to offer residential customers the option of receiving
service pursuant to dynamic pricing. The bill would, beginning
January 1, 2016, authorize the PUC to authorize an electrical
corporation to employ default dynamic pricing for residential
customers, if the customer has the option of receiving service
pursuant to a rate schedule that is not based upon dynamic pricing
and if residential customers that exercise the option to not receive
service pursuant to the dynamic pricing incur no additional costs as
a result of the exercise of that option.
   (6) Existing law requires the PUC to establish a program of
assistance to low-income electric and gas customers, referred to as
the California Alternate Rates for Energy or CARE program, and
prohibits the cost to be borne solely by any single class of
customer.
   This bill would require the PUC to establish the CARE program to
provide assistance to low-income electric and gas customers with
annual household incomes at or below 200% of the federal poverty
guideline levels, and require that the cost of the program be
recovered on an equal cents-per-kilowatthour or cents-per therm basis
from all classes of customers that were subject to the surcharge
that funded the CARE program on January 1, 2008.
   (7) Existing law relative to electrical restructuring requires
that the electrical corporations and gas corporations that
participate in the CARE program administer low-income energy
efficiency and rate assistance programs described in specified
statutes, and undertake certain actions in administering specified
energy efficiency and weatherization programs.
   This bill would require that electrical corporations, in
administering the specified energy efficiency and weatherization
programs, to target energy efficiency and solar programs to
upper-tier and multifamily customers in a manner that will result in
long-term permanent reductions in electricity usage and develop
programs that specifically target new construction by, and new and
retrofit appliances for, nonprofit affordable housing providers. The
bill would require the PUC to require electrical corporations to
deploy enhanced low-income energy efficiency programs, as defined,
designed to reach as many eligible customers as practicable by
December 31, 2014, particularly targeting those customers occupying
apartment houses or similar multiunit residential structures, and
would require the PUC and electrical corporations and gas
corporations to expend all reasonable efforts to coordinate
ratepayer-funded programs with other energy conservation and
efficiency programs and to obtain additional federal funding to
support actions undertaken pursuant to this requirement.
   (8) Existing law relative to electrical restructuring requires the
PUC to authorize and facilitate direct transactions between
electricity suppliers and retail end-use customers.
   Existing law requires the PUC to designate a baseline quantity of
electricity and gas necessary for a significant portion of the
reasonable energy needs of the average residential customer, and
requires that electrical and gas corporations file rates and charges,
to be approved by the PUC, providing baseline rates and requires the
PUC, in establishing baseline rates, to avoid excessive rate
increases for residential customers.
   Existing law enacted during the energy crisis of 2000-01,
authorized the Department of Water Resources, until January 1, 2003,
to enter into contracts for the purchase of electricity, and to sell
electricity to retail end use customers and, with specified
exceptions, local publicly owned electric utilities, at not more than
the department's acquisition costs and to recover those costs
through the issuance of bonds to be repaid by ratepayers. That law
provides that the department is entitled to recover certain expenses
resulting from its purchases and sales of electricity and authorizes
the PUC to enter into an agreement with the department relative to
cost recovery. That law prohibits the PUC from increasing the
electricity charges in effect on February 1, 2001, for residential
customers for existing baseline quantities or usage by those
customers of up to 130% of then existing baseline quantities, until
the department has recovered the costs of electricity it procured for
electrical corporation retail end use customers. That law also
suspends the right of retail end-use customers, other than community
choice aggregators and a qualifying direct transaction customer, to
acquire service through a direct transaction until the Department of
Water Resources no longer supplies electricity under that law.
   This bill would delete the prohibition that the PUC not increase
the electricity charges in effect on February 1, 2001, for
residential customers for existing baseline quantities or usage by
those customers of up to 130% of then existing baseline quantities.
The bill would authorize the PUC, until January 1, 2019, to increase
the rates charged residential customers for electricity usage up to
130% of the baseline quantities by the annual percentage change in
the Consumer Price Index from the prior year plus 1%, but not less
than 3% and not more than 5% per year. This authorization would be
subject to the limitation that rates charged residential customers
for electricity usage up to the baseline quantities, including any
customer charge revenues, not exceed 90% of the system average rate,
as defined. The bill would authorize the PUC to increase the rates
for participants in the CARE program, subject to certain limitations.
The bill would authorize the PUC to allow individual retail end-use
customers currently taking service from an electric service provider,
or eligible to take service from an electric service provider under
rules adopted by the PUC in existence on January 1, 2008, to acquire
service for new accounts, as defined, from an electric service
provider. The bill would suspend the right of retail end-use
customers to acquire service through a direct transaction until the
Legislature, by statute, lifts the suspension or otherwise authorizes
direct transactions.
   (9) Existing law requires the PUC to require the state's 3 largest
electrical corporations, Pacific Gas and Electric Company, San Diego
Gas and Electric, and Southern California Edison, to identify a
separate electrical 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. Existing PUC resolutions refer to the
nonbypassable rate component as a "public goods charge." The public
goods charge moneys 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.
   The existing Warren-Alquist State Energy Resources Conservation
and Development Act establishes the State Energy Resources
Conservation and Development Commission (Energy Commission). Existing
law establishes the Renewable Resource Trust Fund as a continuously
appropriated fund in the State Treasury and requires that certain
moneys collected to support renewable energy resources through the
public goods charge are deposited into the fund and authorizes the
Energy Commission to expend the moneys pursuant to the Renewable
Energy Resources Program. The program states the intent of the
Legislature to increase the amount of electricity generated from
eligible renewable energy resources per year so that amount equals at
least 20% of total retail sales of electricity in California per
year by December 31, 2010.
   This bill would revise the Renewable Energy Resources Program to
state the intent of the Legislature to increase the amount of
electricity generated from eligible renewable energy resources per
year, so that amount equals at least 20% of total retail sales of
electricity in California per year by December 31, 2010, and 33% by
December 31, 2020. The bill would limit eligible in-state renewable
electricity generation facilities to facilities that commence initial
operation after January 1, 2005. This limitation would also apply to
the California Renewables Portfolio Standard (RPS) Program discussed
below.
   (10) Existing law expresses the intent of the Legislature, in
establishing the California Renewables Portfolio Standard (RPS)
Program, to increase the amount of electricity generated per year
from eligible renewable energy resources, as defined, to an amount
that equals at least 20% of the total electricity sold to retail
customers in California per year by December 31, 2010.
   This bill would express the additional intent that the amount of
electricity generated per year from eligible renewable energy
resources is increased to an amount that equals at least 33% of the
total electricity sold to retail customers in California per year by
December 31, 2020.
   (11) The Public Utilities Act imposes various duties and
responsibilities on the PUC with respect to the purchase of
electricity and requires the PUC to review and adopt a procurement
plan and a renewable energy procurement plan for each electrical
corporation, as defined, pursuant to the RPS program. The RPS 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 in any given year as a specified
percentage of total kilowatthours sold to retail end-use customers
each calendar year. The RPS program requires each retail seller to
increase its total procurement of electricity generated by eligible
renewable energy resources by at least an additional 1% of retail
sales per year so that 20% of its retail sales of electricity are
procured from eligible renewable energy resources no later than
December 31, 2010.
   This bill would instead require that each retail seller increase
its total procurement of electricity generated by eligible renewable
energy resources by at least an additional 1% of retail sales per
year so that 33% of its retail sales are procured from eligible
renewable energy resources no later than December 31, 2020.
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the PUC
is a crime.
   Because the provisions of this bill are within the act and require
action by the PUC to implement its requirements, a violation of
these provisions would impose a state-mandated local program by
expanding the definition of a crime.
   (12) Under existing law, the governing board of a local publicly
owned electric utility is responsible for implementing and enforcing
a renewables portfolio standard for the utility 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.
   This bill would repeal this provision and instead make certain of
the requirements of the RPS program, as discussed below, applicable
to local publicly owned electric utilities. By placing additional
requirements upon local publicly owned electric utilities, the bill
would impose a state-mandated local program.
   (13) Existing law requires the Energy Commission to certify
eligible renewable energy resources, to design and implement an
accounting system to verify compliance with the RPS requirements by
retail sellers, and to develop tracking, accounting, verification,
and enforcement mechanisms for renewable energy credits, as defined.
   This bill would require the Energy Commission to design and
implement an accounting system to verify compliance with the RPS
requirements by retail sellers and local publicly owned electric
utilities. The bill would require the Energy Commission, among other
things, to adopt regulations for the enforcement of the RPS program
with respect to a local publicly owned electric utility, would
require, by October 30, 2009, at a noticed public meeting and in
consultation with the State Air Resources Board, to establish an RPS
requiring each local publicly owned electric utility to procure a
minimum quantity of electricity generated by eligible renewable
energy resources as a specified percentage of total kilowatthours
sold to the utility's retail end-use customers each calendar year,
and, in order to meet the requirements of the RPS program, would
require the Energy Commission to substantially increase the amounts
of electricity generated by eligible renewable energy resources
integrated with and interconnected to specified transmission grids.
   (14) Existing law requires that an electrical corporation's
proposed procurement plan include certain elements, including a
showing that the electrical corporation will, in order to fulfill its
unmet resource needs, until a 20% renewable resources portfolio is
achieved, procure renewable energy resources with the goal of
ensuring that at least an additional 1% per year of the electricity
sold by the electrical corporation is generated from eligible
renewable energy resources, provided sufficient funds are made
available to cover the above-market costs for new renewable energy
resources pursuant to certain provisions of the Renewable Energy
Resources Program. Existing law requires the PUC to make a
determination of the existing market cost for electricity (market
price referent).
   This bill would require that an electrical corporation's proposed
procurement plan include a showing that the electrical corporation
will, in order to fulfill its unmet resource needs, until a 33%
renewable resources portfolio is achieved, procure renewable energy
resources with the goal of ensuring that at least an additional 1%
per year of the electricity sold by the electrical corporation is
generated from eligible renewable energy resources. The bill would,
on January 1, 2010, delete the requirement that the PUC determine the
market price referent and delete the limitation on a retail seller's
procurement requirements that sufficient funds be made available to
cover the above-market costs of electricity.
   (15) The Public Utilities Act prohibits any electrical corporation
from beginning the construction of, among other things, a line,
plant, or system, or of any extension thereof, without having first
obtained from the PUC a certificate that the present or future public
convenience and necessity require or will require that construction,
termed a certificate of public convenience and necessity. Existing
law requires the PUC, in acting upon an application by an electrical
corporation for a certificate of public convenience and necessity, to
deem new transmission facilities necessary to the provision of
electric service if the PUC finds that new transmission facilities
are necessary to facilitate achievement of the renewable power goals
established under the RPS program. Existing law requires the PUC,
upon finding that new transmission facilities are necessary to
facilitate achievement of the renewable power goals established under
the RPS, to take all feasible actions to ensure that the
transmission rates established by the Federal Energy Regulatory
Commission (FERC) are fully reflected in any retail rates established
by the PUC.
   This bill would require the PUC to approve an application for a
certificate of public convenience and necessity within one year of
the filing of a completed application under specified circumstances
and would authorize the PUC, if it finds the costs are justified
pursuant to the statutory requirements for approving a rate increase,
to allow recovery of certain transmission costs incurred by an
electrical corporation.
   (16) The existing restructuring of the electrical industry within
the Public Utilities Act provides for the establishment of an
Independent System Operator (ISO). Existing law requires the ISO to
ensure efficient use and reliable operation of the transmission grid
consistent with achieving planning and operating reserve criteria no
less stringent than those established by the Western Electricity
Coordinating Council and the American Electric Reliability Council.
Pursuant to existing law, the ISO's tariffs are required to be
approved by the FERC.
   This bill would require the ISO to undertake all feasible efforts
to do certain things and seek the approval of the FERC, if necessary,
including adjusting its market structure to achieve, in the most
cost-effective manner possible, the increased amount of electricity
to be generated by eligible renewable energy resources. The bill
would require the PUC to approve reasonable and cost-effective
transmission and power line investments that are not under the
ratemaking authority of the FERC that are necessary to enable
electricity generated by eligible renewable energy resources to be
delivered to retail sellers and local publicly owned electric
utilities.
   (17) This bill would state the intent of the Legislature to
appropriate $3,700,000 from the Public Interest Research,
Development, and Demonstration Fund to the Energy Commission for
contracts and for interagency agreements with the Department of Fish
and Game or other wildlife agencies for the preparation of one or
more natural communities conservation plans in the Mojave Desert for
the purposes of facilitating the development of solar energy in that
region.
   (18) 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: 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 25740 of the Public Resources Code is amended
to read:
   25740.   The Legislature finds and declares that the State Air
Resources Board has identified a statewide 33 percent renewables
portfolio standard as a key measure to comply with the requirements
of the California Global Warming Solutions Act of 2006.  It is
the intent of the Legislature in establishing this program, to
increase the amount of electricity generated from eligible renewable
energy resources per year, so that it equals at least 20 percent of
total retail sales of electricity in California per year by December
31, 2010  , and 33 percent by December 31, 2020  .
  SEC. 2.  Section 25741 of the Public Resources Code is amended to
read:
   25741.  As used in this chapter, the following terms have the
following meaning:
   (a) "Delivered" and "delivery" mean the electricity output of an
in-state renewable electricity generation facility that is used to
serve end-use retail customers located within the state. Subject to
verification by the accounting system established by the commission
pursuant to subdivision (b) of Section 399.13 of the Public Utilities
Code, electricity shall be deemed delivered if it is either
generated at a location within the state, or is scheduled for
consumption by California end-use retail customers. Subject to
criteria adopted by the commission, electricity generated by an
eligible renewable energy resource may be considered "delivered"
regardless of whether the electricity is generated at a different
time from consumption by a California end-use customer.
   (b) "In-state renewable electricity generation facility" means a
facility that meets all of the following criteria:
   (1) The facility uses biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small hydroelectric
generation of 30 megawatts or less, digester gas, municipal solid
waste conversion, landfill gas, ocean wave, ocean thermal, or tidal
current, and any additions or enhancements to the facility using that
technology.
   (2) The facility satisfies one of the following requirements:
   (A) The facility is located in the state or near the border of the
state with the first point of connection to the transmission network
within this state and electricity produced by the facility is
delivered to an in-state location.
   (B) The facility has its first point of interconnection to the
transmission network outside the state and satisfies all of the
following requirements:
   (i) It is connected to the transmission network within the Western
Electricity Coordinating Council (WECC) service territory. 
   (ii) It commences initial commercial operation after January 1,
2005.  
   (iii) 
    (ii)  Electricity produced by the facility is delivered
to an in-state location. 
   (iv) 
    (iii)  It will not cause or contribute to any violation
of a California environmental quality standard or requirement.

   (v) 
    (iv)  If the facility is outside of the United States,
it is developed and operated in a manner that is as protective of the
environment as a similar facility located in the state. 
   (vi) 
    (v)  It participates in the accounting system to verify
compliance with the renewables portfolio standard  by retail
sellers,  once established by the  Energy Commission
  commission  pursuant to subdivision (b) of
Section 399.13 of the Public Utilities Code. 
   (C) The facility meets the requirements of clauses (i), (iii),
(iv), (v), and (vi) in subparagraph (B), but does not meet the
requirements of clause (ii) because it commences initial operation
prior to January 1, 2005, if the facility satisfies either of the
following requirements:  
   (i) The electricity is from incremental generation resulting from
expansion or repowering of the facility.  
   (ii) The facility has been part of the existing baseline of
eligible renewable energy resources of a retail seller established
pursuant to paragraph (2) of subdivision (b) of Section 399.15 of the
Public Utilities Code or has been part of the existing baseline of
eligible renewable energy resources of a local publicly owned
electric utility established pursuant to Section 387 of the Public
Utilities Code. 
   (3) For the purposes of this subdivision, "solid waste conversion"
means a technology that uses a noncombustion thermal process to
convert solid waste to a clean-burning fuel for the purpose of
generating electricity, and that meets all of the following criteria:

   (A) The technology does not use air or oxygen in the conversion
process, except ambient air to maintain temperature control.
   (B) The technology produces no discharges of air contaminants or
emissions, including greenhouse gases as defined in Section 38505 of
the Health and Safety Code.
   (C) The technology produces no discharges to surface or
groundwaters of the state.
   (D) The technology produces no hazardous wastes.
   (E) To the maximum extent feasible, the technology removes all
recyclable materials and marketable green waste compostable materials
from the solid waste stream prior to the conversion process and the
owner or operator of the facility certifies that those materials will
be recycled or composted.
   (F) The facility at which the technology is used is in compliance
with all applicable laws, regulations, and ordinances.
   (G) The technology meets any other conditions established by the
commission.
   (H) The facility certifies that any local agency sending solid
waste to the facility diverted at least 30 percent of all solid waste
it collects through solid waste reduction, recycling, and
composting. For purposes of this paragraph, "local agency" means any
city, county, or special district, or subdivision thereof, which is
authorized to provide solid waste handling services.
   (c) "Procurement entity" means any person or corporation that
enters into an agreement with a retail seller to procure eligible
renewable energy resources pursuant to subdivision (f) of Section
399.14 of the Public Utilities Code.
   (d) "Renewable energy public goods charge" means that portion of
the nonbypassable system benefits charge  authorized
  required  to be collected  and to be
transferred to the Renewable Resource Trust Fund   to
fund renewable energy  pursuant to the Reliable Electric Service
Investments Act (Article 15 (commencing with Section 399) of Chapter
2.3 of Part 1 of Division 1 of the Public Utilities Code).
   (e) "Report" means the report entitled "Investing in Renewable
Electricity Generation in California" (June 2001, Publication Number
P500-00-022) submitted to the Governor and the Legislature by the
commission.
   (f) "Retail seller" means a "retail seller" as defined in Section
399.12 of the Public Utilities Code.
  SEC. 3.  Section 305 of the Public Utilities Code is amended to
read:
   305.  The Governor shall  designate  
appoint, subject to the approval of the Senate,  a president of
the commission from among the members of the commission. The
president shall  direct the executive director, the attorney,
and other staff of the commission, except for the staff of the
division described in Section 309.5, in the performance of their
duties, in accordance with commission policies and guidelines. The
president shall  preside at all meetings and sessions of the
commission.
  SEC. 4.  Section 306 of the Public Utilities Code is amended to
read:
   306.  (a) The office of the commission shall be in the City and
County of San Francisco. The office shall always be open, legal
holidays and nonjudicial days excepted. The commission shall hold its
sessions at least once in each calendar month in the City and County
of San Francisco.  The commission shall hold at least one
session in each calendar month in the City of Sacramento.  The
commission may also meet at such other times and in such other places
as may be expedient and necessary for the proper performance of its
duties, and for that purpose may rent quarters or offices.
   (b) The meetings of the commission shall be open and public in
accordance with the provisions of Article 9 (commencing with Section
11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the
Government Code.
   In addition to the requirements of Section 11125 of the Government
Code, the commission shall include in its notice of meetings the
agenda of business to be transacted, and no item of business shall be
added to the agenda subsequent to the notice in the absence of an
unforeseen emergency situation. A rate increase shall not constitute
an unforeseen emergency situation. As used in this subdivision,
"meeting" shall include all investigations, proceedings, and showings
required by law to be open and public.
   (c) The commission shall have a seal, bearing the inscription
"Public Utilities Commission State of California." The seal shall be
affixed to all writs and authentications of copies of records and to
such other instruments as the commission shall direct.
   (d) The commission may procure all necessary books, maps, charts,
stationery, instruments, office furniture, apparatus, and appliances.

  SEC. 5.  Section 307 of the Public Utilities Code is amended to
read:
   307.  (a) The commission may appoint as attorney to the commission
an attorney at law of this state, who shall hold office during the
pleasure of the commission.
   (b) The attorney shall represent and appear for the people of the
State of California and the commission in all actions and proceedings
involving any question under this part or under any order or act of
the commission. If directed to do so by the  president,
except as otherwise directed by vote of the  commission, the
attorney shall intervene, if possible, in any action or proceeding
in which any such question is involved.
   (c) The attorney shall commence, prosecute, and expedite the final
determination of all actions and proceedings directed or authorized
by the  president, except as otherwise directed or authorized
by vote of the  commission, advise the commission and each
commissioner, when so requested, in regard to all matters in
connection with the powers and duties of the commission and the
members thereof, and generally perform all duties and services as
attorney to the commission that the  president, or vote of
the commission,   commission  may require of him
 or her  .
  SEC. 6.  Section 308 of the Public Utilities Code is amended to
read:
   308.  (a) The commission shall appoint an executive director, who
shall hold office during its pleasure. The executive director shall
be responsible for the commission's executive and administrative
duties and shall organize, coordinate, supervise, and direct the
operations and affairs of the commission and expedite all matters
within the commission's jurisdiction.
   (b) The executive director shall keep a full and true record of
all proceedings of the commission, issue all necessary process,
writs, warrants, and notices, and perform  such 
 the other duties  as  the 
president, or vote of the commission,   commission 
prescribes. The  president   commission 
may authorize the executive director to dismiss complaints or
applications when all parties are in agreement thereto, in accordance
with rules that the commission may prescribe.
   (c) The commission may appoint assistant executive directors who
may serve warrants and other process in any county or city and county
of this state.
  SEC. 7.  Section 327 of the Public Utilities Code is amended to
read:
   327.  (a) The  electric   electrical
corporations  and gas corporations that participate in the
California  Alternative   Alternate  Rates
for Energy program, as established pursuant to Section 739.1, shall
administer low-income energy efficiency and rate assistance programs
described in Sections  382,  739.1, 739.2, and 2790, subject
to commission oversight. In administering the programs described in
Section 2790, the  electric   electrical
corporations  and gas corporations, to the extent practical,
shall do all of the following:
   (1) Continue to leverage funds collected to fund the program
described in subdivision (a) with funds available from state and
federal sources.
   (2) Work with state and local agencies, community-based
organizations, and other entities to ensure efficient and effective
delivery of programs.
   (3) Encourage local employment and job skill development.
   (4) Maximize the participation of eligible participants.
   (5) Work to reduce consumers electric and gas consumption, and
bills. 
   (6) For electrical corporations only, target energy efficiency and
solar programs to upper-tier and multifamily customers in a manner
that will result in long-term permanent reductions in electricity
usage, and develop programs that specifically target new construction
by, and new and retrofit appliances for, nonprofit affordable
housing providers. 
   (b) If the commission requires low-income energy efficiency
programs to be subject to competitive bidding, the electric and gas
corporation described in subdivision (a), as part of their bid
evaluation criteria, shall consider both cost-of-service criteria and
quality-of-service criteria. The bidding criteria, at a minimum,
shall recognize all of the following factors:
   (1) The bidder's experience in delivering programs and services,
including, but not limited to, weatherization, appliance repair and
maintenance, energy education, outreach and enrollment services, and
bill payment assistance programs to targeted communities.
   (2) The bidder's knowledge of the targeted communities.
   (3) The bidder's ability to reach targeted communities.
   (4) The bidder's ability to utilize and employ people from the
local area.
   (5) The bidder's general contractor's license and evidence of good
standing with the Contractors' State License Board.
   (6) The bidder's performance quality as verified by the funding
source.
   (7) The bidder's financial stability.
   (8) The bidder's ability to provide local job training.
   (9) Other attributes that benefit local communities.
   (c) Notwithstanding subdivision (b), the commission may modify the
bid criteria based upon public input from a variety of sources,
including representatives from low-income communities and the program
administrators identified in subdivision (b), in order to ensure the
effective and efficient delivery of high quality low-income energy
efficiency programs.
  SEC. 8.  Section 382 of the Public Utilities Code is amended to
read:
   382.  (a) Programs provided to low-income electricity customers,
including, but not limited to, targeted energy-efficiency services
and the California Alternate Rates for Energy program shall be funded
at not less than 1996 authorized levels based on an assessment of
customer need.
   (b) In order to meet legitimate needs of electric and gas
customers who are unable to pay their electric and gas bills and who
satisfy eligibility criteria for assistance, recognizing that
electricity is a basic necessity, and that all residents of the state
should be able to afford essential electricity and gas supplies, the
commission shall ensure that low-income ratepayers are not
jeopardized or overburdened by monthly energy expenditures. Energy
expenditure may be reduced through the establishment of different
rates for low-income ratepayers, different levels of rate assistance,
and energy efficiency programs.
   (c) Nothing in this section shall be construed to prohibit
electric and gas providers from offering any special rate or program
for low-income ratepayers that is not specifically required in this
section.
   (d) The commission shall allocate funds necessary to meet the
low-income objectives in this section.
   (e) Beginning in 2002, an assessment of the needs of low-income
electricity and gas ratepayers shall be conducted periodically by the
commission with the assistance of the Low-Income Oversight Board.
The assessment shall evaluate low-income program implementation and
the effectiveness of weatherization services and energy efficiency
measures in low-income households. The assessment shall consider
whether existing programs adequately address low-income electricity
and gas customers' energy expenditures, hardship, language needs, and
economic burdens. 
   (f) The commission shall require electrical corporations to deploy
enhanced low-income energy efficiency programs designed to reach as
many eligible customers as practicable by December 31, 2014,
particularly targeting those customers occupying apartment houses or
similar multiunit residential structures. The commission and
electrical corporations and gas corporations shall make all
reasonable efforts to coordinate ratepayer-funded programs with other
energy conservation and efficiency programs and to obtain additional
federal funding to support actions undertaken pursuant to this
subdivision. For purposes of this subdivision, "enhanced programs"
are programs that provide long-term reductions in energy consumption
at the dwelling unit based on an audit or assessment of the dwelling
unit, and may include improved insulation, energy efficient
appliances, measures that utilize solar energy, and other
cost-effective improvements to the physical structure. 
  SEC. 9.  Section 387 of the Public Utilities Code is repealed.

   387.  (a) Each governing body of a local publicly owned electric
utility 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.
   (b) Each local publicly owned electric utility shall report, on an
annual basis, to its customers and to the State Energy Resources
Conservation and Development Commission, the following:
   (1) Expenditures of public goods funds collected pursuant to
Section 385 for eligible 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 that are
eligible renewable energy resources as defined in Section 399.12,
except that the electricity is delivered to the local publicly owned
electric utility and not a retail seller. Electricity shall be
reported as having been delivered to the local publicly owned
electric utility from an eligible renewable energy resource when the
electricity would qualify for compliance with the renewables
portfolio standard if it were delivered to a retail seller.
   (3) The utility's status in implementing a renewables portfolio
standard pursuant to subdivision (a) and the utility's progress
toward attaining the standard following implementation. 
  SEC. 10.  Section 399.11 of the Public Utilities Code is amended to
read:
   399.11.  The Legislature finds and declares all of the following:
   (a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from eligible renewable
energy resources by December 31, 2010,  and 33 percent by
December 31, 2020,  and for the purposes of increasing the
diversity, reliability, public health  ,  and environmental
benefits of the energy mix,  reducing emissions of greenhouse
gases, and promoting economic   development  it is the
intent of the Legislature that the commission and the  State
Energy Resources Conservation and Development Commission 
 Energy Commission  implement the California Renewables
Portfolio Standard Program described in this article.
   (b) Increasing California's reliance on eligible renewable energy
resources may promote stable electricity prices, protect public
health, improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce
reliance on imported fuels.
   (c) The development of eligible renewable energy resources and the
delivery of the electricity generated by those resources to
customers in California may ameliorate air quality problems
throughout the state and improve public health by reducing the
burning of fossil fuels and the associated environmental impacts and
by reducing in-state fossil fuel consumption.
   (d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the  State Energy Resources Conservation and
Development Commission   Energy Commission  and
established pursuant to Chapter 8.6 (commencing with Section 25740)
of Division 15 of the Public Resources Code.
   (e) New and modified electric transmission facilities  may
  will  be necessary to facilitate the state
achieving its renewables portfolio standard targets.
  SEC. 11.  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) "Conduit hydroelectric facility" means a facility for the
generation of electricity that uses only the hydroelectric potential
of an existing pipe, ditch, flume, siphon, tunnel, canal, or other
manmade conduit that is operated to distribute water for a beneficial
use.
   (b) "Delivered" and "delivery" have the same meaning as provided
in subdivision (a) of Section 25741 of the Public Resources Code.
   (c) "Eligible renewable energy resource" means an electric
generating facility that meets the definition of "in-state renewable
electricity generation facility" in Section 25741 of the Public
Resources Code, subject to the following  limitations
 :
   (1) (A) An existing small hydroelectric generation facility of 30
megawatts or less shall be eligible only if a retail seller or local
publicly owned electric utility owned or procured the electricity
from the facility as of December 31, 2005. A new hydroelectric
facility is not an eligible renewable energy resource if it will
cause an adverse impact on instream beneficial uses or cause a change
in the volume or timing of streamflow.
   (B) Notwithstanding subparagraph (A), a conduit hydroelectric
facility of 30 megawatts or less that commenced operation before
January 1, 2006, is an eligible renewable energy resource. A conduit
hydroelectric facility of 30 megawatts or less that commences
operation after December 31, 2005, is an eligible renewable energy
resource so long as it does not cause an adverse impact on instream
beneficial uses or cause a change in the volume or timing of
streamflow.
   (2) 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.
   (d) "Procure" means that a retail seller or local publicly owned
electric utility receives delivered electricity generated by an
eligible renewable energy resource that it owns or for which it has
entered into an electricity purchase agreement. 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
or the obligation of a local publicly owned electric utility to meet
its renewables portfolio standard implemented pursuant to Section
387. 
   (e) "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 this article or
the obligation of a local publicly owned electric utility to meet its
renewables portfolio standard implemented pursuant to Section 387.
 
   (f) 
    (e)  (1) "Renewable energy credit" means a certificate
of proof  associated with the generation of electricity from an
eligible renewable energy resource  , issued through the
accounting system established by the Energy Commission pursuant to
Section 399.13, that one unit of electricity was generated and
delivered by an eligible renewable energy resource.
   (2) "Renewable energy credit" includes all renewable and
environmental attributes associated with the production of
electricity from the eligible renewable energy resource, except for
an emissions reduction credit issued pursuant to Section 40709 of the
Health and Safety Code and any credits or payments associated with
the reduction of solid waste and treatment benefits created by the
utilization of biomass or biogas fuels.
   (3) No electricity generated by an eligible renewable energy
resource attributable to the use of nonrenewable fuels, beyond a de
minimis quantity, as determined by the Energy Commission, shall
result in the creation of a renewable energy credit. 
   (f) "Renewable energy public goods charge" means that portion of
the nonbypassable system benefits charge required to be collected to
fund renewable energy pursuant to the Reliable Electric Service
Investments Act (Article 15 (commencing with Section 399) of Chapter
2.3 of Part 1 of Division 1 for an electrical corporation and
pursuant to Section 385 for a local publicly owned electric utility.
 
   (g) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller or a local publicly owned electric utility is
required to procure pursuant to this article.  
   (g) 
    (h)  "Retail seller" means an entity engaged in the
retail sale of electricity to end-use customers located within the
state, 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 program subject to
the same terms and conditions applicable to an electrical
corporation.
   (3) An electric service provider, as defined in Section 218.3, for
all sales of electricity to customers beginning January 1, 2006. The
commission shall institute a rulemaking to determine the manner in
which electric service providers will participate in the renewables
portfolio standard program. 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 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 electric utility.
  SEC. 12.  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  (b) 
 (c)  of Section 399.12.
   (b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers  and
local publicly owned electric utilities , to ensure that
electricity generated by an eligible renewable energy resource is
counted only once for the purpose of meeting the renewables portfolio
standard of this state or any other state, to certify renewable
energy credits produced by eligible renewable energy resources, and
to verify retail product claims in this state or any other state. 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  and local publicly owned electric utilities  , 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) Establish a system for tracking and verifying renewable energy
credits that, through the use of independently audited data,
verifies the generation and delivery of electricity associated with
each renewable energy credit and protects against multiple counting
of the same renewable energy credit. The Energy Commission shall
consult with other western states and with the Western Electricity
Coordinating Council in the development of this system. 
   (d) Certify, for purposes of compliance with the renewable
portfolio standard requirements by a retail seller, the eligibility
of renewable energy credits associated with deliveries of electricity
by an eligible renewable energy resource to a local publicly owned
electric utility, if the Energy Commission determines that the
following conditions have been satisfied:  
   (1) The local publicly owned electric utility that is procuring
the electricity is in compliance with the requirements of Section
387.  
   (2) The local publicly owned electric utility has established an
annual renewables portfolio standard target comparable to those
applicable to an electrical corporation, is procuring sufficient
eligible renewable energy resources to satisfy the targets, and will
not fail to satisfy the targets in the event that the renewable
energy credit is sold to another retail seller.  
   (d) Certify, for purposes of compliance with the renewables
portfolio standard requirements by a retail seller, the eligibility
of renewable energy credits associated with deliveries of electricity
by an eligible renewable energy resource to a local publicly owned
electric utility, if the Energy Commission determines that all of the
following conditions have been satisfied:  
   (1) The local publicly owned electric utility has established an
annual 33 percent renewables portfolio standard target comparable to
those applicable to an electrical corporation, and is procuring
sufficient eligible renewable energy resources to satisfy the target
standard, and will not fail to satisfy the target standard in the
event that the renewable energy credit is sold to another retail
seller.  
   (2) Each local publicly owned electric utility reports, on an
annual basis, to its customers, and to the Energy Commission, all of
the following:  
   (A) Expenditures of funds collected pursuant to the renewable
energy public goods charge for eligible renewable energy resource
development. Reports shall contain a description of programs,
expenditures, and expected or actual results.  
   (B) 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 that are
eligible renewable energy resources as defined in Section 399.12,
except that the electricity is delivered to the local publicly owned
electric utility and not a retail seller. Electricity shall be
reported as having been delivered to the local publicly owned
electric utility from an eligible renewable energy resource when the
electricity would qualify for compliance with the renewables
portfolio standard if it were delivered to a retail seller. 

   (C) The utility's status in implementing a 33 percent renewables
portfolio standard pursuant to paragraph (2) of subdivision (f).
 
   (e) In consultation with the State Air Resources Board, adopt
regulations for the enforcement of this article with respect to a
local publicly owned electric utility. The regulations shall be
adopted at a publicly noticed meeting offering all interested parties
an opportunity to comment. Not less than 30 days' notice shall be
given to the public of any meeting held for purposes of adopting the
regulations. Not less than 10 days' notice shall be given to the
public before any meeting is held to make a substantive change to the
regulations. The regulations shall provide for the imposition of
penalties by the State Air Resources Board pursuant to Part 6
(commencing with Section 38580) of Division 25.5 of the Health and
Safety Code, upon referral and recommendation by the commission, for
failure to comply with this article.  
   (f) (1) By October 30, 2009, at a duly noticed public meeting and
in consultation with the State Air Resources Board, establish a
renewables portfolio standard requiring each local publicly owned
electric utility to procure a minimum quantity of electricity
generated by eligible renewable energy resources, including renewable
energy credits, as a specified percentage of total kilowatthours
sold to the utility's retail end-use customers each calendar year.
The Energy Commission shall enforce the renewables portfolio standard
upon its establishment.  
   (2) Every three years, each local publicly owned electric utility
shall post notice in accordance with Chapter 9 (commencing with
Section 54950) of Part 1 of Division 2 of Title 5 of the Government
Code whenever its governing body will deliberate in public on its
renewable energy resources procurement plan.  
   (A) Contemporaneous with the posting of the notice of a public
meeting to consider the energy resources procurement plan, the local
publicly owned electric utility shall notify the Energy Commission of
the date, time, and location of the meeting so the Energy Commission
may post the information on its Internet Web site. This requirement
is satisfied if the local publicly owned electric utility provides
the uniform resource locator (URL) that links to this information.
 
   (B) Upon distribution to its governing body of information related
to its renewable energy resource procurement status and future
plans, for its consideration at a noticed public meeting, the local
publicly owned electric utility shall make that information available
to the public and shall provide the Energy Commission with an
electronic copy of the documents for posting on the Energy Commission'
s Internet Web site. This requirement is satisfied if the local
publicly owned electric utility provides the uniform resource locator
(URL) that links to the documents or information regarding other
manners of access to the documents.  
   (3) Within 30 business days after a local publicly owned electric
utility enters into a renewable resource procurement contract, the
local publicly owned electric utility shall submit to the Energy
Commission documentation that includes all of the following: 

   (A) A description of the renewable resource and the terms of the
contract.  
   (B) A description and identification of the electric generating
facility providing the renewable energy resource under the contract.
 
   (C) An explanation as to how the electricity generated by that
facility will be certified as having been generated by an eligible
renewable energy resource and how that electricity will be used to
serve the load of the local publicly owned electric utility. 

   (D) An explanation as to how the contract supports the local
publicly owned electric utility's renewables portfolio standard.
 
   (g) In order for the state to meet the requirements of the
California Renewables Portfolio Standard Program, substantially
increased amounts of electricity generated by eligible renewable
energy resources must be integrated with, and interconnected to, the
transmission grid that is either owned by, or under the operational
control of, the local publicly owned electric utilities and the
transmission grid that is under the operational control of the
Independent System Operator.  
   (h) The Energy Commission, in consultation and cooperation with
the Independent System Operator and local publicly owned electric
utility balancing authorities, shall facilitate a process for the
execution of so-called "seams agreements" between balancing
authorities providing for the joint operation and cooperative
scheduling of separately owned and operated but interconnected
transmission grid systems in a way that optimizes the available
transfer capacity of the combined statewide system, respects the
long-term physical transmission rights of each party, and provides
cost certainty. The Energy Commission shall facilitate all of the
following:  
   (1) The development of annual statewide transmission plans that
incorporate local publicly owned electric utility transmission plans
and any potential joint privately owned and local publicly owned
electric utility infrastructure projects, with the goal of minimizing
the aggregate amount and cost of new transmission needed statewide
to meet both reliability needs and renewables portfolio standard
targets.  
   (2) The siting and approval of new transmission lines that can be
jointly owned or utilized by electrical corporations, merchant
transmission companies, and local publicly owned electric utilities,
and can be jointly operated by the Independent System Operator and
local publicly owned electric utility balancing authorities. 
  SEC. 13.  Section 399.14 of the Public Utilities Code is amended to
read:
   399.14.  (a) (1) The commission shall direct each electrical
corporation to prepare a renewable energy procurement plan that
includes the matter 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.
   (2) The commission shall adopt, by rulemaking, 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.
   (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. 
This process shall also consider, but shall not be limited to, the
cost impact of procuring the eligible renewable energy resources on
the electrical corporation's electricity portfolio, system
reliability,   and the environmen   tal and
economic benefits of procuring renewable energy. 
   (C) (i) Flexible rules for compliance, including rules permitting
retail sellers to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years. The flexible rules for compliance shall apply
to all years, including years before and after a retail seller
procures at least 20 percent  by 2010, and 33 percent by 2020,
 of total retail sales of electricity from eligible renewable
energy resources.
   (ii) The flexible rules for compliance shall address situations
where, as a result of insufficient transmission, a retail seller is
unable to procure eligible renewable energy resources sufficient to
satisfy the requirements of this article. Any rules addressing
insufficient transmission shall require a finding by the commission
that the retail seller has undertaken all reasonable efforts to do
all of the following:
   (I) Utilize flexible delivery points.
   (II) Ensure the availability of any needed transmission capacity.
   (III) If the retail seller is an electric corporation, to
construct needed transmission facilities.
   (IV) Nothing in this subparagraph shall be construed to revise any
portion of Section 454.5.
   (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. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall, at a minimum, include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
   (3) Consistent with the goal of  procuring the least-cost
and best-fit eligible   increasing California's reliance
on eligible  renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
   (A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of eligible renewable energy
resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity.
 This assessment shall be consistent with the electrical
corporation's long-term portfolio planning   conducted
pursuant to Section 454.5 and shall consider the electrical
corporation's optimal portfolio to reach the state's goals for
reducing emissions of greenhouse gases. Consistent with an electrical
corporation's long-term portfolio planning, the commission may
require analyses, including, but not limited to, the rate impact,
effects on system reliability, and the environmental and economic
benefits of the proposed procurement. 
   (B)  Provisions   Strategies  for
employing available compliance flexibility mechanisms established by
the commission.
   (C) A bid solicitation setting forth the need for eligible
renewable energy resources 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. 

   (5) (A) In soliciting and procuring eligible renewable energy
resources for California-based projects, each electrical corporation
shall give preference to renewable energy projects that provide
environmental and economic benefits to communities afflicted with
poverty or high unemployment, or that suffer from high emission
levels of toxic air contaminants, criteria air pollutants, and
greenhouse gases.  
   (B) The commission shall report to the Legislature by January 1,
2012, and every two years thereafter, on the progress and status of
procurement activities, the identification of barriers, and policy
recommendations for achieving the goals set forth in this paragraph.

   (b)  A retail seller may enter into a combination of long- and
short-term contracts   for delivery of electricity and
associated renewable energy credits.  The commission may
authorize a retail seller to enter into a contract of less than 10
years' duration with an eligible renewable energy resource, if the
commission has established, for each retail seller, minimum
quantities of eligible renewable energy resources to be procured
 either  through contracts of at least 10 years'
duration  or from new facilities commencing commercial
operations on or after January 1, 2005  .
   (c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of renewable procurement pursuant to this article by
an electrical corporation.
   (d) The commission shall review the results of an eligible
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 among the bidders, the commission shall direct
the electrical corporation to renegotiate the contracts or conduct a
new solicitation.
   (e)  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. The commission shall enforce comparable penalties
on any other retail seller that fails to meet annual procurement
targets established pursuant to Section 399.15.   The
commission, in consultation with the State Air Resources Board, shall
adopt rules for the enforcement of this article with respect to
retail sellers. The rules shall be adopted at a publicly noticed
meeting offering all interested parties an opportunity to comment.
Not less than 30 days' notice shall be given to the public of any
meeting held for purposes of adopting the rules. Not less than 10
days' notice shall be given to the public before any meeting is held
to make a substantive change to the rules. The rules shall provide
for the imposition of penalties by the State Air Resources Board
pursuant to Part 6 (commencing with Section 38580) of Division 25.5
of the Health and Safety Code, upon referral and recommendation by
the commission, for failure to comply with this article   .
  Nothing in this subdivision precludes the imposition of
any other penalties under any other provision of law. 
   (f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
deliveries of eligible renewable energy resources to satisfy annual
renewables portfolio standard obligations. The commission may not
require any person or corporation to act as a procurement entity or
require any party to purchase eligible renewable energy resources
from a procurement entity.
   (2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
   (g) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article and approved by
the commission shall be deemed reasonable  per se 
and shall be recoverable in rates.
   (h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives  is   are 
"public works" for the purposes of Chapter 1 (commencing with Section
1720) of Part 7 of Division 2 of the Labor Code. 
   (i) This section shall remain in effect only until January 1,
2010, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2010, deletes or extends
that date. 
  SEC. 14.  Section 399.14 is added to the Public Utilities Code, to
read:
   399.14.  (a) (1) The commission shall direct each electrical
corporation to prepare a renewable energy procurement plan that
includes the matter 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.
   (2) The commission shall adopt, by rulemaking, all of the
following:
   (A) 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. This
process shall also consider, but not be limited to, the cost impact
of procuring the eligible renewable energy resources on the
electrical corporation's electricity portfolio, system reliability,
and the environmental and economic benefits of procuring renewable
energy.
   (B) Flexible rules for compliance, including rules permitting
retail sellers to apply excess procurement in one year to subsequent
years or inadequate procurement in one year to no more than the
following three years. The flexible rules for compliance shall apply
to all years, including years before and after a retail seller
procures at least 20 percent by 2010, and 33 percent by 2020, of
total retail sales of electricity from eligible renewable energy
resources.
   (C) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource shall, at a minimum, include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
   (3) Consistent with the goal of increasing California's reliance
on eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
                                                                (A)
An assessment of annual or multiyear portfolio supplies and demand to
determine the optimal mix of eligible renewable energy resources
with deliverability characteristics that may include peaking,
dispatchable, baseload, firm, and as-available capacity. This
assessment shall be consistent with the electrical corporation's
long-term portfolio planning conducted pursuant to Section 454.5 and
shall consider the electrical corporation's optimal portfolio to
reach the state's goals for reducing emissions of greenhouse gases.
Consistent with an electrical corporation's long-term portfolio
planning, the commission may require analyses, including, but not
limited to, the rate impact, effects on system reliability, and the
environmental and economic benefits of the proposed procurement.
   (B) Strategies for employing available compliance flexibility
mechanisms established by the commission.
   (C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
   (D) A status update on the development schedule of all eligible
renewable resources currently under contract.
   (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) (A) In soliciting and procuring eligible renewable energy
resources for California-based projects, each electrical corporation
shall give preference to renewable energy projects that provide
environmental and economic benefits to communities afflicted with
poverty or high unemployment, or that suffer from high emission
levels of toxic air contaminants, criteria air pollutants, and
greenhouse gases.
   (B) The commission shall report to the Legislature by January 1,
2012, and every two years thereafter, on the progress and status of
procurement activities, the identification of barriers, and policy
recommendations for achieving the goals set forth in this paragraph.
   (b) A retail seller may enter into a combination of long- and
short-term contracts for delivery of electricity and associated
renewable energy credits. The commission may authorize a retail
seller to enter into a contract of less than 10 years' duration with
an eligible renewable energy resource, if the commission has
established, for each retail seller, minimum quantities of eligible
renewable energy resources to be procured through contracts of at
least 10 years' duration.
   (c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of renewable procurement pursuant to this article by
an electrical corporation.
   (d) (1) The commission shall review the results of an eligible
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 among the bidders, the commission shall direct
the electrical corporation to renegotiate the contracts or conduct a
new solicitation.
   (2) The commission shall establish project development milestones
to evaluate the potential for compliance with the adopted renewable
procurement plan and a set of actions that will occur as a result of
not meeting those milestones. These actions may include, but shall
not be limited to, determining a cure period for failure to meet
milestones, a suspense period on the contract online date for events
beyond the developer's control that cause a failure to meet
milestones, allow other developers that are prepared to go forward to
move ahead of suspended contracts, and forfeiture of deposits.
   (e) The commission, in consultation with the State Air Resources
Board, shall adopt rules for the enforcement of this article with
respect to retail sellers. The rules shall be adopted at a publicly
noticed meeting offering all interested parties an opportunity to
comment. Not less than 30 days' notice shall be given to the public
of any meeting held for purposes of adopting the rules. Not less than
10 days' notice shall be given to the public before any meeting is
held to make a substantive change to the rules. The rules shall
provide for the imposition of penalties by the State Air Resources
Board pursuant to Part 6 (commencing with Section 38580) of Division
25.5 of the Health and Safety Code, upon referral and recommendation
by the commission, for failure to comply with this article. Nothing
in this subdivision precludes the imposition of any other penalties
under any other provision of law.
   (f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
deliveries of eligible renewable energy resources to satisfy annual
renewables portfolio standard obligations. The commission may not
require any person or corporation to act as a procurement entity or
require any party to purchase eligible renewable energy resources
from a procurement entity.
   (2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
   (g) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article and approved by
the commission shall be deemed reasonable and shall be recoverable in
rates.
   (h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives are "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
   (i) This section shall become operative on January 1, 2010.
  SEC. 15.  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   The  commission shall establish a
renewables portfolio standard requiring all  electrical
corporations   retail sellers  to procure a minimum
quantity of electricity generated by eligible renewable energy
resources as a specified percentage of total kilowatthours sold to
their retail end-use customers each calendar year, subject to limits
 for electrical corporations  on the total amount of costs
expended above the market prices determined in subdivision (c), to
achieve the targets established under this article.
   (b) The commission shall implement annual procurement targets for
each retail seller as follows:
   (1) Each retail seller 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, 2010  , and 33
percent no later than December 31, 2020, if the commission determines
that achieving these targets will result in just and reasonable
rates  . A retail seller with  20   33
 percent of retail sales procured from eligible renewable energy
resources in any year shall not be required to increase its
procurement of renewable energy resources in the following year.
   (2) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each retail seller
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 Section 399.12.
   (3) Only for purposes of establishing these targets, the
commission shall include all 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.
   (4)  In the event that   If   
a retail seller fails to procure sufficient eligible renewable energy
resources in a given year to meet any annual target established
pursuant to this subdivision, the retail seller shall procure
additional eligible renewable energy resources in subsequent years to
compensate for the shortfall, subject to the limitation on costs for
electrical corporations established pursuant to subdivision (d).
   (c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with eligible renewable energy resources, in consideration
of the following:
   (1) The long-term market price of electricity for fixed price
contracts, determined pursuant to an 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 electricity.
   (d) The commission shall establish, for each electrical
corporation, a limitation on the total costs expended above the
market prices determined in subdivision (c) for the procurement of
eligible renewable energy resources to achieve the annual procurement
targets established under this article.
   (1) The cost limitation shall be equal to the amount of funds
transferred to each electrical corporation by the Energy Commission
pursuant to subdivision (b) of Section 25743 of the Public Resources
Code and the 51.5 percent of the funds which would have been
collected through January 1, 2012, from the customers of the
electrical corporation based on the renewable energy public goods
charge in effect as of January 1, 2007.
   (2) The above-market costs of a contract selected by an electrical
corporation may be counted toward the cost limitation if all of the
following conditions are satisfied:
   (A) The contract has been approved by the commission and was
selected through a competitive solicitation pursuant to the
requirements of subdivision (d) of Section 399.14.
   (B) The contract covers a duration of no less than 10 years.

   (C) The contracted project is a new or repowered facility
commencing commercial operations on or after January 1, 2005.
 
   (D) 
    (C)  No purchases of renewable energy credits may be
eligible for consideration as an above-market cost. 
   (E)
    (D)  The above-market costs of a contract do not include
any indirect expenses including imbalance energy charges, sale of
excess energy, decreased generation from existing resources, or
transmission upgrades.
   (3) If the cost limitation for an electrical corporation is
insufficient to support the total costs expended above the market
prices determined in subdivision (c) for the procurement of eligible
renewable energy resources satisfying the conditions of paragraph
(2), the commission shall allow the electrical corporation to limit
its procurement to the quantity of eligible renewable energy
resources that can be procured at or below the market prices
established in subdivision (c).
   (4) Nothing in this section prevents an electrical corporation
from voluntarily proposing to procure eligible renewable energy
resources at above-market prices that are not counted toward the cost
limitation. Any voluntary procurement involving above-market costs
shall be subject to commission approval prior to the expense being
recovered in rates.
   (e) 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).
   (f) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies. 
   (g) An electrical corporation shall submit a contract for eligible
renewable energy resources to the commission for review, pursuant to
the electrical corporation's approved renewable energy procurement
plan.  
   (1) In conducting a review, the commission shall do all of the
following:  
   (A) Consider system reliability.  
   (B) Consider the value of different generation characteristics
including peaking, dispatchable, baseload, and firm and as-available
capacity of renewable projects.  
   (C) Make an assessment of the price risk associated with the
electrical corporation's renewable energy portfolio, including any
proposed contracts or purchases under which an electrical corporation
will procure renewable energy.  
   (2) The costs of contracts for eligible renewable energy resources
that have been approved by the commission shall be recoverable in
rates of electrical corporations.  
   (h) This section shall remain in effect only until January 1,
2010, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2010, deletes or extends
that date. 
  SEC. 16.  Section 399.15 is added to the Public Utilities Code, to
read:
   399.15.  (a) The commission shall establish a renewables portfolio
standard requiring all retail sellers to procure a minimum quantity
of electricity generated by eligible renewable energy resources as a
specified percentage of total kilowatthours sold to their retail
end-use customers each calendar year to achieve the targets
established under this article.
   (b) The commission shall implement annual procurement targets for
each retail seller as follows:
   (1) Each retail seller 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, 2010, and 33 percent no
later than December 31, 2020, if the commission determines that
achieving these targets will result in just and reasonable rates. A
retail seller with 33 percent of retail sales procured from eligible
renewable energy resources in any year shall not be required to
increase its procurement of renewable energy resources in the
following year.
   (2) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each retail seller
based on the actual percentage of retail sales procured from
eligible renewable energy resources in 2001, and to the extent
applicable, adjusted in subsequent years pursuant to Section 399.12.
   (3) Only for purposes of establishing these targets, the
commission shall include all 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.
   (4) If a retail seller fails to procure sufficient eligible
renewable energy resources in a given year to meet any annual target
established pursuant to this subdivision, the retail seller shall
procure additional eligible renewable energy resources in subsequent
years to compensate for the shortfall.
   (c) 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).
   (d) The commission shall consult with the Energy Commission in
establishing renewables portfolio standard policies.
   (e) An electrical corporation shall submit a contract for eligible
renewable energy resources to the commission for review, pursuant to
the electrical corporation's approved renewable energy procurement
plan.
   (1) In conducting a review, the commission shall do all of the
following:
   (A) Consider system reliability.
   (B) Consider the value of different generation characteristics
including peaking, dispatchable, baseload, and firm and as-available
capacity of renewable projects.
   (C) Make an assessment of the price risk associated with the
electrical corporation's renewable energy portfolio, including any
proposed contracts or purchases under which an electrical corporation
will procure renewable energy.
   (2) The costs of contracts for eligible renewable energy resources
that have been approved by the commission shall be recoverable in
rates of electrical corporations.
   (f) This section shall become operative on January 1, 2010.
  SEC. 17.  Section 399.22 is added to the Public Utilities Code, to
read:
   399.22.  (a) In order for the state to meet the requirements of
the California Renewables Portfolio Standard Program, substantially
increased amounts of electricity generated by eligible renewable
energy resources must be integrated with, and interconnected to, the
transmission grid that is under the operational control of the
Independent System Operator.
   (b) The Independent System Operator shall undertake all feasible
efforts to do all of the following, and shall seek the approval of
the Federal Energy Regulatory Commission, if necessary:
   (1) Adjust its market structure to achieve, in the most
cost-effective manner possible, a minimum of 33 percent of
electricity generated from eligible renewable energy resources by
December 31, 2020.
   (2) In consultation and cooperation with local publicly owned
electric utilities develop annual statewide transmission plans that
incorporate local publicly owned electric utility transmission plans
and any potential joint privately owned and local publicly owned
electric utility infrastructure projects, with the goal of minimizing
the aggregate amount and cost of new transmission needed statewide
to meet both reliability needs and renewable energy targets.
   (3) Seek proposals from, and propose transmission projects to,
local publicly owned electric utilities that can be jointly owned by
electrical corporations, merchant transmission companies, and local
publicly owned electric utilities, and can be jointly operated by the
Independent System Operator and local publicly owned electric
utility balancing authorities.
   (4) Eliminate barriers established by the Independent System
Operator over transmission lines in its control area.
   (c) The commission shall approve reasonable and cost-effective
transmission and power line investments that are not under the
ratemaking authority of the Federal Energy Regulatory Commission and
that are necessary to enable electricity generated by eligible
renewable energy resources to be delivered to retail sellers and
local publicly owned electric utilities.
  SEC. 18.  Section 454.5 of the Public Utilities Code is amended to
read:
   454.5.  (a) The commission shall specify the allocation of
electricity, including quantity, characteristics, and duration of
electricity delivery, that the Department of Water Resources shall
provide under its power purchase agreements to the customers of each
electrical corporation, which shall be reflected in the electrical
corporation's proposed procurement plan. Each electrical corporation
shall file a proposed procurement plan with the commission not later
than 60 days after the commission specifies the allocation of
electricity. The proposed procurement plan shall specify the date
that the electrical corporation intends to resume procurement of
electricity for its retail customers, consistent with its obligation
to serve. After the commission's adoption of a procurement plan, the
commission shall allow not less than 60 days before the electrical
corporation resumes procurement pursuant to this section.
   (b) An electrical corporation's proposed procurement plan shall
include, but not be limited to, all of the following:
   (1) An assessment of the price risk associated with the electrical
corporation's portfolio, including any utility-retained generation,
existing power purchase and exchange contracts, and proposed
contracts or purchases under which an electrical corporation will
procure electricity, electricity demand reductions, and
electricity-related products and the remaining open position to be
served by spot market transactions.
   (2) A definition of each electricity product, electricity-related
product, and procurement related financial product, including support
and justification for the product type and amount to be procured
under the plan.
   (3) The duration of the plan.
   (4) The duration, timing, and range of quantities of each product
to be procured.
   (5) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services,
including the format and criteria of that procurement process.
   (6) An incentive mechanism, if any incentive mechanism is
proposed, including the type of transactions to be covered by that
mechanism, their respective procurement benchmarks, and other
parameters needed to determine the sharing of risks and benefits.
   (7) The upfront standards and criteria by which the acceptability
and eligibility for rate recovery of a proposed procurement
transaction will be known by the electrical corporation prior to
execution of the transaction. This shall include an expedited
approval process for the commission's review of proposed contracts
and subsequent approval or rejection thereof. The electrical
corporation shall propose alternative procurement choices in the
event a contract is rejected.
   (8) Procedures for updating the procurement plan.
   (9) A showing that the procurement plan will achieve the
following:
   (A) The electrical corporation will,  in order to fulfill
its unmet resource needs and in furtherance of Section 701.3,
 until a  20   33  percent
renewable resources portfolio is achieved, procure renewable energy
resources with the goal of ensuring that at least an additional 1
percent per year of the electricity sold by the electrical
corporation is generated from renewable energy resources  ,
provided sufficient funds are made available pursuant to Sections
399.6 and 399.15, to cover the above-market costs for new renewable
energy resources  .
   (B) The electrical corporation will create or maintain a
diversified procurement portfolio consisting of both short-term and
long-term electricity and electricity-related and demand reduction
products.
   (C) The electrical corporation will first meet its unmet resource
needs through all available energy efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
   (10) The electrical corporation's risk management policy,
strategy, and practices, including specific measures of price
stability.
   (11) A plan to achieve appropriate increases in diversity of
ownership and diversity of fuel supply of nonutility electrical
generation.
   (12) A mechanism for recovery of reasonable administrative costs
related to procurement in the generation component of rates.
   (c) The commission shall review and accept, modify, or reject each
electrical corporation's procurement plan. The commission's review
shall consider each electrical corporation's individual procurement
situation, and shall give strong consideration to that situation in
determining which one or more of the features set forth in this
subdivision shall apply to that electrical corporation. A procurement
plan approved by the commission shall contain one or more of the
following features, provided that the commission may not approve a
feature or mechanism for an electrical corporation if it finds that
the feature or mechanism would impair the restoration of an
electrical corporation's creditworthiness or would lead to a
deterioration of an electrical corporation's creditworthiness:
   (1) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services. The
commission shall specify the format of that procurement process, as
well as criteria to ensure that the auction process is open and
adequately subscribed. Any purchases made in compliance with the
commission-authorized process shall be recovered in the generation
component of rates.
   (2) An incentive mechanism that establishes a procurement
benchmark or benchmarks and authorizes the electrical corporation to
procure from the market, subject to comparing the electrical
corporation's performance to the commission-authorized benchmark or
benchmarks. The incentive mechanism shall be clear, achievable, and
contain quantifiable objectives and standards. The incentive
mechanism shall contain balanced risk and reward incentives that
limit the risk and reward of an electrical corporation.
   (3) Upfront achievable standards and criteria by which the
acceptability and eligibility for rate recovery of a proposed
procurement transaction will be known by the electrical corporation
prior to the execution of the bilateral contract for the transaction.
The commission shall provide for expedited review and either approve
or reject the individual contracts submitted by the electrical
corporation to ensure compliance with its procurement plan. To the
extent the commission rejects a proposed contract pursuant to this
criteria, the commission shall designate alternative procurement
choices obtained in the procurement plan that will be recoverable for
ratemaking purposes.
   (d) A procurement plan approved by the commission shall accomplish
each of the following objectives:
   (1) Enable the electrical corporation to fulfill its obligation to
serve its customers at just and reasonable rates.
   (2) Eliminate the need for after-the-fact reasonableness reviews
of an electrical corporation's actions in compliance with an approved
procurement plan, including resulting electricity procurement
contracts, practices, and related expenses. However, the commission
may establish a regulatory process to verify and assure that each
contract was administered in accordance with the terms of the
contract, and contract disputes which may arise are reasonably
resolved.
   (3) Ensure timely recovery of prospective procurement costs
incurred pursuant to an approved procurement plan. The commission
shall establish rates based on forecasts of procurement costs adopted
by the commission,
actual procurement costs incurred, or combination thereof, as
determined by the commission. The commission shall establish power
procurement balancing accounts to track the differences between
recorded revenues and costs incurred pursuant to an approved
procurement plan. The commission shall review the power procurement
balancing accounts, not less than semiannually, and shall adjust
rates or order refunds, as necessary, to promptly amortize a
balancing account, according to a schedule determined by the
commission. Until January 1, 2006, the commission shall ensure that
any overcollection or undercollection in the power procurement
balancing account does not exceed 5 percent of the electrical
corporation's actual recorded generation revenues for the prior
calendar year excluding revenues collected for the Department of
Water Resources. The commission shall determine the schedule for
amortizing the overcollection or undercollection in the balancing
account to ensure that the 5 percent threshold is not exceeded. After
January 1, 2006, this adjustment shall occur when deemed appropriate
by the commission consistent with the objectives of this section.
   (4) Moderate the price risk associated with serving its retail
customers, including the price risk embedded in its long-term supply
contracts, by authorizing an electrical corporation to enter into
financial and other electricity-related product contracts.
   (5) Provide for just and reasonable rates, with an appropriate
balancing of price stability and price level in the electrical
corporation's procurement plan.
   (e) The commission shall provide for the periodic review and
prospective modification of an electrical corporation's procurement
plan.
   (f) The commission may engage an independent consultant or
advisory service to evaluate risk management and strategy. The
reasonable costs of any consultant or advisory service is a
reimbursable expense and eligible for funding pursuant to Section
631.
   (g) The commission shall adopt appropriate procedures to ensure
the confidentiality of any market sensitive information submitted in
an electrical corporation's proposed procurement plan or resulting
from or related to its approved procurement plan, including, but not
limited to, proposed or executed power purchase agreements, data
request responses, or consultant reports, or any combination,
provided that the Office of Ratepayer Advocates and other consumer
groups that are nonmarket participants shall be provided access to
this information under confidentiality procedures authorized by the
commission.
   (h) Nothing in this section alters, modifies, or amends the
commission's oversight of affiliate transactions under its rules and
decisions or the commission's existing authority to investigate and
penalize an electrical corporation's alleged fraudulent activities,
or to disallow costs incurred as a result of gross incompetence,
fraud, abuse, or similar grounds. Nothing in this section expands,
modifies, or limits the State Energy Resources Conservation and
Development Commission's existing authority and responsibilities as
set forth in Sections 25216, 25216.5, and 25323 of the Public
Resources Code.
   (i) An electrical corporation that serves less than 500,000
electric retail customers within the state may file with the
commission a request for exemption from this section, which the
commission shall grant upon a showing of good cause.
   (j) (1) Prior to its approval pursuant to Section 851 of any
divestiture of generation assets owned by an electrical corporation
on or after the date of enactment of the act adding this section, the
commission shall determine the impact of the proposed divestiture on
the electrical corporation's procurement rates and shall approve a
divestiture only to the extent it finds, taking into account the
effect of the divestiture on procurement rates, that the divestiture
is in the public interest and will result in net ratepayer benefits.
   (2) Any electrical corporation's procurement necessitated as a
result of the divestiture of generation assets on or after the
effective date of the act adding this subdivision shall be subject to
the mechanisms and procedures set forth in this section only if its
actual cost is less than the recent historical cost of the divested
generation assets.
   (3) Notwithstanding paragraph (2), the commission may deem
proposed procurement eligible to use the procedures in this section
upon its approval of asset divestiture pursuant to Section 851.
  SEC. 19.  Section 739.1 of the Public Utilities Code is amended to
read:
   739.1.  (a) The commission shall establish a program of assistance
to low-income electric and gas customers  with annual household
incomes at or below 200 percent of the federal poverty guideline
levels  , the cost of which shall  not be borne solely
by any single class of customer   be recovered on an
equal cent-per-kilowatthour or equal cents-per-   therm
basis from all classes of customers that were subject to the
surcharge   that funded the program on January 1, 2008 
. The program shall be referred to as the California Alternate Rates
for Energy or CARE program. The commission shall ensure that the
level of discount for low-income electric and gas customers correctly
reflects the level of need.
   (b) The commission shall work with the public utility electrical
and gas corporations to establish penetration goals. The commission
shall authorize recovery of all administrative costs associated with
the implementation of the CARE program that the commission determines
to be reasonable, through a balancing account mechanism.
Administrative costs shall include, but are not limited to, outreach,
marketing, regulatory compliance, certification and verification,
billing, measurement and evaluation, and capital improvements and
upgrades to communications and processing equipment.
   (c) The commission shall examine methods to improve CARE
enrollment and participation. This examination shall include, but
need not be limited to, comparing information from CARE and the
Universal Lifeline Telephone Service (ULTS) to determine the most
effective means of utilizing that information to increase CARE
enrollment, automatic enrollment of ULTS customers who are eligible
for the CARE program, customer privacy issues, and alternative
mechanisms for outreach to potential enrollees. The commission shall
ensure that a customer consents prior to enrollment. The commission
shall consult with interested parties, including ULTS providers, to
develop the best methods of informing ULTS customers about other
available low-income programs, as well as the best mechanism for
telephone providers to recover reasonable costs incurred pursuant to
this section.
   (d) (1) The commission shall improve the CARE application process
by cooperating with other entities and representatives of California
government, including the California Health and Human Services Agency
and the Secretary of California Health and Human Services, to ensure
that all gas and electric customers eligible for public assistance
programs in California that reside within the service territory of an
electrical corporation or gas corporation, are enrolled in the CARE
program. To the extent practicable, the commission shall develop a
CARE application process using the existing ULTS application process
as a model. The commission shall work with public utility electrical
and gas corporations and the Low-Income Oversight Board established
in Section 382.1 to meet the low-income objectives in this section.
   (2) The commission shall ensure that an electrical corporation or
gas corporation with a commission-approved program to provide
discounts based upon economic need in addition to the CARE program,
including a Family Electric Rate Assistance program, utilize a single
application form, to enable an applicant to alternatively apply for
any assistance program for which the applicant may be eligible. It is
the intent of the Legislature to allow applicants under one program,
that may not be eligible under that program, but that may be
eligible under an alternative assistance program based upon economic
need, to complete a single application for any commission-approved
assistance program offered by the public utility.
   (e) The commission's program of assistance to low-income electric
and gas customers shall, as soon as practicable, include nonprofit
group living facilities specified by the commission, if the
commission finds that the residents in these facilities substantially
meet the commission's low-income eligibility requirements and there
is a feasible process for certifying that the assistance shall be
used for the direct benefit, such as improved quality of care or
improved food service, of the low-income residents in the facilities.
The commission shall authorize utilities to offer discounts to
eligible facilities licensed or permitted by appropriate state or
local agencies, and to facilities, including women's shelters,
hospices, and homeless shelters, that may not have a license or
permit but provide other proof satisfactory to the utility that they
are eligible to participate in the program.
   (f) It is the intent of the Legislature that the commission ensure
CARE program participants are afforded the lowest possible electric
and gas rates and, to the extent possible, are exempt from additional
surcharges attributable to the energy crisis of 2000-01. 
   (g) (1) As used in this subdivision, the following terms have the
following meanings:  
   (A) "Baseline quantity" has the same meaning as defined in Section
739.  
   (B) "California Solar Initiative" means the program providing
ratepayer funded incentives for eligible solar energy systems adopted
by the commission in Decision 05-12-044 and Decision 06-01-024, as
modified by Article 1 (commencing with Section 2851) of Chapter 9 of
Part 2 and Chapter 8.8 (commencing with Section 25780) of Division 15
of the Public Resources Code.  
   (C) "CalWORKs program" means the program established pursuant to
the California Work Opportunity and Responsibility to Kids Act
(Chapter 2 (commencing with Section 11200) of Part 3 of Division 9
the Welfare and Institutions Code).  
   (D) "Public good charge" means the nonbypassable separate rate
component imposed pursuant to Article 7 (commencing with Section 381)
or Chapter 2.3 and the nonbypassable system benefits charge imposed
pursuant to the Reliable Electric Service Investments Act (Article 15
(commencing with Section 399) of Chapter 2.3).  
   (2) The commission may, subject to the limitation in paragraph
(4), increase the rates in effect for CARE program participants for
electricity usage up to 130 percent of baseline quantities by the
annual percentage increase in benefits under the CalWORKs program as
authorized by the Legislature for the fiscal year in which the rate
increase would take effect, but not to exceed 3 percent per year. The
CARE rate for usage above 130 percent of baseline quantities may be
adjusted annually by up to 3 percent, but not to exceed the annual
percentage increase in benefits under the CalWORKs program. This
paragraph shall become inoperative on January 1, 2019, unless a later
enacted statute deletes or extends that date.  
   (3) Beginning January 1, 2019, the commission may, subject to the
limitation in paragraph (4), establish rates for CARE program
participants pursuant to Sections 739, 739.1, and 739.9, subject to
the requirements of subdivision (b) of Section 382 that the
commission ensure that low-income ratepayers are not jeopardized or
overburdened by monthly energy expenditures.  
   (4) Tier 1, tier 2, and tier 3 CARE rates shall not exceed 80
percent of the corresponding rates charged residential customers not
participating in the CARE program, excluding any Department of Water
Resources bond charge imposed pursuant to Division 27 (commencing
with Section 80000) of the Water Code, the CARE surcharge portion of
the public goods charge, any charge imposed pursuant to the
California Solar Initiative, and any charge imposed to fund any other
program that exempts CARE participants from paying the charge. 

   (5) Rates charged CARE program participants shall not have more
than three tiers. An electrical corporation that does not have a tier
3 CARE rate may introduce a tier 3 CARE rate that, in order to
moderate the impact on program participants whose usage exceeds 130
percent of baseline quantities, shall be phased in to 80 percent of
the corresponding rates charged residential customers not
participating in the CARE program, excluding any Department of Water
Resources bond charge imposed pursuant to Division 27 (commencing
with Section 80000) of the Water Code, the CARE surcharge portion of
the public goods charge, any charge imposed pursuant to the
California Solar Initiative, and any other charge imposed to fund a
program that exempts CARE participants from paying the charge. Any
additional revenues collected by an electrical corporation resulting
from the adoption of a tier 3 CARE rate shall, until the utility's
next periodic general rate case review of cost allocation and rate
design, be tracked and credited to reduce rates of residential
ratepayers not participating in the CARE program with usage above 130
percent of baseline quantities. 
  SEC. 20.  Section 739.9 is added to the Public Utilities Code, to
read:
   739.9.  (a) The commission may, subject to the limitation in
subdivision (b), increase the rates charged residential customers for
electricity usage up to 130 percent of the baseline quantities, as
defined in Section 739, by the annual percentage change in the
Consumer Price Index from the prior year plus 1 percent, but not less
than 3 percent and not more than 5 percent per year. For purposes of
this subdivision, the annual percentage change in the Consumer Price
Index shall be calculated using the same formula that was used to
determine the annual Social Security Cost of Living Adjustment on
January 1, 2008. This subdivision shall become inoperative on January
1, 2019, unless a later enacted statute deletes or extends that
date.
   (b) The rates charged residential customers for electricity usage
up to the baseline quantities, including any customer charge
revenues, shall not exceed 90 percent of the system average rate
prior to January 1, 2019, and may not exceed 92.5 percent after that
date. For purposes of this subdivision, the system average rate shall
be determined by dividing the electrical corporation's total revenue
requirements for bundled service customers by the adopted forecast
of total bundled service sales.
   (c) This section does not require the commission to raise any
residential rate or restrict, or otherwise limit, the authority of
the commission to reduce any residential rate in effect immediately
preceding January 1, 2009.
  SEC. 21.  Section 745 is added to the Public Utilities Code, to
read:
   745.  (a) The commission shall not require or permit an electrical
corporation to employ mandatory dynamic pricing for residential
customers.
   (b) The commission may authorize an electrical corporation to
offer residential customers the option of receiving service pursuant
to dynamic pricing.
   (c) The commission may, beginning January 1, 2016, authorize an
electrical corporation to employ default dynamic pricing for
residential customers, if the customer has the option of receiving
service pursuant to a rate schedule that is not based upon dynamic
pricing. The commission shall only approve an electrical corporation'
s default use of dynamic pricing if residential customers that
exercise the option to not receive service pursuant to dynamic
pricing incur no additional costs as a result of the exercise of that
option.
  SEC. 22.  Section 1005.1 is added to the Public Utilities Code, to
read:
   1005.1.  (a) The commission shall approve an application for a
certificate within one year of the date of filing of the completed
application, when all of the following are true:
   (1) The application is for a certificate for building or upgrading
an electrical transmission line.
   (2) The transmission line is needed to provide transmission to
load centers for electricity generated in a high priority renewable
energy zone or is reasonably necessary to facilitate achievement of
the renewables portfolio standard established in Article 16
(commencing with Section 399.11) of Chapter 2.3.
   (3) The commission has not expressly found any of the following:
   (A) That the investment is not reasonable and necessary to
maintain or enhance reliability of the transmission grid.
   (B) That the building or upgrading of the electrical transmission
line will not maintain or enhance efficient use of the transmission
grid.
   (C) That the transmission line fails to meet other applicable
standards and requirements for approval and construction.
   (D) That the transmission line threatens substantial harm to the
environment that necessitates an extension of time for completion of
review pursuant to the California Environmental Quality Act (Division
13 (commencing with Section 21000) of the Public Resources Code).
   (b) The commission may, if it finds that the costs were justified
pursuant to subdivision (a) of Section 454, allow recovery in rates
of any increase in transmission costs incurred by an electrical
corporation in planning, designing, and engineering the
reconfiguration, replacement, expansion, or construction of
transmission facilities, to the extent that those costs are not
otherwise authorized for recovery in rates approved by the Federal
Energy Regulatory Commission.
  SEC. 23.  Section 80110 of the Water Code is amended to read:
   80110.  (a) The department shall retain title to all power sold by
it to the retail end-use customers. The department shall be entitled
to recover, as a revenue requirement, amounts and at the times
necessary to enable it to comply with Section 80134, and shall advise
the commission as the department determines to be appropriate.
   (b) The revenue requirements may also include any advances made to
the department hereunder or hereafter for purposes of this division,
or from the Department of Water Resources Electric Power Fund, and
General Fund moneys expended by the department pursuant to the
Governor's Emergency Proclamation dated January 17, 2001.
   (c) (1) For the purposes of this division and except as otherwise
provided in this section, the Public Utility Commission's authority
as set forth in Section 451 of the Public Utilities Code shall apply,
except any just and reasonable review under Section 451 shall be
conducted and determined by the department. Prior to the execution of
any modification of any contract for the purchase of power by the
department pursuant to this division, on or after the effective date
of this section, the department or the commission, as applicable,
shall do the following:
   (A) The department shall notify the public of its intent to modify
a contract and the opportunity to comment on the proposed
modification.
   (B) At least 21 days after providing public notice, the department
shall make a determination as to whether the proposed modifications
are just and reasonable. The determination shall include responses to
any public comments.
   (C) No later than 70 days before the date of execution of the
contract modification, the department shall provide a written report
to the commission setting forth the justification for the
determination that the proposed modification is just and reasonable,
including documents, analysis, response to public comments, and other
information relating to the determination.
   (D) Within 60 days of the date of receipt of the department's
written report, the commission shall review the report and make
public its comments. If the commission in its comments recommends
against the proposed modification, the department shall not execute
the proposed contract modification.
   (2) This subdivision does not apply to the modification of a
contract modified to settle litigation to which the commission is a
party.
   (3) This subdivision does not apply to the modification of a
contract for the purchase of electricity that is generated from a
facility owned by a public agency if the contract requires the public
agency to sell electricity to the department at or below the public
agency's cost of that power.
   (4) This subdivision does not apply to the modification of a
contract to address issues relating to billing, scheduling, delivery
of electricity, and related contract matters arising out of the
implementation by the Independent System Operator of its market
redesign and technology upgrade program.
   (5) (A) For purposes of this subdivision, the department proposes
to "modify" a contract if there is any material change proposed in
the terms of the contract.
   (B) A change to a contract is not material if it is only
administrative in nature or the change in ratepayer value results in
ratepayer savings, not to exceed twenty-five million dollars
($25,000,000) per year. For the purpose of making a determination
that a change is only administrative in nature or results in
ratepayer savings of twenty-five million dollars ($25,000,000) or
less per year, the executive director of the commission shall concur
in writing with each of those determinations by the department.
   (d) The commission may enter into an agreement with the department
with respect to charges under Section 451 for purposes of this
division, and that agreement shall have the force and effect of a
financing order adopted in accordance with Article 5.5 (commencing
with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public
Utilities Code, as determined by the commission. 
   (e) In no case shall the commission increase the electricity
charges in effect on the date that the act that adds this section
becomes effective for residential customers for existing baseline
quantities or usage by those customers of up to 130 percent of
existing baseline quantities, until such time as the department has
recovered the costs of power it has procured for the electrical
corporation's retail end-use customers as provided in this division.
 
   (f) 
    (e)   After the passage of a period of time
after February 1, 2001, as shall be determined by the commission, the
  The    right of retail end-use
customers pursuant to Article 6 (commencing with Section 360) of
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code to
acquire service from other providers shall be suspended until
 the department no longer supplies power hereunder 
 the Legislature, by statute, lifts the suspension or otherwise
authorizes direct transactions  .  The  
   (f) Notwithstanding subdivision (e), the commission may allow
individual retail end-use customers currently taking service from an
electric service provider, or eligible to take service from an
electric service provider under rules adopted by the commission in
existence on January 1, 2008, to acquire service for new accounts
from an electric service provider.  
   (g) For purposes of this section, a "new account" means: 

   (1) An account belonging to an individual retail end-use customer
as described in subdivision (f) that exists on January 1, 2009, that
receives bundled utility service from an electrical corporation.
 
   (2) An additional meter or request for service of an individual
retail end-use customer as described in subdivision (f), added after
January 1, 2009. 
    (h)     The  department shall have the
same rights with respect to the payment by retail end-use customers
for power sold by the department as do providers of power to the
customers.
  SEC. 24.  It is the intent of the Legislature to, through the
Budget Act or other measure, appropriate the sum of three million
seven hundred thousand dollars ($3,700,000) from the Public Interest
Research, Development, and Demonstration Fund to the Energy
Commission for contracts and for interagency agreements with the
Department of Fish and Game or other wildlife agencies for the
preparation of one or more natural communities conservation plans in
the Mojave Desert for the purposes of facilitating the development of
solar energy in that region.