Bill Text: CA SB854 | 2011-2012 | Regular Session | Introduced
Bill Title: Renewable energy resources.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB854 Detail]
Download: California-2011-SB854-Introduced.html
BILL NUMBER: SB 854 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Blakeslee
FEBRUARY 18, 2011
An act to amend Section 25740 of the Public Resources Code, and to
amend Sections 399.11, 399.12.5, 399.13, and 454.5 of, to add
Section 399.18 to, to repeal Section 387 of, and to repeal and add
Sections 399.12, 399.14, 399.15, 399.16, and 377.17 of, the Public
Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 854, as introduced, Blakeslee. Renewable energy resources.
(1) The existing California renewables portfolio standard program
requires the Public Utilities Commission (PUC) to implement annual
procurement targets for the procurement of eligible renewable energy
resources, as defined, for all retail sellers, as defined, to achieve
the targets and goals of the program. The renewables portfolio
standard 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 (renewables portfolio
standard). The renewables portfolio standard requires each retail
seller to increase its total procurement of eligible renewable energy
resources by at least an additional 1% of retail sales per year so
that 20% of its retail sales are procured from eligible renewable
energy resources no later than December 31, 2010. Under existing law
the governing body 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 require an obligated party to procure an amount of
renewable energy credits (RECs), as defined, sufficient to
demonstrate compliance with the party's renewables portfolio
standard, as defined, procurement requirements. Obligated parties
would be defined to include an electrical corporation, electric
service provider, community choice aggregator, and local publicly
owned electric utility. The bill would establish renewables portfolio
standards for 6 different compliance intervals, to be calculated by
multiplying the obligated party's total electricity sales to
California retail end-use customers during the compliance interval by
a specified percentage that increases by interval from 20% of sales
in January 1, 2012, to 40% of sales by January 1, 2027. The bill
would require that not less than 50% of the renewables portfolio
standard procurement requirements be met with bundled RECs, as
defined, would authorize firmed and shaped RECs, as defined, to be
used to meet not more than 50% of the procurement requirements, and
would authorize tradable RECs, as defined, to be used to meet not
more than 25% of the procurement requirements. The bill would make
the PUC responsible for supervising the implementation of the
renewables portfolio standard program by electrical corporations and
overseeing certain aspects of the program by electric service
providers and community choice aggregators. The bill would make its
governing body responsible for implementation of the program by a
local publicly owned electric utility. The bill would make numerous
other revisions to the renewables portfolio standard program.
(2) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to (A) certify
eligible renewable energy resources, (B) design and implement an
accounting system to verify compliance with the renewables portfolio
standard by retail sellers, (C) establish a system for tracking and
verifying RECs that verifies the generation and delivery of
electricity associated with RECs, and (D) certify the eligibility of
RECs associated with deliveries of electricity to a local publicly
owned electric utility.
This bill would require the Energy Commission to design and
implement an accounting system to verify compliance with the
renewables portfolio standard by all obligated parties and would
delete the separate requirement that it certify the eligibility of
RECs associated with deliveries of electricity to a local publicly
owned electric utility. The bill would require the Energy Commission,
among other things, to adopt regulations specifying procedures for
enforcement of the renewables portfolio standard procurement
requirements that include a public process under which the Energy
Commission is authorized to issue a notice of violation and
correction with respect to a local publicly owned electric utility
and for referral to the State Air Resources Board for penalties
imposed pursuant to the California Global Warming Solutions Act of
2006 or other laws if that act is suspended or repealed.
(3) The bill would require every electrical corporation that owns
electrical transmission facilities to annually prepare and submit a
report to the PUC that contains specified matter and identifies any
electrical transmission facility, upgrade, or enhancement that is
reasonably necessary to achieve the renewables portfolio standard
procurement requirements. The bill would delete certain reporting
requirements and would require each electrical corporation, electric
service provider, and community choice aggregator to prepare and
submit to the PUC, and each local publicly owned electric utility to
prepare and submit to the Energy Commission, an annual report that
includes the current status and progress made by that obligated party
toward meeting the renewables portfolio standard procurement
requirements for the current compliance interval and recommendations
to remove impediments towards its achievement. The bill would require
the PUC, in coordination with the Energy Commission, the State Air
Resources Board, the Independent System Operator, and local publicly
owned electric utilities to conduct 3 reviews of the renewables
portfolio standard program to assess changes that may be needed to
improve implementation progress and to complete and present its
review to the Legislature by December 31, 2015, December 31, 2020,
and December 31, 2025.
(4) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because certain provisions of this bill would be a part of the act
and because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by expanding the definition of a
crime. By placing additional requirements upon local publicly owned
electric utilities, the bill would impose a state-mandated local
program.
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. 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 meet 40
percent of the state's electrical demand with generation from
eligible renewable energy resources meeting the requirements of
Article 16 (commencing with Section 399.11) of Chapter 2.3
of Part 1 of Division 1 of the Public
Utilities Code .
SEC. 2. 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. 3. 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 for the purposes
of increasing the diversity, reliability, public health and
environmental benefits of the energy mix meeting 40
percent of the state's electrical demand with generat ion
from eligible renewable energy resources , it is the intent of
the Legislature that the commission and the State Energy
Resources Conservation and Development Energy
Commission implement the California Renewables Portfolio
Standard Program 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 by diversifying the state'
s energy mix and reducing ratepayer exposure to the price volatility
of natural gas used for conventional generation, while
facilitating the expansion of California's clean energy economic
sector and improving air quality .
(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 and established pursuant to Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code.
(c) The generational characteristics of eligible renewable energy
resources vary greatly among fuel types and geographic location. In
addition, the adverse environmental impacts of different eligible
renewable energy resources, including impacts to endangered or
threatened species and their critical habitats, also range from
minimal to significant. An obligated party's portfolio of eligible
renewable energy resources should consist of renewable energy credits
from a suite of different eligible renewable energy resources,
located across a range of geographic locations, so as to minimize
intermittency issues and the adverse environmental impacts of
resource development in any one geographic location.
(d) New and modified integrating generational resources, including
flexible gas-fired generation, are necessary to comply with federal
electricity reliability requirements while facilitating the
achievement of the renewables portfolio standard procurement
requirements.
(e) New and modified electric electrical
transmission facilities may be necessary to facilitate the
state achieving its renewables portfolio standard targets
procurement requirements .
(f) The successful implementation of the California renewables
portfolio standard program may serve as a model for regional and
federal renewable energy policy. It is the intent of the Legislature
that the program be designed and implemented in a manner that
supports the development of regional and federal renewable energy
programs.
SEC. 4. Section 399.12 of the Public Utilities Code is repealed.
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 electrical
generating facility that meets the definition of an "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 energy resource unless
it is located in Stanislaus County and was operational prior to
September 26, 1996.
(d) "Procure" means to acquire through ownership or contract. For
purposes of meeting the renewables portfolio standard procurement
requirements, a retail seller or local publicly owned electric
utility may procure either 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) (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 used to generate electricity in the same process
through which the facility converts renewable fuel to electricity,
shall result in the creation of a renewable energy credit. The Energy
Commission shall set the de minimis quantity of nonrenewable fuels
for each renewable energy technology at a level of no more than 2
percent of the total quantity of fuel used by the technology to
generate electricity. The Energy Commission may adjust the de minimis
quantity for an individual facility, up to a maximum of 5 percent,
if it finds that all of the following conditions are met:
(A) The facility demonstrates that the higher quantity of
nonrenewable fuel will lead to an increase in generation from the
eligible renewable energy facility that is significantly greater than
generation from the nonrenewable fuel alone.
(B) The facility demonstrates that the higher quantity of
nonrenewable fuels will reduce the variability of its electrical
output in a manner that results in net environmental benefits to the
state.
(C) The higher quantity of nonrenewable fuel is limited to either
natural gas or hydrogen derived by reformation of a fossil fuel.
(f) "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.
(g) "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. 5. Section 399.12 is added to the Public Utilities Code, to
read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) "Balancing authority" means the responsible entity that
integrates resource plans ahead of time, maintains load-interchange
generation balance within a balancing authority area, and supports
interconnection frequency in real time.
(b) "Balancing authority area" means the collection of generation,
transmission, and loads within the metered boundaries of the
balancing authority. The balancing authority maintains the electrical
load-resource balance within this area.
(c) (1) "Bundled renewable energy credits" means renewable energy
credits procured with the underlying electricity that created the
renewable energy credits that is used to serve the electrical load of
retail end-use customers of an obligated party. "Bundled renewable
energy credits" may only be created by eligible renewable energy
resources under the operational control of a California balancing
authority.
(2) Bundled renewable energy credits include renewable energy
credits created by distributed generation resources for which an
obligated party compensates the generator for the underlying
electricity that created the renewable energy credits, including both
of the following:
(A) Electricity from eligible renewable energy resources
participating in the standard contract and tariff program established
pursuant to Section 399.20.
(B) Surplus electricity from a net surplus customer generator who
elects to receive net surplus compensation pursuant to Section 2827.
(3) Renewable energy credits procured by an obligated party
pursuant to a contract executed prior to January 1, 2010, that do not
satisfy the definition of "bundled renewable energy credits," shall
be treated as being bundled renewable energy credits.
(4) Bundled renewable energy credits sold or traded by an
obligated party to a second party, independent of the underlying
electricity that created the renewable energy credits, become
"unbundled renewable energy credits" and are ineligible to meet an
obligated party's bundled eligible renewable energy resources
procurement requirement pursuant to subdivision (b) of Section
399.15.
(d) "California balancing authority" is a balancing authority with
control over a balancing authority area primarily located in this
state and operating for obligated parties subject to the requirements
of this article and includes the ISO and a local publicly owned
electric utility operating a transmission grid that is not under the
operational control of the ISO. A California balancing authority is
responsible for the operation of the transmission grid within its
metered boundaries which may not be limited by the political
boundaries of the State of California.
(e) "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.
(f) "Eligible renewable energy resource" means an electrical
generation facility that uses biomass, solar thermal, photovoltaic,
wind, geothermal, fuel cells using renewable fuels, hydroelectric
generation meeting the requirements specified in Section 399.12.5,
digester gas, municipal solid waste conversion, municipal solid waste
combustion meeting the requirements specified in Section 399.12.5,
landfill gas, ocean wave, ocean thermal, or tidal current, and any
additions or enhancements to the facility using that technology, and
that satisfies one of the following requirements:
(1) The facility is interconnected to the distribution grid
serving load within the state or is interconnected to the
transmission grid that is under the operational control of a
California balancing authority serving load within the state.
(2) The facility is interconnected to the transmission grid that
is under the operational control of a balancing authority that is not
primarily located inside California, but is located within the WECC
service area, and satisfies all of the following requirements:
(A) It commences initial commercial operation on or after January
1, 2005.
(B) It will not cause or contribute to any violation of a
California environmental quality standard or requirement.
(C) It participates in the accounting system established by the
Energy Commission pursuant to subdivision (b) of Section 399.13.
(3) The facility is interconnected to the transmission grid that
is under the operational control of a balancing authority that is not
primarily located inside California but is located within the WECC
service area, and satisfies all of the following requirements:
(A) It commences initial commercial operation before January 1,
2005.
(B) It will not cause or contribute to any violation of a
California environmental quality standard or requirement.
(C) It participates in the accounting system established by the
Energy Commission pursuant to subdivision (b) of Section 399.13.
(D) Electricity generated by the facility was procured by an
obligated party as of January 1, 2010.
(E) The electricity is from incremental generation resulting from
expansion or repowering of the facility.
(g) "Firmed and shaped renewable energy credits" means those
renewable energy credits procured from eligible renewable energy
resources interconnected to the transmission grid that is under the
operational control of a balancing authority that is within the WECC
service area for which, in a calendar year, an amount of electricity
equal to the number of renewable energy credits procured, is
scheduled into a California balancing authority.
(h) "ISO" means the public benefit, nonprofit corporation
organized pursuant to Sections 337, 340, and 341.5 and operating
pursuant to Article 3 (commencing with Section 345) and federal
regulation.
(i) "Obligated party" means an entity subject to the requirements
of this article and includes all of the following:
(1) A local publicly owned electric utility.
(2) An electrical corporation.
(3) An electric service provider.
(4) A community choice aggregator, as defined in Section 331.1.
(j) (1) "Renewable energy credit" means a certificate of proof
associated with the generation of 1 megawatthour of electricity from
an eligible renewable energy resource, issued through the accounting
system established by the Energy Commission pursuant to Section
399.13.
(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) 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 not result in
the creation of a renewable energy credit.
(k) "Renewables portfolio standard" means the specified percentage
of renewable energy credits that an obligated party is required to
procure pursuant to this article.
(l) "Tradable renewable energy credit" means a renewable energy
credit that is sold or transferred independent of the underlying
electricity that created the renewable energy credit. A "tradable
renewable energy credit" includes both of the following:
(1) A renewable energy credit attributed to electricity generated
by a customer-sited eligible renewable energy resource that uses the
electrical output to serve the customer's on-site load and for which
the customer has not received compensation for that electrical
output, either through a tariff or standard contract made available
pursuant to Section 399.12, or by having elected to receive net
surplus electricity compensation pursuant to Section 2827.
(2) Unbundled renewable energy credits.
(m) "WECC" means the Western Electricity Coordinating Council of
the North American Electric Reliability Corporation, or a successor
to either corporation.
SEC. 6. Section 399.12.5 of the Public Utilities Code is amended
to read:
399.12.5. (a) Notwithstanding subdivision (c) of Section
399.12, a (1) A small
hydroelectric generation facility of 30 megawatts or less is an
eligible renewable energy resource if an obligated party owned or
procured the electricity from the facility as of December 31, 2005.
(2) A new small hydroelectric
generation facility of 30 megawatts or less that commences generation
of electricity on or after January 1, 2006, is an
eligible renewable energy resource only if its operation does not
cause an adverse impact on instream beneficial uses or cause a change
in the volume or timing of streamflow.
(3) Notwithstanding paragraph (1), a
conduit hydroelectric facility of 30 megawatts or less that commenced
operation before January 1, 2006, is an eligible renewable energy
resource.
(4) A conduit hydroelectric facility of
30 megawatts or less that commences operation on or after January 1,
2006, is an eligible renewable energy resource only if its operation
does not cause an adverse impact on instream beneficial uses or
cause a change in the volume or timing of streamflow.
(5) A small hydroelectric
generation facility or conduit hydroelectric facility that
satisfies the criteria for to be an
eligible renewable energy resource pursuant to Section
399.12 this subdivision shall not lose its
eligibility if efficiency improvements undertaken after January 1,
2008, cause the generating capacity of the facility to exceed 30
megawatts, and the efficiency improvements do not result in an
adverse impact on instream beneficial uses or cause a change in the
volume or timing of streamflow. The entire generating capacity of the
facility shall be eligible.
(b) Notwithstanding subdivision (c) of Section 399.12,
the The incremental increase in the amount of
electricity generated from a hydroelectric generation facility as a
result of efficiency improvements at the facility, is electricity
from an eligible renewable energy resource, without regard to the
electrical output of the facility, if all of the following conditions
are met:
(1) The incremental increase is the result of efficiency
improvements from a retrofit that do not result in an adverse impact
on instream beneficial uses or cause a change in the volume or timing
of streamflow.
(2) The hydroelectric generation facility meets one of the
following certification mechanisms:
(A) The hydroelectric generation facility has, within the
immediately preceding 15 years, received certification from the State
Water Resources Control Board pursuant to Section 401 of the federal
Clean Water Act (33 U.S.C. Sec. 1341), or has received certification
from a regional board to which the state board has delegated
authority to issue certification, unless the facility is not subject
to certification because there is no potential for discharge into
waters of the United States.
(B) If the hydroelectric facility is not located in California,
the certification pursuant to Section 401 of the federal Clean Water
Act (33 U.S.C. Sec. 1341) may be received from the applicable state
board or agency or from a regional board to which the state board has
delegated authority to issue the certification.
(C) If the hydroelectric generation facility is the Rock Creek
Powerhouse, Federal Energy Regulatory Commission Project Number 1962,
the efficiency improvements have received any necessary incremental
certification from the State Water Resources Control Board.
(3) The hydroelectric generation facility is owned by a retail
seller or a local publicly owned electric utility, was operational
prior to January 1, 2007, the efficiency improvements are initiated
on or after January 1, 2008, the efficiency improvements are not the
result of routine maintenance activities, as determined by the Energy
Commission, and the efficiency improvements were not included in any
resource plan sponsored by
the facility owner prior to January 1, 2008.
(4) All of the incremental increase in electricity resulting from
the efficiency improvements are demonstrated to result from a
long-term financial commitment by the retail seller or local publicly
owned electric utility. For purposes of this paragraph, "long-term
financial commitment" means either new ownership investment in the
facility by the retail seller or local publicly owned electric
utility or a new or renewed contract with a term of 10 or more years,
which includes procurement of the incremental generation.
(c) The incremental increase in the amount of electricity
generated from a hydroelectric generation facility as a result of
efficiency improvements at the facility are not eligible for
supplemental energy payments pursuant to the Renewable Energy
Resources Program (Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code), or a successor program.
(d) Notwithstanding subdivision (c) of Section 399.12 and
subdivisions (a) and (b), a hydroelectric generation
facility that is an eligible renewable energy resource pursuant to
this article as of January 1, 2010, shall not lose its eligibility if
the facility causes a change in the volume or timing of streamflow
required by license conditions approved pursuant to the Federal Power
Act (Chapter 12 (commencing with Section 791a) of Title 16 of the
United States Code) on or after January 1, 2010.
(e) A facility engaged in the combustion of municipal solid waste
is an eligible renewable energy resource only if it is located in
Stanislaus County and was operational prior to September 26, 1996.
SEC. 7. 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)
( j ) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers
obligated parties , 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
obligated parties , 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
obligated parties , 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.
(e) On or before July 1, 2012, the Energy Commission shall adopt
regulations specifying procedures for a public process under which
the Energy Commission may issue a notice of violation and correction
against a local publicly owned electric utility for failure to comply
with this article, and for referral of violations to the State Air
Resources Board for penalties pursuant to subdivision (f).
(f) (1) Upon a determination by the Energy Commission that a local
publicly owned electric utility has failed to comply with this
article, the Energy Commission shall refer the failure to comply with
this article to the State Air Resources Board, which may impose
penalties to enforce this article consistent with Part 6 (commencing
with Section 38580) of Division 25.5 of the Health and Safety Code.
(2) If Division 25.5 (commencing with Section 38500) of the Health
and Safety Code is suspended or repealed, the State Air Resources
Board may take action to enforce this article on local publicly owned
electric utilities consistent with Section 41513 of the Health and
Safety Code, and impose penalties on a local publicly owned electric
utility consistent with Article 3 (commencing with Section 42400) of
Chapter 4 of Part 4 of, and Chapter 1.5 (commencing with Section
43025) of Part 5 of, Division 26 of the Health and Safety Code.
(3) For purposes of carrying out this subdivision, this article is
an emissions reduction measure pursuant to Section 38580 of the
Health and Safety Code.
(4) If the State Air Resources Board has imposed a penalty upon a
local publicly owned electric utility for the utility's failure to
comply with this article, the State Air Resources Board shall not
impose an additional penalty for the same infraction, or the same
failure to comply with any renewables portfolio standard procurement
requirement imposed upon the utility pursuant to the California
Global Warming Solutions Act of 2006 (Division 25.5 (commencing with
Section 38500) of the Health and Safety Code).
(5) Any penalties collected by the State Air Resources Board
pursuant to this article shall be deposited in the Air Pollution
Control Fund and, upon appropriation by the Legislature, shall be
expended for reducing emissions of air pollution or greenhouse gases
within the same geographic area as the local publicly owned electric
utility.
SEC. 8. Section 399.14 of the Public Utilities Code is repealed.
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.
(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 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 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.
(B) Provisions 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.
(b) 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.
(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 "public works" for the purposes of
Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of
the Labor Code.
SEC. 9. Section 399.14 is added to the Public Utilities Code, to
read:
399.14. (a) The commission, by rulemaking, shall adopt all of the
following with respect to compliance with the requirements of this
article by an electrical corporation:
(1) 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 procurement obligations of this article,
on a total cost basis. This process shall take into account all of
the following:
(A) Estimates of indirect costs associated with needed
transmission investments and ongoing electrical corporation expenses
resulting from integrating and operating eligible renewable energy
resources.
(B) The cost impact of procuring the eligible renewable energy
resources on the electrical corporation's electricity portfolio.
(C) The viability of the project to construct and reliably operate
the eligible renewable energy resource, including the developer's
experience, the feasibility of the technology used to generate
electricity, and the risk that the facility will not be built, or
that construction will be delayed, with the result that electricity
will not be supplied as required by the contract.
(D) The potential for electrical generation from the eligible
renewable energy resource to either be curtailed or provided to
retail end-use customers who are compensated with ratepayer dollars
for consuming the generation.
(E) The siting, permitting, and environmental impact benefits of
eligible renewable energy resources located in any of the following:
(i) Lands identified by the federal government to be retired from
agricultural production.
(ii) Lands disturbed from their natural state by mining or other
activity of man.
(iii) Lands disturbed by agricultural activities that are
unsuitable for future agricultural uses due to salt or mineral
accumulations in the soil, as determined by local agricultural
commissioners.
(2) 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, at a minimum, shall 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.
(b) 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).
(c) The commission may exercise its authority pursuant to Section
2113 to require an electrical corporation to comply with any part of
this article and may enforce comparable penalties on community choice
aggregators or energy service providers for failure to comply with
any part of this article.
(d) The commission shall allow an electrical corporation to
recover in rates the reasonable costs of purchasing tradable
renewable energy credits.
SEC. 10. Section 399.15 of the Public Utilities Code is repealed.
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of 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 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. A retail seller
with 20 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 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) No purchases of renewable energy credits may be eligible for
consideration as an above-market cost.
(E) 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.
SEC. 11. Section 399.15 is added to the Public Utilities Code, to
read:
399.15. (a) An obligated party shall procure an amount of
renewable energy credits sufficient to demonstrate compliance with
the obligated party's renewables portfolio standard procurement
requirements. The obligated party's renewables portfolio standard
procurement requirements shall be calculated by multiplying the
obligated party's total electricity sales to California retail
end-use customers during the compliance interval by the renewable
energy credit percentage for the compliance interval. The renewables
portfolio standard procurement requirements for compliance intervals
are as follows:
(1)
Twenty percent of the total electricity sales to retail end-use
customers from January 1, 2012, through December 31, 2014.
(2) Twenty-four percent of the total electricity sales to retail
end-use customers from January 1, 2015, through December 31, 2017.
(3) Twenty-eight percent of the total electricity sales to retail
end-use customers from January 1, 2018, through December 31, 2020.
(4) Thirty-two percent of the total electricity sales to retail
end-use customers from January 1, 2021, through December 31, 2023.
(5) Thirty-six percent of the total electricity sales to retail
end-use customers from January 1, 2024, through December 31, 2026.
(6) Forty percent of the total electricity sales to retail end-use
customers from January 1, 2027, through December 31, 2029, and every
three-year interval thereafter.
(b) In furtherance of the goals of, and consistent with the intent
of, the Legislature identified in Section 399.11, obligated parties
shall meet their procurement obligations pursuant to the following
requirements and limitations:
(1) Bundled renewable energy credits shall be used to meet not
less than 50 percent of the renewables portfolio standard procurement
requirements for a compliance interval.
(2) Firmed and shaped renewable energy credits may be used to meet
not more than 50 percent of the renewables portfolio standard
procurement requirements for a compliance interval.
(3) Tradable renewable energy credits may be used to meet not more
than 25 percent of the renewables portfolio standard procurement
requirements for a compliance interval.
(c) (1) By June 1 of the year following a compliance interval,
each electrical corporation, electric service provider, and community
choice aggregator shall submit to the commission, and each local
publicly owned electric utility shall submit to the Energy
Commission, a compliance interval report demonstrating compliance
with the renewables portfolio standard procurement requirements for
the preceding compliance interval.
(2) If an obligated party's compliance interval report indicates
the obligated party did not meet its renewables portfolio standard
procurement requirements, the obligated party shall explain, in
detail, the reasons for the deficiency.
(d) Renewable energy credits retired for the purpose of compliance
with the renewables portfolio standard procurement requirements for
each compliance interval shall be retired no later than the
compliance deadline for that compliance interval.
(e) Obligated parties shall not be required to procure eligible
renewable energy resources or renewable energy credits in excess of
the renewables portfolio standard procurement requirements for a
compliance interval.
SEC. 12. Section 399.16 of the Public Utilities Code is repealed.
399.16. (a) The commission, by rule, may authorize the use of
renewable energy credits to satisfy the requirements of the
renewables portfolio standard established pursuant to this article,
subject to the following conditions:
(1) Prior to authorizing any renewable energy credit to be used
toward satisfying annual procurement targets, the commission and the
Energy Commission shall conclude that the tracking system established
pursuant to subdivision (c) of Section 399.13, is operational, is
capable of independently verifying the electricity generated by an
eligible renewable energy resource and delivered to the retail
seller, and can ensure that renewable energy credits shall not be
double counted by any seller of electricity within the service
territory of the Western Electricity Coordinating Council (WECC).
(2) A renewable energy credit shall be counted only once for
compliance with the renewables portfolio standard of this state or
any other state, or for verifying retail product claims in this state
or any other state.
(3) The electricity is delivered to a retail seller, the
Independent System Operator, or a local publicly owned electric
utility.
(4) All revenues received by an electrical corporation for the
sale of a renewable energy credit shall be credited to the benefit of
ratepayers.
(5) No renewable energy credits shall be created for electricity
generated pursuant to any electricity purchase contract with a retail
seller or a local publicly owned electric utility executed before
January 1, 2005, unless the contract contains explicit terms and
conditions specifying the ownership or disposition of those credits.
Deliveries under those contracts shall be tracked through the
accounting system described in subdivision (b) of Section 399.13 and
included in the baseline quantity of eligible renewable energy
resources of the purchasing retail seller pursuant to Section 399.15.
(6) No renewable energy credits shall be created for electricity
generated under any electricity purchase contract executed after
January 1, 2005, pursuant to the federal Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. Sec. 2601 et seq.). Deliveries under
the electricity purchase contracts shall be tracked through the
accounting system described in subdivision (b) of Section 399.12 and
count toward the renewables portfolio standard obligations of the
purchasing retail seller.
(7) The commission may limit the quantity of renewable energy
credits that may be procured unbundled from electricity generation by
any retail seller, to meet the requirements of this article.
(8) No electrical corporation shall be obligated to procure
renewable energy credits to satisfy the requirements of this article
in the event that the total costs expended above the applicable
market prices for the procurement of eligible renewable energy
resources exceeds the cost limitation established pursuant to
subdivision (d) of Section 399.15.
(9) Any additional condition that the commission determines is
reasonable.
(b) The commission shall allow an electrical corporation to
recover the reasonable costs of purchasing renewable energy credits
in rates.
SEC. 13. Section 399.16 is added to the Public Utilities Code, to
read:
399.16. (a) A renewable energy credit shall be counted only once
for compliance with the renewables portfolio standard of this state
or any other state, or for verifying retail product claims in this
state or any other state.
(b) A renewable energy credit shall be applied toward an obligated
party's renewables portfolio standard procurement requirements
within 60 months from the date of generation or the credit expires
and after the passage of 60 months the renewable energy credit is no
longer eligible for use by the obligated party for compliance with
its renewables portfolio standard procurement requirements.
(c) Once a renewable energy credit is applied towards an obligated
party's renewables portfolio standard procurement requirement it
shall not be sold, transferred, or otherwise applied.
(d) (1) Renewable energy credits that are retired in one
compliance interval may be banked by the regulated party and applied
to the subsequent compliance interval, but only if the regulated
party exceeds its renewables portfolio standard procurement
requirements for the initial compliance interval.
(2) Bundled renewable energy credits that are banked shall be
applied towards the obligated party's renewables portfolio standard
procurement requirements established pursuant to subdivision (b) of
Section 399.15.
(3) Firmed and shaped renewable energy credits and tradable
renewable energy credits that are retired in one compliance interval
may be banked for use in the subsequent compliance interval and shall
be applied toward the respective limitations established for their
individual uses in subdivision (b) of Section 399.15.
(4) Banked renewable energy credits may only be used by the
obligated party to satisfy their own renewables portfolio standard
procurement requirements for the compliance interval immediately
following the compliance interval during which the renewable energy
credit was generated.
(5) For an obligated party that retired renewable energy credits
equal to at least 18 percent of its retail sales in 2010, any
renewable energy credits in excess of that 18 percent may be banked
for use in the first compliance interval of January 1, 2012, to
December 31, 2014, and may be applied to the obligated party's
bundled renewables portfolio standard procurement requirement
established pursuant to subdivision (b) of Section 399.15.
SEC. 14. Section 399.17 of the Public Utilities Code is repealed.
399.17. (a) Subject to the provisions of this section, the
requirements of this article apply to an electrical corporation with
60,000 or fewer customer accounts in California that serves retail
end-use customers outside California.
(b) For an electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, an eligible renewable energy resource includes a facility
that is located outside California, if the facility is connected to
the Western Electricity Coordinating Council (WECC) transmission
system, provided all of the following conditions are met:
(1) The electricity generated by the facility is procured by the
electrical corporation on behalf of its California customers, and is
not used to fulfill renewable energy procurement requirements in
other states.
(2) The electrical corporation participates in, and complies with,
the accounting system administered by the Energy Commission pursuant
to subdivision (b) of Section 399.13.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the annual procurement targets of
this article.
(c) The commission shall determine the annual procurement targets
for an electrical corporation with 60,000 or fewer customer accounts
in California that serves retail end-use customers outside
California, as a specified percentage of total kilowatthours sold by
the electrical corporation to its retail end-use customers in
California in a calendar year.
(d) An electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, may use an integrated resource plan prepared in
compliance with the requirements of another state utility regulatory
commission, to fulfill the requirement to prepare a renewable energy
procurement plan pursuant to this article, provided the plan meets
the requirements of Sections 399.11, 399.12, 399.13, and 399.14, as
modified by this section.
(e) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation with 60,000 or
fewer customer accounts in California that serves retail end-use
customers outside California, for eligible renewable energy resources
pursuant to this article, at or below the market price determined by
the commission pursuant to subdivision (c) of Section 399.15, shall
be deemed reasonable per se, and shall be recoverable in rates of the
electrical corporation's California customers, provided the costs
are not recoverable in rates in other states served by the electrical
corporation.
SEC. 15. Section 399.17 is added to the Public Utilities Code, to
read:
399.17. (a) The following provisions apply to all electrical
corporations:
(1) Each electrical corporation shall prepare a renewable energy
procurement plan to meet its renewables portfolio standard
procurement requirements. 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 pursuant
to Section 454.5. The commission shall require each electrical
corporation to review and update its renewable energy procurement
plan as it determines to be necessary.
(2) Consistent with the criteria adopted by the commission
pursuant to paragraph (1) of subdivision (a) of Section 399.14 for
procuring the least-cost and best-fit 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.
(B) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
(C) Information relative to the current status of development of
all eligible renewable energy resources currently under contract.
(D) Consideration of mechanisms for price adjustments associated
with the costs of key components for eligible renewable energy
resource projects with online dates more than 24 months after the
date of contract execution.
(E) An assessment of the risk that an eligible renewable energy
resource will not be built, or that construction will be delayed,
with the result that electricity will not be delivered as required by
the contract.
(3) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer initial contracts
of no less than 10 years duration, unless the commission approves a
contract of shorter duration. An electrical corporation may offer a
contract less than 10 years in duration to eligible renewable energy
resources after the initial long-term contract has been fulfilled.
(4) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy procurement plan prior to
the commencement of procurement of eligible renewable energy
resources by the electrical corporation.
(5) 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.
(6) Procurement and administrative costs associated with contracts
entered into by an electrical corporation for eligible renewable
energy resources pursuant to this article and approved by the
commission are reasonable and prudent and shall be recoverable in
rates.
(7) 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.
(8) All revenues received by an electrical corporation for the
sale of renewable energy credits shall be credited to the benefit of
ratepayers.
(9) An electrical corporation shall be allowed to recover in rates
the reasonable costs of procuring tradable renewable energy credits
that are incurred consistent with the requirements of this article.
(b) The following provisions apply to an electrical corporation
with 60,000 or fewer customer accounts in California, that serves
retail end-use customers outside California, and that is located
outside of a California balancing authority:
(1) The commission shall determine the renewables portfolio
standard procurement requirements for the electrical corporation or
qualifying successor entity based on total kilowatthours sold by the
electrical corporation to its retail end-use customers in California
during a compliance interval.
(2) The electrical corporation or qualifying successor entity may
use an integrated resource plan prepared in compliance with the
requirements of another state utility regulatory commission to
fulfill the requirement to prepare a renewable energy procurement
plan pursuant to subdivision (a), if the plan meets the requirements
of Sections 399.13, 399.14, and 399.15, as modified by this section.
(3) Procurement and administrative costs associated with long-term
contracts for eligible renewable energy resources pursuant to this
article entered into by the electrical corporation or qualifying
successor entity and approved by the commission, are reasonable and
prudent and shall be recoverable in the rates of the electrical
corporation or its successor's California customers, if those costs
are not recoverable in rates in other states served by the electrical
corporation.
(c) The following provisions apply to a local publicly owned
electric utility:
(1) Each local publicly owned electric utility shall adopt and
implement a renewable energy procurement plan to satisfy its
renewables portfolio standard procurement requirements. To the extent
feasible, this procurement plan shall be proposed, reviewed, and
adopted by the governing body as part of, and pursuant to, a general
procurement plan process.
(2) The renewable energy procurement plan adopted by a local
publicly owned electric utility 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.
(B) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
(C) Information relative to the current status of development of
all eligible renewable energy resources currently under contract.
(D) Consideration of mechanisms for price adjustments associated
with the costs of key components for eligible renewable energy
resource projects with online dates more than 24 months after the
date of contract execution.
(E) An assessment of the risk that an eligible renewable energy
resource will not be built, or that construction will be delayed,
with the result that electricity will not be delivered as required by
the contract.
(3) In soliciting and procuring eligible renewable energy
resources, each local publicly owned electric utility shall offer
initial contracts of no less than 10 years duration, unless its
governing board approves a contract of shorter duration. A local
publicly owned electric utility may offer a contract less than 10
years in duration to eligible renewable energy resources after the
initial long-term contract has been fulfilled.
(4) The governing body of the local publicly owned electric
utility shall adopt a program for the enforcement of this article on
or before January 1, 2012. The program 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 program. Not less
than 10 days' notice shall be given to the public before any meeting
is held, to make a substantive change to the program.
(5) (A) Each local publicly owned electric utility shall annually
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.
(B) Contemporaneous with the posting of the notice of a public
meeting to consider the renewable energy resources procurement plan,
the local publicly owned electric utility shall notify the Energy
Commission of the date, time, and location of the meeting in order to
enable the Energy Commission to 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.
(6) Upon distribution to its governing body of information related
to its renewable energy resources 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.
(d) A public utility district that receives all of its electricity
pursuant to a preference right adopted and authorized by the United
States Congress pursuant to Section 4 of the Trinity River Division
Act of August 12, 1955 (Public Law 84-386) shall be in compliance
with the renewables portfolio standard procurement requirements of
this article.
(e) For a local publicly owned electric utility that was in
existence on or before January 1, 2009, that provides retail electric
service to 15,000 or fewer customer accounts in California, and is
interconnected to a balancing authority located outside this state
but within the WECC, an eligible renewable energy resource includes a
facility that is located outside California that is connected to the
WECC transmission system, if all of the following conditions are
met:
(1) The electricity generated by the facility is procured by the
local publicly owned electric utility, is delivered to the balancing
authority area in which the local publicly owned electric utility is
located, and is not used to fulfill renewable energy procurement
requirements of other states.
(2) The local publicly owned electric utility participates in, and
complies with, the accounting system administered by the Energy
Commission pursuant to this article.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the renewables portfolio standard
procurement requirements.
(f) A local publicly owned electric utility in a city and county
that only receives greater than 67 percent of its electricity sources
from hydroelectric generation located within the state that it owns
and operates, and that does not meet the definition of an eligible
renewable energy resource, shall be required to procure eligible
renewable energy resources, including renewable energy credits, to
meet only the electricity demands unsatisfied by its hydroelectric
generation in any compliance period, in order to meet its renewables
portfolio standard procurement requirements.
(g) The commission has no authority or jurisdiction to enforce any
of the requirements of this article on a local publicly owned
electric utility.
SEC. 16. Section 399.18 is added to the Public Utilities Code, to
read:
399.18. (a) Every electrical corporation that owns electrical
transmission facilities shall annually prepare, as part of the
Federal Energy Regulatory Commission Order 890 process, and submit to
the commission, a report identifying any electrical transmission
facility, upgrade, or enhancement that is reasonably necessary to
achieve the renewables portfolio standard procurement requirements of
this article. Each report shall look forward at least five years
and, to ensure that adequate investments are made in a timely manner,
shall include a preliminary schedule when an application for a
certificate of public convenience and necessity will be made,
pursuant to Chapter 5 (commencing with Section 1001), for any
electrical transmission facility identified as being reasonably
necessary to achieve the renewable energy resources procurement
requirements of this article. Each electrical corporation that owns
electrical transmission facilities shall ensure that project-specific
interconnection studies are completed in a timely manner.
(b) Each electrical corporation, electric service provider, and
community choice aggregator shall prepare and submit to the
commission, and each local publicly owned electric utility shall
prepare and submit to the Energy Commission, an annual report that
includes both of the following:
(1) The current status and progress made during the prior year
toward meeting the renewables portfolio standard procurement
requirements of the current compliance interval, including, if
applicable, the status of any necessary siting and permitting
approvals from federal, state, and local agencies for those eligible
renewable energy resources procured by the obligated party,
procurement of eligible renewable energy resources located outside
the state, and procurement of renewable energy credits.
(2) Recommendations to remove impediments to making progress
toward achieving the renewables portfolio standard procurement
requirements established pursuant to this article.
(c) (1) The commission, in coordination with the Energy
Commission, the State Air Resources Board, the ISO, and local
publicly owned electric utilities, shall conduct three reviews of the
renewables portfolio standard program to assess changes that may be
needed to improve implementation progress. Reviews shall be completed
and presented to the Legislature by December 31, 2015, December 31,
2020, and December 31, 2025.
(2) The reviews may consider information made available through
the proceedings of the Energy Commission, the State Air Resources
Board, the ISO, and local publicly owned electric utilities relative
to the integration of eligible renewable energy resources into the
electrical transmission and distribution system. The scope of each
review shall include consideration of the following:
(A) The
progress made by obligated parties toward compliance with the
renewables portfolio standard procurement requirements.
(B) Whether compliance interval adjustments are desirable to
reduce costs and increase benefits for California's economy, improve
and modernize California's energy infrastructure, maximize potential
reductions in emissions of greenhouse gases and criteria air
pollutants, and maintaining the reliability of the electrical system
reliability.
(C) Advances in renewable energy generation technologies, and
complementary storage technologies, and the feasibility and cost
effectiveness those advances that may contribute to the effectiveness
of program implementation.
(D) The availability and supplies of eligible renewable energy
resources and renewable energy credits within the WECC service area.
(E) The impact of integrating variable eligible renewable energy
resources on the reliability of the electrical system. In considering
this matter, the commission shall consult with, and where relevant
incorporate information developed by, the Energy Commission and the
ISO.
(F) The impacts associated with implementation of this article on
electric service rates, consumers, and economic growth.
(G) The impacts associated with implementation of this article
upon public health, including the operational impacts of generating
facilities, demand response measures, and storage facility
development needed to implement this article.
(H) The impacts upon air quality in California associated with
implementation of this article, including effects on attainment of
state or federal air quality standards.
(I) The impact of barriers or delays to the development of
eligible renewable energy resources encountered by obligated parties,
such as transmission permitting and development issues.
(J) Opportunities to harmonize the renewables portfolio standard
with any federal, regional, or other state renewable energy programs
or renewable energy credit markets.
(3) The commission shall conduct the reviews in a public process
and shall conduct at least one public workshop for each review prior
to presenting its findings to the Legislature. In presenting the
results of each program review to the Legislature, the commission
shall propose any amendments or such other action as the commission
determines is warranted.
(4) The reports to be submitted pursuant to this subdivision shall
be submitted in compliance with Section 9795 of the Government Code.
SEC. 17. 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 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
, shall procure resources from eligible renewable energy
resources in an amount sufficient to meet its procurement
requirements pursuant to the California renewables portfolio standard
program (Article 16 (commencing with Section 399.11) of Chapter 2.3)
.
(B) The electrical corporation will shall
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 shall
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
ensure that each contract was administered in
accordance with the terms of the contract, and contract disputes
which that 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. 18. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act or because costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.
