BILL NUMBER: SB 67 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 3, 2003
AMENDED IN ASSEMBLY JUNE 26, 2003
INTRODUCED BY Senator Bowen
JANUARY 17, 2003
An act to amend Sections 399.12 and
Section 399.14 of the Public Utilities Code, relating to
energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 67, as amended, Bowen. Energy: California Renewables
Portfolio Standard Program.
Existing law establishes the California Renewables Portfolio
Standard Program. The program requires that a retail seller of
electricity, including electrical corporations, community choice
aggregators, and electric service providers, purchase a specified
minimum percentage of electricity generated by eligible renewable
energy resources , as defined, in any given year as a
specified percentage of total kilowatthours sold to retail end-use
customers each calendar year (renewables portfolio standard).
Existing law defines the term "eligible renewable energy
resource" to include an electric generating facility that meets an
existing definition of "in-state renewable electricity generation
technology" and the output of a small hydroelectric generation
facility of 30 megawatts or less procured or owned by an electrical
corporation as of January 1, 2003, for purposes of establishing the
baseline of an electrical corporation for purposes of the program.
Under existing law, the Public Utilities Commission may not
require an electrical corporation to conduct procurement to fulfill
the renewables portfolio standard until it is deemed creditworthy by
the commission. Existing law requires the commission to direct
electrical corporations to prepare, within 90 days of being deemed
creditworthy, and to review and update as necessary, renewable energy
procurement plans that are sufficient to satisfy its obligations
under the renewables portfolio standard. Existing law requires the
commission to allow an electrical corporation to recover, in rates,
electricity procurement and administrative costs associated with
long-term contracts reasonably incurred consistent with a renewable
energy procurement plan approved by the commission.
This bill would modify the definition of the term
"eligible renewable energy resource" to include an electric
generating facility that meets that existing definition of "in-state
renewable electricity generation facility," subject to certain
limitations. Included in those limitations, the bill would make
eligible the output of an existing hydroelectric generation facility
of 30 megawatts or less only if it was owned, or its output was
procured, by an electrical corporation as of January 1, 2003, and
would further limit that eligibility to the establishment of the
baseline of an electrical corporation for purposes of the program.
The bill would prohibit the commission from requiring an
electrical corporation to conduct procurement to fulfill the
renewables portfolio standard until (1) the commission
determines either that the electrical corporation has attained an
investment grade credit rating or (2) that the electrical
corporation is able to procure eligible renewable energy resources on
reasonable terms, those resources can be financed if necessary, and
the procurement will not impair the restoration of an electrical
corporation's creditworthiness. The second provision would not
apply before April 1, 2004 to an electrical corporation that is in
federal court under Chapter 11 of the federal bankruptcy law.
The bill would clarify that the provision allowing an electrical
corporation to recover, in rates, electricity procurement and
administrative costs associated with long-term contracts applies to
contracts entered into pursuant to the California Renewables
Portfolio Standard Program. The bill would make other clarifying
changes.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 399.12 of the Public Utilities Code is amended
to read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) "Eligible renewable energy resource" means an electric
generating facility that meets the definition of "in-state renewable
electricity generation technology" in Section 383.5, subject to the
following limitations:
(1) A geothermal generation facility originally commencing
operation prior to September 26, 1996, shall be eligible for purposes
of adjusting a retail seller's baseline quantity of eligible
renewable energy resources except for output certified as incremental
geothermal production by the State Energy Resources Conservation and
Development Commission, provided that the incremental output is not
sold to an electrical corporation under a contract entered into prior
to September 26, 1996. For each facility seeking certification, the
State Energy Resources Conservation and Development Commission shall
determine historical production trends and establish criteria for
measuring incremental geothermal production that recognizes the
declining output of existing steamfields and the contribution of
capital investments in the facility or wellfield.
(2) The output of an existing hydroelectric generation facility of
30 megawatts or less shall be eligible only if it was owned, or its
output was procured, by an electrical corporation as of January 1,
2003, and that eligibility shall be limited to the establishment of
the baseline of an electrical corporation pursuant to paragraph (3)
of subdivision (a) of Section 399.15. A new hydroelectric facility
is not an eligible renewable energy resource if it will require a new
or increased appropriation or diversion of water under Part 2
(commencing with Section 1200) of Division 2 of the Water Code.
(3) A facility engaged in the combustion of municipal solid waste
shall not be considered an eligible renewable resource unless it is
located in Stanislaus County and was operational prior to September
26, 1996. Output from such facilities shall be eligible only for the
purpose of adjusting a retail seller's baseline quantity of eligible
renewable energy resources.
(b) "Retail seller" means an entity engaged in the retail sale of
electricity to end-use customers, including any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
subject to the same terms and conditions applicable to an electrical
corporation.
(3) An electric service provider, as defined in Section 218.3
subject to the following conditions:
(A) An electric service provider shall be considered a retail
seller under this article for sales to any customer acquiring service
after January 1, 2003.
(B) An electric service provider shall be considered a retail
seller under this article for sales to all its customers beginning on
the earlier of January 1, 2006, or the date on which a contract
between an electric service provider and a retail customer expires.
Nothing on this subdivision may require an electric service provider
to disclose the terms of the contract to the commission.
(C) The commission shall institute a rulemaking to determine the
manner in which electric service providers will participate in the
renewables portfolio standard. The electric service provider shall
be subject to the same terms and conditions applicable to an
electrical corporation pursuant to this article. Nothing in this
paragraph shall impair a contract entered into between an electric
service provider and a retail customer prior to the suspension of
direct access by the commission pursuant to Section 80110 of the
Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electrical utility as defined in
subdivision (d) of Section 9604.
(c) "Renewables portfolio standard" means the specified percentage
of electricity generated by eligible renewable energy resources that
a retail seller is required to procure pursuant to Sections 399.13
and 399.15.
SEC. 2.
SECTION 1. Section 399.14 of the Public Utilities Code is
amended to read:
399.14. (a) The commission shall direct each electrical
corporation to prepare renewable energy procurement plans as
described in paragraph (3) to satisfy its obligations under the
renewables portfolio standard. To the extent feasible, this
procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary.
(1) (A) The commission shall not require an electrical corporation
to conduct procurement to fulfill the renewables portfolio standard
until the commission determines either of the following:
(i) The electrical corporation has attained an investment grade
credit rating as determined by at least two major rating agencies.
(ii) The electrical corporation is able to procure eligible
renewable energy resources on reasonable terms, those resources can
be financed if necessary, and the procurement will not impair the
restoration of an electrical corporation's creditworthiness.
This provision shall not apply before April 1, 2004, for any
electrical corporation that on June 30, 2003, is in federal court
under Chapter 11 of the federal bankruptcy law.
(B) Within 90 days of the commission's determination as provided
in subparagraph (A), an electrical corporation shall conduct
solicitations to implement a renewable energy procurement plan. The
determination required by this paragraph shall apply only to the
requirements established pursuant to this article. The requirements
established for an electrical corporation pursuant to Section 454.5
shall be governed by that section.
(2) Not later than six months after the effective date of this
section, the commission shall adopt, by rule, for all electrical
corporations, all of the following:
(A) A process for determining market prices pursuant to
subdivision (c) of Section 399.15. The commission shall make
specific determinations of market prices after the closing date of a
competitive solicitation conducted by an electrical corporation for
eligible renewable energy resources. In order to ensure that the
market price established by the commission pursuant to subdivision
(c) of Section 399.15 does not influence the amount of a bid
submitted through the competitive solicitation in a manner that would
increase the amount ratepayers are obligated to pay for renewable
energy, and in order to ensure that the bid price does not influence
the establishment of the market price, the electrical corporation
shall not transmit or share the results of any competitive
solicitation for eligible renewable energy resources until the
commission has established market prices pursuant to subdivision (c)
of Section 399.15.
(B) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit renewable resources to comply
with the annual California Renewables Portfolio Standard Program
obligations on a total cost basis. This process shall consider
estimates of indirect costs associated with needed transmission
investments and ongoing utility expenses resulting from integrating
and operating eligible renewable energy resources.
(C) Flexible rules for compliance including, but not limited to,
permitting electrical corporations to apply excess procurement in one
year to subsequent years or inadequate procurement in one year to no
more than the following three years.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators.
(3) Consistent with the goal of procuring the least-cost and
best-fit eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall
include, but is not limited to, all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of renewable generation resources
with deliverability characteristics that may include peaking,
dispatchable, baseload, firm, and as-available capacity.
(B) Provisions for employing available compliance flexibility
mechanisms established by the commission.
(C) A bid solicitation setting forth the need for renewable
generation of each deliverability characteristic, required online
dates, and locational preferences, if any.
(4) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years in duration, unless the commission approves of a
contract of shorter duration.
(5) In soliciting and procuring eligible renewable energy
resources, each electrical corporation may give preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(b) The commission shall review and accept, modify, or reject each
electrical corporation's renewable procurement plan 90 days prior to
the commencement of renewable procurement pursuant to this article
by the electrical corporation.
(c) The commission shall review the results of a renewable energy
resources solicitation submitted for approval by an electrical
corporation and accept or reject proposed contracts with eligible
renewable energy resources based on consistency with the approved
renewable procurement plan. If the commission determines that the
bid prices are elevated due to a lack of effective competition
amongst the bidders, the commission shall direct the electrical
corporation to renegotiate such contracts or conduct a new
solicitation.
(d) If an electrical corporation fails to comply with a commission
order adopting a renewable procurement plan, the commission shall
exercise its authority pursuant to Section 2113 to require
compliance.
(e) Upon application by an electrical corporation, the commission
may authorize another entity to enter into contracts on behalf of
customers of the electrical corporation for deliveries of eligible
renewable energy resources to satisfy the annual portfolio standard
obligations, subject to similar terms and conditions applicable to an
electrical corporation. The commission shall allow the procurement
entity to recover reasonable costs through retail rates subject to
review and approval.
(f) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation for eligible
renewable energy resources pursuant to this article, at or below the
market price determined by the commission pursuant to subdivision (c)
of Section 399.15, shall be deemed reasonable per se, and shall be
recoverable in rates.
(g) For purposes of this article, "procure" means that a utility
may acquire the renewable output of electric generation facilities
that it owns or for which it has contracted. Nothing in this article
is intended to imply that the purchase of electricity from third
parties in a wholesale transaction is the preferred method of
fulfilling a retail seller's obligation to comply with this article.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives or supplemental energy payments pursuant to
Section 383.5, including, but not limited to, work performed to
qualify, receive, or maintain production incentives or supplemental
energy payments is "public works" for the purposes of Chapter 1
(commencing with Section 1720) of Part 7 of Division 2 of the Labor
Code.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.