BILL NUMBER: SB 67 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 8, 2003
AMENDED IN ASSEMBLY JULY 16, 2003
AMENDED IN ASSEMBLY JULY 3, 2003
AMENDED IN ASSEMBLY JUNE 26, 2003
INTRODUCED BY Senator Bowen
JANUARY 17, 2003
An act to amend Section 399.14 of, and to add Section 399.16 to,
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). Under existing
law, the Public Utilities Commission is prohibited from requiring 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 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.
The bill would authorize the commission to consider an electric
generating facility that is located outside the state to be an
eligible renewable energy resource if it meets certain criteria.
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 399.14 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. 2. Section 399.16 is added to the Public Utilities Code, to
read:
399.16. The commission may consider an electric generating
facility that is located outside the state to be an eligible
renewable energy resource if it meets the criteria described in
Section 399.12 and all of the following requirements:
(a) It is located so that it is, or will be, connected to the
Western Electricity Coordinating Council (WECC) transmission system.
(b) It is developed with guaranteed contracts to sell its
generation, and demonstrates delivery of energy, to a retail seller
or the Independent System Operator.
(c) It participates in the accounting system to verify compliance
with the renewables portfolio standard by retail sellers , once
established by the State Energy Resources Conservation and
Development Commission pursuant to subdivision (b) of Section 399.13.