BILL NUMBER: SB 183 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 27, 2003
INTRODUCED BY Senator Sher
FEBRUARY 12, 2003
An act to amend add Chapter 8.6
(commencing with Section 25740) to Division 15 of the Public
Resources Code, and to repeal Section 383.5 of the Public
Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 183, as amended, Sher. Energy: renewable technologies.
Under the Public Utilities Act, the Public Utilities Commission
requires electrical corporations to identify a separate rate
component to fund in-state operation and development of existing and
new and emerging renewable resources technologies. This rate
component is a nonbypassable element of local distribution and
collected on the basis of usage. Existing law requires specified
electrical corporations to collect specific amounts to support
in-state operation and development of existing and new and emerging
renewable resources technologies. Existing law also requires the
State Energy Resources Conservation and Development Commission
(Energy Commission) to transfer funds collected for in-state
operation and development of existing and new and emerging renewable
resources technologies into the Renewable Resource Trust Fund.
Existing law requires that 17.5% of the funds collected to accomplish
the funding of in-state operation and development of existing and
new and emerging renewable resources technologies, after deducting
certain administrative costs, be used for a multiyear, consumer-based
program to foster the development of emerging renewable technologies
in distributed generation applications by providing monetary
rebates, buydowns, or equivalent incentives. The Emerging Renewable
Resources Account is established within the Renewable Resource Trust
Fund, to accomplish these purposes.
This bill would require the Energy Commission to make
reasonably available, regularly updated information on funds in the
Emerging Renewable Resources Account that remain available for the
above stated purposes recast those provisions in the
Public Resources Code. The bill would require the Energy Commission,
at least once annually, to publish and make available to the public
the balance of funds available for emerging renewable energy
resources for rebates, buydowns, and other incentives for the
purchase of these resources .
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 383.5 of the Public Utilities Code is
SECTION 1. Chapter 8.6 (commencing with Section 25740) is added to
Division 15 of the Public Resources Code, to read:
CHAPTER 8.6. RENEWABLE ENERGY RESOURCES PROGRAM
25740. It is the intent of the Legislature in establishing this
program, to increase the amount of renewable electricity generated
per year, so that it equals at least 17 percent of the total
electricity generated for consumption in California per year by 2006.
25741. As used in this chapter, the following terms have the
following meaning:
(a) "In-state renewable electricity generation facility" means a
facility that meets all of the following criteria:
(1) The facility uses biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small hydroelectric
generation of 30 megawatts or less, digester gas, municipal solid
waste conversion, landfill gas, ocean wave, ocean thermal, or tidal
current, and any additions or enhancements to the facility using that
technology.
(2) The facility is located in the state or near the border of the
state with the first point of connection to the Western Electricity
Coordinating Council (WECC) transmission system located within this
state.
(3) For the purposes of this subdivision, "solid waste conversion"
means a technology that uses a noncombustion thermal process to
convert solid waste to a clean-burning fuel for the purpose of
generating electricity, and that meets all of the following criteria:
(A) The technology does not use air or oxygen in the conversion
process, except ambient air to maintain temperature control.
(B) The technology produces no discharges of air contaminants or
emissions, including greenhouse gases as defined in Section 42801.1
of the Health and Safety Code.
(C) The technology produces no discharges to surface or
groundwaters of the state.
(D) The technology produces no hazardous wastes.
(E) To the maximum extent feasible, the technology removes all
recyclable materials and marketable green waste compostable materials
from the solid waste stream prior to the conversion process and the
owner or operator of the facility certifies that those materials will
be recycled or composted.
(F) The facility at which the technology is used is in compliance
with all applicable laws, regulations, and ordinances.
(G) The technology meets any other conditions established by the
commission.
(H) The facility certifies that any local agency sending solid
waste to the facility is in compliance with Division 30 (commencing
with Section 40000), has reduced, recycled, or composted solid waste
to the maximum extent feasible, and shall have been found by the
California Integrated Waste Management Board to have diverted at
least 30 percent of all solid waste through source reduction,
recycling, and composting.
(b) "Report" means the report entitled "Investing in Renewable
Electricity Generation in California" (June 2001, Publication Number
P500-00-022) submitted to the Governor and the Legislature by the
commission.
25742. (a) Twenty percent of the funds collected pursuant to
paragraph (6) of subdivision (c) of Section 381 of the Public
Utilities Code shall be used for programs that are designed to
improve the competitiveness of existing in-state renewable
electricity generation facilities, and to secure for the state the
environmental, economic, and reliability benefits that continued
operation of those facilities will provide. Eligibility for
incentives under this section shall be limited to those technologies
found eligible for funds by the commission pursuant to paragraphs
(5), (6), and (8) of subdivision (c) of Section 399.6 of the Public
Utilities Code.
(b) Any funds used to support in-state renewable electricity
generation facilities pursuant to this section shall be expended in
accordance with the provisions of the report, subject to all of the
following requirements:
(1) Of the funding for existing renewable electricity generation
facilities available pursuant to this section, 75 percent shall be
used to fund first tier technologies, including biomass and solar
electric technologies and 25 percent shall be used to fund second
tier wind technologies.
(2) The commission shall reexamine the tier structure as proposed
in the report and adjust the structure to reflect market and
contractual conditions. The commission shall also consider inflation
when adjusting the structure.
(3) The commission shall establish a cents per kilowatthour
production incentive, not to exceed the payment caps per kilowatthour
established in the report, as those payment caps are revised in
guidelines adopted by the commission, representing the difference
between target prices and the price paid for electricity, if
sufficient funds are available. If there are insufficient funds in
any payment period to pay either the difference between the target
and price paid for electricity or the payment caps, production
incentives shall be based on the amount determined by dividing
available funds by eligible generation. The price paid for
electricity shall be determined by the commission based on the energy
prices paid to nonutility power generators as authorized by the
Public Utilities Commission, or on otherwise available measures of
price. For the first tier technologies, the commission shall
establish a time-differentiated incentive structure that encourages
plants to run the maximum feasible amount of time and that provides a
higher incentive when the plants are receiving the lowest price.
(4) Facilities that are eligible to receive funding pursuant to
this section shall be registered in accordance with criteria
developed by the commission and those facilities may not receive
payments for any electricity produced that has any of the following
characteristics:
(A) Is sold at monthly average rates equal to or greater than the
applicable target price, as determined by the commission.
(B) Is that portion of electricity generation attributable to the
use of qualified agricultural biomass fuel, for a facility that is
receiving fuel-based incentives through the Agricultural
Biomass-to-Energy Incentive Grant Program established pursuant to
Part 3 (commencing with Section 1101) of Division 1 of the Food and
Agricultural Code. Notwithstanding subdivision (f) of Section 1104
of the Food and Agricultural Code, facilities that receive funding
from the Agricultural Biomass-to-Energy Incentive Grant Program are
eligible to receive funding pursuant to this section.
(C) Is used onsite or is sold to customers in a manner that
excludes competitive transition charge payments, or is otherwise
excluded from competitive transition charge payments.
25743. (a) Fifty-one and one-half percent of the money collected
pursuant to paragraph (6) of subdivision (c) of Section 381 of the
Public Utilities Code, shall be used for programs designed to foster
the development of new in-state renewable electricity generation
facilities, and to secure for the state the environmental, economic,
and reliability benefits that operation of those facilities will
provide.
(b) Any funds used for new in-state renewable electricity
generation facilities pursuant to this section shall be expended in
accordance with the report, subject to all of the following
requirements:
(1) In order to cover the above market costs of renewable
resources as approved by the Public Utilities Commission and selected
by retail sellers to fulfill their obligations under Article 16
(commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division
1 of the Public Utilities Code, the commission shall award funds in
the form of supplemental energy payments, subject to the following
criteria:
(A) The commission may establish caps on supplemental energy
payments. The caps shall be designed to provide for a viable energy
market capable of achieving the goals of Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1 of the Public Utilities
Code. The commission may waive application of the caps to
accommodate a facility, if it is demonstrated to the satisfaction of
the commission, that operation of the facility would provide
substantial economic and environmental benefits to end use customers
subject to the funding requirements of Section 381 of the Public
Utilities Code.
(B) Supplemental energy payments shall be awarded only to
facilities that are eligible for funding under this subdivision.
(C) Supplemental energy payments awarded to facilities selected by
an electrical corporation pursuant to Article 16 (commencing with
Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public
Utilities Code shall be paid for the lesser of 10 years, or the
duration of the contract with the electrical corporation.
(D) The commission shall reduce or terminate supplemental energy
payments for projects that fail either to commence and maintain
operations consistent with the contractual obligations to an
electrical corporation, or that fail to meet eligibility
requirements.
(E) Funds shall be managed in an equitable manner in order for
retail sellers to meet their obligation under Article 16 (commencing
with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the
Public Utilities Code.
(2) The commission may determine as part of a solicitation, that a
facility that does not meet the definition of "in-state renewable
electricity generation technology" facility solely because it is
located outside the state, is eligible for funding under this
subdivision if it meets both 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 to end use customers subject to the funding requirements
of Section 381 of the Public Utilities Code, or to marketers that
provide this guarantee for resale of the generation, for a period of
time at least equal to the amount of time it receives incentive
payments under this subdivision.
(3) Facilities that are eligible to receive funding pursuant to
this subdivision shall be registered in accordance with criteria
developed by the commission and those facilities may not receive
payments for any electricity produced that has any of the following
characteristics:
(A) Is sold under an existing long-term contract with an existing
in-state electrical corporation if the contract includes fixed energy
or capacity payments, except for that electricity that satisfies
subparagraph (C) of paragraph (1) of subdivision (c) of Section 399.6
of the Public Utilities Code.
(B) Is used onsite or is sold to customers in a manner that
excludes competitive transition charge payments, or is otherwise
excluded from competitive transition charge payments.
(C) Is produced by a facility that is owned by an electrical
corporation or a local publicly owned electric utility as defined in
subdivision (d) of Section 9604 of the Public Utilities Code.
(D) Is a hydroelectric generation project that will require a new
or increased appropriation of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(4) Eligibility to compete for funds or to receive funds shall be
contingent upon having to sell the output of the renewable
electricity generation facility to customers subject to the funding
requirements of Section 381 of the Public Utilities Code.
(5) The commission may require applicants competing for funding to
post a forfeitable bid bond or other financial guaranty as an
assurance of the applicant's intent to move forward expeditiously
with the project proposed. The amount of any bid bond or financial
guaranty may not exceed 10 percent of the total amount of the funding
requested by the applicant.
(6) In awarding funding, the commission may provide preference to
projects that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(c) Repowered existing facilities shall be eligible for funding
under this subdivision if the capital investment to repower the
existing facility equals at least 80 percent of the value of the
repowered facility.
(d) Facilities engaging in the combustion of municipal solid waste
or tires are not eligible for funding under this subdivision.
(e) Production incentives awarded under this subdivision prior to
January 1, 2002, shall commence on the date that a project begins
electricity production, provided that the project was operational
prior to January 1, 2002, unless the commission finds that the
project will not be operational prior to January 1, 2002, due to
circumstances beyond the control of the developer. Upon making a
finding that the project will not be operational due to circumstances
beyond the control of the developer, the commission shall pay
production incentives over a five-year period, commencing on the date
of operation, provided that the date that a project begins
electricity production may not extend beyond January 1, 2007.
(f) Facilities generating electricity from biomass energy shall be
considered an in-state renewable electricity generation technology
facility to the extent that they certify to the satisfaction of the
commission that fuel utilization is limited to the following:
(1) Agricultural crops and agricultural wastes and residues.
(2) Solid waste materials such as waste pallets, crates, dunnage,
manufacturing, and construction wood wastes, landscape or
right-of-way tree trimmings, mill residues that are directly the
result of the milling of lumber, and rangeland maintenance residues.
(3) Wood and wood wastes that meet all of the following
requirements:
(A) Have been harvested pursuant to an approved timber harvest
plan prepared in accordance with the Z'berg-Nejedly Forest Practice
Act of 1973 (Chapter 8 (commencing with Sec. 4511) of Part 2 of
Division 4).
(B) Have been harvested for the purpose of forest fire fuel
reduction or forest stand improvement.
(C) Do not transport or cause the transportation of species known
to harbor insect or disease nests outside zones of infestation or
current quarantine zones, as identified by the Department of Food and
Agriculture or the Department of Forestry and Fire Protection,
unless approved by the Department of Food and Agriculture and the
Department of Forestry and Fire Protection.
25744. (a) Seventeen and one-half percent of the money collected
pursuant to paragraph (6) of subdivision (c) of Section 381 of the
Public Utilities Code shall be used for a multiyear, consumer-based
program to foster the development of emerging renewable technologies
in distributed generation applications.
(b) Any funds used for emerging technologies pursuant to this
section shall be expended in accordance with the report, subject to
all of the following requirements:
(1) Funding for emerging technologies shall be provided through a
competitive, market-based process that shall be in place for a period
of not less than five years, and shall be structured so as to allow
eligible emerging technology manufacturers and suppliers to
anticipate and plan for increased sale and installation volumes over
the life of the program.
(2) The program shall provide monetary rebates, buydowns, or
equivalent incentives, subject to subparagraph (C), to purchasers,
lessees, lessors, or sellers of eligible electricity generating
systems. Incentives shall benefit the end-use consumer of renewable
generation by directly and exclusively reducing the purchase or lease
cost of the eligible system, or the cost of electricity produced by
the eligible system. Incentives shall be issued on the basis of the
rated electrical generating capacity of the system measured in watts,
or the amount of electricity production of the system, measured in
kilowatthours. Incentives shall be limited to a maximum percentage
of the system price, as determined by the commission.
(3) Eligible distributed emerging technologies are photovoltaic,
solar thermal electric, fuel cell technologies that utilize renewable
fuels, and wind turbines of not more than 50 kilowatts rated
electrical generating capacity per customer site, and other
distributed renewable emerging technologies that meet the emerging
technology eligibility criteria established by the commission.
Eligible electricity generating systems are intended primarily to
offset part or all of the consumer's own electricity demand, and
shall not be owned by local publicly owned electric utilities, nor be
located at a customer site that is not receiving distribution
service from an electrical corporation that is subject to Section 381
of the Public Utilities Code and contributing funds to support
programs under this chapter. All eligible electricity generating
system components shall be new and unused, shall not have been
previously placed in service in any other location or for any other
application, and shall have a warranty of not less than five years to
protect against defects and undue degradation of electrical
generation output. Systems and their fuel resources shall be located
on the same premises of the end-use consumer where the consumer's
own electricity demand is located, and all eligible electricity
generating systems shall be connected to the utility grid in
California. The commission may require eligible electricity
generating systems to have meters in place to monitor and measure a
system's performance and generation. Only systems that will be
operated in compliance with applicable law and the rules of the
Public Utilities Commission shall be eligible for funding.
(4) The commission shall limit the amount of funds available for
any system or project of multiple systems and reduce the level of
funding for any system or project of multiple systems that has
received, or may be eligible to receive, any government or utility
funds, incentives, or credit.
(5) In awarding funding, the commission may provide preference to
systems that provide tangible demonstrable benefits to communities
with a plurality of minority or low-income populations.
(6) In awarding funding, the commission shall develop and
implement eligibility criteria and a system that provides preference
to systems based upon system performance, taking into account
factors, including, but not limited to, shading, insulation levels,
and installation orientation.
(7) At least once annually, the commission shall publish and make
available to the public the balance of funds available for emerging
renewable energy resources for rebates, buydowns, and other
incentives for the purchase of these resources.
25745. (a) Ten percent of the money collected pursuant to
paragraph (6) of subdivision (c) of Section 381 of the Public
Utilities Code shall be used to provide customer credits to customers
that entered into a direct transaction on or before September 20,
2001, for purchases of electricity produced by registered in-state
renewable electricity generating facilities.
(b) Any funds used for customer credits pursuant to this section
shall be expended, as provided in the report, subject to all of the
following requirements:
(1) Customer credits shall be awarded to California retail
customers located in the service territory of an electrical
corporation that is subject to Section 381 of the Public Utilities
Code that is contributing funds to support programs under this
chapter, and that is purchasing qualifying electricity from renewable
electricity generating facilities, through transactions traceable to
specific generation sources by any auditable contract trail or
equivalent that provides commercial verification that the electricity
from the claimed renewable electricity generating facilities has
been sold once and only once to a retail customer.
(2) Credits awarded pursuant to this paragraph may be paid
directly to electric service providers, energy marketers,
aggregators, or generators if those persons or entities account for
the credits on the recipient customer's bills. Credits may not
exceed one and one-half cents ($0.015) per kilowatthour. Credits
awarded to members of the combined class of customers, other than
residential and small commercial customers, may not exceed one
thousand dollars ($1,000) per customer per calendar year. In no event
may more than 20 percent of the total customer incentive funds be
awarded to members of the combined class of customers other than
residential and small commercial customers.
(3) The commission shall develop criteria and procedures for the
identification of energy purchasers and providers that are eligible
to receive funds pursuant to this paragraph through a process
consistent with this paragraph. These criteria and procedures shall
apply only to funding eligibility and may not extend to other
renewable marketing claims.
(4) Customer credits may not be awarded for the purchase of
electricity that is used to meet the obligations of a renewable
portfolio standard.
(5) The Public Utilities Commission shall notify the commission in
writing within 10 days of revoking or suspending the registration of
any electric service provider pursuant to paragraph (4) of
subdivision (b) of Section 394.25 of the Public Utilities Code.
(6) By March 31, 2003, the commission shall report to the Governor
and the Legislature on how to most effectively utilize the funds for
customer credits, including whether, and under what conditions, the
program should be continued. The report shall include an examination
of trends in markets for renewable energy, including the trading of
nonenergy attributes, and the role of customer credits in these
markets. The report will recommend an appropriate funding allocation
for the customer credits and how implementation of the customer
credits should be structured, if appropriate.
25746. One percent of the money collected pursuant to paragraph
(6) of subdivision (e) of Section 381 of the Public Utilities Code
shall be used in accordance with the report to promote renewable
energy and disseminate information on renewable energy technologies,
including emerging renewable technologies, and to help develop a
consumer market for renewable energy and for small-scale emerging
renewable energy technologies.
25747. (a) The commission shall adopt guidelines governing the
funding programs authorized under this chapter, at a publicly noticed
meeting offering all interested parties an opportunity to comment.
Substantive changes to the guidelines may not be adopted without at
least 10 days' written notice to the public. The public notice of
meetings required by this subdivision may not be less than 30 days.
Notwithstanding any other provision of law, any guidelines adopted
pursuant to this chapter shall be exempt from the requirements of
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code. The Legislature declares that the
changes made to this subdivision by the act amending this section
during the 2002 portion of the 2001-02 Regular Session are
declaratory of, and not
a change in existing law.
(b) Funds to further the purposes of this chapter may be committed
for multiple years.
(c) Awards made pursuant to this chapter are grants, subject to
appeal to the commission upon a showing that factors other than those
described in the guidelines adopted by the commission were applied
in making the awards and payments. Any actions taken by an applicant
to apply for, or become or remain eligible and registered to
receive, payments or awards, including satisfying conditions
specified by the commission, shall not constitute the rendering of
goods, services, or a direct benefit to the commission.
25748. The commission shall report to the Legislature on or
before May 31, 2000, and on or before May 31 of every second year
thereafter, regarding the results of the mechanisms funded pursuant
to this chapter. Reports prepared pursuant to this section shall
include a description of the allocation of funds among existing, new
and emerging technologies; the allocation of funds among programs,
including consumer-side incentives; and the need for the reallocation
of money among those technologies. The reports shall discuss the
progress being made toward achieving the 17 percent target provided
in Section 25740 by each funding category authorized pursuant to this
chapter. The reports shall also address the allocation of funds
from interest on the accounts described in this chapter, and money in
the accounts described in subdivision (e) of Section 381 of the
Public Utilities Code. Money may be reallocated without further
legislative action among existing, new, and emerging technologies and
consumer-side programs in a manner consistent with the report and
with the latest report provided to the Legislature pursuant to this
section, except that reallocations may not reduce the allocation
established in Section 25743 nor increase the allocation established
in Section 25742.
25749. The commission shall, by December 1, 2003, prepare and
submit to the Legislature a comprehensive renewable electricity
generation resource plan that describes the renewable resource
potential available in California, and recommendations for a plan for
development to achieve the target of increasing the amount of
electricity generated from renewable sources per year, so that it
equals 17 percent of the total electricity generated for consumption
in California by 2006. The commission shall consult with the Public
Utilities Commission, electrical corporations, and the Independent
System Operator, in the development and preparation of the plan.
25750. The commission shall participate in proceedings at the
Public Utilities Commission that relate to or affect efforts to
stimulate the development of electricity generated from renewable
sources, in order to obtain coordination of the state's efforts to
achieve the target of increasing the amount of electricity generated
from renewable sources per year, so that it equals 17 percent of the
total electricity generated for consumption in California by 2006.
SEC. 2. Section 383.5 of the Public Utilities Code is repealed.
383.5. (a) It is the intent of the Legislature in establishing
this program, to increase the amount of renewable electricity
generated per year, so that it equals at least 17 percent of the
total electricity generated for consumption in California.
(b) As used in this section, the following terms have the
following meaning:
(1) "In-state renewable electricity generation technology" means a
facility that meets all of the following criteria:
(A) The facility uses biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small hydroelectric
generation of 30 megawatts or less, digester gas, municipal solid
waste conversion, landfill gas, ocean wave, ocean thermal, or tidal
current, and any additions or enhancements to the facility using that
technology.
(B) The facility is located in the state or near the border of the
state with the first point of connection to the Western Electricity
Coordinating Council (WECC) transmission system located within this
state.
(C) For the purposes of this subdivision, "solid waste conversion"
means a technology that uses a noncombustion thermal process to
convert solid waste to a clean burning fuel for the purpose of
generating electricity, and that meets all of the following criteria:
(i) The technology does not use air or oxygen in the conversion
process, except ambient air to maintain temperature control.
(ii) The technology produces no discharges of air contaminants or
emissions, including greenhouse gases as defined in Section 42801 of
the Health and Safety Code.
(iii) The technology produces no discharges to surface or
groundwaters of the state.
(iv) The technology produces no hazardous wastes.
(v) To the maximum extent feasible, the technology removes all
recyclable materials and marketable green waste compostable materials
from the solid waste stream prior to the conversion process and the
owner or operator of the facility certifies that the those materials
will be recycled or composted.
(vi) The facility at which the technology is used is in compliance
with all applicable laws, regulations, and ordinances.
(vii) The technology meets any other conditions established by the
State Energy Resources Conservation and Development Commission.
(viii) The facility certifies that any local agency sending solid
waste to the facility is in compliance with Division 30 (commencing
with Section 40000) of the Public Resources Code, has reduced,
recycled, or composted solid waste to the maximum extent feasible,
and shall have been found by the California Integrated Waste
Management Board to have diverted at least 30 percent of all solid
waste through source reduction, recycling and composting.
(2) "Report" means the report entitled "Investing in Renewable
Electricity Generation in California" (June 2001, Publication Number
P500-00-022) submitted to the Governor and the Legislature by the
State Energy Resources Conservation and Development Commission.
(3) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(c) (1) Twenty percent of the funds collected pursuant to
paragraph (6) of subdivision (c) of Section 381 shall be used for
programs that are designed to improve the competitiveness of existing
in-state renewable electricity generation technology facilities, and
to secure for the state the environmental, economic, and reliability
benefits that continued operation of those facilities will provide.
Eligibility for incentives under this subdivision shall be limited
to those technologies found eligible for funds by the Energy
Commission pursuant to paragraphs (5), (6), and (8) of subdivision
(c) of Section 399.6.
(2) Any funds used to support in-state renewable electricity
generation technology facilities pursuant to this subdivision shall
be expended in accordance with the provisions of the report, subject
to all of the following requirements:
(A) Of the funding for existing renewable electricity generation
technology facilities available pursuant to this subdivision, 75
percent shall be used to fund first tier technologies, including
biomass and solar electric technologies and 25 percent shall be used
to fund second tier wind technologies.
(B) The Energy Commission shall reexamine the tier structure as
proposed in the report and adjust the structure to reflect market and
contractual conditions. The Energy Commission shall also consider
inflation when adjusting the structure.
(C) The Energy Commission shall establish a cents per kilowatthour
production incentive, not to exceed the payment caps per
kilowatthour established in the report, as those payment caps are
revised in guidelines adopted by the commission, representing the
difference between target prices and the market clearing price for
electricity, if sufficient funds are available. If there are
insufficient funds in any payment period to pay either the difference
between the target and market clearing price or the payment caps,
production incentives shall be based on the amount determined by
dividing available funds by eligible generation. The market clearing
price for electricity shall be determined by the Energy Commission
based on the energy prices paid to nonutility power generators as
authorized by the commission, or on otherwise available measures of
market price. For the first tier biomass technologies, the Energy
Commission shall establish a time-differentiated incentive structure
that encourages plants to run the maximum feasible amount of time and
that provides a higher incentive when the plants are receiving the
lowest price. The Energy Commission may establish a different
incentive rate within the same technology tier to account for
discounted contracts.
(D) Facilities that are eligible to receive funding pursuant to
this subdivision shall be registered in accordance with criteria
developed by the Energy Commission and those facilities may not
receive payments for any electricity produced that has any of the
following characteristics:
(i) Is sold at monthly average rates equal to or greater than the
applicable target price, as determined by the Energy Commission.
(ii) Is that portion of electricity generation attributable to
the use of qualified agricultural biomass fuel, for a facility that
is receiving fuel-based incentives through the Agricultural
Biomass-to-Energy Incentive Grant Program established pursuant to
Part 3 (commencing with Section 1101) of Division 1 of the Food and
Agricultural Code. Notwithstanding subdivision (f) of Section 1104
of the Food and Agricultural Code, facilities that receive funding
from the Agricultural Biomass-to-Energy Incentive Grant Program are
eligible to receive funding pursuant to this subdivision.
(iii) Is used onsite or is sold to customers in a manner that
excludes competitive transition charge payments, or is otherwise
excluded from competitive transition charge payments.
(d) (1) Fifty-one and one-half percent of the funds collected
pursuant to paragraph (6) of subdivision (c) of Section 381, shall be
used for programs designed to foster the development of new in-state
renewable electricity generation technology facilities, and to
secure for the state the environmental, economic, and reliability
benefits that continued operation of those facilities will provide.
(2) Any funds used for new in-state renewable electricity
generation technology facilities pursuant to this subdivision shall
be expended in accordance with the report, subject to all of the
following requirements:
(A) In order to cover the above market costs of renewable
resources as approved by the commission and selected by retail
sellers to fulfill their obligations under Article 16 (commencing
with Section 399.11), the Energy Commission shall award funds in the
form of supplemental energy payments, subject to the following
criteria:
(i) The Energy Commission may establish caps on supplemental
energy payments. The caps shall be designed to provide for a viable
energy market capable of achieving the goals of Article 16
(commencing with Section 399.11). The Energy Commission may waive
application of the caps to accommodate a facility, if it is
demonstrated to the satisfaction of the Energy Commission, that
operation of the facility would provide substantial economic and
environmental benefits to end-use customers subject to the funding
requirements of Section 381.
(ii) Supplemental energy payments shall be awarded only to
facilities that are eligible for funding under this subdivision.
(iii) Supplemental energy payments awarded to facilities selected
by an electrical corporation pursuant to Article 16 (commencing with
Section 399.11) shall be paid for the lesser of 10 years, or the
duration of the contract with the electrical corporation.
(iv) The Energy Commission shall reduce or terminate supplemental
energy payments for projects that fail either to commence and
maintain operations consistent with the contractual obligations to an
electrical corporation, or that fail to meet eligibility
requirements.
(v) Funds shall be managed in an equitable manner in order for
retail sellers to meet their obligation under Article 16 (commencing
with Section 399.11).
(B) The Energy Commission may determine as part of a solicitation,
that a facility that does not meet the definition of "in-state
renewable electricity generation technology" facility solely because
it is located outside the state, is eligible for funding under this
subdivision if it meets both of the following requirements:
(i) It is located so that it is or will be connected to the
Western Electricity Coordinating Council (WECC) transmission system.
(ii) It is developed with guaranteed contracts to sell its
generation to end-use customers subject to the funding requirements
of Section 381, or to marketers that provide this guarantee for
resale of the generation, for a period of time at least equal to the
amount of time it receives incentive payments under this subdivision.
(C) Facilities that are eligible to receive funding pursuant to
this subdivision shall be registered in accordance with criteria
developed by the Energy Commission and those facilities may not
receive payments for any electricity produced that has any of the
following characteristics:
(i) Is sold under an existing long-term contract with an existing
in-state electrical corporation if the contract includes fixed energy
or capacity payments, except for that electricity that satisfies the
provisions of subparagraph (C) of paragraph (1) of subdivision (c)
of Section 399.6.
(ii) Is used onsite or is sold to customers in a manner that
excludes competitive transition charge payments, or is otherwise
excluded from competitive transition charge payments.
(iii) Is produced by a facility that is owned by an electrical
corporation or a local publicly owned electric utility as defined in
subdivision (d) of Section 9604.
(iv) Is a hydroelectric generation project that will require a new
or increased appropriation of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(D) Eligibility to compete for funds or to receive funds shall be
contingent upon having to sell the output of the renewable
electricity generation facility to customers subject to the funding
requirements of Section 381.
(E) The Energy Commission may require applicants competing for
funding to post a forfeitable bid bond or other financial guaranty as
an assurance of the applicant's intent to move forward expeditiously
with the project proposed. The amount of any bid bond or financial
guaranty may not exceed 10 percent of the total amount of the funding
requested by the applicant.
(F) In awarding funding, the Energy Commission may provide
preference to projects that provide tangible demonstrable benefits to
communities with a plurality of minority or low-income populations.
(3) Repowered existing facilities shall be eligible for funding
under this subdivision if the capital investment to repower the
existing facility equals at least 80 percent of the value of the
repowered facility.
(4) Facilities engaging in the combustion of municipal solid waste
or tires are not eligible for funding under this subdivision.
(5) Production incentives awarded under this subdivision prior to
January 1, 2002, shall commence on the date that a project begins
electricity production, provided that the project was operational
prior to January 1, 2002, unless the Energy Commission finds that the
project will not be operational prior to January 1, 2002, due to
circumstances beyond the control of the developer. Upon making a
finding that the project will not be operational due to circumstances
beyond the control of the developer, the Energy Commission shall pay
production incentives over a five-year period, commencing on the
date of operation, provided that the date that a project begins
electricity production may not extend beyond January 1, 2007.
(6) Facilities generating electricity from biomass energy shall be
considered an in-state renewable electricity generation technology
facility to the extent that they certify to the satisfaction of the
Energy Commission that fuel utilization is limited to the following:
(A) Agricultural crops and agricultural wastes and residues.
(B) Solid waste materials such as waste pallets, crates, dunnage,
manufacturing, and construction wood wastes, landscape or
right-of-way tree trimmings, mill residues that are directly the
result of the milling of lumber, and rangeland maintenance residues.
(C) Wood and wood wastes that meet all of the following
requirements:
(i) Have been harvested pursuant to an approved timber harvest
plan prepared in accordance with the Z'berg-Nejedly Forest Practice
Act of 1973 (Ch. 8 (commencing with Sec. 4511), Pt. 2, Div. 4,
P.R.C.).
(ii) Have been harvested for the purpose of forest fire fuel
reduction or forest stand improvement.
(iii) Do not transport or cause the transportation of species
known to harbor insect or disease nests outside zones of infestation
or current quarantine zones, as identified by the Department of Food
and Agriculture or the Department of Forestry and Fire Protection,
unless approved by the Department of Food and Agriculture and the
Department of Forestry and Fire Protection.
(e) (1) Seventeen and one-half percent of the funds collected
pursuant to paragraph (6) of subdivision (c) of Section 381 shall be
used for a multiyear, consumer-based program to foster the
development of emerging renewable technologies in distributed
generation applications.
(2) Any funds used for emerging technologies pursuant to this
subdivision shall be expended in accordance with the report, subject
to all of the following requirements:
(A) Funding for emerging technologies shall be provided through a
competitive, market-based process that shall be in place for a period
of not less than five years, and shall be structured so as to allow
eligible emerging technology manufacturers and suppliers to
anticipate and plan for increased sale and installation volumes over
the life of the program.
(B) The program shall provide monetary rebates, buydowns, or
equivalent incentives, subject to subparagraph (C), to purchasers,
lessees, lessors, or sellers of eligible electricity generating
systems. Incentives shall benefit the end-use consumer of renewable
generation by directly and exclusively reducing the purchase or lease
cost of the eligible system, or the cost of electricity produced by
the eligible system. Incentives shall be issued on the basis of the
rated electrical capacity of the system measured in watts, or in the
amount of electricity production of the system, measured in
kilowatthours, determined by the Energy Commission.
(C) Eligible distributed emerging technologies are photovoltaic,
solar thermal electric, fuel cell technologies that utilize renewable
fuels, and wind turbines of not more than 50 kilowatts rated
electrical generating capacity per customer site, and other
distributed renewable emerging technologies that meet the emerging
technology eligibility criteria established by the Energy Commission.
Eligible electricity generating systems are intended primarily to
offset part or all of the consumer's own electricity demand, and
shall not be owned by local publicly owned electric utilities, nor be
located at a customer site that is not receiving distribution
service from an electrical corporation that is subject to Section 381
and contributing funds to support programs under this section. All
eligible electricity generating system components shall be new and
unused, and shall not have been previously placed in service in any
other location or for any other application, and shall have a
warranty of not less than five years to protect against defects and
undue degradation of electrical generation output. Systems and their
fuel resource shall be located on the same premises of the end-use
consumer where the consumer's own electricity demand is located, and
all eligible electricity generating systems shall be connected to
the utility grid in California. The Energy Commission may require
eligible electricity generating systems to have meters in place to
monitor and measure a system's performance and generation. Only
systems that will be operated in compliance with applicable law and
the rules of the commission shall be eligible for funding.
(D) The Energy Commission shall limit the amount of funds
available for any system or project of multiple systems and reduce
the level of funding for any system or project of multiple systems
that has received, or may be eligible to receive, any government or
utility funds, incentives, or credit.
(E) In awarding funding, the Energy Commission may provide
preference to systems that provide tangible demonstrable benefits to
communities with a plurality of minority or low-income populations.
(F) In awarding funding, the Energy Commission shall develop and
implement eligibility criteria and a system that provides preference
to systems based upon system performance, taking into account
factors, including, but not limited to, shading, insolation levels,
and installation orientation.
(f) (1) Ten percent of the funds collected pursuant to paragraph
(6) of subdivision (c) of Section 381 shall be used to provide
customer credits to customers that entered into a direct transaction
on or before September 20, 2001, for purchases of electricity
produced by registered in-state renewable electricity generating
facilities.
(2) Any funds used for customer credits pursuant to this
subdivision shall be expended, as provided in the report, subject to
the following requirements:
(A) Customer credits shall be awarded to California retail
customers located in the service territory of an electrical
corporation that is subject to Section 381 that is contributing funds
to support programs under this section, and that is purchasing
qualifying electricity from renewable electricity generating
facilities, through transactions traceable to specific generation
sources by any auditable contract trail or equivalent that provides
commercial verification that the electricity from the claimed
renewable electricity generating facilities has been sold once and
only once to a retail customer.
(B) Credits awarded pursuant to this paragraph may be paid
directly to electric service providers, energy marketers,
aggregators, or generators if those persons or entities account for
the credits on the recipient customer's utility bills. Credits may
not exceed one and one-half cents ($0.015) per kilowatthour. Credits
awarded to members of the combined class of customers, other than
residential and small commercial customers, may not exceed one
thousand dollars ($1,000) per customer per calendar year. In no event
may more than 20 percent of the total customer incentive funds be
awarded to members of the combined class of customers other than
residential and small commercial customers.
(C) The Energy
Commission shall develop criteria and procedures for the
identification of energy purchasers and providers that are eligible
to receive funds pursuant to this paragraph through a process
consistent with this paragraph. These criteria and procedures shall
apply only to funding eligibility and may not extend to other
renewable marketing claims.
(D) The commission shall notify the Energy Commission in writing
within 10 days of revoking or suspending the registration of any
electric service provider pursuant to paragraph (4) of subdivision
(b) of Section 394.25.
(E) By March 31, 2003, the Energy Commission shall report to the
Governor and the Legislature on how to most effectively utilize the
funds for customer credits, including whether, and under what
conditions, the program should be continued. The report shall
include an examination of trends in markets for renewable energy,
including the trading of nonenergy attributes, and the role of
customer credits in these markets. The report will recommend an
appropriate funding allocation for the customer credits and how
implementation of the customer credits should be structured, if
appropriate.
(F) Customer credits may not be awarded for the purchase of
electricity that is used to meet the obligations of a renewable
portfolio standard.
(g) One percent of the funds collected pursuant to paragraph (6)
of subdivision (c) of Section 381 shall be used in accordance with
the report to promote renewable energy and to disseminate information
on renewable energy technologies, including emerging renewable
technologies, and to help develop a consumer market for renewable
energy and for small-scale emerging renewable energy technologies.
(h) (1) The Energy Commission shall adopt guidelines governing the
funding programs authorized under this section and Section 399.13,
at a publicly noticed meeting offering all interested parties an
opportunity to comment. Substantive changes to the guidelines may
not be adopted without at least 10 days' written notice to the
public. The public notice of meetings required by this paragraph may
not be less than 30 days. Notwithstanding any other provision of
law, any guidelines adopted pursuant to this section shall be exempt
from the requirements of Chapter 3.5 (commencing with Section 11340)
of Division 3 of Title 2 of the Government Code. The Legislature
declares that the changes made to this paragraph by the act amending
this section during the 2002 portion of the 2001-02 Regular Session
are declaratory of, and not a change in existing law.
(2) Funds to further the purposes of this section may be committed
for multiple years.
(3) Awards made pursuant to this section are grants, subject to
appeal to the Energy Commission upon a showing that factors other
than those described in the guidelines adopted by the Energy
Commission were applied in making the awards and payments. Any
actions taken by an applicant to apply for, or become or remain
eligible and registered to receive, payments or awards, including
satisfying conditions specified by the Energy Commission, shall not
constitute the rendering of goods, services, or a direct benefit to
the Energy Commission.
(i) The Energy Commission shall report to the Legislature on or
before May 31, 2000, and on or before May 31 of every second year
thereafter, regarding the results of the mechanisms funded pursuant
to this section. Reports prepared pursuant to this subdivision shall
include a description of the allocation of funds among existing, new
and emerging technologies; the allocation of funds among programs,
including consumer-side incentives; and the need for the reallocation
of money among those technologies. The reports shall discuss the
progress being made toward achieving the 17 percent target provided
in subdivision (a) by each funding category authorized pursuant to
subdivisions (c), (d), (e), (f), and (g) of this section. The
reports shall also address the allocation of funds from interest on
the accounts described in this section, and money in the accounts
described in subdivision (e) of Section 381. Notwithstanding
subdivisions (c), (d), (e), (f), and (g) of this section, money may
be reallocated without further legislative action among existing,
new, and emerging technologies and consumer-side programs in a manner
consistent with the report and with the latest report provided to
the Legislature pursuant to this subdivision, except that
reallocations may not reduce the allocation established in
subdivision (d) nor increase the allocation established in
subdivision (c).
(j) The Energy Commission shall, by December 1, 2003, prepare and
submit to the Legislature a comprehensive renewable electricity
generation resource plan that describes the renewable resource
potential available in California, and recommendations for a plan for
development to achieve the target of increasing the amount of
electricity generated from renewable sources per year, so that it
equals 17 percent of the total electricity generated for consumption
in California by 2006. The Energy Commission shall consult with the
commission, electrical corporations, and the Independent System
Operator, in the development and preparation of the plan.
(k) The Energy Commission shall participate in proceedings at the
commission that relate to or affect efforts to stimulate the
development of electricity generated from renewable sources, in order
to obtain coordination of the state's efforts to achieve the target
of increasing the amount of electricity generated from renewable
sources per year, so that it equals 17 percent of the total
electricity generated for consumption in California by 2006.
_____________________________________ All matter
omitted in this version of the bill appears in the bill as
introduced in the Senate February 12, 2003, 2003 (JR 11)
____________________________________