BILL NUMBER: SB 1478 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Sher
FEBRUARY 19, 2004
An act to amend Sections 25740, 25743, 25744, and 25748 of, and to
repeal Sections 25745 and 25749 of, the Public Resources Code, and
to amend Sections 399.11, 399.13, 399.14, and 399.15 of, the Public
Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1478, as introduced, Sher. Renewable energy.
(1) Existing law expresses the intent of the Legislature, in
establishing the Renewable Energy Resources Program, to increase the
amount of renewable electricity generated per year, so that it equals
at least 17% of the total electricity generated for consumption in
California per year by 2006.
This bill would recast that intent language so that the amount of
renewable electricity generated per year is increased to an amount
that equals at least 20% of the total electricity generated for
consumption in California per year by 2010, rather than 2006, and 33%
by the year 2020. The bill would make conforming changes.
(2) Under existing law, 51.5% of the money collected as part of
the renewable energy public goods charge is required to 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. Existing law also provides that any
of those funds used for new in-state renewable electricity generation
facilities are required to be expended in accordance with a
specified report of the State Energy Resources Conservation and
Development Commission to the Legislature, subject to certain
requirements, including the awarding of supplemental energy payments.
This bill would require that these funds be awarded only to a
project that is selected by an electrical corporation in accordance
with a competitive solicitation procedure found by the Public
Utilities Commission (PUC) to comply with the California Renewables
Portfolio Standard Program and that the project participant has
entered into a purchase power agreement resulting from that
solicitation that is approved by the PUC.
(3) Existing law requires 17.5% of the money collected under the
renewable energy public goods charge be used for a multiyear,
consumer-based program to foster the development of emerging
renewable technologies in distributed generation applications, and
that certain of funds be expended in accordance with the
above-described report, subject to, among other things, the
requirement that funding for emerging technologies be provided
through a competitive, market-based process.
This bill would recast the competitive process so that the
solicitation process includes provision for expressly notifying all
potential bidders that emerging technologies are the subject of the
solicitation.
The bill would also prohibit a sum greater than 10% of available
energy technology funds from being awarded to a single project.
(4) Existing law requires the PUC to direct each electrical
corporation to prepare renewable energy procurement plans, as
described, to satisfy its obligations under the renewables portfolio
standard.
This bill would require each electrical corporation to commence
its renewable energy procurement with a competitive solicitation, as
specified, that is held no later than June 1, 2005. This bill would
prohibit, after January 1, 2005, bilateral contracts by electrical
corporations with renewable energy resource until an electrical
corporation has held at least 2 competitive solicitations and power
purchase agreements have been entered into with selected projects and
approved by the PUC.
(5) Existing law requires the use of standard terms and conditions
by all electrical corporations in contracting for eligible renewable
energy resources.
This bill would require that those terms and conditions include
the requirement that, no later than 6 months after the commission's
approval of a purchase power agreement, the following information
about the agreement be disclosed by the PUC: party names, resource
type, project location, and project capacity.
(6) This bill would delete certain obsolete and duplicative
provisions.
(7) Because a violation of the Public Utilities Act or an order of
the PUC is a crime under existing law, the bill would impose a
state-mandated local program by creating a new crime.
(8) 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 a specified reason.
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 renewable electricity generated
per year, so that it equals at least 17 20
percent of the total electricity generated for consumption in
California per year by 2006 the year 2010 and
at least 33 percent by the year 2020 .
SEC. 2. Section 25743 of the Public Resources Code is amended to
read:
25743. (a) Fifty-one and one-half percent of the money collected
pursuant to the renewable energy public goods charge ,
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
the renewable energy public goods charge.
(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.
(F) Funds described in subdivision (a) and in this paragraph may
only be awarded to a project that is selected by an electric
corporation pursuant to a competitive solicitation that is found by
the Public Utilities Commission to comply with the California
Renewables Portfolio Standard Program under Article 16 (commencing
with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the
Public Utilities Code and that has entered a purchase power agreement
resulting from that solicitation that is approved by the Public
Utilities Commission.
(2) The commission may determine as part of a solicitation, that a
facility that does not meet the definition of an "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 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 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) It will not cause or contribute to any violation of a
California environmental quality standard or requirement.
(D) If the facility is outside of the United States, it is
developed and operated in a manner that is as protective of the
environment as a similar facility located in the state.
(E) It meets any other condition established by the commission.
(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.
(E) Is a solid waste conversion facility, unless the facility
meets the criteria established in paragraph (3) of subdivision (a) of
Section 25741 and 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.
(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 the renewable energy public goods charge.
(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 direct 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 report to the commission the types
and quantities of biomass fuels used and 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.
SEC. 3. Section 25744 of the Public Resources Code is amended to
read:
25744. (a) Seventeen and one-half percent of the money collected
pursuant to the renewable energy public goods charge 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
to projects that are chosen through a competitive solicitation
process that expressly notifies all potential bidders that emerging
technologies are the subject of the solicitation and that is
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)
paragraph (3) , 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. The commission shall
not award any single project sum that exceeds 10 percent of available
emerging technology funds.
(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 the
renewable energy public goods charge 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.
SEC. 4. Section 25745 of the Public Resources Code is repealed.
25745. (a) Ten percent of the money collected pursuant to the
renewable energy public goods charge 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 the renewable energy public goods
charge 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.
SEC. 5. Section 25748 of the Public Resources Code is amended to
read:
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 report shall identify the
types and quantities of biomass fuels used by facilities receiving
funds pursuant to Section 25743 and their impacts on improving air
quality. The reports shall discuss the progress being made toward
achieving the 17-percent target provided in
targets established under 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 (b) of Section 25751. 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.
SEC. 6. Section 25749 of the Public Resources Code is repealed.
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.
SEC. 7. 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 20 percent by the year
2010 and 33 percent by the year 2020 renewable energy for the
State of California and for the purposes of increasing the diversity,
reliability, public health and environmental benefits of the energy
mix, it is the intent of the Legislature that the California Public
Utilities Commission and the State Energy Resources Conservation and
Development Commission implement the California Renewables Portfolio
Standard Program described in this article.
(b) Increasing California's reliance on renewable energy resources
may promote stable electricity prices, protect public health,
improve environmental quality, stimulate sustainable economic
development, create new employment opportunities, and reduce reliance
on imported fuels.
(c) The development of renewable energy resources may ameliorate
air quality problems throughout the state and improve public health
by reducing the burning of fossil fuels and the associated
environmental impacts.
(d) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Program administered by
the State Energy Resources Conservation and Development Commission
and established pursuant to Sections 383.5 and 445.
SEC. 8. 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 (a) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that renewable energy output is counted only once for the purpose of
meeting the renewables portfolio standard of this state or any other
state, and for verifying retail product claims in this state or any
other state. In establishing the guidelines governing this system,
the Energy Commission shall collect data from electricity market
participants that it deems necessary to verify compliance of retail
sellers, 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) Allocate and award supplemental energy payments pursuant to
Section 383.5 to eligible renewable energy resources to cover
above-market costs of renewable energy. These supplemental
energy payments may only be awarded to a project that is selected by
an electric corporation pursuant to a competitive solicitation that
is found by the commission to comply with the California Renewables
Portfolio Standard Program under this article and that has entered a
purchase power agreement resulting from that solicitation that is
approved by the commission.
SEC. 9. 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. Each electrical corporation shall
commence its renewable energy procurement under this article with a
competitive solicitation that complies with this article and is held
no later than June 1, 2005. After January 1, 2005, bilateral
contracts by electrical corporations with renewable energy resources
are prohibited until the electrical corporation has held at least two
competitive solicitations in compliance with this article and power
purchase agreements are entered into with selected projects and
approved by the commission.
(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.
Those standard terms and conditions shall include the requirement
that, no later than six months after the commission's approval of a
purchase power agreement entered under 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, 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. Any bid solicitation or contract
of less than 10 years in duration shall be considered nonconforming
and shall not represent more than 10 percent of the total amount
solicited or purchased by a utility in any single solicitation.
(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. 10. Section 399.15 of the Public Utilities Code is amended to
read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of output from eligible renewable energy resources as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year, if sufficient funds are made available
pursuant to paragraph (2), and Sections 399.6 and 383.5 to cover the
above-market costs of eligible renewables, and subject to all of the
following:
(1) An electric corporation shall not be required to enter into
long-term contracts with eligible renewable energy resources that
exceed the market prices established pursuant to subdivision (c) of
this section.
(2) The Energy Commission shall provide supplemental energy
payments from funds in the New Renewable Resources Account in the
Renewable Resource Trust Fund to eligible renewable energy resources
pursuant to Section 383.5,, consistent with this article, for
above-market costs. Funds may be provided or awarded by the
Energy Commission only to a project that is selected by an electric
corporation under a competitive solicitation that is found by the
commission to comply with the California Renewables Portfolio
Standard Program under this article and that has entered a purchase
power agreement resulting from that solicitation that is approved by
the commission. Indirect costs associated with the purchase of
eligible renewable energy resources, such as imbalance energy
charges, sale of excess energy, decreased generation from existing
resources, or transmission upgrades shall not be eligible for
supplemental energy payments, but shall be recoverable by an
electrical corporation in rates, as authorized by the commission.
(3) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation 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 subdivision (a) of
Section 399.12.
(b) The commission shall implement annual procurement targets for
each electrical corporation as follows:
(1) Beginning on January 1, 2003, each electrical corporation
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, 2017. An electrical corporation with 20 percent of
retail sales procured from eligible renewable energy resources in
any year shall not be required to increase its procurement of such
resources in the following year.
(2) Only for purposes of establishing these targets, the
commission shall include all power 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.
(3) In the event that an electrical corporation fails to procure
sufficient eligible renewable energy resources in a given year to
meet any annual target established pursuant to this subdivision, the
electrical corporation shall procure additional eligible renewable
energy resources in subsequent years to compensate for the shortfall
if sufficient funds are made available pursuant to paragraph (2), and
Sections 399.6 and 383.5 to cover the above-market costs of eligible
renewables.
(4) If supplemental energy payments from the Energy Commission, in
combination with the market prices approved by the commission, are
insufficient to cover the above-market costs of eligible renewable
energy resources, the commission shall allow an electrical
corporation to limit its annual procurement obligation to the
quantity of eligible renewable energy resources that can be procured
with available supplemental energy payments.
(c) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with renewable generators, in consideration of the
following:
(1) The long-term market price of electricity for fixed price
contracts, determined pursuant to the 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 output.
(d) 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).
(e) The commission shall consult with the Energy Commission in
calculating market prices under subdivision (c) and establishing
other renewables portfolio standard policies.
SEC. 11. 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.