BILL NUMBER: SB 1478 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 12, 2004
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,
387, 399.11, 399.12, 399.13, 399.14, 399.15, and
399.16 of, and to add Section 399.17 to, the Public Utilities
Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1478, as amended, 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) The Public Utilities Act imposes various duties and
responsibilities on the Public Utilities Commission (CPUC) with
respect to the purchase of electricity and requires the CPUC to
review and adopt a procurement plan and a renewable energy
procurement plan for each electrical corporation pursuant to the
California Renewables Portfolio Standard Program. The program
requires that a retail seller of electricity, including electrical
corporations, community choice aggregators, and electric service
providers, but not including local publicly owned electric utilities,
purchase a specified minimum percentage of electricity generated by
eligible renewable energy resources, as defined, in any given year as
a specified percentage of total kilowatthours sold to retail end-use
customers each calendar year (renewables portfolio standard). The
renewables portfolio standard requires each electrical corporation to
increase its total procurement of eligible renewable energy
resources by at least an additional 1% of retail sales per year so
that 20% of its retail sales are procured from eligible renewable
energy resources no later than December 31, 2017.
This bill would instead require that each electrical corporation
increase its total procurement of eligible renewable energy resources
by at least an additional 1% of retail sales per year so that 20% of
its retail sales are procured from eligible renewable energy
resources no later than December 31, 2010.
(3) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to certify eligible
renewable energy resources, to design and implement an accounting
system to verify compliance with the renewables portfolio standard by
retail sellers, and to allocate and award supplemental energy
payments to cover above-market costs of renewable energy.
This bill would require the Energy Commission to establish a
renewable energy credit, as defined, trading program and to develop
tracking, accounting, verification, and enforcement mechanisms for
the program. The bill would additionally require the Energy
Commission to require any retail seller of electricity that does not
meet the requirements of the renewables portfolio standard by
directly owning or purchasing electricity generated from eligible
renewable energy resources, to purchase renewable energy credits for
a quantity of electricity produced from eligible renewable energy
resources, that is sufficient to make up the shortfall. The bill
would require the commission to establish rules authorizing
electrical corporations to meet the renewables standard portfolio
requirements using renewable energy credits. The bill would make
other technical and conforming changes.
(4) Under existing law the governing board of a local publicly
owned electric utility is responsible for implementing and enforcing
a renewables portfolio standard that recognizes the intent of the
Legislature to encourage renewable resources, while taking into
consideration the effect of the standard on rates, reliability, and
financial resources and the goal of environmental improvement.
Existing law requires the governing board of a local publicly owned
electric utility to report certain information relative to renewable
energy resources to its customers.
This bill would require the governing board of a local publicly
owned electric utility to establish a renewables portfolio standard
requiring the utility to increase its total procurement of eligible
renewable energy resources by at least an additional 1% of retail
sales per year so that 20% of its retail sales are procured from
eligible renewable energy resources no later than December 31, 2010.
In the event the local publicly owned electric utility fails to
procure sufficient renewable energy resources in a given year to meet
the annual target, the utility would be required to procure
additional eligible renewable resources within the following 3 years.
The bill would require the governing board of a local publicly
owned electric utility to report certain information relative to
renewable energy resources to the Energy Commission.
(5) Under the Public Utilities Act, the CPUC requires electrical
corporations to identify a separate rate component to fund programs
that enhance system reliability and provide in-state benefits. This
rate component is a nonbypassable element of local distribution and
collected on the basis of usage. The funds are collected to support
cost-effective energy efficiency and conservation activities, public
interest research and development not adequately provided by
competitive and regulated markets, and renewable energy resources
(renewable energy public goods charge). 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) CPUC 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 CPUC .
(3)
(6) 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)
(7) Existing law requires 10% of the money collected under the
renewable energy public goods charge be used for 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.
This bill would delete this provision.
(8) 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)
(9) This bill would delete certain obsolete and duplicative
provisions and make technical and conforming changes .
(7)
(10) 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)
(11) 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 20 percent of the total
electricity generated for consumption in California per year by 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 An electrical corporation may receive funds
pursuant to this section only if the project is selected by the
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 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 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.
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 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.
SEC. 7. Section 387 of the Public Utilities Code is amended
to read:
387. (a) Each In order to fulfill unmet
long-term energy resource needs, the governing body of a local
publicly owned electric utility, as defined in Section 9604, shall
be responsible for implementing and enforcing a renewables
portfolio standard that recognizes the intent of the Legislature to
encourage renewable resources, while taking into consideration the
effect of the standard on rates, reliability, and financial resources
and the goal of environmental improvement establish a
renewables portfolio standard requiring the local publicly owned
electric utility to procure a minimum quantity of electricity
generated from eligible renewable energy resources as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year .
(b) Beginning January 1, 2005, the governing body of a local
publicly owned electric utility shall, pursuant to subdivision (a),
increase its total procurement of eligible renewable energy resources
by at least an additional 1 percent of retail sales per year so that
20 percent of its retail sales are procured from eligible renewable
energy resources no later than December 31, 2010.
(c) For purposes of setting annual procurement targets, the
governing body of a local publicly owned electric utility shall
establish an initial baseline based on the actual percentage of
retail sales procured from eligible renewable energy resources in
2003, and to the extent applicable, adjusted going forward on an
annual basis. A local publicly owned electric utility with 20
percent retail sales procured from eligible renewable energy
resources in any year shall not be required to increase its
procurement of those resources in the following year.
(d) In the event that a local publicly owned electric utility
fails to procure sufficient eligible renewable energy resources in a
given year to meet any annual target established pursuant to this
section, the local publicly owned electric utility shall procure
additional eligible renewable energy resources sufficient to satisfy
the resulting deficit within the following three years.
(e) Each local publicly owned electric utility shall report,
on an annual basis, to its customers the
State Energy Resources Conservation and Development Commission
, the following:
(1) Expenditures of public goods funds collected pursuant to
Section 385 for renewable energy resource development. Reports shall
contain a description of programs, expenditures, and expected or
actual results.
(2) The resource mix used to serve its customers by fuel type.
Reports shall contain the contribution of each type of renewable
energy resource with separate categories for those fuels considered
eligible renewable energy resources as defined by Section 399.12.
SEC. 8. 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.
SEC. 9. Section 399.12 of the Public Utilities Code is amended to
read:
399.12. For purposes of this article, the following terms have
the following meanings:
(a) (1) "Eligible renewable energy resource"
means an electric generating facility that is one of the following:
(1) The facility meets the definition of "in-state renewable
electricity generation technology facility
" in Section 383.5 25741 of the Public
Resources Code .
(2) A geothermal generation facility originally commencing
operation prior to September 26, 1996, shall be eligible for purposes
of adjusting a retail seller's baseline quantity of eligible
renewable energy resources except for output
electricity certified as incremental geothermal production by
the Energy Commission, provided that the incremental output
electricity that is generated was not sold to an
electrical corporation under contract entered into prior to
September 26, 1996. For each facility seeking certification, the
Energy Commission shall determine historical production trends and
establish criteria for measuring incremental geothermal production
that recognizes the declining geothermal output of
existing steamfields and the contribution of capital investments in
the facility or wellfield.
(3) The output of electricity generated by
a small hydroelectric generation facility of 30 megawatts or
less procured or owned by an electrical corporation as of the date of
enactment of this article shall be eligible only for purposes of
establishing the baseline of an electrical corporation pursuant to
paragraph (3) of subdivision (a) of Section 399.15. A new
hydroelectric facility is not an eligible renewable energy resource
if it will require a new or increased appropriation or diversion of
water under Part 2 (commencing with Section 1200) of Division 2 of
the Water Code.
(4) A facility engaged in the combustion of municipal solid waste
shall not be considered an eligible renewable resource unless it is
located in Stanislaus County and was operational prior to September
26, 1996. Output from Electricity generated
by such facilities shall be eligible only for the purpose of
adjusting a retail seller's baseline quantity of eligible renewable
energy resources.
(b) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(c) "Retail seller" means an entity engaged in the retail
sale of electricity to end-use customers, including any of the
following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. The commission shall institute
a rulemaking to determine the manner in which a community choice
aggregator will participate in the renewables portfolio standard
subject to the same terms and conditions applicable to an electrical
corporation.
(3) An electric service provider, as defined in Section 218.3
subject to the following conditions:
(A) An electric service provider shall be considered a retail
seller under this article for sales to any customer acquiring service
after January 1, 2003.
(B) An electric service provider shall be considered a retail
seller under this article for sales to all its customers beginning on
the earlier of January 1, 2006, or the date on which a contract
between an electric service provider and a retail customer expires.
Nothing on in this subdivision may
require an electric service provider to disclose the terms of the
contract to the commission.
(C) The commission shall institute a rulemaking to determine the
manner in which electric service providers will participate in the
renewables portfolio standard. The electric service provider shall
be subject to the same terms and conditions applicable to an
electrical corporation pursuant to this article. Nothing in this
paragraph shall impair a contract entered into between an electric
service provider and a retail customer prior to the suspension of
direct access transactions by the
commission pursuant to Section 80110 of the Water Code.
(4) A local publicly owned electrical utility, as defined in
Section 9604, shall comply with the renewables portfolio standard
obligation pursuant to the requirements of Section 387.
(5) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electrical utility as defined in
subdivision (d) of Section 9604.
(c)
(d) "Renewables portfolio standard" means the specified
percentage of electricity generated by eligible renewable energy
resources that a retail seller is required to procure pursuant to
Sections 399.13 and 399.15.
(e) "Renewable energy credit" means a certificate of proof, issued
by the Energy Commission, that one kilowatthour of electricity was
generated by an eligible renewable energy resource and delivered to a
retail seller, a local publicly owned electric utility in compliance
with the requirements of Section 387, or the Independent System
Operator. The renewable energy credit shall represent all renewable
and environmental attributes associated with electricity production
by an eligible renewable energy resource and environmental attributes
associated with electricity generated by an eligible renewable
energy resource attributable to the use of nonrenewable fuels shall
not result in the creation of any renewable energy credits.
SEC. 10. 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 to certify renewable
energy credits produced by eligible renewable energy resources, and
to verify retail product claims in this state or any other
state. In establishing the guidelines governing this 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) Establish a system for tracking and verifying renewable
energy credits. The Energy Commission shall consult with other
states in the Western Electricity Coordinating Council transmission
system to develop consistent mechanisms and protocols for verifying
renewable energy credits and to prevent double counting of the
electricity generated from any renewable energy resource.
(d) Allocate and award supplemental energy payments pursuant
to Section 383.5 Chapter 8.6 (commencing
with Section 25740) of Division 15 of the Public Resources, 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 An electrical corporation
may receive supplemental energy payments for projects selected by
that 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. The Energy Commission may not award
supplemental energy payments for the sale or purchase of renewable
energy credits.
SEC. 9.
SEC. 11. 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) Rules that authorize the use of renewable energy credits
to satisfy annual procurement targets. At minimum, the rules shall
do all of the following:
(i) Prohibit a renewable energy credit from being counted more
than once by any retail seller who purchases the credit.
(ii) Prohibit a renewable energy credit from being resold to any
other retail seller of electricity and used for the purposes of
complying with the renewable portfolio standard established under
this chapter.
(iii) Prohibit the sale of a renewable energy credit to a retail
seller in the state for the purposes of complying with the renewable
portfolio standard established under this chapter unless the seller
of the credit is an in-state renewable electricity generation
technology facility, as defined in Section 25741 of the Public
Resources Code.
(iv) Ensure that any revenues received by an electrical
corporation for the sale of excess renewable energy credits are
credited to ratepayers.
(v) In approving a renewable energy procurement plan, the
commission may limit the quantity of renewable energy credits that
can be separately procured to meet the annual procurement targets.
(E) 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 A contract for the
purchase of electricity generated by an eligible renewable energy
resource shall include the renewable energy credits associated with
all electricity generation specified under the contract. The
standard terms and conditions shall include the requirement that, no
later than six months after the commission's approval of 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 25742 of the Public Resources
Code , 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.
(i) Renewable energy credits attributable to electricity generated
by a source other than an electrical corporation that is delivered
to an electrical corporation under the terms of an electricity
purchase contract executed prior to January 1, 2001, shall be the
property of the electrical corporation at no additional cost and go
towards fulfilling the electrical corporation's baseline procurement
until the expiration of the contract.
SEC. 10.
SEC. 12. 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 electricity generated by
eligible renewable energy resources , or an equivalent quantity
of renewable energy credits, 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
Section 399.6, and Chapter 8.6 (commencing with Section 25740) of
Division 15 of the Public Resources Code, 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, Chapter 8.6
(commencing with Section 25740) of Division 15 of the Public
Resources Code, 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 2010 . 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 Section 399.6, and
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code, 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.
SEC. 13. Section 399.16 of the Public Utilities Code is amended to
read:
399.16. The commission Energy Commission
may consider an electric generating facility that is located
outside the state to be an eligible renewable energy resource if
it the facility meets the criteria
described in Section 399.12 and all of the following requirements:
(a) It is located so that it is, or will be, connected to the
Western Electricity Coordinating Council (WECC) transmission system.
(b) It is developed with guaranteed contracts to sell its
generation, and demonstrates delivery of energy
the contracted amount of electricity , to a retail seller
or the Independent System Operator a local
publicly owned electric utility in compliance with the requirements
of Section 387 .
(c) It participates in the accounting system to verify compliance
with the renewables portfolio standard by retail sellers, once
established by the State Energy Resources
Conservation and Development Commission pursuant to
subdivision (b) of Section 399.13.
SEC. 14. Section 399.17 is added to the Public Utilities Code, to
read:
399.17. (a) Subject to the provisions of this section, the
requirements of this article apply to an electrical corporation with
60,000 or fewer customer accounts in California that serves retail
end-use customers outside California.
(b) For an electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, an eligible renewable energy resource includes a facility
that is located outside California, if the facility is connected to
the Western Electricity Coordinating Council (WECC) transmission
system, provided all of the following conditions are met:
(1) The electricity generated by the facility is procured by the
electrical corporation on behalf of its California customers, and is
not used to fulfill renewable energy procurement requirements in
other states.
(2) The electrical corporation participates in, and complies with,
the accounting system administered by the Energy Commission pursuant
to subdivision (b) of Section 399.13.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the annual procurement targets of
this article.
(c) The commission shall determine the annual procurement targets
for an electrical corporation with 60,000 or fewer customer accounts
in California that serves retail end-use customers outside
California, as a specified percentage of total kilowatthours sold by
the electrical corporation to its retail end-use customers in
California in a calendar year.
(d) An electrical corporation with 60,000 or fewer customer
accounts in California that serves retail end-use customers outside
California, may use an integrated resource plan prepared in
compliance with the requirements of another state utility regulatory
commission, to fulfill the requirement to prepare a renewable energy
procurement plan pursuant to this article, provided the plan meets
the requirements of Sections 399.11, 399.12, 399.13, and 399.14, as
modified by this section.
(e) Procurement and administrative costs associated with long-term
contracts entered into by an electrical corporation with 60,000 or
fewer customer accounts in California that serves retail end-use
customers outside California, for eligible renewable energy resources
pursuant to this article, at or below the market price determined by
the commission pursuant to subdivision (c) of Section 399.15, shall
be deemed reasonable per se, and shall be recoverable in rates of the
electrical corporation's California customers, provided the costs
are not recoverable in rates in other states served by the electrical
corporation.
SEC. 15. 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.