BILL NUMBER: SB 1478 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 23, 2004
AMENDED IN ASSEMBLY JUNE 30, 2004
AMENDED IN ASSEMBLY JUNE 23, 2004
AMENDED IN ASSEMBLY JUNE 16, 2004
AMENDED IN SENATE MAY 4, 2004
AMENDED IN SENATE APRIL 22, 2004
AMENDED IN SENATE APRIL 12, 2004
INTRODUCED BY Senator Sher
(Principal coauthor: Assembly Member Jackson)
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 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 sold to retail
customers in California per year by 2010, rather than 2006. 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 prohibit the Energy Commission from
certifying or awarding tradeable renewable energy credits
for electricity generated pursuant to any electricity purchase
contract with a retail seller executed before January 1, 2005, that
does not contain explicit terms and conditions specifying the
ownership or disposition of those credits. The bill would
provide for the tracking of those credits through a prescribed
accounting system. 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 CPUC to establish rules authorizing electrical
corporations to meet the renewables portfolio standard requirements
using renewable energy credits. The bill would require the
rules to prohibit an electrical corporation from selling renewable
energy credits associated with eligible renewable energy resources
included in the corporation's baseline quantity on January 1, 2004.
The bill would require new contracts executed after January 1, 2005,
with an eligible renewable energy resource, pursuant to prescribed
federal law, to include the option to elect a fixed energy prices for
the duration of the contract as determined by the CPUC. The
bill would require the Energy Commission to certify, and would
specify criteria for, the eligibility of renewable energy credits
associated with electricity delivered to a local publicly owned
electric utility by an eligible renewable energy resource, for
purposes of compliance with the portfolio standard by a retail
seller. 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 energy 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 annually report certain
information relative to renewable energy resources to its customers.
This bill would additionally require that the governing board of a
local publicly owned electric utility report to the Energy
Commission , the information that they are
required to annually report to their customers. The bill would
require the Energy Commission to report to the Governor and
Legislature no later than January 1, 2006, with recommendations for
how to incentivize each local publicly owned electric utility to
implement and enforce a renewables portfolio standard program
consistent with the renewables portfolio standard program
requirements applicable to a retail seller of electricity.
(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
Energy 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 pursuant to a
competitive solicitation procedure found by the CPUC to comply with
the 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 CPUC. The bill
would authorize a project selected for a power purchase contract by
another retail seller to receive supplemental energy payments if
retail seller demonstrates to the CPUC that the project selection is
consistent with a least-cost, best-fit process, and that the payments
are reasonable in comparison to those paid under contracts with
other retail sellers. The bill would prohibit the Energy Commission
from awarding supplemental energy payments for the sale or purchase
of renewable energy credits. The bill would revise existing criteria
for Energy Commission consideration of an out-of-state electrical
generation facility as an eligible renewable energy resource.
(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 funding
would be provided to projects chosen through a competitive,
market-based process that is in place for not less than five years,
and would be structured to allow eligible emerging technology
manufacturers and suppliers to anticipate and plan for increased sale
and installation volumes over the life of the program.
(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 CPUC's
approval of a purchase power agreement, the following information
about the agreement be disclosed by the CPUC: party names, resource
type, project location, and project capacity.
(9) This bill would delete certain obsolete and duplicative
provisions and make technical and conforming changes.
(10) Existing law makes a violation of the Public Utilities Act or
a violation of an order of the CPUC a crime.
Because a violation of the provisions of the bill or of any CPUC
order implementing these provisions would be a crime, this bill would
impose a state-mandated local program by creating new crimes.
(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 sold to retail customers in California per year by the
year 2010.
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
no longer than 10 years. Payments shall be equal to
the cumulative above-market costs over the duration of the
contract with the electrical corporation , based upon the market
price at the time of contracting, subject to the caps on
supplemental energy payments established by the commission pursuant
to subparagraph (A) .
(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) A project may receive funds pursuant to this section only if
it is selected by an electrical 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.
Projects selected by other retail sellers may receive supplemental
energy payments so long as the Public Utilities Commission develops
an approval process that incorporates the same terms and conditions
applicable to comparable contracts with an electrical corporation.
Commission. A project selected for a power project
contract by another retail seller may receive supplemental energy
payments if the retail seller demonstrates to the Public Utilities
Commission that the selection of this project is consistent with the
results of a least-cost, best-fit process and that the supplemental
energy payments are reasonable in comparison to those paid under
contracts with other retail sellers. The commission may not award
supplemental energy payments for the sale or purchase of renewable
energy credits.
(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 Section 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 is in place for a period of
not less than five years, and is structured 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.
(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 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 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.
(b) Each local publicly owned electric utility shall report, on an
annual basis, to its customers and 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
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.
(e) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewable portfolio
standard targets. In order to attain a target of 20 percent by 2010,
the state must expedite regulatory proceedings related to the
addition or modification of electric transmission by fast-tracking
the processing of transmission permit requests needed to facilitate
the development or delivery of renewable generation. It is the
intent of the Legislature that the commission report to the
Legislature annually, consistent with its reporting obligations under
Section 1701.6, the actions it has taken to fast-track completion of
proceedings related to the addition or modification of electric
transmission needed to access renewable power, and the results of
those actions.
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) "Eligible renewable energy resource" means an electric
generating facility that satisfies all of the following
conditions:
(1) The facility meets the definition of "in-state
renewable electricity generation facility" in Section 25741 of the
Public Resources Code .
(2) , subject to the following limitations:
(1) (A) 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 electricity certified
as incremental geothermal production by the Energy Commission,
provided that the incremental 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.
(B) This paragraph shall remain operative only until January 1,
2010.
(3)
(2) An existing small hydroelectric generation facility of
30 megawatts or less shall be eligible only if a retail seller owned
or procured the electricity from the facility as of December 31,
2003, and that electricity shall be eligible only for purposes of
establishing the baseline. 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)
(3) A facility engaged in the combustion of municipal solid
waste shall not be considered an eligible renewable resource unless
it is located in Stanislaus County and was operational prior to
September 26, 1996. Electricity generated by a facility meeting these
requirements shall be eligible only for the purpose of adjusting a
retail seller's baseline quantity of eligible renewable energy
resources.
(5)
(4) Notwithstanding paragraph (2) (1)
, any geothermal electricity included in the baseline of a
retail seller from a facility under a long-term contract executed
before January 1, 2004, shall be eligible to satisfy the annual
procurement targets of any retail seller upon the expiration of that
contract.
(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 located within this state, 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 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 transactions by the commission pursuant to Section 80110 of
the Water Code.
(4) "Retail seller" does not include any of the following:
(A) A corporation or person employing cogeneration technology or
producing power consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(C) A local publicly owned electric utility, as defined in Section
9604.
(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 through the
accounting system established by the Energy Commission pursuant to
Section 399.13 , that one unit of electricity was generated by
an eligible renewable energy resource and delivered to a retail
seller or the Independent System Operator. The renewable
energy credit shall represent Energy Commission shall
ensure that the renewable energy credit includes all renewable
and environmental attributes associated with electricity
production by an eligible renewable energy resource, unless the
commission determines that certain environmental benefits unrelated
to electricity production should be excluded. Any electricity
renewable electricity production. The Energy
Commission shall consult with the commission in establishing the
definition of a renewable energy credit, to ensure compatibility with
the standard contract terms adopted pursuant to Section 399.14 and
to protect the interests of ratepayers. Any electricity
generated by an eligible renewable energy resource attributable to
the use of nonrenewable fuels, beyond a de minimus quantity, as
determined by the Energy Commission, 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, 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
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code, to eligible renewable energy resources to
cover above-market costs of renewable energy. A project may receive
supplemental energy payments only if it is selected by an electrical
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. Projects selected by other retail sellers
may receive supplemental energy payments if the commission develops
an approval process that incorporates the same terms and conditions
applicable to comparable contracts with an electrical corporation.
The Energy A project selected for a power purchase
contract by another retail seller may receive supplemental energy
payments if the retail seller demonstrates to the Public Utilities
Commission that the selection of this project is consistent with the
results of a least-cost, best-fit process and that the supplemental
energy payments are reasonable in comparison to those paid under
contracts with other retail sellers. The Energy Commission may
not award supplemental energy payments for the sale or purchase of
renewable energy credits.
(e) Certify, for purposes of compliance with the renewables
portfolio standard by a retail seller, the eligibility of renewable
energy credits associated with deliveries of electricity by an
eligible renewable energy resource to a local publicly owned electric
utility if the Energy Commission determines that the following
conditions have been satisfied:
(1) The local publicly owned electric utility procuring the
electricity complies with the requirements of Section 387.
(2) The local publicly owned electric utility has established
annual procurement targets comparable to those applicable to an
electrical corporation, is procuring sufficient eligible renewable
energy resources to satisfy these targets, and will not fail to
satisfy these targets in the event that the renewable energy credit
is sold to another retail seller.
(f) The Energy Commission shall not certify or award
tradeable renewable energy credits for electricity generated
pursuant to any electricity purchase contract with a retail seller
executed before January 1, 2005, that does not contain explicit terms
and conditions specifying the ownership or disposition of those
credits. Deliveries under those contracts shall count
towards the portfolio standard obligations of a retail seller.
be tracked through the accounting system described in
subdivision (b) and included in the baseline quantity of eligible
renewable energy resources of the purchasing retail seller pursuant
to Section 399.15.
(g) (1) The Energy Commission shall not certify or
award tradeable renewable energy credits for electricity
generated under any purchase contract executed after January 1, 2005,
pursuant to the federal Public Utility Regulatory Policies Act of
1978 (16 U.S.C. 2601, et seq.) , unless the new or renegotiated
contract contains explicit terms and conditions specifying the
ownership and disposition of those credits . Deliveries under
these contracts shall count towards the portfolio standard
obligations of a retail seller. be tracked through the
accounting system described in subdivision (b) and count towards the
portfolio standard obligations of the purchasing retail seller.
(2) Any new contracts executed after January 1, 2005, with an
eligible renewable energy resource pursuant to the federal Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. Sec 2601 et seq.)
shall include the option to elect a fixed energy price for the
duration of the contract, as determined by the commission.
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.
(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 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 a 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 for compliance with the renewables
portfolio standard of this state or any other state, or for verifying
retail product claims in this state or any other state.
(ii) Prohibit the eligibility of any renewable energy credit for
the purposes of complying with the portfolio standard unless the
seller of the credit is a retail seller, an in-state
renewable electricity generation technology facility, or any
eligible renewable energy resource, a local publicly
owned utility satisfying the requirements of subdivision (e) of
Section 399.13, or any other entity procuring power from an
eligible renewable energy resource under a long-term electricity
purchase contract. No credit shall be eligible for complying
with the portfolio standard if it has been sold or transferred more
than once separately from any initial transfer of the credit
originally conveyed with energy delivered by the eligible renewable
energy resource.
(iii) Ensure that any revenues received by an electrical
corporation for the sale of excess renewable
energy credits are credited to ratepayers.
(iv) In approving a renewable energy procurement plan, the
commission may limit the quantity of renewable energy credits that
can be procured unbundled from electricity generation to meet the
annual procurement targets.
(v) Require every electrical corporation demonstrate that all
purchased renewable energy credits are certified by the Energy
Commission and comply with the requirements of this article, before
purchase expenses may be recovered in rates.
(vi) Ensure that no retail seller shall be obligated to procure
renewable energy credits to satisfy annual procurement targets in the
event that supplemental energy payments, in combination with the
market prices approved by the Energy Commission
commission , are insufficient to cover the above-market
costs of long-term contracts with eligible renewable energy
resources.
(vii) Prohibit an electrical corporation from selling renewable
energy credits associated with eligible renewable energy resources
included in that electrical corporation's baseline quantity on
January 1, 2004.
(viii) Prohibit sales of renewable energy credits by an electrical
corporation during any year in which the electrical corporation
utilizes flexible compliance rules to permit inadequate procurement
pursuant to subparagraph (C).
(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. 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 into pursuant to 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
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.
(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 the 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 25742 or 25743 of the Public Resources Code, including 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. 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 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 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 electrical 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 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 electrical
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 into 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 retail seller
as follows:
(1) Beginning on January 1, 2003, each electrical
corporation retail seller 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.
An electrical corporation A retail seller
with 20 percent of retail sales procured from eligible
renewable energy resources in any year shall not be required to
increase its procurement of eligible renewable energy 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
a retail seller 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 retail seller 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 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 a retail seller 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. 13. Section 399.16 of the Public Utilities Code is amended to
read:
399.16. The Energy Commission may consider an electric generating
facility that is located outside the state to be an eligible
renewable energy resource if the facility meets the criteria
described in Section 399.12 and all of the following requirements:
(a) It is located so that it will be connected to the Western
Electricity Coordinating Council (WECC) transmission system.
(b) It is originally constructed for the purpose of supplying
(b) It commences initial commercial operation after January 1,
2005, supplies electricity under a guaranteed contract with a
retail seller, and demonstrates delivery of the contracted amount of
electricity to that retail seller.
(c) It participates in the accounting system to verify compliance
with the renewables portfolio standard by retail sellers, once
established by the Energy 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. The State Energy Resources Conservation and Development
Commission shall, on or before January 1, 2006, report to the
Governor and the Legislature with recommendations for how to
incentivize each local publicly owned electric utility, as defined in
Section 9604 of the Public Utilities Code, to implement and enforce
a renewables portfolio standard program meeting the requirements of
Section 399.15 of the Public Utilities Code, utilizing eligible
renewable energy resources, as defined in Section 399.12. The
commission may include the report as a component of the 2005
Integrated Energy Policy or the next
renewable energy report required pursuant to Section 25758 of the
Public Resources Code. The commission shall use existing resources to
comply with this section.
SEC. 16. 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.