BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1478|
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THIRD READING
Bill No: SB 1478
Author: Sher (D)
Amended: 5/4/04
Vote: 21
SENATE ENERGY, UTILITIES & COMM. COMMITTEE : 5-1, 4/27/04
AYES: Bowen, Alarcon, Dunn, Sher, Vasconcellos
NOES: Morrow
NO VOTE RECORDED: Battin, McClintock, Murray
SENATE APPROPRIATIONS COMMITTEE : 7-3, 5/20/04
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Machado,
Speier
NOES: Aanestad, Ashburn, Poochigian
NO VOTE RECORDED: Battin, Johnson, Murray
SUBJECT : Renewable energy
SOURCE : Author
DIGEST : This bill makes numerous changes to the
California Renewables Portfolio Standards Program and the
Renewable Energy Program, as specified.
ANALYSIS :
Existing law:
1. Requires the State Public Utilities Commission (PUC) to
reserve a portion of future electrical generating
capacity for renewable resources.
CONTINUED
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2. Expresses legislative intent to increase renewable
electricity to 17 percent of consumption in the state by
2006 (SB 1038, Sher, Chapter 515, Statutes of 2002).
3. Requires investor-owned utilities (IOUs) to increase
their existing level of renewable resources by one
percent of sales per year until a 20 percent renewable
resources portfolio is achieved (AB 57, Wright, Chapter
835, Statutes of 2002).
4. The "Renewables Portfolio Standard" (RPS), requires IOUs
and certain other retail sellers to meet essentially the
same renewable procurement goals as AB 57, but sets a
deadline of 2017 for achieving a 20 percent renewable
portfolio and establishes a detailed process and
standards for renewable procurement. Local
publicly-owned electric utilities (munis) are exempt
from the statutory requirements of the RPS and instead
required to implement and enforce their own RPS programs
(SB 1078, Sher, Chapter 516, Statutes of 2002).
This bill:
1. Advances the deadline for achieving a 20 percent
renewable portfolio from 2017 to 2010.
2. Authorizes a renewable energy credit (REC) trading
program to allow the sale of the renewable attribute of
renewable electricity as a commodity unbundled from the
physical production and delivery of renewable
electricity, subject to the following limitations:
A. RECs may not be counted more than once.
B. RECs must originate from an eligible renewable
resource and may not be resold for RPS compliance.
C. Revenues from the sale of RECs by an IOU must be
credited to ratepayers.
D. An IOU may not buy or sell RECs from renewable
resources already included in the IOU's baseline.
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3. Provides an IOU may only receive an award of "new
renewable" funds for a project if the project is
selected pursuant to a competitive solicitation the PUC
finds complies with the RPS and the PUC has approved a
contract for the project.
4. Repeals the requirement that the California Energy
Commission (CEC) direct 10 percent ($13.5 million/year)
of renewable funds collected via the Public Goods Charge
(PGC) for credits to existing renewable direct access
customers (the CEC has suspended the customer credit
program and redirected the funds to other renewable
programs).
5. Permits an IOU serving fewer than 60,000 customers in
California that also serves customers in another state
(i.e. PacifiCorp and Sierra Pacific Power) to count its
out-of-state renewable resources toward its RPS
compliance.
Background
The RPS requires IOUs, and certain other retail energy
providers, to buy renewable electricity to the extent PGC
funds are available to pay for any costs exceeding a market
price set by the PUC.
Each IOU is required to increase its renewable procurement
each year by at least one percent of total sales, so that
20 percent of its sales are renewable energy sources (refer
to NOTE) by December 31, 2017. Once a 20 percent portfolio
is achieved, no further increase is required. The PUC is
required to adopt comparable requirements for direct access
providers and community choice aggregators.
The RPS applies to:
1. IOUs meeting specified creditworthiness conditions.
2. Direct access providers, for any new customers or new
contracts, and for all customers beginning January 1,
2006.
3. Community choice aggregators.
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The RPS explicitly does not apply to:
1. Co-generation supplying customers on-site and via "over
the fence" transactions.
2. The State Department of Water Resources.
3. Municipal and other local publicly-owned electric
utilities. These utilities are responsible for
implementing and enforcing their own, unspecified,
renewable portfolio standards.
The RPS requires the PUC to adopt a rulemaking within six
months of its enactment (January 2003), including processes
for determining market prices, ranking renewable bids
according to cost and fit, flexible compliance rules, and
standard contract terms and conditions. Sixteen months
later, these items still are pending adoption at the PUC.
In the meantime, the PUC has approved a number of renewable
contracts through an ad hoc process lacking clear rules or
consistency with the statutory scheme of the RPS. This
bill provides that an IOU may count renewable resources
toward its RPS requirements and receive PGC funds only if
the contract is selected pursuant to a competitive
solicitation that complies with the RPS and is approved by
the PUC.
The RPS requires IOUs to offer contracts of at least 10
years, unless the PUC approves shorter contracts. This is
intended to support the development of new renewable
resources. This bill limits contracts less than 10 years
to no more than 10 percent of any solicitation.
The "Energy Action Plan" adopted by the PUC, the CEC and
the Power Authority pledges that the agencies with
accelerate RPS implementation to meet the 20 percent goal
by 2010, instead of 2017. In his statements on energy, the
Governor has endorsed "20 percent by 2010" and proposed an
additional goal of 33 percent by 2020.
NOTE: Eligible renewable technologies are biomass, solar
thermal, photovoltaic, wind, geothermal, renewable
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fuel cells, hydroelectric 30 megawatts or less,
digester gas, municipal solid waste conversion,
landfill gas, ocean wave, ocean thermal, and tidal
current. Existing small hydroelectric, existing
geothermal, and a garbage burning plant in Modesto
may be counted toward a retail seller's baseline,
but are not eligible for supplemental payments from
PGC funds.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
PUC $85 $44 $44
Special*
Costs should be offset by fee
revenues
CEC --- No increased costs
---Special**
Customer credits See comments
below General
* Public Utilities' Reimbursement
Account
** Energy Resources Program Account or Renewable
Resources Trust Fund
SUPPORT : (Verified 5/20/04)
American Lung Association of California
Clean Power Campaign
East Bay Municipal Utility District
Sempra (if amended)
Sierra Club California
OPPOSITION : (Verified 5/20/04)
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City of Roseville
Pacific Gas and Electric Company
NC:mel 5/20/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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