BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1478
Author: Sher (D)
Amended: 8/27/04
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
SENATE FLOOR : 22-10, 8/27/04
AYES: Alarcon, Ashburn, Bowen, Burton, Chesbro, Ducheny,
Dunn, Figueroa, Karnette, Kuehl, Machado, McPherson,
Murray, Ortiz, Perata, Romero, Scott, Sher, Soto, Speier,
Torlakson, Vasconcellos
NOES: Ackerman, Brulte, Denham, Hollingsworth, Johnson,
Margett, McClintock, Morrow, Oller, Poochigian
NO VOTE RECORDED: Aanestad, Alpert, Battin, Cedillo,
Escutia, Florez, Vincent, Vacancy
ASSEMBLY FLOOR : 55-24, 8/27/04 - See last page for vote
SUBJECT : Renewable energy
SOURCE : Author
CONTINUED
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DIGEST : This bill makes numerous changes to the
California Renewables Portfolio Standards Program and the
Renewable Energy Program, as specified.
Assembly amendments make further revisions to the programs.
ANALYSIS : Existing law:
1. Requires the State Public Utilities Commission (PUC) to
reserve a portion of future electrical generating
capacity for renewable resources.
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.Provides that a renewable energy project may only receive
an award of Supplement Energy Payments (SEP) if the
project is selected by an investor owned utility (IOU)
pursuant to a competitive solicitation or by other retail
electricity providers through a solicitation process
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approved by California Public Utilities Commission (PUC).
3.Provides that electricity generation from hydroelectric
facilities of 30 megawatts or less shall count toward a
retail seller's renewable portfolio only if the retail
seller procured power from that source prior to December
31, 2003.
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 (CEC has suspended the customer credit program
and redirected the funds to other renewable programs).
5.Allows a renewable energy facility to qualify for SEPs
based on the total length of the contract instead of
limiting the payment to the value of the contract over
the first ten years.
6.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.
7.Provides that CEC may not award SEPs for the sale or
purchase or RECs.
8.Provides that a contract for the purchase of electricity
generated by an eligible renewable resource shall include
REC associated with all electricity generation specified
in the contract.
9.Provides that there are no RECs associated with renewable
power generated under terms of a contract executed before
January 1, 2005, that did not contain explicit terms
specifying ownership of energy credits.
10.Provides that there are no RECs associated with
contracts awarded to Qualifying Facilities (QFs) under
the Public Utility Regulatory Policies Act (PURPA) of
1978, but deliveries under these contracts shall count
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toward RPS obligations.
11.Provides that no REC shall be eligible to count toward
RPS if it has been sold more than once separately from
the associated electricity.
12.Prohibits an electrical corporation from selling RECs
associated with electricity included in the electrical
corporations baseline quantity on January 1, 2004.
13.Prohibits an electrical corporation from selling RECs in
any year in which it has procured inadequate renewable
resources.
14.Allows an IOU serving less than 60,000 customers in
California that also serves customers in another state
(i.e., PacifiCorp and Sierra Pacific Power) to count out
of state renewable resources toward its RPS compliance.
15.Requires electrical corporations and municipal utilities
to adopt strategies in their long term procurement plans
to achieve efficiency in the use of fossil fuels and to
address carbon emissions.
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
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contracts, and for all customers beginning January 1,
2006.
3. Community choice aggregators.
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
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additional goal of 33 percent by 2020.
NOTE: Eligible renewable technologies are biomass, solar
thermal, photovoltaic, wind, geothermal, renewable 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
ASSEMBLY FLOOR :
AYES: Bates, Berg, Bermudez, Calderon, Campbell,
Canciamilla, Chan, Chavez, Chu, Cohn, Corbett, Correa,
Daucher, Diaz, Dutra, Dymally, Firebaugh, Frommer,
Garcia, Goldberg, Hancock, Jerome Horton, Shirley Horton,
Jackson, Kehoe, Koretz, Laird, Leno, Levine, Lieber, Liu,
Longville, Lowenthal, Maldonado, Matthews, Montanez,
Mullin, Nakano, Nation, Negrete McLeod, Oropeza, Parra,
Pavley, Reyes, Richman, Ridley-Thomas, Salinas, Simitian,
Steinberg, Vargas, Wesson, Wiggins, Wolk, Yee, Nunez
NOES: Aghazarian, Benoit, Bogh, Cogdill, Cox, Dutton,
Harman, Haynes, Houston, Keene, La Malfa, La Suer,
Leslie, Maze, McCarthy, Mountjoy, Nakanishi, Pacheco,
Plescia, Runner, Samuelian, Spitzer, Strickland, Wyland
NO VOTE RECORDED: Maddox
NC:nl 8/31/04 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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