BILL NUMBER: SB 1891 CHAPTERED
BILL TEXT
CHAPTER 694
FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2004
APPROVED BY GOVERNOR SEPTEMBER 22, 2004
PASSED THE SENATE AUGUST 17, 2004
PASSED THE ASSEMBLY AUGUST 12, 2004
AMENDED IN ASSEMBLY AUGUST 4, 2004
AMENDED IN ASSEMBLY JUNE 10, 2004
AMENDED IN SENATE MAY 4, 2004
INTRODUCED BY Committee on Energy, Utilities and Communications
(Senators Bowen (Chair), Alarcon, Battin, Dunn, Morrow, Murray, Sher,
and Vasconcellos)
MARCH 1, 2004
An act to amend Section 25747 of the Public Resources Code, and to
amend Sections 399.11, 399.12, 399.13, 399.14, 399.15, 399.16, and
780.5 of, to amend and renumber Section 454.1 of, and to repeal
Sections 383.5 and 445 of, the Public Utilities Code, relating to
public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 1891, Committee on Energy, Utilities and Communications.
Public utilities: metering of multiunit residences: electrical
transmission facilities: renewable energy resources.
(1) Existing law requires the commission to require every
residential unit in an apartment house or similar multiunit
residential structure, condominium, or mobilehome park issued a
building permit on or after July 1, 1982, with certain exceptions, to
be individually metered for electric and gas service, except that
separate metering for gas service is not required for residential
units that are not equipped with gas appliances requiring venting or
that receive the majority of energy used for water or space heating
from a solar energy system or through cogeneration technology.
This bill would except from the requirement for separate metering
for gas service, multiunit residential units which are not equipped
with gas appliances requiring venting or are equipped with only
vented decorative appliances or which receive the majority of energy
used for water or space heating from a solar energy system or through
cogeneration technology.
(2) This bill would amend and renumber a provision of the Public
Utilities Code to eliminate a duplicative statutory numbering.
(3) Under the Public Utilities Act, the Public Utilities
Commission requires electrical corporations to identify a separate
rate component to fund in-state operation and development of existing
and new and emerging renewable resources technologies. This rate
component is a nonbypassable element of local distribution and
collected on the basis of usage. Existing law requires specified
electrical corporations to collect specific amounts to support
in-state operation and development of existing and new and emerging
renewable resources technologies.
Existing provisions in the Public Resources Code and Public
Utilities Code both require the State Energy Resources Conservation
and Development Commission (Energy Commission) to transfer funds
collected for in-state operation and development of existing and new
and emerging renewable resources technologies into the Renewable
Resource Trust Fund and establishes certain accounts in the fund to
carry out certain renewable energy purposes.
This bill would repeal provisions in the Public Utilities Code
pertaining to the creation and administration of the Renewable
Resource Trust Fund by the Energy Commission. The bill would make
other technical and conforming changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25747 of the Public Resources Code is amended
to read:
25747. (a) The commission shall adopt guidelines governing the
funding programs authorized under this chapter, at a publicly noticed
meeting offering all interested parties an opportunity to comment.
Substantive changes to the guidelines may not be adopted without at
least 10 days' written notice to the public. The public notice of
meetings required by this subdivision may not be less than 30 days.
Notwithstanding any other provision of law, any guidelines adopted
pursuant to this chapter or Section 399.13 of the Public Utilities
Code, shall be exempt from the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. The Legislature declares that the changes made
to this subdivision by the act amending this section during the 2002
portion of the 2001-02 Regular Session are declaratory of, and not a
change in existing law.
(b) Funds to further the purposes of this chapter may be committed
for multiple years.
(c) Awards made pursuant to this chapter are grants, subject to
appeal to the commission upon a showing that factors other than those
described in the guidelines adopted by the commission were applied
in making the awards and payments. Any actions taken by an applicant
to apply for, or become or remain eligible and registered to
receive, payments or awards, including satisfying conditions
specified by the commission, shall not constitute the rendering of
goods, services, or a direct benefit to the commission.
SEC. 2. Section 383.5 of the Public Utilities Code is repealed.
SEC. 3. 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 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 Chapter 8.6 (commencing with Section
25740) of Division 15 of the Public Resources Code.
SEC. 4. 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 is one of the following:
(1) The facility meets the definition of "in-state renewable
electricity generation facility" in Section 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 certified as incremental
geothermal production by the Energy Commission, provided that the
incremental output 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
output of existing steamfields and the contribution of capital
investments in the facility or wellfield.
(3) The output of 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 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 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 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 electrical utility as defined in
subdivision (d) of 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.
SEC. 5. Section 399.13 of the Public Utilities Code is amended to
read:
399.13. The Energy Commission shall do all of the following:
(a) Certify eligible renewable energy resources that it determines
meet the criteria described in subdivision (a) of Section 399.12.
(b) Design and implement an accounting system to verify compliance
with the renewables portfolio standard by retail sellers, to ensure
that renewable energy output is counted only once for the purpose of
meeting the renewables portfolio standard of this state or any other
state, and for verifying retail product claims in this state or any
other state. In establishing the guidelines governing this system,
the Energy Commission shall collect data from electricity market
participants that it deems necessary to verify compliance of retail
sellers, in accordance with the requirements of this article and the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code). In seeking
data from electrical corporations, the Energy Commission shall
request data from the commission. The commission shall collect data
from electrical corporations and remit the data to the Energy
Commission within 90 days of the request.
(c) Allocate and award supplemental energy payments pursuant to
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.
SEC. 6. 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, but not limited to,
permitting electrical corporations to apply excess procurement in one
year to subsequent years or inadequate procurement in one year to no
more than the following three years.
(D) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators.
(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.
(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
Sections 25742 and 25743 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.
SEC. 7. Section 399.15 of the Public Utilities Code is amended to
read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of output from eligible renewable energy resources as a specified
percentage of total kilowatthours sold to their retail end-use
customers each calendar year, if sufficient funds are made available
pursuant to paragraph (2), and 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 Chapter 8.6 (commencing with Section 25740) of Division
15 of the Public Resources Code, consistent with this article, for
above-market costs. Indirect costs associated with the purchase of
eligible renewable energy resources, such as imbalance energy
charges, sale of excess energy, decreased generation from existing
resources, or transmission upgrades shall not be eligible for
supplemental energy payments, but shall be recoverable by an
electrical corporation in rates, as authorized by the commission.
(3) For purposes of setting annual procurement targets, the
commission shall establish an initial baseline for each electrical
corporation based on the actual percentage of retail sales procured
from eligible renewable energy resources in 2001, and, to the extent
applicable, adjusted going forward pursuant to subdivision (a) of
Section 399.12.
(b) The commission shall implement annual procurement targets for
each electrical corporation as follows:
(1) Beginning on January 1, 2003, each electrical corporation
shall, pursuant to subdivision (a), increase its total procurement of
eligible renewable energy resources by at least an additional 1
percent of retail sales per year so that 20 percent of its retail
sales are procured from eligible renewable energy resources no later
than December 31, 2017. An electrical corporation with 20 percent of
retail sales procured from eligible renewable energy resources in
any year shall not be required to increase its procurement of such
resources in the following year.
(2) Only for purposes of establishing these targets, the
commission shall include all power sold to retail customers by the
Department of Water Resources pursuant to Section 80100 of the Water
Code in the calculation of retail sales by an electrical corporation.
(3) In the event that an electrical corporation fails to procure
sufficient eligible renewable energy resources in a given year to
meet any annual target established pursuant to this subdivision, the
electrical corporation shall procure additional eligible renewable
energy resources in subsequent years to compensate for the shortfall
if sufficient funds are made available pursuant to paragraph (2), and
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. 8. 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 it 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, to a retail seller
or the Independent System Operator.
(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. 9. Section 445 of the Public Utilities Code is repealed.
SEC. 10. Section 454.1 of the Public Utilities Code, as added by
Chapter 1040 of the Statutes of 2000, is amended and renumbered to
read:
464. (a) Reasonable expenditures by transmission owners that are
electrical corporations to plan, design, and engineer
reconfiguration, replacement, or expansion of transmission facilities
are in the public interest and are deemed prudent if made for the
purpose of facilitating competition in electric generation markets,
ensuring open access and comparable service, or maintaining or
enhancing reliability, whether or not these expenditures are for
transmission facilities that become operational.
(b) The commission and the Electricity Oversight Board shall
jointly facilitate the efforts of the state's transmission owning
electrical corporations to obtain authorization from the Federal
Energy Regulatory Commission to recover reasonable expenditures made
for the purposes stated in subdivision (a).
(c) Nothing in this section alters or affects the recovery of the
reasonable costs of other electric facilities in rates pursuant to
the commission's existing ratemaking authority under this code or
pursuant to the Federal Power Act (41 Stat. 1063; 16 U.S.C. Secs.
791a, et seq.). The commission may periodically review and adjust
depreciation schedules and rates authorized for an electric plant
that is under the jurisdiction of the commission and owned by an
electrical corporation and periodically review and adjust
depreciation schedules and rates authorized for a gas plant that is
under the jurisdiction of the commission and owned by a gas
corporation, consistent with this code.
SEC. 11. Section 780.5 of the Public Utilities Code is amended to
read:
780.5. The commission shall require every residential unit in an
apartment house or similar multiunit residential structure,
condominium, and mobilehome park for which a building permit has been
obtained on or after July 1, 1982, other than a dormitory or other
housing accommodation provided by any postsecondary educational
institution for its students or employees and other than farmworker
housing, to be individually metered for electrical and gas service,
except that separate metering for gas service is not required for
residential units which are not equipped with gas appliances
requiring venting or are equipped with only vented decorative
appliances or which receive the majority of energy used for water or
space heating from a solar energy system or through cogeneration
technology.