BILL NUMBER: AB 1362 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Levine
FEBRUARY 22, 2005
An act to amend Section 25740 of the Public Resources Code, to
amend Sections 399.11, 399.12, 399.13, 399.14, and 399.15 of, and to
add Section 399.17 to, the Public Utilities Code, relating to
renewable energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1362, as introduced, Levine. Renewable energy: California
Renewables Portfolio Standard Program: renewable energy credits.
(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 revise and recast that intent language so that the
amount of electricity generated per year from renewable energy
resources is increased to an amount that equals at least 20% of the
total electricity generated for consumption in California by 2010.
The bill would make conforming changes consistent with this goal.
(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.
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 restate the target of the renewables portfolio
standard to increase the amount of electricity procured from eligible
renewable energy resources, so that it equals 20% of the total
electricity sold to retail customers in California per year by
December 31, 2010. The bill would require that the CPUC adopt rules
or other appropriate procedures that authorize the use of renewable
energy credits, as defined, to satisfy annual procurement targets for
renewable energy resources pursuant to the renewables portfolio
standard. The bill would require that the CPUC authorize an
electrical corporation to meet its procurement obligations under a
renewable energy procurement plan either by procuring a minimum
quantity of electricity generated by eligible renewable energy
resources, or an equivalent quantity of renewable energy credits. The
bill would authorize the CPUC, in approving a renewable energy
procurement plan, to limit the quantity of renewable energy credits
that an electrical corporation is permitted to procure unaccompanied
by delivery of the electricity that earned the credit.
This bill would require the Energy Commission to design and
implement an accounting system to certify renewable energy credits
produced by eligible renewable energy resources and to establish a
system for tracking and verifying renewable energy credits.
The bill would make other clarifying changes.
(3) Under existing law, a violation of the Public Utilities Act or
an order or direction of the CPUC is a crime.
Certain provisions of this bill would be part of the act, and an
order or other action of the CPUC would be required to implement
certain of the provisions. Because a violation of the bill's
provisions or of an order or decision of the CPUC would be a crime,
this bill would impose a state-mandated local program by creating new
crimes.
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 17 20
percent of the total electricity generated for consumption in
California per year by 2006 2010 .
SEC. 2. 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 by 2010, 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. 3. 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
. , subject to the following
limitations:
(2)
(1) 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)
(2) The output of
electricity generated by a small hydroelectric generation
facility of 30 megawatts or less procured or owned by an electrical
corporation as of the date of enactment of this article shall be
eligible only for purposes of establishing the baseline of an
electrical corporation pursuant to paragraph (3) of subdivision (a)
of Section 399.15. A new hydroelectric facility is not an eligible
renewable energy resource if it will require a new or increased
appropriation or diversion of water under Part 2 (commencing with
Section 1200) of Division 2 of the Water Code.
(4)
(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. Output from such
facilities 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.
(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 electricity 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) "Renewable energy credit" means a certificate of proof,
issued by the Energy Commission, 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 all renewable and environmental
attributes associated with electricity production by an eligible
renewable energy resource, unless the Energy Commission determines
that certain environmental benefits unrelated to electricity
production should be excluded. Any electricity generated by a
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.
(e) "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. 4. 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
do all of the following:
(1) Verify compliance with the
renewables portfolio standard by retail sellers , to ensure
that .
(2) Ensure that electricity generated
by an eligible renewable energy output
resource is counted only once for the purpose of meeting the
renewables portfolio standard of this state or any other state
, and for verifying .
(3) Certify renewable energy credits
produced by eligible renewable energy resources.
(4) 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 eligible renewable energy resource.
(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. 5. Section 399.14 of the Public Utilities Code is amended
to read:
399.14. (a) The commission shall direct each electrical
corporation to prepare a renewable energy procurement
plans plan 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 Bankruptcy
Code (11 U.S.C. Sec. 1101 et seq.) .
(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 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
electricity generated by eligible renewable energy
resources , 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 eligible renewable
energy 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 energy 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 energy 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 renewables
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 electricity generated by an eligible
renewable energy resource 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. 6. Section 399.15 of the Public Utilities Code is amended
to read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all electrical corporations to procure a minimum quantity
of output from electricity generated by
eligible renewable energy resources , or an equivalent quantity
of renewable energy credits, as a specified percentage of
total kilowatthours sold to their retail end-use customers each
calendar year, if sufficient funds are made available pursuant to
paragraph (2), and 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 2010 . An
electrical corporation with 20 percent of retail sales procured from
eligible renewable energy resources in any year shall not be required
to increase its procurement of such resources in the following year.
(2) Only for purposes of establishing these targets, the
commission shall include all power
electricity 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 renewable energy
resources .
(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 electricity .
(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. 7. Section 399.17 is added to the Public Utilities Code , to
read:
399.17. (a) The commission shall, not later than July 1, 2006,
adopt rules or other appropriate procedures, that authorize the use
of renewable energy credits to satisfy annual procurement targets for
renewable energy resources. The rules shall do all of the following:
(1) 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.
(2) Prohibit any renewable energy credit from applying toward a
retail seller's renewables portfolio standard program obligations
unless the renewable energy credit results from electricity generated
by an eligible renewable energy resource.
(3) Ensure that any revenues received by an electrical corporation
for the sale of renewable energy credits are credited to ratepayers.
(4) Require every electrical corporation to 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.
(5) 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 commission, are insufficient to cover
the above-market costs of long-term contracts with eligible renewable
energy resources.
(6) 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) of paragraph (2) of subdivision (a) of
Section 399.14.
(b) In approving a renewable energy procurement plan pursuant to
this chapter, the commission may limit the quantity of renewable
energy credits that an electrical corporation is permitted to procure
unaccompanied by delivery of the electricity that earned the credit.
SEC. 8.
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.