BILL ANALYSIS
AB 1362
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Date of Hearing: May 11, 2005
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 1362 (Levine) - As Amended: April 11, 2005
Policy Committee: UtilitiesVote:8-3
Natural Resources 7-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Accelerates the Renewables Portfolio Standard (RPS) program to
require retail sellers of electricity to procure at least 20%
of their retail sales from renewable power by 2010 instead of
2017.
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. The program
is to include specified rules, to be adopted by the Public
Utilities Commission (PUC) by July 1, 2006.
3)Requires the California Energy Commission (CEC) to establish a
system to certify the use of renewable energy credits produced
by eligible renewable resources.
FISCAL EFFECT
1)The PUC indicates an ongoing need for five positions at a cost
of $560,000 for increased compliance workload related to the
accelerated RPS and to implement the REC program. This
estimate is considerably higher than the PUC's estimate last
year for a very similar bill. [Public Utilities Reimbursement
Account]
2)Absorbable reporting costs to the CEC, which, along with other
AB 1362
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western states, is already establishing a tracking system for
renewable energy sales, and can include the recommendations
regarding local public utilities in its Integrated Energy
Policy Report.
COMMENTS
1)Background and Purpose . In 2002, SB 1078 (Sher) created the
RPS program. Under RPS, the IOUs are required to increase
their renewable procurement each year by at least 1% of total
sales, so that 20% of their sales are from renewable energy
sources by December 31, 2017. The PUC is required to adopt
comparable requirements for direct access providers and
community choice aggregators.
The "Energy Action Plan" adopted by the PUC, CEC and the
California Power Authority pledges that the agencies will
accelerate RPS implementation to meet the 20% goal by 2010,
which is consistent with this bill. (The governor has also
endorsed "20% by 2010" and proposed an additional goal of 33%
by 2020.)
Two of the three major IOUs appear able to meet the 20% by the
2010 goal. Pacific Gas & Electric's current baseline portfolio
of renewable power is 13%, while Southern California Edison's
baseline is 18%. However, San Diego Gas & Electric (SDG&E)
currently receives only 5.5% of its electricity from renewable
resources. Due to its small baseline and transmission
constraints that limit its ability to procure new renewable
power from outside its service territory, SDG&E believes it
will not be able to meet a 20% by 2010 goal without a
renewable energy credit (REC) program.
The REC program established in AB 1362 is intended to help
IOUs and other retail electric providers meet the accelerated
RPS goals by allowing them to purchase the attributes of
renewable power without having to purchase unneeded or
undeliverable generation. Under such a program, SDG&E could,
for example, purchase RECs from a wind farm in Northern
California while the wind farm sells its electricity output to
another retail electricity provider that does not need the
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environmental attributes. SDG&E would not need to rely on
congested transmission lines for delivery of the actual
electricity and instead could produce the needed energy from
non-renewable sources within its service territory. Similar
trading programs are already in place in Texas and
Massachusetts.
2)Related Legislation . SB 108 (Simitian), pending in Senate
Appropriations, similarly accelerates the RPS requirement and
establishes a REC program.
AB 1585 (Blakeslee), also on today's committee agenda,
requires the CEC to examine the feasibility of increasing the
RPS target to 33% by 2017.
3)Prior Legislation . SB 1478 (Sher) of 2004, which was similar
to AB 1362, was vetoed by the governor.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081