BILL ANALYSIS
AB 1362
Page A
ASSEMBLY THIRD READING
AB 1362 (Levine)
As Amended May 27, 2005
Majority vote
UTILITIES & COMMERCE 8-3 NATURAL RESOURCES 7-3
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|Ayes:|Levine, Baca, Blakeslee, |Ayes:|Hancock, Pavley, Koretz, |
| |Cohn, | |Laird, Nava, Saldana, |
| |De La Torre, Jerome | |Wolk |
| |Horton, Montanez, | | |
| |Ridley-Thomas | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bogh, Keene, Wyland |Nays:|La Malfa, Harman, Keene |
| | | | |
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APPROPRIATIONS 13-5
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|Ayes:|Chu, Bass, Berg, | | |
| |Calderon, Mullin, | | |
| |Karnette, Klehs, Leno, | | |
| |Nation, Oropeza, | | |
| |Ridley-Thomas, Saldana, | | |
| |Yee | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Sharon Runner, Emmerson, | | |
| |Haynes, Nakanishi, | | |
| |Walters | | |
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SUMMARY : Accelerates the California Renewables Portfolio
Standard (RPS) to require retail sellers of electricity to
procure at least 20% of their retail sales from renewable power
by 2010 instead of 2017. Allows Renewable Energy Credits (RECs)
to be counted toward a retail electricity provider's RPS
requirement. Specifically, this bill :
1)Requires that all retail sellers of electricity, excluding
local publicly owned electric utilities (munis), to procure at
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least 20% of the total electricity sold from eligible
renewable resources by 2010.
2)Authorizes a REC trading program to allow the sale of the
renewable and environmental attributes of renewable
electricity as a commodity unbundled from the actual
electricity produced, subject to the specified limitations.
3)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.
4)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 toward RPS
obligations.
5)Clarifies that renewable electricity produced outside of
California may be counted toward a retail seller's RPS if the
electricity is delivered to California.
6)Provides that renewable power that is net metered under a
retail seller net metering tariff shall count toward the
seller's RPS.
EXISTING LAW :
1)Requires retail sellers of electricity, except munis, to
increase their existing level of renewable resources by 1% of
sales per year such that 20% of their retail sales are
procured from eligible renewable resources by 2017.
2)Defines eligible renewable resources to inclued all generation
from an in-state renewable electricity generation facility
that uses biomass, solar thermal, photovoltaic, wind,
geothermal, fuel cells using renewable fuels, small
hydroelectric generation of 30 megawatts or less, digester
gas, municipal solid waste conversion, landfill gas, ocean
wave, ocean thermal, or tidal current, and any additions or
enhancements to the facility using that technology.
FISCAL EFFECT : Ongoing need for five positions at a cost of
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$560,000 for increased compliance workload related to the
accelerated RPS and to implement the REC program at the
California Public Utilities Commission (PUC) and absorbable
costs at CEC.
COMMENTS : The purpose of this bill is to accelerate the state's
existing RPS requirements so that 20% of retail sales of
electricity in California come from renewable resources by the
year 2010, and to allow retail sellers of electricity to apply
RECs toward their RPS requirements.
SB 1078 (Sher), Chapter 576, Statutes of 2002, creates
California's RPS. Under RPS, Investor Owned Utilities (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. Once a 20%
portfolio is achieved, no further increase is required. PUC is
required to adopt comparable requirements for direct access
providers and community choice aggregators. Munis are not
required to meet the same RPS as IOUs, but instead must
implement and enforce their own RPS program that recognizes the
intent of the Legislature to encourage renewable resources.
RPS also allows new renewable energy providers to apply to CEC
for Supplemental Energy Payments (SEPs). SEPs will be awarded
to renewable energy providers to cover the difference between
the prices they bid in a competitive solicitation and a market
price established by PUC. This difference represents the above
market costs of renewable power, thus SEPs assure that
ratepayers do not pay more for renewable power. RPS requires
IOUs, and certain other retail energy providers, to buy
renewable electricity to the extent Public Goods Charges (PGC)
funds are available to pay for SEPs. If no PGC funds are
available, the retail energy providers are not required to
purchase additional renewable power.
The "Energy Action Plan" adopted by PUC, CEC and the Power
Authority (PA) pledges that the agencies will accelerate RPS
implementation to meet the 20% goal by 2010, instead of 2017.
The Governor has also endorsed "20% by 2010" and proposed an
additional goal of 33% by 2020.
Currently, two of the three major IOUs appear to be able to meet
the 20% by 2010 goal. Pacific Gas & Electric's (PG&E) current
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baseline of renewable power is at 13%, while Southern California
Edison (SCE) already has 18% of eligible renewable power in its
portfolio. San Diego Gas & Electric (SDG&E) currently only
receives 5.5% of its electricity from renewable resources.
Due to SDG&E's small renewable electricity baseline and
transmission constraints that will limit its ability to procure
new renewable power from outside its service territory, SDG&E
believes they will not be able to meet a 20% by 2010 goal
without the addition of a REC program.
The REC program established in this bill will help the 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.
A REC program will allow the environmental attributes of
renewable energy to be unbundled from the energy itself and
allow the energy and the attributes to be traded as separate
commodities. A REC program would allow SDG&E to 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 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. Alternatively, a small retail seller, such as an
ESP, who may not be able to sign the long-term contracts
necessary to develop new renewable resources, can buy RECs
instead.
Since this bill contains explicit provisions against double
counting of RECs, the same amount of new renewable power would
need to be built to meet RPS as would be needed without a REC
program. However, the REC program will allow the retail
providers to more efficiently meet their renewable obligations.
Similar trading programs are already in place in Texas and
Massachusetts. Additionally, programs have been in place for
some time that allow for the trading of the environmental
benefits of reduced SO2 and NOx emissions.
For further discussion or RECs see the Utilities and Commerce
Committee analysis on this bill.
AB 1362
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Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083
FN:
0010852