BILL ANALYSIS
SB 107
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Date of Hearing: August 25, 2005
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
SB 107 (Simitian) - As Amended: July 13, 2005
Policy Committee: UtilitiesVote:7-3
Natural Resources 7-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill accelerates the state's 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. Specifically, this bill:
1)Requires all retail sellers of electricity except local
publicly owned electric utilities (munis) to procure at least
20% of their sold electricity from eligible renewable
resources by 2010 instead of 2017.
2)Requires each municipal utility to annually prepare a report
to the California Energy Commission (CEC) on the mix of
eligible renewable resources used in their portfolio and on
progress toward meeting their RPS.
3)Defines Renewable Energy Credit (REC) to mean a certificate
that one unit of electricity was generated by an eligible
renewable energy resource and includes all renewable and
environmental attributes associated with the production of
electricity, except for emission reduction credits.
4)Requires the CEC to develop a system to certify, track and
verify RECs produced by renewable energy resources.
5)Provides that RECs unbundled from the electricity cannot be
used to satisfy the RPS requirements.
FISCAL EFFECT
1)The PUC indicates an ongoing need for four positions at a cost
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of $380,000 for increased compliance workload related to the
accelerated RPS and to implement the REC program. [Public
Utilities Reimbursement Account]
2)Absorbable costs to the CEC, which along with other Western
states, is already establishing a tracking system for
renewable energy sales.
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COMMENTS
1)Background . SB 1078 (Sher), Statutes of 2002, created
California's RPS, under which the IOUs are required to
increase their renewable procurement by at least 1% each year
such that 20% of their sales are from renewable energy sources
by December 31, 2017. Once a 20% threshold is achieved, no
further increase is required. The 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 the IOUs, but instead must implement and
enforce their own RPS program that recognizes the intent of
the Legislature to encourage renewable resources.
The RPS also allows new renewable energy providers to apply to
the CEC for Supplement Energy Payments (SEPs) to cover the
difference between the prices they bid in a competitive
solicitation and a market price established by the PUC. The
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. (The PGC
is a separate electricity rate component that funds energy
efficiency, renewable energy research, and related programs.)
If no PGC funds are available, the retail energy providers are
not required to purchase additional renewable power.
2)Accelerated RPS Compliance : The "Energy Action Plan"(EAP)
adopted by the PUC, the CEC and the Power Authority (PA)
pledges that the agencies will accelerate RPS implementation
(consistent with this bill) 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. Pacific Gas & Electric's (PG&E) current 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.
3)Related Legislation . AB 1362 (Levine), which contained many
provisions similar to this bill and passed off this
committee's Suspense file in May, has since been amended
simply to accelerate the RPS standard.
4)Prior Legislation . In 2004, SB 1478 (Sher) accelerated the RPS
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target to 20% by 2010, but also contained provisions allowing
RECs to be eligible for RPS compliance.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081