BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 107|
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UNFINISHED BUSINESS
Bill No: SB 107
Author: Simitian (D)
Amended: 8/30/05
Vote: 21
SEN. ENERGY, UTIL. & COMMUNICATIONS COMM. : 7-3, 4/26/05
AYES: Escutia, Alarcon, Bowen, Dunn, Kehoe, Murray,
Simitian
NOES: Morrow, Battin, Cox
NO VOTE RECORDED: Campbell
SENATE APPROPRIATIONS COMMITTEE : 8-5, 5/26/05
AYES: Migden, Alarcon, Alquist, Escutia, Florez, Murray,
Ortiz, Romero
NOES: Aanestad, Ashburn, Battin, Dutton, Poochigian
SENATE FLOOR : 25-14, 5/31/05
AYES: Alarcon, Alquist, Ashburn, Bowen, Cedillo, Chesbro,
Ducheny, Dunn, Escutia, Figueroa, Florez, Kehoe, Kuehl,
Lowenthal, Migden, Murray, Ortiz, Perata, Romero, Scott,
Simitian, Soto, Speier, Torlakson, Vincent
NOES: Aanestad, Ackerman, Battin, Campbell, Cox, Denham,
Dutton, Hollingsworth, Maldonado, Margett, McClintock,
Morrow, Poochigian, Runner
NO VOTE RECORDED: Machado
ASSEMBLY FLOOR : Not available
SUBJECT : Renewable energy
SOURCE : Author
CONTINUED
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DIGEST : This bill accelerates the Renewables Portfolio
Standard (RPS) requirement from 2017 to 2010. The RPS is a
program that requires investor-owned utilities to, among
other things, achieve a 20 percent renewable electricity
portfolio. The bill also makes other several other
changes.
Assembly Amendments (1) require the Public Utilities
Commission (PUC) to exempt utilities from their renewable
energy obligations if the PUC determines that existing
transmission is insufficient to ensure deliverability to
the renewable energy, (2) make numerous technical,
clarifying changes, and (3) add co-authors.
ANALYSIS :
Existing law:
1. Requires retail sellers of electricity, except local
publicly owned electric utilities (munis), to increase
their existing level of renewable resources by one
percent of sales per year such that 20 percent of their
retail sales are procured from eligible renewable
resources by 2017.
2. Exempts munis from the statutory requirements of RPS and
instead requires munis to implement and enforce their
own RPS program that recognizes the intent of the
Legislature to encourage renewable resources.
3. Allows the California Energy Commission (CEC) to award
SEPs to generators of eligible renewable resources to
cover above market costs of renewable energy, but
Supplemental Energy Payments (SEPs) may not be paid to
one project for more than 10 years.
This bill accelerates RPS to require retail sellers of
electricity to procure at least 20 percent of their retail
sales from renewable power by 2010 instead of 2017.
Clarifies existing rules to allow renewable power to count
toward a retail seller's RPS even if the associated
electricity is not delivered to the retail seller.
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Specifically, this bill:
1. Requires that all retail sellers of electricity,
excluding munis, to procure at least 20 percent of the
total electricity sold from eligible renewable resources
by 2010.
2. Changes the definition of eligible renewable resource to
allow renewable power that is produced outside of
California to count toward a retail seller's RPS if the
associated electricity is delivered to an in-state
location, and it complies with California environmental
quality standards.
3. Allows renewable energy projects to receive SEPs for the
above market cost of the renewable electricity for the
value of the life of the contract instead of just for
the first 10 years of the contract.
4. Requires munis to annually prepare a report to the CEC
on the mix of eligible renewable resources used in their
portfolio and on their progress toward meeting the
munis' RPS.
5. Provides that Renewable Energy Credits (RECs) that are
unbundled from the electricity cannot be used to satisfy
the RPS requirements.
6. Requires CEC to develop a system to certify, track and
verify RECs produced by renewable energy resources.
7. Specifies that a renewable energy project selected by an
Energy Service Provider (ESP) may only receive SEPs only
if ESP selects the project through a "least-costs
best-fit process" and the SEPs are reasonable in
comparison to other projects.
8. Provides renewable power generated under terms of
contracts awarded to Qualifying Facilities under the
Public Utility Regulatory Policies Act of 1978, shall
count toward a retail seller's RPS obligations.
9. Provides that the Public Utilities Commission (PUC)
shall allow an electrical corporation to reduce its RPS
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obligation if the PUC determines that there is
insufficient transmission to ensure deliverability of
the renewable energy.
10.Requires all long-term procurement plans entered into by
an electrical corporation or a muni to adopt a strategy
to achieve efficiency in the use of fossil fuel and to
address carbon emissions.
Comments
The purpose of this bill is to accelerate the state's
existing RPS requirements so that 20 percent of retail
sales of electricity in California come from renewable
resources by the year 2010 and to address issues that may
make compliance with the RPS difficult.
In 2002, the Legislature approved SB 1078 (Sher), Chapter
516, Statutes of 2002, which creates California's RPS.
Under RPS, all retail sellers of electricity are required
to increase their renewable procurement each year by at
least one percent of total sales, so that 20 percent of
their sales are from renewable energy sources by December
31, 2017. Once a 20 percent portfolio is achieved, no
further increase is required. Munis are not required to
meet the same RPS, 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 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 the PUC. RPS requires investor owned
utilities (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 pledges that the agencies will accelerate RPS
implementation to meet the 20 percent goal by 2010, instead
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of 2017. The Governor has also endorsed "20% by 2010" and
proposed an additional goal of 33 percent by 2020. PUC
believes this accelerated goal can be mandated without
additional legislation. Currently, two of the three major
IOUs appear to be able to meet the 20 percent by 2010 goal.
Pacific Gas & Electric's current baseline of renewable
power is at 13 percent, while Southern California Edison
already has 18 percent of eligible renewable power in its
portfolio. San Diego Gas & Electric (SDG&E) currently only
receives 5.5 percent of its electricity from renewable
resources.
Complying with the new standard: Currently, provisions in
the RPS statute may prevent some retail sellers from
meeting any mandate to procure 20 percent of their
electricity from renewable resources by 2010. Transmission
constraints will limit SDG&E's ability to buy new renewable
electricity and have that electricity delivered to its
service territory. The current RPS statute requires that
ESPs procure their renewable resources through contracts
that are at least 10 years in length, but because of the
long-term uncertainty of direct access markets in
California, ESPs may not be able to sign enforceable
contracts of that length.
This bill attempts to address the problems with
transmission constraints by clarifying that electricity
from eligible renewable resources does not have to be
delivered to the service territory of the retail seller and
instead only requires that the electricity be provided to
the retail seller at a location within California. This
provision maintains the RPS's objective of reducing
consumption of fossil fuels within California, but allows
for more flexibility in the delivery of electricity. If
the renewable electricity were actually provided to the
retail seller in another IOU's service territory, the
retail seller and the IOU will merely arrange to swap other
electricity. This type of swapping had been a common
practice in the past.
This bill also allows PUC to reduce an electric
corporation's RPS obligation if there is insufficient
transmission to ensure the delivery required under the RPS.
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This bill does not address the problems ESPs have in
signing long-term contracts.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
PUC indicates an ongoing need for four positions at a cost
of $380,000 for increased compliance workload related to
the accelerated RPS and to implement the REC program. CEC
indicated absorbable costs to CEC.
SUPPORT : (Verified 5/26/05) (Unable to reverify)
Clean Power Campaign
East Bay Municipal Utility District
Independent Energy Producers
Sierra Club California
The Utility Reform Network
Union of Concerned Scientists
OPPOSITION : (Verified 5/26/05) (Unable to reverify)
California Council for Environmental and Economic Balance
Calpine
Constellation New Energy
Pacific Gas and Electric Company
Sempra Energy
Southern California Edison
NC:cm 9/7/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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