BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 107|
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UNFINISHED BUSINESS
Bill No: SB 107
Author: Simitian (D) & Perata (D), et al
Amended: 8/29/06
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 make further changes to the RPS program
and add provisions relating to the Public Interest Energy
Research, Demonstration and Development Program.
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.
Specifically, this bill:
1.Requires all retail sellers of electricity except local
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publicly owned electric utilities (munis) to procure at
least 20 percent of their sold electricity from eligible
renewable resources by 2010 instead of 2017.
2.Requires the PUC's flexible rules for compliance with
the RPS to:
A. Apply to all years before and after a retail
seller procures at least 20 percent of total retail
sales of electricity from eligible renewable
resources.
B. Address situations where, as a result of
insufficient transmission, a retail seller is unable
to procure eligible renewable energy resources
sufficient to satisfy their RPS obligations. In this
regard, the PUC is required to make a finding that
the retail seller made all reasonable efforts to
ensure sufficient transmission, including, for an
investor-owned utility (IOU), constructing
transmission facilities.
3.Declares that the PUC's flexible rules for compliance
with the RPS do not revise existing statutory
requirements that the PUC's approval of an IOU's
procurement plan eliminate the need for after-the-fact
reasonableness review of an IOU's actions in compliance
with the procurement plan.
4.Changes the definition of "eligible renewable resource"
to allow renewable power that is produced outside of
California from a facility that commences operation
after January 1, 2005, 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.
5.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.
6.Defines Renewable Energy Credit (REC) to mean a
certificate that one unit of electricity was generated
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by an eligible renewable energy resource and includes
all renewable and environmental attributes associated
with the production of electricity, except for emission
reduction credits.
7.Requires the CEC to develop a system to certify, track
and verify RECs produced by renewable energy resources.
8.Allows the PUC to authorize the use of RECs to meet the
RPS requirements.
9.Allows the PUC to authorize a procurement entity to
enter into contracts for renewable energy on behalf of a
retail seller.
10.Requires the PUC, by June 30, 2007 and in consultation
with the CEC, to report on the impact of allowing
Supplemental Energy Payments (SEPs) to be applied to
renewable energy procurement contracts of less than 10
years.
11.Limits SEPs paid to facilities outside California to 10
percent of funds available.
12.Makes numerous other clarification and changes regarding
SEPs, RECs, and compliance with the RPS standard.
13.Incorporates technical and clarifying changes to the
provisions of SB 1250 (Perata), which authorizes the
continued expenditure of monies collected pursuant to
current law for the Public Interest Energy Research
(PIER) program and the Renewable Research Development
and Demonstration (Renewable RD&D) program and provides
policy directions for these programs.
14.Requires the PUC, by January 1, 2008, to report on the
feasibility of performance-based incentives for solar
energy systems of less than 30 kilowatts.
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
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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
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
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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
SEPs 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, SEPs 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The PUC indicates an ongoing need for six positions at a
cost of $660,000 for increased compliance workload related
to the accelerated RPS, the procurement entity, the SEPs,
and to implement the REC program [Public Utilities
Reimbursement Account].
The CEC believes it will incur additional one-time costs of
around $250,000 to modify its planned system for tracking
and verifying RECs to verify the delivery of electricity
and ongoing costs of around $150,000 to ensure that
out-of-state suppliers of renewable energy qualifying
toward the RPS comply with California environmental quality
standards. [Energy Resources Programs Account]
SUPPORT : (Verified 5/26/05) (Unable to reverify)
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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 8/30/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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