BILL ANALYSIS
SB 107
Page 1
Date of Hearing: August 30, 2006
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
SB 107 (Simitian) - As Amended: August 29, 2005
Policy Committee: UtilitiesVote:7-3
Natural Resources 6-3
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 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% 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
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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 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 or 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% 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
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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.
FISCAL EFFECT
1)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].
2)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]
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
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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 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)Amendments . The August 29 amendments are reflected in Summary
points 3, 10, 11, and 12 above. Additional amendments were
technical and clarifying.
4)Opposition . The Clean Power Campaign is opposed to provisions
providing the IOUs with additional flexibility, and the
opportunity to delay, by up to three years, the accelerated
RPS standard.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081