BILL NUMBER: SB 523	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Pavley
   (Coauthor: Assembly Member Brownley)

                        FEBRUARY 27, 2009

   An act to add Sections 387.2 and 399.21 to the Public Utilities
Code, relating to energy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 523, as introduced, Pavley. Renewable energy resources: feed-in
tariff.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations. The Public Utilities Act imposes various duties and
responsibilities on the commission with respect to the purchase of
electricity by electrical corporations and requires the commission to
review and adopt a procurement plan and a renewable energy
procurement plan for each electrical corporation pursuant to the
California Renewables Portfolio Standard Program. The program
requires that a retail seller of electricity, including electrical
corporations, purchase a specified minimum percentage of electricity
generated by eligible renewable energy resources, as defined, in any
given year as a specified percentage of total kilowatthours sold to
retail end-use customers each calendar year (renewables portfolio
standard).
   Existing law requires every electrical corporation to file with
the commission a standard tariff for electricity generated by an
electric generation facility, as defined, that is owned and operated
by a retail customer of the electrical corporation. Existing law
requires that the electric generation facility: (1) have an effective
capacity of not more than 1.5 megawatts and be located on property
owned or under the control of the customer, (2) be interconnected and
operate in parallel with the electric transmission and distribution
grid, (3) be strategically located and interconnected to the electric
transmission system in a manner that optimizes the deliverability of
electricity generated at the facility to load centers, and (4) meet
the definition of an eligible renewable energy resource under the
California Renewables Portfolio Standard Program. Existing law
requires that the tariff provide for payment for every kilowatthour
of electricity generated by an electric generation facility at a
market price referent established by the commission pursuant to the
program. Existing law requires the electrical corporation to make
this tariff available to customers that own and operate an electric
generation facility within the service territory of the electrical
corporation, upon request, on a first-come-first-served basis, until
the combined statewide cumulative rated generating capacity of those
electric generation facilities equals 500 megawatts, or the
electrical corporation meets its proportionate share of the 500
megawatt limit based upon the ratio of its peak demand to total
statewide peak demand of all electrical corporations. Existing law
authorizes the commission to modify or adjust the above-described
requirements for any electrical corporation with less than 100,000
service connections, as individual circumstances merit. Existing law
provides that the electricity generated by an electric generation
facility counts toward the electrical corporation's renewables
portfolio standard and provides that the physical generating capacity
counts toward meeting the electrical corporation's resource adequacy
requirements.
   This bill would require every electrical corporation with more
than 100,000 service connections to develop and, upon approval by the
commission, implement a standard-offer contract and feed-in tariff,
as defined, that requires the electrical corporation to purchase
every kilowatthour of electricity delivered to the grid that is
generated by a tariff-eligible generation facility. The bill would
require the commission to approve the standard-offer contract and
feed-in tariff at a rate and upon those terms that the commission
determines are reasonable on a market segment, as specified, and
technology specific basis in consideration of certain criteria. Each
electrical corporation would be required to obtain commission
approval of a standard-offer contract and feed-in tariff by June 1,
2010, and to implement the standard-offer contract and feed-in tariff
by July 1, 2010. The bill would authorize an electrical corporation
to offer optional alternative standard-offer contracts and feed-in
tariffs of differing duration upon approval by the commission. The
bill would require an electrical corporation to make the
standard-offer contract or feed-in tariff available to the owner or
operator of a tariff-eligible generation facility on a
first-come-first-served basis until the time that 2% of total retail
sales of electricity by the electrical corporation is generated by
tariff-eligible generation facilities. The bill would require that
after June 30, 2014, the commission review the effectiveness of the
implementation of standard-offer contracts and feed-in tariffs in
advancing specified purposes and would authorize the commission to
revise the program as it sees fit for additional tariff-eligible
generation facilities. The bill would authorize the commission to
modify the above-described requirements for an electrical corporation
with less than 100,000 service connections in the state based upon
the individual circumstances of that electrical corporation. The bill
would provide that every kilowatthour of electricity generated by a
tariff-eligible generation facility receiving service pursuant to the
standard-offer contract or feed-in tariff count toward meeting the
electrical corporation's requirements pursuant to the renewable
portfolio standard and the California Global Warming Solutions Act of
2006.
   Under existing law, a violation of the Public Utilities Act or an
order or direction of the commission is a crime. Because this bill
would require an order or other action of the commission to implement
its provisions and a violation of that order or action would be a
crime, the bill would impose a state-mandated local program by
creating a new crime.
   (2) Under existing law the governing board of a local publicly
owned electric utility is responsible for implementing and enforcing
a renewables portfolio standard for the utility that recognizes the
intent of the Legislature to encourage renewable resources, while
taking into consideration the effect of the standard on rates,
reliability, and financial resources and the goal of environmental
improvement.
   This bill would require the governing board of a local publicly
owned electric utility with more than 100,000 service connections to
develop and implement a feed-in tariff that provides for payment for
every kilowatthour of electricity generated by a tariff-eligible
generation facility that is delivered to the grid. The bill requires
that the tariff price to be paid by the utility be approved by the
governing board and be of a duration of not less than 20 years. The
bill would authorize the utility to offer optional alternative
feed-in tariffs of differing duration and to make the terms of a
feed-in tariff available to owners or operators of a tariff-eligible
generation facility in the form of a non-negotiable standard-offer
contract for a term of 20 years, and any other contract durations
determined to be necessary and reasonable by the utility's governing
board. The bill would provide that every kilowatthour of electricity
generated by a tariff-eligible generation facility receiving service
pursuant to the feed-in tariff or contract count toward meeting the
utility's renewable portfolio standard and the California Global
Warming Solutions Act of 2006. Because the bill would require actions
to be undertaken by local publicly owned electric utilities which
are entities of local government, the bill would impose a
state-mandated local program.
   (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for specified reasons.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  This act shall be known and may be cited as the
Renewable Energy and Economic Stimulus Act of 2009.
  SEC. 2.  Section 387.2 is added to the Public Utilities Code, to
read:
   387.2.  (a) For purposes of this section, the following terms have
the following meanings:
   (1) "Feed-in tariff" means a schedule detailing the rates, rules,
and terms of service that is approved by the governing board of a
local publicly owned electric utility that governs the purchase of
electricity delivered to the grid that is generated by a
tariff-eligible generation facility.
   (2) "Tariff-eligible generation facility" means a facility for the
generation of electricity that meets all of the following criteria:
   (A) Has a nameplate capacity of 20 megawatts or less.
   (B) Is an eligible renewable energy resource, as defined in
Section 399.12.
   (C) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
   (D) Is located within the service territory of the local publicly
owned electric utility.
   (b) It is the policy of this state and the intent of the
Legislature to encourage energy production from renewable resources
in an amount commensurate with electricity demand. Utilization of
feed-in tariffs for electricity generated by eligible renewable
energy resources can help the state achieve its renewable energy and
climate change mitigation goals. It is the further intent of the
Legislature that local publicly owned electric utilities retain
flexibility and wide discretion in developing their feed-in tariff.
   (c) (1) The governing board of each local publicly owned electric
utility with more than 100,000 service connections shall develop and
implement a feed-in tariff that provides for payment for every
kilowatthour of electricity generated and delivered to the grid by a
tariff-eligible generation facility. The tariff price to be paid by
the utility shall be approved by the governing board and shall be for
a duration of not less than 20 years.
   (2) This subdivision does not prohibit a local publicly owned
utility from offering optional alternative feed-in tariffs of
differing duration that authorize an owner or operator of a
tariff-eligible generation facility to elect to receive service
pursuant to the optional alternative tariff.
   (3) The local publicly owned electric utility may make the terms
of the feed-in tariff available to owners or operators of a
tariff-eligible generation facility in the form of a non-negotiable
standard-offer contract for a term of 20 years, and any other
contract durations determined to be necessary and reasonable by the
governing board.
   (4) This subdivision does not limit the authority of a local
publicly owned electric utility to enter into bilateral contracts for
the purchase of electricity to meet its renewables portfolio
standard procurement requirements or for resource adequacy purposes.
   (d) Every kilowatthour of electricity generated by a
tariff-eligible generation facility receiving service pursuant to
paragraph (1), (2), or (3) of subdivision (c) shall count toward
meeting the local publicly owned utility's renewables portfolio
standard procurement requirements adopted pursuant to Section 387.
   (e) Every kilowatthour of electricity generated by a
tariff-eligible generation facility receiving service pursuant to
paragraph (1), (2), or (3) of subdivision (c) shall count toward any
renewable energy procurement requirement imposed pursuant to the
California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code).
  SEC. 3.  Section 399.21 is added to the Public Utilities Code, to
read:
   399.21.  (a) For purposes of this section, the following terms
have the following meanings:
   (1) "Feed-in tariff" means a schedule detailing the rates, rules,
and terms of service that is filed by an electrical corporation and
approved by the commission that governs the electrical corporation's
purchase of electricity delivered to the grid that is generated by a
tariff-eligible generation facility.
   (2) "Tariff-eligible generation facility" means a facility for the
generation of electricity that meets all of the following criteria:
   (A) Has a nameplate capacity of 20 megawatts or less.
   (B) Is an eligible renewable energy resource.
   (C) Is interconnected and operates in parallel with the electric
transmission and distribution grid.
   (D) Is located within the service territory of the electrical
corporation.
   (b) The commission shall implement the requirements of this
section for each electrical corporation with more than 100,000
service connections in the state. The commission may modify the
requirements of this section for an electrical corporation with less
than 100,000 service connections in the state based upon the
individual circumstances of that electrical corporation.
   (c) (1) It is the policy of this state and the intent of the
Legislature to encourage energy production from renewable resources
in an amount commensurate with electricity demand.
   (2) Utilization of feed-in tariffs can help electrical
corporations achieve their renewables portfolio standard procurement
requirements and assist the state to achieve all of the following:
   (A) The deployment of eligible renewable energy resources in a
timely manner in order to eliminate, to the greatest extent possible,
the need for additional powerplants using fossil fuels, and to avoid
building unnecessary additional transmission lines where distributed
resources can substitute for central-station eligible renewable
energy resources.
   (B) The growth of green-collar jobs in California by developing
industries that build and deploy eligible renewable energy resources.

   (C) The expansion of market opportunities for renewable energy
technologies.
   (D) The reduction of transaction costs that substantially limit
participation of small renewable distributed generation in renewables
portfolio standard solicitations.
   (E) The financing of renewable energy projects by ensuring a
predictable and stable revenue stream for project developers.
   (F) The creation of a robust renewable energy resource base in
California that will allow electrification of transportation with
electric vehicles and plug-in hybrid electric vehicles.
   (d) (1) An electrical corporation shall develop and, upon approval
by the commission, implement a standard-offer contract and a feed-in
tariff that requires payment for every kilowatthour of electricity
generated and delivered to the grid by a tariff-eligible generation
facility. The contract and tariff price to be paid by the electrical
corporation shall be for a duration of not less than 20 years. The
standard-offer contract and feed-in tariff shall be reviewed and, if
needed, updated on a biennial basis. The updated standard-offer
contract and feed-in tariff would be applicable to a tariff-eligible
generation facility that interconnects to the grid or commences
initial operation subsequent to the operative date of the update.
   (2) The commission shall approve the standard-offer contract and
feed-in tariff at a rate and upon those terms that the commission
determines are reasonable.
   (3) The reasonableness of prices paid for electricity pursuant to
the feed-in tariff shall be determined for the following market
segments:
   (A) One to 3 megawatts.
   (B) Three to 20 megawatts.
   (4) A feed-in tariff price shall be developed and implemented for
each market segment for each of the following technologies:
   (A) Thin-film solar photovoltaic.
   (B) Solar photovoltaic technologies other than thin-film.
   (C) Solar thermal electric.
   (D) Wind.
   (E) Biogas, digester gas, and landfill gas.
   (F) Biomass and municipal solid waste conversion.
   (G) Geothermal.
   (H) Small hydroelectric.
   (I) Any additional technology that the commission determines is an
eligible renewable energy resource and that holds promise to
contribute toward meeting the state's renewable energy goals. The
maximum feed-in tariff price paid by an electrical corporation
pursuant to this subparagraph is thirty cents ($0.30) per
kilowatthour.
   (5) The commission shall, in approving the standard-offer contract
and feed-in tariff, and any update, consider the following criteria
in determining the standard-offer contract and feed-in tariff price
for each technology:
   (A) The cost of production of each technology, to be determined by
the Energy Commission, based on typical technology costs for each
market segment and each technology and on typical renewable energy
resources available in the state.
   (B) A reasonable profit for developers of tariff-eligible
generation facilities, commensurate to those authorized by the
commission for a reasonable rate of return for the electrical
corporations.
   (C) A market transformation premium, designed to provide a
short-term additional price component for accelerated investments in
renewable energy technologies, in the amount of a 10 percent payment
above the amount provided by the two prior criteria, declining to 7.5
percent in the second year, 5 percent in the third year, and 2.5
percent in the fourth year. No market transformation premium shall be
paid beginning with the beginning of the fifth year.
   (D) The availability of federal and state tax credits.
   (6) An electrical corporation shall obtain commission approval of
a standard-offer contract and feed-in tariff by June 1, 2010, and the
standard-offer contract and feed-in tariff shall be implemented by
July 1, 2010.
   (7) The commission shall review for reasonableness the price paid
by the electrical corporation pursuant to the standard-offer contract
and feed-in tariff on at least a biennial basis.
   (8) Expenses incurred by an electrical corporation for purchases
of electricity under a commission approved standard-offer contract or
feed-in tariff shall be fully recoverable by the electrical
corporation in rates.
   (9) This subdivision does not prohibit an electrical corporation,
upon approval by the commission, from offering optional alternative
standard-offer contracts and feed-in tariffs of differing duration
that authorize an owner or operator of a tariff-eligible generation
facility to elect to receive service pursuant to the optional
alternative tariff.
   (10) This subdivision does not limit the authority of an
electrical corporation to enter into bilateral contracts for the
purchase of electricity to meet its renewables portfolio standard
procurement requirements pursuant to this chapter or its resource
adequacy requirements pursuant to Section 454.5.
   (e) (1) Each electrical corporation shall make the standard-offer
contract and feed-in tariff available to the owner or operator of a
tariff-eligible generation facility upon request, on a
first-come-first-served basis until the time that 2 percent of total
retail sales of electricity by the electrical corporation is
generated by tariff-eligible generation facilities.
   (2) After June 30, 2014, the commission shall review the
effectiveness of the implementation of this section in furthering the
goals of subdivision (c). The commission may, upon completion of
this review, revise the program as it sees fit for additional
tariff-eligible generation facilities. The commission shall consider,
in its review, the net cost to ratepayers of the program, the
reliability of the electrical grid as a consequence of
tariff-eligible generation facilities interconnections, and any
related system upgrades, and progress to achieving the goals of this
article.
   (f) (1) The commission shall, in consultation with the Energy
Commission, electrical corporations, and the distributed generation
industry, develop and implement rules for tariff-eligible generation
facilities for interconnection to the distribution grid of the
electrical corporation.
   (2) It is the intent of the Legislature that the commission
continue to apply Rule 21, as revised in Decisions 00-12-037 and
01-07-027, to interconnections by tariff-eligible generation
facilities to electrical corporation distribution systems, without
codifying that rule, in order that the commission retain flexibility
over interconnections resulting from changing circumstances and
technological advancements.
   (3) This subdivision does not limit the ability of a
tariff-eligible generation facility to interconnect to the
transmission grid pursuant to the Small Generator Interconnection
Protocol of the Independent System Operator and approved by the
Federal Energy Regulatory Commission.
   (g) Every kilowatthour of electricity generated by a
tariff-eligible generation facility receiving service pursuant to
subdivision (c) or (d) shall count toward the electrical corporation'
s renewables portfolio standard annual procurement targets for
purposes of paragraph (1) of subdivision (b) of Section 399.15.
   (h)  Every kilowatthour of electricity generated by a
tariff-eligible generation facility receiving service pursuant to
subdivision (c) or (d) shall count toward any renewable energy
procurement requirement imposed pursuant to the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code).
   (i) The physical generating capacity of a tariff-eligible
generation facility shall count toward the electrical corporation's
resource adequacy requirement for purposes of Section 380, as
determined by relevant renewable energy capacity credits developed by
the commission and the California Independent System Operator.
   (j) A customer or host facility may have separate tariff-eligible
generation facilities that participate in the California Solar
Initiative, net energy metering pursuant to Section 2827, or as
tariff-eligible generation facilities, on the condition that each
facility is separately metered. A tariff-eligible generation facility
shall have a dedicated meter, shall not be eligible for net energy
metering, and shall not be eligible for incentives pursuant to the
California Solar Initiative or self-generation incentive program
administered pursuant to Section 379.6.
   (k) Performance assurances shall not be required for a
tariff-eligible generation facility.
   (l) The implementation of the requirements of this section shall
not constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
certain costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
   With respect to certain other costs, no reimbursement is required
by this act pursuant to Section 6 of Article XIII B of the California
Constitution because a local agency or school district has the
authority to levy service charges, fees, or assessments sufficient to
pay for the program or level of service mandated by this act, within
the meaning of Section 17556 of the Government Code.