BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   April 29, 2013

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                   AB 1014 (Williams) - As Amended:  April 24, 2013
           
          SUBJECT  :   Energy: electrical corporations: Renewable Energy  
          Self-Generation Program

           SUMMARY  :   This bill creates a new renewable energy program  
          substantially similar to a settlement agreement filed at the  
          California Public Utilities Commission (PUC).  Specifically,  
           this bill  :  

          a)Requires the PUC to authorize electrical corporations to  
            provide participating customers' with rate credits for avoided  
            generation costs and pay charges to fully cover the cost of  
            procuring Green Option resources to serve their needs.

          b)States intent to further the Governor's Clean Energy Jobs  
            Plan.

          c)States intent to preserve a thriving, sustainable agricultural  
            industry and to ensure that renewable energy development does  
            not remove prime farmland from productive use without a  
            comprehensive public review process.

          d)Exempts small electrical corporations.

          e)Repeals a bill credit mechanism authorized for the City of  
            Davis to receive a bill credit for generation from the  
            photovoltaic generating facility known as PVUSA.

           EXISTING LAW  

          1)Existing law authorizes the PUC to fix the rates and charges  
            for every public utility, and requires that those rates and  
            charges be just and reasonable. (Public Utilities Code 451)

          2)Existing law authorizes the City of Davis to assign a bill  
            credit to a benefit account, for electricity supplied to the  
            electrical grid by PVUSA, at the retail time-of-use rate for  
            that electricity. (Public Utilities Code 2826.5)

          3)Existing law authorizes a local government benefit account  








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            which, similar to the City of Davis provides a bill credit, at  
            the retail time-of-use rate for electricity supplies from a  
            renewable generating facility for local governments and  
            campuses.  (Public Utilities Code 2830)

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Author's Comment  . "California accounts for more than 70% of  
            solar photovoltaic installations for residential and  
            commercial electricity production in the United States.   
            Despite its substantial lead, California is missing an  
            opportunity to speed the deployment of renewable energy  
            technology to meet the electricity needs of its residents.   
            Programs like the California Solar Initiative (CSI), are  
            sunsetting soon and don't meet the needs of everyone who wants  
            renewables.  Specifically, CSI has primarily benefitted people  
            who both own their homes and businesses and are oriented  
            properly toward the sun.  However, the overwhelming majority  
            of California residents, businesses and other organizations  
            can't utilize solar power due to obstructed or shaded roofs,  
            renting their property, or other resource issues.  That leaves  
            a huge portion of solar opportunity on the table.  

            "The state's Renewable Portfolio Standard (RPS), which  
            requires investor-owned utilities (IOUs) to procure 33% of  
            their electricity from renewable sources by 2020, will  
            increase the proportion of IOU customers' overall power mix  
            being served by renewables.  However, without a Shared  
            Renewables program, customers without suitable roofs do not  
            have the option to invest in more clean energy than is  
            required by the RPS and to receive a corresponding credit on  
            their power bills. 

            "Off-site renewables arrangements allowing ratepayers to  
            purchase shares in renewable facilities and receive generation  
            credits on their utility bills can enable low-income  
            Californians and those who don't own their roofs or who aren't  
            oriented toward the sun to participate in the market for  
            renewable energy."

           1)The Governor's Goal.  The bill includes a finding that the  
            Governor has proposed the Clean Energy Jobs Plan calling for  
            development of 20,000 megawatts of generation from renewable  








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            energy by 2020.

            In 2009, then-candidate Jerry Brown included this as part of  
            his campaign goal, which he has also advocated for as  
            Governor, to:

            "Build 12,000 Megawatts of Localized Electricity Generation
                 California should develop 12,000 megawatts of localized  
               energy by 2020. Localized energy is onsite or small energy  
               systems located close to where energy is consumed that can  
               be constructed quickly (without new transmission lines) and  
               typically without any environmental impact.
                 Solar systems of up to 2 megawatts should be installed  
               on the roofs of warehouses, parking lot structures,  
               schools, and other commercial buildings throughout the  
               state.
                 Solar energy projects of up to 20 megawatts in size  
               should be built on public and private property throughout  
               the state. For example, we should create the California  
               Solar Highway by placing solar panels along the banks of  
               state highways.
                 The PUC or Legislature should implement a system of  
               carefully calibrated power payments (commonly called feed  
               in tariffs) for distributed generation projects up to 20  
               megawatts in size. Holding down overall rates must be part  
               of the design.
            "Build 8,000 Megawatts of Large Scale Renewables & Necessary  
            Transmission Lines
                 The Legislature should codify a requirement that 33% of  
               the state's electricity be derived from renewable sources.  
               This will create market certainty and drive investment in  
               renewable technologies."

            AB 2014 does not propose to address the large scale renewable  
            goal and proposes to address a subset of the 12,000 MW goal  
            (12,000 megawatts of localized energy and projects of up to 20  
            megawatts should be built on public and private property  
            throughout the state).

           1)Intent language clean up.  Several of the statements appearing  
            in the uncodified intent language express various policies or  
            make statements that have not yet been fully considered by the  
            Legislature. The author may wish to amend the bill to remove  
            those provisions to ensure that the Legislature is afforded an  
            opportunity to fully deliberate on those matters separately  








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            from the program proposed by this bill. Specifically:  


             2832.   (c) The Governor has proposed the Clean Energy Jobs  
            Plan calling for the development of  20,000   12,000  megawatts of  
             generation from renewable energy resources   localized  
            electricity generation  by 2020. There is widespread interest  
            from many large institutional customers, including schools,  
            colleges, universities, local governments, businesses, and the  
            military, for development of renewable generation facilities  
            to serve more than 33 percent of their energy needs.  For these  
            reasons, the Legislature agrees that the Governor's Clean  
            Energy Jobs Plan represents a desired policy direction for the  
            state. It is the intent of the Legislature that renewable  
            generation that comes online as part of the Green Tariff and  
            Shared Renewable Generation Program is counted toward an  
            electrical corporation's voluntary efforts to implement the  
            Governor's Clean Energy Jobs Plan.  

             (d) Properly designed, shared renewable energy programs can  
            provide access and long-term cost savings to underserved  
            communities, such as low- to moderate-income residents, and  
            residential and commercial renters, while not shifting costs  
            to nonbeneficiaries.
            (e) While municipal utilities already have the authority to  
            create their own shared renewable energy programs, only an act  
            of the Legislature can empower the vast majority of California  
            residents to be able to enjoy the significant benefits of  
            shared renewable energy systems while the state benefits from  
            avoided transmission and distribution upgrades, avoided line  
            loss, and cleaner air and water.
            (f)  (d) Public institutions will benefit from  the Green Tariff  
            and Shared Renewable Generation Program's   a green tariff  
            shared renewable program's  enhanced flexibility to participate  
            in shared renewable energy facilities.  Electricity usage is  
            one of the most significant cost pressures facing public  
            institutions at a time when they have been forced to cut  
            essential programs, increase classroom sizes, and lay off  
            teachers. Schools may use the long-term savings for restoring  
            funds for salaries, facility maintenance, and other budgetary  
            needs.  
             (g)  (e) Renewable generation creates jobs, reduces emissions  
            of greenhouse gases, and promotes energy independence.
            (h) (f) Many large energy users in California have pursued  
            onsite renewable energy generation, but cannot achieve their  








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            goals due to rooftop or land space limitations, or size limits  
            on net metering. The enactment of this chapter will create a  
            mechanism whereby institutional customers such as military  
            installations, universities, and local governments, as well as  
            commercial customers and groups of individuals, can  
            efficiently invest in generating electricity from renewable  
            generation.
             (i)  (g) It is the intent of the Legislature that  the Green  
            Tariff and Shared Renewable Generation Program's   a green  
            tariff shared renewable program  be implemented in such a  
            manner as to  create   facilitate  a large, sustainable market for  
            the purchase of an interest in offsite renewable generation,  
            while fairly compensating electrical corporations for the  
            services they provide,  without affecting non-participating  
            ratepayers  .
             (j)  (h) It is the further intent of the Legislature to  
            preserve a thriving, sustainable agricultural industry, and to  
            ensure that the development of renewable energy does not  
            remove prime farmland from productive use without a  
            comprehensive public review process.
           
          2)Clarifications needed.  In order to ensure that the bill will  
            meet the author's intent, the author may wish to consider  
            amending the bill to add clarifying provisions to give the  
            commission specific guidance on the design of a green tariff  
            shared renewable program, specific to the following subject  
            areas:

              a)   Clarify that this is a single program.  The Chapter is  
               titled Green Tariff  and  Shared Renewable Generation  
               Program. It is the intent to consider a single program. The  
               inclusion of the word "and" could create unnecessary  
               confusion. No other program will be created by this bill  
               but some stakeholders have expressed concern that this bill  
               could be an attempt to create an expansion of direct  
               access. This bill does not expand or create a direct access  
               program. Removing the word "and" would help to address  
               those concerns and verify that this bill has no connection  
               to direct access. In addition, to avoid referring to any  
               other program with a similar name, the language referring  
               to the program should be modified to use lower case  
               letters.  
             b)   Clarify distributed generation is the goal.  In order to  
               ensure that the program is implemented expeditiously and  
               enhances procurement of distributed generation, the author  








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               may wish to specify that existing mechanisms (such as  
               standard contracts) be used and that the utilities procure  
               additional renewable facilities no larger than 20 megawatts  
               so that it is more likely that the projects can be located  
               closer to load.  
             c)   Establish a 600 megawatt program and allocate megawatts  
               on an annual basis.  In order to ensure that the program has  
               a means to assess the outcomes, the author may wish to  
               allocate 600 megawatts to this program, divided  
               proportionally among the electrical corporation and  
               allocated in equal increments over a five year period.  
             d)   Incorporate Diverse Procurement and General Order 156.   
               In order to continue to increase diversity within the  
               various renewable energy programs authorized by the  
               commission, the author may wish to include a requirement  
               that this new program incorporate diverse procurement and  
               General Order 156 goals.  
             e)   Proximity.  In order to ensure that this program focuses  
               its efforts on local projects and projects, the author may  
               wish to specify that the utilities shall seek to procure  
               renewable energy projects that are close to the  
               participating customers' load.  
             f)   Limit subscriptions  . In order to ensure that megawatts  
               are available to a variety of participants, the author may  
               wish to limit any single participant to no more than 2  
               megawatts, except for public entities such as schools,  
               colleges, universities, local governments, and the  
               military. At the same time, the author may wish to ensure  
               that the entire allotment of megawatts cannot be taken by a  
               few large participants.  
             g)   Disadvantaged and minority community and customer  
               inclusion.  The author may wish to specify that the  
               utilities should actively market to low income customers  
               and minority communities and customers.  
             h)   Protect non-participants from green option costs.  The  
               author may wish to specify that participating customers are  
               to pay for the cost of participating in and administration  
               of this program. The author may also wish to include a  
               provision to allow electrical corporations may provide  
               support for enhanced community renewable programs to  
               facilitate development of additional renewable projects  
               closer to load.  
             i)   Participant Attrition.  To the extent that some  
               participants may elect to discontinue their participation,  
               the author may wish to specify that, in the event of  








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               participant attrition, the utility will apply any  
               additional resources procured for this program to the  
               utilities renewable portfolio standard obligation or banked  
               for future compliance purposes  .
             j)   Tracking and accounting.   The author may wish to ensure  
               that the accounting for this program is executed in  
               transparent manner to ensure that all costs and revenues  
               are properly accounted for.
              aa)  Disposition of Renewable Energy Certificates (REC). T  he  
               author may wish to specify that any REC associated with  
               this program are retired on behalf of the participant so  
               that it cannot be used to count toward a utility's  
               renewable portfolio standard compliance goal; specify the  
               disposition of the REC in the event of attrition, and  
               specify the treatment of the procurement for purposes of  
               RPS procurement.  
             bb)  Sunset this tariff in January 1, 2019 unless  
               reauthorized by the Legislature.

               The amendments to address these clarifications are as  
               follows.


                2833.  (a) On or before March 1, 2014, an electrical  
               corporation with at least 100,000 customers shall file with  
               the commission an advice letter requesting approval of a  
               Green Tariff and  Shared Renewable Generation Program that  
               it determines is consistent with the findings specified in  
               Section 2832. 

               (b) On or before July 1, 2014, the commission shall issue a  
               resolution on the electrical corporation's advice letter  
               for a  the Green Tariff and Shared Renewable Generation  
               Program's   green tariff shared renewable program  ,  
               determining whether to approve or disprove it, with or  
               without modifications.
               (c) After notice and an opportunity for public comment, the  
               commission shall approve an advice letter by an electrical  
               corporation for a Green Tariff  and  Shared Renewable  
               Generation Program if the commission determines that the  
               program is reasonable and consistent with the findings  
               specified in Section 2832.
               (d) This section does not apply to applications by  
               electrical corporations for a  Green Tariff and Shared  
               Renewable Generation Program   a green tariff shared  








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               renewable program's  that are filed at the commission prior  
               to May 1, 2013, and does not change the existing authority  
               of the commission to approve those applications in  
               accordance with its existing authority under the Public  
               Utilities Code.
                2834. In implementing this section, the commission shall  
               require that a green tariff shared renewable program's   to  
               be administered in accordance with this section.
               (a) Electrical corporations shall use existing  
               commission-approved tools and mechanisms to procure  
               additional renewable energy resources from incremental,  
               additional renewable generation facilities, primarily sized  
               20 MW and below.
               (b) The megawatts to be procured under this section are  
               limited to an allocation of 600 megawatts to this program,  
               divided proportionally among the electrical corporation and  
               allocated in equal increments over a five year period.
               (c) To the extent possible, electrical corporations shall  
               seek to procure renewable energy supplies that are located  
               within a reasonable proximity to enrolled participants.
               (d) Electrical corporations shall ensure that the program  
               complies with diverse procurement and General Order 156  
               Goals.
               (e) Electrical corporations shall not subscribe a  
               participant to more than two megawatts of generating  
               capacity or the equivalent amount. This limitation does not  
               apply to a federal, state, or local government, school,  
               school district, county office of education, the California  
               Community Colleges, the California State University, or the  
               University of California. Electrical corporation shall  
               ensure that no single entity or its affiliates or  
               subsidiaries is awarded more than 20 percent of any single  
               calendar year's total cumulative rated generating capacity  
               made available pursuant to this program.
               (f) To the extent possible the electrical corporation shall  
               actively market the program to low income and minority  
               communities and customers.
               (g) Participating customers are to receive bill credits for  
               the generation using the class average retail generation  
               rate as established in the electrical corporation's  
               approved tariff for the class to which the subscriber  
               belongs plus a renewable adjustment value representing the  
               difference between the time of day profile of the renewable  
               resource used to serve the subscriber and the class average  
               time of day profile and the resource adequacy value, if  








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               any, of the resource contained in this program.
               (h) Participating customers shall pay the administrative  
               costs of the electrical corporation and pay charges to  
               fully cover the cost of procuring a green tariff shared  
               renewable program's   resources to serve their needs,  
               consistent with other existing similar voluntary, optional  
               rate schedules. Electrical corporations may provide support  
               for enhanced community renewable programs to facilitate  
               development of additional renewable projects closer to  
               load.
               (i) The commission shall ensure that the charges and  
               credits associated with this program shall be structured to  
               ensure non-participant ratepayer indifference for the  
               remaining, bundled service, direct access and community  
               choice aggregation customers and no costs are shifted from  
               participating customers to nonparticipating ratepayers.
                (j) Electrical corporations shall track and account for  
               all revenues and costs to ensure that the electrical  
               corporation recovers the actual costs of the program and  
               that all costs and revenues are fully transparent and  
               auditable.
               (k) Electrical corporations shall, in the event of  
               participant attrition or related factors, apply the  
               additional resources procured through this program to the  
               electrical corporation's renewable portfolio standard  
               procurement obligations or banked for future use to benefit  
               all customers in accordance with renewable portfolio  
               standard banking and procurement rules.
                (l) Any renewable energy credits associated with an  
               interest shall be retired by either the provider or  
               electrical corporation, as they may agree, on behalf of the  
               participant or transferred to the Western Renewable Energy  
               Generation Information System account of that participant,  
               for the purpose of demonstrating the purchase of renewable  
               energy. Those renewable energy credits shall not be further  
               sold, transferred, or otherwise monetized by a party for  
               any purpose. Any renewable energy credits associated with  
               electricity paid for by the electrical corporation shall be  
               counted toward meeting that electrical corporation's  
               renewables portfolio standard. For purposes of this  
               subdivision, "renewable energy credit" and "renewables  
               portfolio standard" have the same meanings as defined in  
               Section 399.12.
                 (m) Electrical corporations shall, in the event of  
               participant attrition or related factors, apply the  








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               additional resources procured through this program to the  
               electrical corporation's renewable portfolio standard  
               procurement obligations or banked for future use to benefit  
               all customers in accordance with renewable portfolio  
               standard banking and procurement rules.  
                (n) In calculating its procurement requirements to meet the  
               requirements of the California Renewables Portfolio  
               Standard Program (Article 16 (commencing with Section  
               399.11) of Chapter 72.3 of Part 1), an electrical  
               corporation may exclude from total retail sales the  
               kilowatthours generated by a shared renewable energy  
               facility commencing with the point in time at which the  
               facility achieves commercial operation.
               (o) This section shall sunset on January 1, 2019 unless  
               reauthorized.
           
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Advanced Energy Economy (AEE)
          AEE Solar, Inc
          American Lung Association in California
          Asian Pacific Environmental Network (APEN)
          Clean Power Group
          CleanPath Ventures
          Coalition for Adequate School Housing (C.A.S.H.)
          Community Environmental Council
          Davis Joint Unified School District
          Department of Defense (if amended)
          Ecoplexus
          El Peco Energy, LLC
          Everybody Solar, Inc.
          League of Women Voters of California
          Mainstream Energy Corp.
          Octus Energy
          REC Solar, Inc.
          Recurrent Energy
          Solar Energy Industries Association (SEIA)
          Sonoma County Board of Supervisors
          Sullivan Solar Power
          The Vote Solar Initiative (Vote Solar)

           Opposition 
           








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          California Farm Bureau (unless amended)
          Coalition of California Utility Employees (CCUE)
          San Diego Gas & Electric Company (SDG&E)
          Southern California Edison (SCE)
          The Utility Reform Network (TURN) (unless amended)

           
          Analysis Prepared by  :    Susan Kateley / U. & C. / (916)  
          319-2083