California Legislature—2015–16 Regular Session

Assembly BillNo. 1832

Introduced by Assembly Member Dahle

February 9, 2016

An act to amend Section 399.13 of the Public Utilities Code, relating to energy.


AB 1832, as introduced, Dahle. California Renewables Portfolio Standard Program

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Public Utilities Act requires the commission to review and accept, modify, or reject a procurement plan for each electrical corporation based on whether it includes specified elements or incentive mechanisms, and whether it accomplishes certain objectives. The California Renewables Portfolio Standard Program, within the act, requires retail sellers, defined as including electrical corporations, and local publicly owned electric utilities to purchase specified minimum quantities of electricity products from eligible renewable energy resources, as defined, for specified compliance periods. The program requires the commission to direct each electrical corporation to annually prepare a renewable energy procurement plan to satisfy its procurement requirements pursuant to the program. To the extent feasible, the renewable energy procurement plan is to be proposed, reviewed, and adopted as part of, and pursuant to, the general procurement plan process.

This bill would make a nonsubstantive revision to the provision that requires, to the extent feasible, that the renewable energy procurement plan be proposed, reviewed, and adopted as part of, and pursuant to, the general procurement plan process.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1


Section 399.13 of the Public Utilities Code is
2amended to read:



(a) (1) The commission shall direct each electrical
4corporation to annually prepare a renewable energy procurement
5plan that includes the matter in paragraph (5), to satisfy its
6obligations under the renewables portfolio standard. To the extent
7feasible, this procurement plan shall be proposed, reviewed, and
8adopted by the commission as part of, and pursuant to,begin delete aend deletebegin insert theend insert general
9procurement planbegin delete process.end deletebegin insert process (Sections 454.5 to 454.55,
10inclusive).end insert
The commission shall require each electrical corporation
11to review and update its renewable energy procurement plan as it
12determines to be necessary. The commission shall require all other
13retail sellers to prepare and submit renewable energy procurement
14plans that address the requirements identified in paragraph (5).

15(2) Every electrical corporation that owns electrical transmission
16facilities shall annually prepare, as part of the Federal Energy
17Regulatory Commission Order 890 process, and submit to the
18commission, a report identifying any electrical transmission
19facility, upgrade, or enhancement that is reasonably necessary to
20achieve the renewables portfolio standard procurement
21requirements of this article. Each report shall look forward at least
22five years and, to ensure that adequate investments are made in a
23timely manner, shall include a preliminary schedule when an
24application for a certificate of public convenience and necessity
25will be made, pursuant to Chapter 5 (commencing with Section
261001), for any electrical transmission facility identified as being
27reasonably necessary to achieve the renewable energy resources
28procurement requirements of this article. Each electrical
29corporation that owns electrical transmission facilities shall ensure
30that project-specific interconnection studies are completed in a
31timely manner.

P3    1(3) The commission shall direct each retail seller to prepare and
2submit an annual compliance report that includes all of the

4(A) The current status and progress made during the prior year
5toward procurement of eligible renewable energy resources as a
6percentage of retail sales, including, if applicable, the status of any
7necessary siting and permitting approvals from federal, state, and
8local agencies for those eligible renewable energy resources
9procured by the retail seller, and the current status of compliance
10with the portfolio content requirements of subdivision (c) of
11Section 399.16, including procurement of eligible renewable energy
12resources located outside the state and within the WECC and
13unbundled renewable energy credits.

14(B) If the retail seller is an electrical corporation, the current
15status and progress made during the prior year toward construction
16of, and upgrades to, transmission and distribution facilities and
17other electrical system components it owns to interconnect eligible
18renewable energy resources and to supply the electricity generated
19by those resources to load, including the status of planning, siting,
20and permitting transmission facilities by federal, state, and local

22(C) Recommendations to remove impediments to making
23progress toward achieving the renewable energy resources
24procurement requirements established pursuant to this article.

25(4) The commission shall adopt, by rulemaking, all of the

27(A) A process that provides criteria for the rank ordering and
28selection of least-cost and best-fit eligible renewable energy
29resources to comply with the California Renewables Portfolio
30Standard Program obligations on a total cost and best-fit basis.
31This process shall take into account all of the following:

32(i) Estimates of indirect costs associated with needed
33transmission investments.

34(ii) The cost impact of procuring the eligible renewable energy
35resources on the electrical corporation’s electricity portfolio.

36(iii) The viability of the project to construct and reliably operate
37 the eligible renewable energy resource, including the developer’s
38experience, the feasibility of the technology used to generate
39electricity, and the risk that the facility will not be built, or that
P4    1construction will be delayed, with the result that electricity will
2not be supplied as required by the contract.

3(iv) Workforce recruitment, training, and retention efforts,
4including the employment growth associated with the construction
5and operation of eligible renewable energy resources and goals
6for recruitment and training of women, minorities, and disabled

8(v) (I) Estimates of electrical corporation expenses resulting
9from integrating and operating eligible renewable energy resources,
10including, but not limited to, any additional wholesale energy and
11capacity costs associated with integrating each eligible renewable

13(II) No later than December 31, 2015, the commission shall
14approve a methodology for determining the integration costs
15described in subclause (I).

16(vi) Consideration of any statewide greenhouse gas emissions
17limit established pursuant to the California Global Warming
18Solutions Act of 2006 (Division 25.5 (commencing with Section
1938500) of the Health and Safety Code).

20(vii) Consideration of capacity and system reliability of the
21eligible renewable energy resource to ensure grid reliability.

22(B) Rules permitting retail sellers to accumulate, beginning
23January 1, 2011, excess procurement in one compliance period to
24be applied to any subsequent compliance period. The rules shall
25apply equally to all retail sellers. In determining the quantity of
26excess procurement for the applicable compliance period, the
27commission shall retain the rules adopted by the commission and
28in effect as of January 1, 2015, for the compliance period specified
29in subparagraphs (A) to (C), inclusive, of paragraph (1) of
30subdivision (b) of Section 399.15. For any subsequent compliance
31period, the rules shall allow the following:

32(i) For electricity products meeting the portfolio content
33requirements of paragraph (1) of subdivision (b) of Section 399.16,
34contracts of any duration may count as excess procurement.

35(ii) Electricity products meeting the portfolio content
36requirements of paragraph (2) or (3) of subdivision (b) of Section
37399.16 shall not be counted as excess procurement. Contracts of
38any duration for electricity products meeting the portfolio content
39requirements of paragraph (2) or (3) of subdivision (b) of Section
40399.16 that are credited towards a compliance period shall not be
P5    1deducted from a retail seller’s procurement for purposes of
2calculating excess procurement.

3(iii) If a retail seller notifies the commission that it will comply
4with the provisions of subdivision (b) for the compliance period
5beginning January 1, 2017, the provisions of clauses (i) and (ii)
6shall take effect for that retail seller for that compliance period.

7(C) Standard terms and conditions to be used by all electrical
8corporations in contracting for eligible renewable energy resources,
9including performance requirements for renewable generators. A
10contract for the purchase of electricity generated by an eligible
11renewable energy resource, at a minimum, shall include the
12renewable energy credits associated with all electricity generation
13specified under the contract. The standard terms and conditions
14shall include the requirement that, no later than six months after
15the commission’s approval of an electricity purchase agreement
16entered into pursuant to this article, the following information
17about the agreement shall be disclosed by the commission: party
18names, resource type, project location, and project capacity.

19(D) An appropriate minimum margin of procurement above the
20minimum procurement level necessary to comply with the
21renewables portfolio standard to mitigate the risk that renewable
22projects planned or under contract are delayed or canceled. This
23paragraph does not preclude an electrical corporation from
24voluntarily proposing a margin of procurement above the
25appropriate minimum margin established by the commission.

26(5) Consistent with the goal of increasing California’s reliance
27on eligible renewable energy resources, the renewable energy
28procurement plan shall include all of the following:

29(A) An assessment of annual or multiyear portfolio supplies
30and demand to determine the optimal mix of eligible renewable
31energy resources with deliverability characteristics that may include
32peaking, dispatchable, baseload, firm, and as-available capacity.

33(B) Potential compliance delays related to the conditions
34described in paragraph (5) of subdivision (b) of Section 399.15.

35(C) A bid solicitation setting forth the need for eligible
36renewable energy resources of each deliverability characteristic,
37required online dates, and locational preferences, if any.

38(D) A status update on the development schedule of all eligible
39renewable energy resources currently under contract.

P6    1(E) Consideration of mechanisms for price adjustments
2associated with the costs of key components for eligible renewable
3energy resource projects with online dates more than 24 months
4after the date of contract execution.

5(F) An assessment of the risk that an eligible renewable energy
6resource will not be built, or that construction will be delayed,
7with the result that electricity will not be delivered as required by
8the contract.

9(6) In soliciting and procuring eligible renewable energy
10resources, each electrical corporation shall offer contracts of no
11less than 10 years duration, unless the commission approves of a
12contract of shorter duration.

13(7) In soliciting and procuring eligible renewable energy
14resources for California-based projects, each electrical corporation
15shall give preference to renewable energy projects that provide
16 environmental and economic benefits to communities afflicted
17with poverty or high unemployment, or that suffer from high
18emission levels of toxic air contaminants, criteria air pollutants,
19and greenhouse gases.

20(8) In soliciting and procuring eligible renewable energy
21resources, each retail seller shall consider the best-fit attributes of
22resource types that ensure a balanced resource mix to maintain the
23reliability of the electrical grid.

24(b) A retail seller may enter into a combination of long- and
25short-term contracts for electricity and associated renewable energy
26credits. Beginning January 1, 2021, at least 65 percent of the
27procurement a retail seller counts toward the renewables portfolio
28standard requirement of each compliance period shall be from its
29contracts of 10 years or more in duration or in its ownership or
30ownership agreements for eligible renewable energy resources.

31(c) The commission shall review and accept, modify, or reject
32each electrical corporation’s renewable energy resource
33procurement plan prior to the commencement of renewable energy
34procurement pursuant to this article by an electrical corporation.
35The commission shall assess adherence to the approved renewable
36energy resource procurement plans in determining compliance
37with the obligations of this article.

38(d) Unless previously preapproved by the commission, an
39electrical corporation shall submit a contract for the generation of
40an eligible renewable energy resource to the commission for review
P7    1and approval consistent with an approved renewable energy
2resource procurement plan. If the commission determines that the
3bid prices are elevated due to a lack of effective competition among
4the bidders, the commission shall direct the electrical corporation
5to renegotiate the contracts or conduct a new solicitation.

6(e) If an electrical corporation fails to comply with a commission
7order adopting a renewable energy resource procurement plan, the
8commission shall exercise its authority to require compliance.

9(f) (1) The commission may authorize a procurement entity to
10enter into contracts on behalf of customers of a retail seller for
11electricity products from eligible renewable energy resources to
12satisfy the retail seller’s renewables portfolio standard procurement
13requirements. The commission shall not require any person or
14corporation to act as a procurement entity or require any party to
15purchase eligible renewable energy resources from a procurement

17(2) Subject to review and approval by the commission, the
18procurement entity shall be permitted to recover reasonable
19administrative and procurement costs through the retail rates of
20end-use customers that are served by the procurement entity and
21are directly benefiting from the procurement of eligible renewable
22energy resources.

23(g) Procurement and administrative costs associated with
24contracts entered into by an electrical corporation for eligible
25renewable energy resources pursuant to this article and approved
26by the commission are reasonable and prudent and shall be
27recoverable in rates.

28(h) Construction, alteration, demolition, installation, and repair
29work on an eligible renewable energy resource that receives
30production incentives pursuant to Section 25742 of the Public
31Resources Code, including work performed to qualify, receive, or
32maintain production incentives, are “public works” for the purposes
33of Chapter 1 (commencing with Section 1720) of Part 7 of Division
342 of the Labor Code.