BILL NUMBER: AB 2700 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Salas
FEBRUARY 19, 2016
An act to amend Section 454.51 399.13
of the Public Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 2700, as amended, Salas. Electrical corporation:
California Renewables Portfolio Standard Program:
procurement plans.
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 in accordance with specified elements, incentive
mechanisms, and objectives. The act requires the commission to (1)
identify a diverse and balanced portfolio of resources needed to
ensure a reliable electricity supply that provides optimal
integration of renewable energy resources in a cost-effective manner,
(2) direct each electrical corporation to include, as part of its
proposed procurement plan, a strategy for procuring best-fit and
least-cost resources to satisfy the portfolio needs identified by the
commission, (3) ensure that the net costs of any incremental
renewable energy integration resources procured by an electrical
corporation to satisfy the need identified by the commission are
allocated on a fully nonbypassable basis, and (4) permit community
choice aggregators to submit proposals for satisfying their portion
of the renewable energy resource integration needs identified by the
commission. The California Renewables Portfolio
Standard Program requires the commission to establish a renewables
portfolio standard requiring all retail sellers, defined as including
an electrical corporation, to procure a minimum quantity of
electricity products from eligible renewable energy resources, as
defined, at specified percentages of the total kilowatthours sold to
their retail end-use customers during specified compliance periods.
The program requires the commission to direct each electrical
corporation to annually prepare a renewable energy procureme
nt plan to satisfy its procurement requirements pursuant to the
program. As part of the renewable energy procurement plan
process, the commission is required to adopt rules establishing a
process that provides criteria for the rank ordering and selection of
least-cost and best-fit eligible renewable energy resources to
comply with the program's procurement obligations and requires that
the criteria take specified matters into account, including workforce
recruitment, training, and retention efforts, as specified.
This bill would make nonsubstantive revisions to the
above-described requirements of the commission relative to
integration of renewable energy resources to ensure a reliable
electricity supply through the procurement plan process.
This bill would require that the criteria take into account jobs
retained associated with contracting for existing eligible renewable
energy resources. The bill would require the commission to update the
criteria by July 1, 2017, to identify the value of maintaining
existing baseload resources to achieve the goal of a balanced
portfolio of eligible renewable energy resources.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 399.13 of the Public
Utilities Code is amended to read:
399.13. (a) (1) The commission shall direct each electrical
corporation to annually prepare a renewable energy procurement plan
that includes the matter in paragraph (5), to satisfy its obligations
under the renewables portfolio standard. To the extent feasible,
this procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary. The commission shall require all other
retail sellers to prepare and submit renewable energy procurement
plans that address the requirements identified in paragraph (5).
(2) Every electrical corporation that owns electrical transmission
facilities shall annually prepare, as part of the Federal Energy
Regulatory Commission Order 890 process, and submit to the
commission, a report identifying any electrical transmission
facility, upgrade, or enhancement that is reasonably necessary to
achieve the renewables portfolio standard procurement requirements of
this article. Each report shall look forward at least five years
and, to ensure that adequate investments are made in a timely manner,
shall include a preliminary schedule when an application for a
certificate of public convenience and necessity will be made,
pursuant to Chapter 5 (commencing with Section 1001), for any
electrical transmission facility identified as being reasonably
necessary to achieve the renewable energy resources procurement
requirements of this article. Each electrical corporation that owns
electrical transmission facilities shall ensure that project-specific
interconnection studies are completed in a timely manner.
(3) The commission shall direct each retail seller to prepare and
submit an annual compliance report that includes all of the
following:
(A) The current status and progress made during the prior year
toward procurement of eligible renewable energy resources as a
percentage of retail sales, including, if applicable, the status of
any necessary siting and permitting approvals from federal, state,
and local agencies for those eligible renewable energy resources
procured by the retail seller, and the current status of compliance
with the portfolio content requirements of subdivision (c) of Section
399.16, including procurement of eligible renewable energy resources
located outside the state and within the WECC and unbundled
renewable energy credits.
(B) If the retail seller is an electrical corporation, the current
status and progress made during the prior year toward construction
of, and upgrades to, transmission and distribution facilities and
other electrical system components it owns to interconnect eligible
renewable energy resources and to supply the electricity generated by
those resources to load, including the status of planning, siting,
and permitting transmission facilities by federal, state, and local
agencies.
(C) Recommendations to remove impediments to making progress
toward achieving the renewable energy resources procurement
requirements established pursuant to this article.
(4) The commission shall adopt, by rulemaking, all of the
following:
(A) A process that provides criteria for the rank ordering and
selection of least-cost and best-fit eligible renewable energy
resources to comply with the California Renewables Portfolio Standard
Program obligations on a total cost and best-fit basis. This process
shall take into account all of the following:
(i) Estimates of indirect costs associated with needed
transmission investments.
(ii) The cost impact of procuring the eligible renewable energy
resources on the electrical corporation's electricity portfolio.
(iii) The viability of the project to construct and reliably
operate the eligible renewable energy resource, including the
developer's experience, the feasibility of the technology used to
generate electricity, and the risk that the facility will not be
built, or that construction will be delayed, with the result that
electricity will not be supplied as required by the contract.
(iv) Workforce recruitment, training, and retention efforts,
including jobs retained associated with contracting for existing
eligible renewable energy resources, the employment growth
associated with the construction and operation of eligible renewable
energy resources resources, and goals
for recruitment and training of women, minorities, and disabled
veterans.
(v) (I) Estimates of electrical corporation expenses resulting
from integrating and operating eligible renewable energy resources,
including, but not limited to, any additional wholesale energy and
capacity costs associated with integrating each eligible renewable
resource.
(II) No later than December 31, 2015, the commission shall approve
a methodology for determining the integration costs described in
subclause (I).
(vi) Consideration of any statewide greenhouse gas emissions limit
established pursuant to the California Global Warming Solutions Act
of 2006 (Division 25.5 (commencing with Section 38500) of the Health
and Safety Code).
(vii) Consideration of capacity and system reliability of the
eligible renewable energy resource to ensure grid reliability.
(B) Rules permitting retail sellers to accumulate, beginning
January 1, 2011, excess procurement in one compliance period to be
applied to any subsequent compliance period. The rules shall apply
equally to all retail sellers. In determining the quantity of excess
procurement for the applicable compliance period, the commission
shall retain the rules adopted by the commission and in effect as of
January 1, 2015, for the compliance period specified in subparagraphs
(A) to (C), inclusive, of paragraph (1) of subdivision (b) of
Section 399.15. For any subsequent compliance period, the rules shall
allow the following:
(i) For electricity products meeting the portfolio content
requirements of paragraph (1) of subdivision (b) of Section 399.16,
contracts of any duration may count as excess procurement.
(ii) Electricity products meeting the portfolio content
requirements of paragraph (2) or (3) of subdivision (b) of Section
399.16 shall not be counted as excess procurement. Contracts of any
duration for electricity products meeting the portfolio content
requirements of paragraph (2) or (3) of subdivision (b) of Section
399.16 that are credited towards a compliance period shall not be
deducted from a retail seller's procurement for purposes of
calculating excess procurement.
(iii) If a retail seller notifies the commission that it will
comply with the provisions of subdivision (b) for the compliance
period beginning January 1, 2017, the provisions of clauses (i) and
(ii) shall take effect for that retail seller for that compliance
period.
(C) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource, at a minimum, shall include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
(D) An appropriate minimum margin of procurement above the minimum
procurement level necessary to comply with the renewables portfolio
standard to mitigate the risk that renewable projects planned or
under contract are delayed or canceled. This paragraph does not
preclude an electrical corporation from voluntarily proposing a
margin of procurement above the appropriate minimum margin
established by the commission.
(5) Consistent with the goal of increasing California's reliance
on eligible renewable energy resources, the renewable energy
procurement plan shall include all of the following:
(A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of eligible renewable energy
resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity.
(B) Potential compliance delays related to the conditions
described in paragraph (5) of subdivision (b) of Section 399.15.
(C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
(D) A status update on the development schedule of all eligible
renewable energy resources currently under contract.
(E) Consideration of mechanisms for price adjustments associated
with the costs of key components for eligible renewable energy
resource projects with online dates more than 24 months after the
date of contract execution.
(F) An assessment of the risk that an eligible renewable energy
resource will not be built, or that construction will be delayed,
with the result that electricity will not be delivered as required by
the contract.
(6) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years duration, unless the commission approves of a
contract of shorter duration.
(7) In soliciting and procuring eligible renewable energy
resources for California-based projects, each electrical corporation
shall give preference to renewable energy projects that provide
environmental and economic benefits to communities afflicted with
poverty or high unemployment, or that suffer from high emission
levels of toxic air contaminants, criteria air pollutants, and
greenhouse gases.
(8) In soliciting and procuring eligible renewable energy
resources, each retail seller shall consider the best-fit attributes
of resource types that ensure a balanced resource mix to maintain the
reliability of the electrical grid.
(b) A retail seller may enter into a combination of long- and
short-term contracts for electricity and associated renewable energy
credits. Beginning January 1, 2021, at least 65 percent of the
procurement a retail seller counts toward the renewables portfolio
standard requirement of each compliance period shall be from its
contracts of 10 years or more in duration or in its ownership or
ownership agreements for eligible renewable energy resources.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy resource procurement plan
prior to the commencement of renewable energy procurement pursuant to
this article by an electrical corporation. The commission shall
assess adherence to the approved renewable energy resource
procurement plans in determining compliance with the obligations of
this article.
(d) Unless previously preapproved by the commission, an electrical
corporation shall submit a contract for the generation of an
eligible renewable energy resource to the commission for review and
approval consistent with an approved renewable energy resource
procurement plan. If the commission determines that the bid prices
are elevated due to a lack of effective competition among the
bidders, the commission shall direct the electrical corporation to
renegotiate the contracts or conduct a new solicitation.
(e) If an electrical corporation fails to comply with a commission
order adopting a renewable energy resource procurement plan, the
commission shall exercise its authority to require compliance.
(f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
electricity products from eligible renewable energy resources to
satisfy the retail seller's renewables portfolio standard procurement
requirements. The commission shall not require any person or
corporation to act as a procurement entity or require any party to
purchase eligible renewable energy resources from a procurement
entity.
(2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
(g) Procurement and administrative costs associated with contracts
entered into by an electrical corporation for eligible renewable
energy resources pursuant to this article and approved by the
commission are reasonable and prudent and shall be recoverable in
rates.
(h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives, are "public works" for the purposes
of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2
of the Labor Code.
SEC. 2. By July 1, 2017, the commission shall
update the criteria for the rank ordering and selection of least-cost
and best-fit eligible renewable energy resources adopted pursuant to
subparagraph (A) of paragraph (4) of subdivision (a) of Section
399.13 to identify the value of maintaining existing baseload
resources to achieve the goal of a balanced portfolio of eligible
renewable energy resources.
SECTION 1. Section 454.51 of the Public
Utilities Code is amended to read:
454.51. The commission shall do all of the following:
(a) Identify a diverse and balanced portfolio of resources needed
to ensure a reliable electricity supply that provides optimal
integration of renewable energy resources in a cost-effective manner.
The portfolio shall rely upon zero carbon-emitting resources to the
maximum extent reasonable and be designed to achieve any statewide
greenhouse gas emissions limit established pursuant to the California
Global Warming Solutions Act of 2006 (Division 25.5 (commencing with
Section 38500) of the Health and Safety Code) or any successor
legislation.
(b) Direct each electrical corporation to include, as part of its
proposed procurement plan, a strategy for procuring best-fit and
least-cost resources to satisfy the portfolio needs identified by the
commission pursuant to subdivision (a).
(c) Ensure that the net costs of any incremental renewable energy
integration resources procured by an electrical corporation to
satisfy the need identified in subdivision (a) are allocated on a
fully nonbypassable basis consistent with the treatment of costs
identified in paragraph (2) of subdivision (c) of Section 365.1.
(d) Permit community choice aggregators to submit proposals for
satisfying their portion of the renewable energy resource integration
need identified in subdivision (a). If the commission finds this
need is best met through long-term procurement commitments for
resources, community choice aggregators shall also be required to
make long-term commitments for resources. The commission shall
approve proposals pursuant to this subdivision if it finds all of the
following:
(1) The resources proposed by a community choice aggregator will
provide equivalent integration of renewable energy resources.
(2) The resources proposed by a community choice aggregator will
promote the efficient achievement of state energy policy objectives,
including reductions in emissions of greenhouse gases.
(3) Bundled customers of an electrical corporation will be
indifferent from the approval of the community choice aggregator
proposals.
(4) All costs resulting from nonperformance will be borne by the
electrical corporation or community choice aggregator responsible for
them.