BILL ANALYSIS Ó SB 919 Page 1 Date of Hearing: June 28, 2016 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair SB 919 (Hertzberg) - As Amended May 31, 2016 SENATE VOTE: 35-0 SUBJECT: Water supply: creation or augmentation of local water supplies SUMMARY: Requires the Public Utilities Commission (PUC) to, before January 1, 2018, address the oversupply of renewable energy resources through a tariff or other economic incentive for electricity purchased for the operation of facilities that create or augment local water supplies. Specifically, this bill: 1) Requires the tariff or economic incentive to reduce the cost of electricity for facilities that create or augment local water supplies. 2) Defines facilities that create or augment local water supplies to include desalination, brackish water desalting, water recycling, water reuse, stormwater and dry weather runoff capture and use, and groundwater recharge facilities. SB 919 Page 2 EXISTING LAW: 1) Gives the PUC regulatory authority over public utilities, including electrical corporations. 2) Requires through the California Renewables Portfolio Standard (RPS) Program a retail seller of electricity and local publicly owned electric utilities to increase purchase of renewable energy such that 50% of retail sales come from renewable sources by December 31, 2030. FISCAL EFFECT: Unknown. COMMENTS: Requires the PUC to, before January 1, 2018, address the oversupply of renewable energy resources through a tariff or other economic incentive for electricity purchased for the operation of facilities that create or augment local water supplies. 1)Author's Statement: This bill encourages the development and diversification of local water supplies through water recycling, reclamation, and desalination by directing renewable energy 'oversupply' to those water suppliers. An ancillary benefit is that the bill requires better coordination of California's renewable energy resources and demand for power and enables better, more cost-effective utilization of renewable power as it is generated. 2)Background: Water supply reliability across much of the state will be an ongoing challenge for the foreseeable future. There are questions and uncertainty about water moving from the Colorado River and from Northern California through the Sacramento-San Joaquin Delta. It seems certain that a more SB 919 Page 3 diversified water portfolio that places greater emphasis on local water supplies will be more adaptable to changing water conditions. The big challenge to diversifying the water supply portfolio is cost. Depending on the water source, energy can be a significant portion of the cost. This bill seeks to reduce the cost of energy for local water supplies while simultaneously limiting curtailment of renewable energy generation. 3)Supporting Arguments: This bill creates a mechanism to harness clean, low-cost renewable energy as a power source to expand California's water supply. This will create an opportunity to use renewable energy that might otherwise be curtailed or sold at a loss due to oversupply conditions. The nexus between the state's water and power needs are clear and this bill provides a beneficial approach to address both those needs. 4)Support if Amended: Two entities have submitted "support if amended" positions, requesting that the PUC be given more time beyond January 1, 2018, or to be allowed to consider active proceedings before having to meet the deadline currently in this bill to develop economic incentives. There are further requests to acknowledged water agencies' energy efficiency and provide for incorporating the opportunities this bill would present in a cost-effective manner. Additionally, there is a request to remove the intent to expedite Proposition 1 as placed on the ballot by AB 1471 (Rendon), Chapter 188, Statutes of 2014, funding for local water supplies. REGISTERED SUPPORT / OPPOSITION: SB 919 Page 4 Support Independent Energy Producers Association (Sponsor) Association of California Water Agencies (If Amended) California Association of Sanitation Agencies California Manufacturers & Technology California Municipal Utilities Association (If Amended) San Diego County Water Authority Opposition None on file. Analysis Prepared by:Ryan Ojakian / W., P., & W. / (916) 319-2096 SB 919 Page 5