BILL NUMBER: AB 197 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 29, 2015
AMENDED IN ASSEMBLY MARCH 26, 2015
INTRODUCED BY Assembly Member Eduardo Garcia
JANUARY 28, 2015
An act to amend Sections 399.13 and 399.15 of, and to add Section
636 to, the Public Utilities Code, relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
AB 197, as amended, Eduardo Garcia. Public utilities: renewable
resources.
(1) The Public Utilities Act requires the Public Utilities
Commission (PUC), in consultation with the Independent System
Operator, to establish resource adequacy requirements for all
load-serving entities, including electrical corporations, in
accordance with specified objectives. The act further requires each
load-serving entity to maintain physical generating capacity adequate
to meet its load requirements, including peak demand and planning
and operating reserves, deliverable to locations and at times as may
be necessary to provide reliable electric service.
The California Renewables Portfolio Standard (RPS) Program,
requires a retail seller of electricity and local publicly owned
electric utilities to purchase specified minimum quantities of
electricity products from eligible renewable energy resources for
specified compliance periods, sufficient to ensure that the
procurement of electricity products from those resources achieves 25%
of retail sales by December 31, 2016 and 33% of retail sales by
December 31, 2020, and in all subsequent years. The RPS Program,
consistent with the goals of procuring the least-cost and best-fit
eligible renewable energy resources that meet project viability
principles, requires that all retail sellers procure a balanced
portfolio of electricity products from eligible renewable energy
resources, as specified, referred to as the portfolio content
requirements. The RPS Program requires the PUC, by rulemaking, to
adopt a process that provides criteria for the rank ordering and
selection of the least-cost and best-fit eligible renewable energy
resources taking into account specified factors and to require an
electrical corporation, in soliciting and procuring eligible
renewable energy resources, to take specified actions. The RPS
Program authorizes an electrical corporation to refraim
refrain from entering into new contracts or
constructing facilities beyond the quantity that can be procured
within the cost limitation of the electrical corporation unless the
eligible renewable energy resources can be procured without exceeding
a de minis increase in rates consistent with the electrical
corporation's long-term procurement plan.
This bill would require the PUC, in adopting the process, to
include consideration of any statewide greenhouse gas emissions limit
established pursuant to the California Global Warming Solutions Act
of 2006 and consideration of capacity and essential reliability
services of the eligible renewable energy resource to ensure grid
reliability. The bill would require the PUC to require an
electrical corporation, a retail seller of
electricity, in soliciting and procuring eligible renewable
energy resources, to consider the best-fit attributes of resources
types that ensure a balanced resource mix to maintain the reliability
of the electrical grid. The bill would revise the authority of an
electrical corporation to refrain from entering into new contracts or
constructing facilities beyond the quantity that can be procured
within the electrical corporation's cost limitation, as specified.
(2) The Public Utilities Act requires an electrical corporation or
a local publicly owned electric utility, in a long-term plan or a
procurement plan, respectively, to adopt a strategy applicable both
to a newly constructed or repowered generation owned and procured by
the electrical corporation or local publicly owned electric utility
to achieve efficiency in the use of fossil fuels and to address
carbon emissions.
This bill would require an electrical corporation or local
publicly owned electric utility, in adopting a procurement plan, to
consider any statewide greenhouse gas emissions limit established
pursuant to the California Global Warming Solutions Act of 2006 and
consider capacity and essential reliability services to ensure grid
reliability.
(3) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
Public Utilities Commission is a crime.
Because the provisions of this bill are within the act, a
violation of the requirements would impose a state-mandated local
program by expanding the definition of a crime.
(4) 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 a specified reason.
(5) This bill would become operative only if AB 645 of the 2015-16
Regular Session is enacted and becomes effective on or before
January 1, 2016.
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. 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.
(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 the employment growth associated with the construction and
operation of eligible renewable energy 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 essential reliability services
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 deduct from actual procurement quantities the total amount of
procurement associated with contracts of less than 10 years in
duration. In no event shall electricity products meeting the
portfolio content of paragraph (3) of subdivision (b) of Section
399.16 be counted as excess procurement.
(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 submitted by an electrical corporation 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 electrical corporation 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. The commission may authorize a retail seller to enter into a
contract of less than 10 years' duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources to
be procured through contracts of at least 10 years' duration.
(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.
(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 pursuant to Section 2113 to
require compliance. The commission shall enforce comparable penalties
on any retail seller that is not an electrical corporation that
fails to meet the procurement targets established pursuant to Section
399.15.
(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. Section 399.15 of the Public Utilities Code is amended to
read:
399.15. (a) In order to fulfill unmet long-term resource needs,
the commission shall establish a renewables portfolio standard
requiring all retail sellers to procure a minimum quantity of
electricity products from eligible renewable energy resources as a
specified percentage of total kilowatthours sold to their retail
end-use customers each compliance period to achieve the targets
established under this article. For any retail seller procuring at
least 14 percent of retail sales from eligible renewable energy
resources in 2010, the deficits associated with any previous
renewables portfolio standard shall not be added to any procurement
requirement pursuant to this article.
(b) The commission shall implement renewables portfolio standard
procurement requirements only as follows:
(1) Each retail seller shall procure a minimum quantity of
eligible renewable energy resources for each of the following
compliance periods:
(A) January 1, 2011, to December 31, 2013, inclusive.
(B) January 1, 2014, to December 31, 2016, inclusive.
(C) January 1, 2017, to December 31, 2020, inclusive.
(2) (A) No later than January 1, 2012, the commission shall
establish the quantity of electricity products from eligible
renewable energy resources to be procured by the retail seller for
each compliance period. These quantities shall be established in the
same manner for all retail sellers and result in the same percentages
used to establish compliance period quantities for all retail
sellers.
(B) In establishing quantities for the compliance period from
January 1, 2011, to December 31, 2013, inclusive, the commission
shall require procurement for each retail seller equal to an average
of 20 percent of retail sales. For the following compliance periods,
the quantities shall reflect reasonable progress in each of the
intervening years sufficient to ensure that the procurement of
electricity products from eligible renewable energy resources
achieves 25 percent of retail sales by December 31, 2016, and 33
percent of retail sales by December 31, 2020. The commission shall
require retail sellers to procure not less than 33 percent of retail
sales of electricity products from eligible renewable energy
resources in all subsequent years.
(C) Retail sellers shall be obligated to procure no less than the
quantities associated with all intervening years by the end of each
compliance period. Retail sellers shall not be required to
demonstrate a specific quantity of procurement for any individual
intervening year.
(3) The commission may require the procurement of eligible
renewable energy resources in excess of the quantities specified in
paragraph (2).
(4) Only for purposes of establishing the renewables portfolio
standard procurement requirements of paragraph (1) and determining
the quantities pursuant to paragraph (2), the commission shall
include all electricity sold to retail customers by the Department of
Water Resources pursuant to Division 27 (commencing with Section
80000) of the Water Code in the calculation of retail sales by an
electrical corporation.
(5) The commission shall waive enforcement of this section if it
finds that the retail seller has demonstrated any of the following
conditions are beyond the control of the retail seller and will
prevent compliance:
(A) There is inadequate transmission capacity to allow for
sufficient electricity to be delivered from proposed eligible
renewable energy resource projects using the current operational
protocols of the Independent System Operator. In making its findings
relative to the existence of this condition with respect to a retail
seller that owns transmission lines, the commission shall consider
both of the following:
(i) Whether the retail seller has undertaken, in a timely fashion,
reasonable measures under its control and consistent with its
obligations under local, state, and federal laws and regulations, to
develop and construct new transmission lines or upgrades to existing
lines intended to transmit electricity generated by eligible
renewable energy resources. In determining the reasonableness of a
retail seller's actions, the commission shall consider the retail
seller's expectations for full-cost recovery for these transmission
lines and upgrades.
(ii) Whether the retail seller has taken all reasonable
operational measures to maximize cost-effective deliveries of
electricity from eligible renewable energy resources in advance of
transmission availability.
(B) Permitting, interconnection, or other circumstances that delay
procured eligible renewable energy resource projects, or there is an
insufficient supply of eligible renewable energy resources available
to the retail seller. In making a finding that this condition
prevents timely compliance, the commission shall consider whether the
retail seller has done all of the following:
(i) Prudently managed portfolio risks, including relying on a
sufficient number of viable projects.
(ii) Sought to develop one of the following: its own eligible
renewable energy resources, transmission to interconnect to eligible
renewable energy resources, or energy storage used to integrate
eligible renewable energy resources. This clause shall not require an
electrical corporation to pursue development of eligible renewable
energy resources pursuant to Section 399.14.
(iii) Procured an appropriate minimum margin of procurement above
the minimum procurement level necessary to comply with the renewables
portfolio standard to compensate for foreseeable delays or
insufficient supply.
(iv) Taken reasonable measures, under the control of the retail
seller, to procure cost-effective distributed generation and
allowable unbundled renewable energy credits.
(C) Unanticipated curtailment of eligible renewable energy
resources necessary to address the needs of a balancing authority.
(6) If the commission waives the compliance requirements of this
section, the commission shall establish additional reporting
requirements on the retail seller to demonstrate that all reasonable
actions under the control of the retail seller are taken in each of
the intervening years sufficient to satisfy future procurement
requirements.
(7) The commission shall not waive enforcement pursuant to this
section, unless the retail seller demonstrates that it has taken all
reasonable actions under its control, as set forth in paragraph (5),
to achieve full compliance.
(8) If a retail seller fails to procure sufficient eligible
renewable energy resources to comply with a procurement requirement
pursuant to paragraphs (1) and (2) and fails to obtain an order from
the commission waiving enforcement pursuant to paragraph (5), the
commission shall exercise its authority pursuant to Section 2113.
(9) Deficits associated with the compliance period shall not be
added to a future compliance period.
(c) The commission shall establish a limitation for each
electrical corporation on the procurement expenditures for all
eligible renewable energy resources used to comply with the
renewables portfolio standard. In establishing this limitation, the
commission shall rely on the following:
(1) The most recent renewable energy procurement plan.
(2) Procurement expenditures that approximate the expected cost of
building, owning, and operating eligible renewable energy resources.
(3) The potential that some planned resource additions may be
delayed or canceled.
(d) In developing the limitation pursuant to subdivision (c), the
commission shall ensure all of the following:
(1) The limitation is set at a level that prevents
disproportionate rate impacts.
(2) The costs of all procurement credited toward achieving the
renewables portfolio standard are counted towards the limitation.
(3) Procurement expenditures do not include any indirect expenses,
including imbalance energy charges, sale of excess energy, decreased
generation from existing resources, transmission upgrades, or the
costs associated with relicensing any utility-owned hydroelectric
facilities.
(e) (1) No later than January 1, 2016, the commission shall
prepare a report to the Legislature assessing whether each electrical
corporation can achieve a 33-percent renewables portfolio standard
by December 31, 2020, and maintain that level thereafter, within the
adopted cost limitations. If the commission determines that it is
necessary to change the limitation for procurement costs incurred by
any electrical corporation after that date, it may propose a revised
cap consistent with the criteria in subdivisions (c) and (d). The
proposed modifications shall take effect no earlier than January 1,
2017.
(2) Notwithstanding Section 10231.5 of the Government Code, the
requirement for submitting a report imposed under paragraph (1) is
inoperative on January 1, 2021.
(3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(f) If the cost limitation for an electrical corporation is
insufficient to support the projected costs of meeting the renewables
portfolio standard procurement requirements, the electrical
corporation may refrain from entering into new contracts or
constructing facilities beyond the quantity that can be procured
within the limitation, unless eligible renewable energy resources can
be procured without exceeding a de minimis increase in rates or to
the extent that the procurement of renewable energy resources,
separate from the renewables portfolio standard procurement
requirements, is authorized by the commission for the long-term
procurement plan established for the electrical corporation pursuant
to Section 454.5.
(g) (1) The commission shall monitor the status of the cost
limitation for each electrical corporation in order to ensure
compliance with this article.
(2) If the commission determines that an electrical corporation
may exceed its cost limitation prior to achieving the renewables
portfolio standard procurement requirements, the commission shall do
both of the following within 60 days of making that determination:
(A) Investigate and identify the reasons why the electrical
corporation may exceed its annual cost limitation.
(B) Notify the appropriate policy and fiscal committees of the
Legislature that the electrical corporation may exceed its cost
limitation, and include the reasons why the electrical corporation
may exceed its cost limitation.
(h) The establishment of a renewables portfolio standard shall not
constitute implementation by the commission of the federal Public
Utility Regulatory Policies Act of 1978 (Public Law 95-617).
SEC. 3. Section 636 is added to the Public Utilities Code, to
read:
636. In a procurement plan adopted by an electrical corporation
or a local publicly owned electric utility, the electrical
corporation or local publicly owned electric utility shall give
consideration to both of the following:
(a) 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).
(b) Capacity and essential reliability services to ensure grid
reliability.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only 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.
SEC. 5. This act shall become operative only if
Assembly Bill 645 of the 2015 -16 Regular Session is
enacted and becomes effective on or before January 1, 2016.