BILL NUMBER: AB 645 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Members Williams and Rendon
FEBRUARY 24, 2015
An act to amend Sections 399.11, 399.15, and 399.30 of the Public
Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 645, as introduced, Williams. Electricity: California
Renewables Portfolio Standard.
(1) Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, as defined, while local publicly owned electric
utilities, as defined, are under the direction of their governing
boards.
Existing law establishes the California Renewables Portfolio
Standard (RPS) program, which expresses the intent of the Legislature
that the amount of electricity generated per year from eligible
renewable energy resources be increased to an amount that equals at
least 33% of the total electricity sold to retail customers in
California per year by December 31, 2020. Existing law requires the
PUC, by January 1, 2012, to establish the quantity of electricity
products from eligible renewable energy resources to be procured by
each retail seller for specified compliance periods, sufficient to
ensure that the procurement of electricity products from eligible
renewable energy resources achieves 25% of retail sales by December
31, 2016, and 33% of retail sales by December 31, 2020, and that
retail sellers procure not less than 33% of retail sales in all
subsequent years.
Existing law makes the requirements of the RPS program applicable
to local publicly owned electric utilities, except that the utility's
governing board is responsible for implementation of those
requirements, instead of the PUC, and certain enforcement authority
with respect to local publicly owned electric utilities is given to
the State Energy Resources Conservation and Development Commission
and State Air Resources Board, instead of the PUC.
This bill would additionally express the intent of the Legislature
for the purposes of the RPS program that the amount of electricity
generated per year from eligible renewable energy resources be
increased to an amount equal to at least 50% by December 31, 2030,
and would require the PUC, by January 1, 2017, to establish the
quantity of electricity products from eligible renewable energy
resources to be procured by each retail seller for specified
compliance periods sufficient to ensure that the procurement of
electricity products from eligible renewable energy resources
achieves 50% of retail sales by December 31, 2030, and that retail
sellers procure not less than 50% of retail sales in all subsequent
years. The bill would require the governing boards of local publicly
owned electric utilities to ensure that specified quantities of
electricity products from eligible renewable energy resources to be
procured for specified compliance periods to ensure that the
procurement of electricity products from eligible renewable energy
resources achieve 50% of retail sales by December 31, 2030, and that
the local publicly owned electric utilities procure not less than 50%
of retail sales in all subsequent years.
(2) Under existing law, a violation of the RPS program is a crime.
Because the provisions of this bill would expand the RPS program,
a violation of these provisions would impose a state-mandated local
program by expanding the definition of a crime.
(3) By placing additional requirements upon local publicly owned
electric utilities, this bill would impose a state-mandated local
program.
(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 reasons.
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 399.11 of the Public Utilities Code is amended
to read:
399.11. The Legislature finds and declares all of the following:
(a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from eligible renewable
energy resources by December 31, 2013, and 33
percent by December 31, 2020, and 50 percent by December 31,
2030, it is the intent of the Legislature that the commission
and the Energy Commission implement the California Renewables
Portfolio Standard Program described in this article.
(b) Achieving the renewables portfolio standard through the
procurement of various electricity products from eligible renewable
energy resources is intended to provide unique benefits to
California, including all of the following, each of which
independently justifies the program:
(1) Displacing fossil fuel consumption within the state.
(2) Adding new electrical generating facilities in the
transmission network within the Western Electricity Coordinating
Council service area.
(3) Reducing air pollution in the state.
(4) Meeting the state's climate change goals by reducing emissions
of greenhouse gases associated with electrical generation.
(5) Promoting stable retail rates for electric service.
(6) Meeting the state's need for a diversified and balanced energy
generation portfolio.
(7) Assistance with meeting the state's resource adequacy
requirements.
(8) Contributing to the safe and reliable operation of the
electrical grid, including providing predictable electrical supply,
voltage support, lower line losses, and congestion relief.
(9) Implementing the state's transmission and land use planning
activities related to development of eligible renewable energy
resources.
(c) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the Energy Commission and established pursuant to
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code.
(d) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.
(e) (1) Supplying electricity to California end-use customers that
is generated by eligible renewable energy resources is necessary to
improve California's air quality and public health, and the
commission shall ensure rates are just and reasonable, and are not
significantly affected by the procurement requirements of this
article. This electricity may be generated anywhere in the
interconnected grid that includes many states, and areas of both
Canada and Mexico.
(2) This article requires generating resources located outside of
California that are able to supply that electricity to California
end-use customers to be treated identically to generating resources
located within the state, without discrimination.
(3) California electrical corporations have already executed, and
the commission has approved, power purchase agreements with eligible
renewable energy resources located outside of California that will
supply electricity to California end-use customers. These resources
will fully count toward meeting the renewables portfolio standard
procurement requirements. In addition, there are nearly 7,000
megawatts of additional proposed renewable energy resources located
outside of California that are awaiting interconnection approval from
the Independent System Operator. All of these resources, if
procured, will count as eligible renewable energy resources that
satisfy the portfolio content requirements of paragraph (1) of
subdivision (c) of Section 399.16.
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.
(D) January 1, 2021, to December 31, 2023, inclusive.
(E) January 1, 2024, to December 31, 2026, inclusive.
(D) January 1, 2027, to December 31, 2030, inclusive.
(2) (A) No later than January 1, 2012,
2017, 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. 2020, 38 percent by
December 31, 2023, 44 percent by December 31, 2026, and 50 percent by
December 31, 2030. The commission shall require retail sellers
to procure not less than 33 50 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,
consistent with 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 399.30 of the Public Utilities Code is amended to
read:
399.30. (a) To fulfill unmet long-term generation resource needs,
each local publicly owned electric utility shall adopt and implement
a renewable energy resources procurement plan that requires the
utility to procure a minimum quantity of electricity products from
eligible renewable energy resources, including renewable energy
credits, as a specified percentage of total kilowatthours sold to the
utility's retail end-use customers, each compliance period, to
achieve the targets of subdivision (c).
(b) The governing board shall implement procurement targets for a
local publicly owned electric utility that require the utility to
procure a minimum quantity of eligible renewable energy resources for
each of the following compliance periods:
(1) January 1, 2011, to December 31, 2013, inclusive.
(2) January 1, 2014, to December 31, 2016, inclusive.
(3) January 1, 2017, to December 31, 2020, inclusive.
(D) January 1, 2021, to December 31, 2023, inclusive.
(E) January 1, 2024, to December 31, 2026, inclusive.
(D) January 1, 2027, to December 31, 2030, inclusive.
(c) The governing board of a local publicly owned electric utility
shall ensure all of the following:
(1) The quantities of eligible renewable energy resources to be
procured for the compliance period from January 1, 2011, to December
31, 2013, inclusive, are equal to an average of 20 percent of retail
sales.
(2) The quantities of eligible renewable energy resources to be
procured for all other compliance periods 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. 2020, 38 percent by
December 31, 2023, 44 percent by December 31, 2026, and 50 percent by
December 31, 2030. The local governing board shall require the
local publicly owned electric utilities
utility to procure not less than 33 50
percent of retail sales of electricity products from eligible
renewable energy resources in all subsequent years.
(3) A local publicly owned electric utility shall adopt
procurement requirements consistent with Section 399.16.
(d) The governing board of a local publicly owned electric utility
may adopt the following measures:
(1) Rules permitting the utility to apply excess procurement in
one compliance period to subsequent compliance periods in the same
manner as allowed for retail sellers pursuant to Section 399.13.
(2) Conditions that allow for delaying timely compliance
consistent with subdivision (b) of Section 399.15.
(3) Cost limitations for procurement expenditures consistent with
subdivision (c) of Section 399.15.
(e) The governing board of the local publicly owned electric
utility shall adopt a program for the enforcement of this article on
or before January 1, 2012. The program shall be adopted at a publicly
noticed meeting offering all interested parties an opportunity to
comment. Not less than 30 days' notice shall be given to the public
of any meeting held for purposes of adopting the program. Not less
than 10 days' notice shall be given to the public before any meeting
is held to make a substantive change to the program.
(f) (1) Each local publicly owned electric utility shall annually
post notice, in accordance with Chapter 9 (commencing with Section
54950) of Part 1 of Division 2 of Title 5 of the Government Code,
whenever its governing body will deliberate in public on its
renewable energy resources procurement plan.
(2) Contemporaneous with the posting of the notice of a public
meeting to consider the renewable energy resources procurement plan,
the local publicly owned electric utility shall notify the Energy
Commission of the date, time, and location of the meeting in order to
enable the Energy Commission to post the information on its Internet
Web site. This requirement is satisfied if the local publicly owned
electric utility provides the uniform resource locator (URL) that
links to this information.
(3) Upon distribution to its governing body of information related
to its renewable energy resources procurement status and future
plans, for its consideration at a noticed public meeting, the local
publicly owned electric utility shall make that information available
to the public and shall provide the Energy Commission with an
electronic copy of the documents for posting on the Energy Commission'
s Internet Web site. This requirement is satisfied if the local
publicly owned electric utility provides the uniform resource locator
(URL) that links to the documents or information regarding other
manners of access to the documents.
(g) A public utility district that receives all of its electricity
pursuant to a preference right adopted and authorized by the United
States Congress pursuant to Section 4 of the Trinity River Division
Act of August 12, 1955 (Public Law 84-386) shall be in compliance
with the renewable energy procurement requirements of this article.
(h) For a local publicly owned electric utility that was in
existence on or before January 1, 2009, that provides retail electric
service to 15,000 or fewer customer accounts in California, and is
interconnected to a balancing authority located outside this state
but within the WECC, an eligible renewable energy resource includes a
facility that is located outside California that is connected to the
WECC transmission system, if all of the following conditions are
met:
(1) The electricity generated by the facility is procured by the
local publicly owned electric utility, is delivered to the balancing
authority area in which the local publicly owned electric utility is
located, and is not used to fulfill renewable energy procurement
requirements of other states.
(2) The local publicly owned electric utility participates in, and
complies with, the accounting system administered by the Energy
Commission pursuant to this article.
(3) The Energy Commission verifies that the electricity generated
by the facility is eligible to meet the renewables portfolio standard
procurement requirements.
(i) Notwithstanding subdivision (a), for a local publicly owned
electric utility that is a joint powers authority of districts
established pursuant to state law on or before January 1, 2005, that
furnish electric services other than to residential customers, and is
formed pursuant to the Irrigation District Law (Division 11
(commencing with Section 20500) of the Water Code), the percentage of
total kilowatthours sold to the district's retail end-use customers,
upon which the renewables portfolio standard procurement
requirements in subdivision (b) are calculated, shall be based on the
authority's average retail sales over the previous seven years. If
the authority has not furnished electric service for seven years,
then the calculation shall be based on average retail sales over the
number of completed years during which the authority has provided
electric service.
(j) A local publicly owned electric utility in a city and county
that only receives greater than 67 percent of its electricity sources
from hydroelectric generation located within the state that it owns
and operates, and that does not meet the definition of a "renewable
electrical generation facility" pursuant to Section 25741 of the
Public Resources Code, shall be required to procure eligible
renewable energy resources, including renewable energy credits, to
meet only the electricity demands unsatisfied by its hydroelectric
generation in any given year, in order to satisfy its renewable
energy procurement requirements.
(k) (1) A local publicly owned electric utility that receives
greater than 50 percent of its annual retail sales from its own
hydroelectric generation that is not an eligible renewable energy
resource shall not be required to procure additional eligible
renewable energy resources in excess of either of the following:
(A) The portion of its retail sales not supplied by its own
hydroelectric generation. For these purposes, retail sales supplied
by an increase in hydroelectric generation resulting from an increase
in the amount of water stored by a dam because the dam is enlarged
or otherwise modified after December 31, 2012, shall not count as
being retail sales supplied by the utility's own hydroelectric
generation.
(B) The cost limitation adopted pursuant to this section.
(2) For the purposes of this subdivision, "hydroelectric
generation" means electricity generated from a hydroelectric facility
that satisfies all of the following:
(A) Is owned solely and operated by the local publicly owned
electric utility as of 1967.
(B) Serves a local publicly owned electric utility with a
distribution system demand of less than 150 megawatts.
(C) Involves a contract in which an electrical corporation
receives the benefit of the electric generation through June of 2014,
at which time the benefit reverts back to the ownership and control
of the local publicly owned electric utility.
(D) Has a maximum penstock flow capacity of no more than 3,200
cubic feet per second and includes a regulating reservoir with a
small hydroelectric generation facility producing fewer than 20
megawatts with a maximum penstock flow capacity of no more than 3,000
cubic feet per second.
(3) This subdivision does not reduce or eliminate any renewable
procurement requirement for any compliance period ending prior to
January 1, 2014.
(4) This subdivision does not require a local publicly owned
electric utility to purchase additional eligible renewable energy
resources in excess of the procurement requirements of subdivision
(c).
(l) A local publicly owned electric utility shall retain
discretion over both of the following:
(1) The mix of eligible renewable energy resources procured by the
utility and those additional generation resources procured by the
utility for purposes of ensuring resource adequacy and reliability.
(2) The reasonable costs incurred by the utility for eligible
renewable energy resources owned by the utility.
(m) On or before July 1, 2011, the Energy Commission shall adopt
regulations specifying procedures for enforcement of this article.
The regulations shall include a public process under which the Energy
Commission may issue a notice of violation and correction against a
local publicly owned electric utility for failure to comply with this
article, and for referral of violations to the State Air Resources
Board for penalties pursuant to subdivision (o).
(n) (1) Upon a determination by the Energy Commission that a local
publicly owned electric utility has failed to comply with this
article, the Energy Commission shall refer the failure to comply with
this article to the State Air Resources Board, which may impose
penalties to enforce this article consistent with Part 6 (commencing
with Section 38580) of Division 25.5 of the Health and Safety Code.
Any penalties imposed shall be comparable to those adopted by the
commission for noncompliance by retail sellers.
(2) If Division 25.5 (commencing with Section 38500) of the Health
and Safety Code is suspended or repealed, the State Air Resources
Board may take action to enforce this article on local publicly owned
electric utilities consistent with Section 41513 of the Health and
Safety Code, and impose penalties on a local publicly owned electric
utility consistent with Article 3 (commencing with Section 42400) of
Chapter 4 of Part 4 of, and Chapter 1.5 (commencing with Section
43025) of Part 5 of, Division 26 of the Health and Safety Code.
(3) For the purpose of this subdivision, this section is an
emissions reduction measure pursuant to Section 38580 of the Health
and Safety Code.
(4) If the State Air Resources Board has imposed a penalty upon a
local publicly owned electric utility for the utility's failure to
comply with this article,
the State Air Resources Board shall not impose an additional
penalty for the same infraction, or the same failure to comply, with
any renewables procurement requirement imposed upon the utility
pursuant to the California Global Warming Solutions Act of 2006
(Division 25.5 (commencing with Section 38500) of the Health and
Safety Code).
(5) Any penalties collected by the State Air Resources Board
pursuant to this article shall be deposited in the Air Pollution
Control Fund and, upon appropriation by the Legislature, shall be
expended for reducing emissions of air pollution or greenhouse gases
within the same geographic area as the local publicly owned electric
utility.
(o) The commission has no authority or jurisdiction to enforce any
of the requirements of this article on a local publicly owned
electric utility.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act or because 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.