Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing boards. Existing law authorizes the PUC to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law prohibits any load-serving entity, consisting of electrical corporations, electric service providers, and community choice aggregators serving end-use customers in the state, and any local publicly owned electric utility, from entering into a long-term financial commitment, as defined, for baseload generation, as defined, unless that baseload generation complies with a greenhouse gases emission performance standard. Existing law requires the PUC, through a rulemaking proceeding and in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission) and the State Air Resources Board (state board), to establish the greenhouse gases emission performance standard for all baseload generation of load-serving entities. Existing law requires the Energy Commission, at a duly noticed public hearing and in consultation with the PUC and the state board, to establish the greenhouse gases emission performance standard for all baseload generation of local publicly owned electric utilities.

This bill would require the PUC to review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the greenhouse gases emission performance standard established by the PUC and to not permit those costs to be recovered in rates if it finds (1) the proposed capital expenditure will materially extend the service life of the baseload generation, (2) cost-effective alternative resources not already owned or contracted for by the electrical corporation would provide superior long-term value to customers and satisfy the greenhouses gases emission performance standard, or (3) the accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of greenhouse gases.

Under existing law, an electrical corporation that provides electric service to 75,000 or fewer retail end-use customers in California may file with the PUC a proposal for alternative compliance with the greenhouse gases emission performance standard, which the PUC is authorized to accept upon a showing by the electrical corporation that (1) a majority of the electrical corporations retail end-use customers for electric service are located outside of California and (2) the emissions of greenhouse gases to generate electricity for the retail end-use customers of the electrical corporation are subject to a review by the utility regulatory commission of at least one other state in which the electrical corporation provides regulated retail electric service.

This bill would eliminate this alternative compliance option.

SENATE THIRD READING

STR Bill Id:SB 1453

Author:(De León)

As Introduced Ver:February 19, 2016

Majority vote

SENATE VOTE: 26-10

SUMMARY: Eliminates the ability of an electrical corporation that provides electricity service to 75,000 or fewer California customers to file a proposal with the California Public Utilities Commission (CPUC) for alternative compliance with the state's greenhouse gas (GHG) emission performance standard (EPS). Requires the CPUC to review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the state's GHG EPS and prohibits the CPUC from allowing those costs to be recovered if it finds the any of the following:

1. The proposed capital expenditure would materially extend the service life of the baseload generation.
2. Cost-effective alternative resources would provide superior long-term value to customers and satisfy the GHG EPS.
3. The accelerated retirement of the baseload generation unit would promote state and regional GHG emissions reduction goals.

FISCAL EFFECT: According to the Assembly Appropriations Committee, increased annual CPUC administrative costs of approximately $131,000 (Utilities Reimbursement Account).

COMMENTS:

1. Purpose. This bill eliminates the alternative compliance option, and requires all electrical corporations operating in California to comply with CPUC's established GHG EPS. This will result in prohibiting one company, PacifiCorp, from extending or renewing contracts for coal-fired electricity. Additionally, this bill ensures costs associated with extending the life of coal-fired powerplants are not borne by ratepayers.
2. The Greenhouse Gas Emission Performance Standard. In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California. Following the passage of SB 1368 (Perata), Chapter 598, Statutes of 2006, the California Energy Commission (CEC) and the CPUC adopted an EPS of 1,100 pounds of carbon dioxide per megawatt-hour for baseload generation. This was, according to the agencies' calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368.

The effect of the EPS was to prevent the state's retail sellers of electricity and publicly-owned utilities (POUs) from entering into new contracts, or from renewing contracts, for coal-fired generation of electricity.

1. PacifiCorp allowed alternative EPS. SB 1368 allowed an electrical corporation meeting certain criteria to file a proposal for alternative compliance with the CPUC. PacifiCorp is a large electric utility serving 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately 45,000 customers in Northern California. PacifiCorp is the only electrical corporation that qualifies for the alternative compliance provisions. The rationale for PacifiCorp's special treatment is that it has a much smaller customer base over which to spread the costs of compliance than do the state's other electrical corporations. In addition, a large portion of PacifiCorp's California customers are low-income. This bill eliminates the alternative compliance option.

Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083 FN: 0003847

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 1453

Author:(De León) – As Introduced Ver:February 19, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill eliminates the ability of an electrical corporation that provides electricity service to 75,000 or fewer California customers to file a proposal with the California Public Utilities Commission (PUC) for alternative compliance with the state's greenhouse gas (GHG) emission performance standard (EPS).

The bill also requires PUC to review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the state's GHG EPS and prohibits the PUC from allowing those costs to be recovered if it finds the any of the following:

1. The proposed capital expenditure would materially extend the service life of the baseload generation.
2. Cost-effective alternative resources would provide superior long-term value to customers and satisfy the GHG EPS.
3. The accelerated retirement of the baseload generation unit would promote state and regional GHG emissions reduction goals.

FISCAL EFFECT:

Increased annual PUC administrative costs of approximately $131,000 (Utilities Reimbursement Account).

COMMENTS:

1. Purpose. This bill eliminates the alternative compliance option, and requires all electrical corporations operating in California to comply with PUC’s established GHG EPS. This will result in prohibiting one company, PacifiCorp, from extending or renewing contracts for coal-fired electricity. Additionally, this bill ensures costs associated with extending the life of coal-fired powerplants are not borne by ratepayers.
2. The Greenhouse Gas Emission Performance Standard. In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California. Following the passage of SB 1368 (Perata), Chapter 598, Statutes of 2006, the California Energy Commission (CEC) and the PUC adopted an EPS of 1,100 pounds of carbon dioxide per megawatt-hour for baseload generation. This was, according to the agencies' calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368.

The effect of the EPS was to prevent the state's retail sellers of electricity and publicly-owned utilities (POUs) from entering into new contracts, or from renewing contracts, for coal-fired generation of electricity.

1. PacifiCorp allowed alternative EPS. SB 1368 allowed an electrical corporation meeting certain criteria to file a proposal for alternative compliance with the PUC. PacifiCorp is a large electric utility serving 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately 45,000 customers in Northern California. PacifiCorp is the only electrical corporation that qualifies for the alternative compliance provisions. The rationale for PacifiCorp's special treatment is that it has a much smaller customer base over which to spread the costs of compliance than do the state's other electrical corporations. In addition, a large portion of PacifiCorp's California customers are low-income. This bill eliminates the alternative compliance option.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: June 29, 2016

ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE

Mike Gatto, Chair

SBPCA Bill Id:SB 1453

Author:(De León) – As Introduced Ver:February 19, 2016

SENATE VOTE: 26-10

SUBJECT: Electrical generation: greenhouse gases emission performance standard

SUMMARY: Requires the California Public Utilities Commission (CPUC) to disallow an electrical corporation to recover in rates the cost of any capital expenditure for baseload generation that does not comply with California's greenhouse gas (GHG) emission performance standard (EPS). Repeals an exemption allowing Pacificorp to meet the state's EPS through an alternative form of compliance. Specifically, this bill:

1. Requires the CPUC to review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the GHG EPS.
2. Directs the CPUC to not allow those costs to be recovered in rates if:
   1. The proposed capital expenditure will materially extend the service life of the baseload generation;
   2. Cost-effective alternative resources not already owned or contracted for by the investor-owned utility (IOU) would provide superior long-term value to customers and satisfy the GHG EPS; or
   3. The accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of GHGs.
3. Repeals from statute the authorization for an IOU that provides electric service to 75,000 or fewer customers in California to file with the CPUC a proposal for alternative compliance with the state's EPS.

EXISTING LAW:

1. Prohibits any load-serving entity (electrical corporations, electric service providers, and community choice aggregators) serving end-use customers in the state, and any local publicly owned electric utility, from entering into a long-term financial commitment for baseload generation unless that baseload generation complies with a GHGs EPS. (Public Utilities Code Section 8341(a))
2. Allows an electrical corporation that provides electric service to 75,000 or fewer retail end-use customers in California to file a proposal at the CPUC for alternative compliance with this section, which the CPUC may accept if: a) a majority of the electrical corporation's retail end-use customers for electric service are located outside of California; and b) the emissions of GHGs to generate electricity for the retail end-use customers of the electrical corporation are subject to a review by a utility regulatory commission of at least one other state in which the electrical corporation provides regulated retail electric service. ((Public Utilities Code Section 8341(d)(9))
3. Requires the CPUC to establish a GHG EPS for all baseload generation of load-serving entities. (Public Utilities Code Section 8341(b))
4. Requires the California Energy Commission (CEC) to establish the GHGs EPS for all baseload generation of local publicly owned electric utilities. (Public Utilities Code Section 8341(c))

FISCAL EFFECT: Unknown.

COMMENTS:

1. The Greenhouse Gas Emission Performance Standard: In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California.^[1] Following passage of SB 1368 (Perata), Chapter 598, Statutes of 2006, the CEC and the CPUC adopted an EPS of 1,100 pounds of carbon dioxide per megawatt-hour for baseload generation. This was, according to the agencies' calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368.

The effect of the EPS was to prevent the state's retail sellers of electricity and publicly-owned utilities (POUs) from entering into new contracts for coal-fired generation of electricity or from renewing such contracts.

1. PacifiCorp allowed alternative Emission Performance Standard: SB 1368 allows an IOU that meets certain criteria to file with the CPUC a proposal for alternative compliance with the EPS. The law permits the CPUC to accept the proposal if: a) a majority of the IOU's customers are located outside of California; and b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service. This alternative compliance option applies to any IOU that serves 75,000 or fewer customers in California.

PacifiCorp is a large electric utility serving 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately 45,000 customers in Northern California. Thus, PacifiCorp is the only IOU that qualifies for the alternative compliance provisions. The rationale for the PacifiCorp's special treatment is that the IOU has a much smaller customer base over which PacifiCorp could spread the costs of compliance than do the state's larger IOUs. In addition, a large portion of PacifiCorp's California customers are low income.

1. Suggested Amendments: The author may wish to consider amendments: a) to place this language in a code section related to procurement and instead require Pacificorp to file a plan by December 2017 to eliminate coal-fired generation from the energy portfolio it provides to its California customers; b) to authorize the CPUC to establish a schedule for phasing out coal-fired generation deliveries by 2030; only allow recovery of costs in rates for capital costs for each coal-fired generation resource in rates on a pro rata basis over the estimated operational life of each asset; and if the estimated operational life extends beyond the date when the coal-fired generation resource will no longer serve California customers under the schedule adopted direct the CPUC to allow recovery of the portion of capital costs associated with the period of time the plant serves California customers; and if the coal-fired generation resource ceases operations prior to its removal from service to California customers under the adopted schedule any unrecovered reasonable and prudently incurred costs associated with that coal-fired generation resource will be determined by the CPUC for rate recovery.

SECTION 1.  Section 8341 of the Public Utilities Code is amended to read:

8341.  (a) No load-serving entity or local publicly owned electric utility may enter into a long-term financial commitment unless any baseload generation supplied under the long-term financial commitment complies with the greenhouse gases emission performance standard established by the commission, pursuant to subdivision (d), for a load-serving entity, or by the Energy Commission, pursuant to subdivision (e), for a local publicly owned electric utility.

(b) (1) The commission shall not approve a long-term financial commitment by an electrical corporation unless any baseload generation supplied under the long-term financial commitment complies with the greenhouse gases emission performance standard established by the commission pursuant to subdivision (d).

(2) The commission shall review any capital expenditure proposed by an electrical corporation for baseload generation that does not comply with the greenhouse gases emission performance standard established by the commission pursuant to subdivision (d). The commission shall not permit those costs to be recovered in rates if it finds any of the following to be true:

(A) The proposed capital expenditure will materially extend the service life of the baseload generation.

(B) Cost-effective alternative resources not already owned or contracted for by the electrical corporation would provide superior long-term value to customers and satisfy the greenhouse gases emission performance standard.

(C) The accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of greenhouse gases.

(3)  The commission may, in order to enforce this section, review any long-term financial commitment proposed to be entered into by an electric service provider or a community choice aggregator.

(4)  The commission shall adopt rules to enforce the requirements of this section, for load-serving entities. The commission shall adopt procedures, for all load-serving entities, to verify the emissions of greenhouse gases from any baseload generation supplied under a contract subject to the greenhouse gases emission performance standard to ensure compliance with the standard.

(5)  In determining whether a long-term financial commitment is for baseload generation, the commission shall consider the design of the powerplant and the intended use of the powerplant, as determined by the commission based upon the electricity purchase contract, any certification received from the Energy Commission, any other permit or certificate necessary for the operation of the powerplant, including a certificate of public convenience and necessity, any procurement approval decision for the load-serving entity, and any other matter the commission determines is relevant under the circumstances.

(6)  Costs incurred by an electrical corporation to comply with this section, including those costs incurred for electricity purchase agreements that are approved by the commission that comply with the greenhouse gases emission performance standard, are to be treated as procurement costs incurred pursuant to an approved procurement plan and the commission shall ensure timely cost recovery of those costs pursuant to paragraph (3) of subdivision (d) of Section 454.5.

(7)  A long-term financial commitment entered into through a contract approved by the commission, for electricity generated by a zero- or low-carbon generating resource that is contracted for, on behalf of consumers of this state on a cost-of-service basis, shall be recoverable in rates, in a manner determined by the commission consistent with Section 380. The commission may, after a hearing, approve an increase from one-half to 1 percent in the return on investment by the third party entering into the contract with an electrical corporation with respect to investment in zero- or low-carbon generation resources authorized pursuant to this subdivision.

(c) (1) The Energy Commission shall adopt regulations for the enforcement of this chapter with respect to a local publicly owned electric utility.

(2) The Energy Commission may, in order to ensure compliance with the greenhouse gases emission performance standard by local publicly owned electric utilities, apply the procedures adopted by the commission to verify the emissions of greenhouse gases from baseload generation pursuant to subdivision (b).

(3) In determining whether a long-term financial commitment is for baseload generation, the Energy Commission shall consider the design of the powerplant and the intended use of the powerplant, as determined by the Energy Commission based upon the electricity purchase contract, any certification received from the Energy Commission, any other permit for the operation of the powerplant, any procurement approval decision for the load-serving entity, and any other matter the Energy Commission determines is relevant under the circumstances.

(d) (1) On or before February 1, 2007, the commission, through a rulemaking proceeding, and in consultation with the Energy Commission and the State Air Resources Board, shall establish a greenhouse gases emission performance standard for all baseload generation of load-serving entities, at a rate of emissions of greenhouse gases that is no higher than the rate of emissions of greenhouse gases for combined-cycle natural gas baseload generation. Enforcement of the greenhouse gases emission performance standard shall begin immediately upon the establishment of the standard. All combined-cycle natural gas powerplants that are in operation, or that have an Energy Commission final permit decision to operate as of June 30, 2007, shall be deemed to be in compliance with the greenhouse gases emission performance standard.

(2) In determining the rate of emissions of greenhouse gases for baseload generation, the commission shall include the net emissions resulting from the production of electricity by the baseload generation.

(3) The commission shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for cogeneration recognizes the total usable energy output of the process, and includes all greenhouse gases emitted by the facility in the production of both electrical and thermal energy.

(4) In calculating the emissions of greenhouse gases by facilities generating electricity from biomass, biogas, or landfill gas energy, the commission shall consider net emissions from the process of growing, processing, and generating the electricity from the fuel source.

(5) Carbon dioxide that is injected in geological formations, so as to prevent releases into the atmosphere, in compliance with applicable laws and regulations shall not be counted as emissions of the powerplant in determining compliance with the greenhouse gases emissions performance standard.

(6) In adopting and implementing the greenhouse gases emission performance standard, the commission, in consultation with the Independent System Operator shall consider the effects of the standard on system reliability and overall costs to electricity customers.

(7) In developing and implementing the greenhouse gases emission performance standard, the commission shall address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.

(8) In developing and implementing the greenhouse gases emission performance standard, the commission shall consider and act in a manner consistent with any rules adopted pursuant to Section 824a-3 of Title 16 of the United States Code.

(e) (1) On or before June 30, 2007, the Energy Commission, at a duly noticed public hearing and in consultation with the commission and the State Air Resources Board, shall establish a greenhouse gases emission performance standard for all baseload generation of local publicly owned electric utilities at a rate of emissions of greenhouse gases that is no higher than the rate of emissions of greenhouse gases for combined-cycle natural gas baseload generation. The greenhouse gases emission performance standard established by the Energy Commission for local publicly owned electric utilities shall be consistent with the standard adopted by the commission for load-serving entities. Enforcement of the greenhouse gases emission performance standard shall begin immediately upon the establishment of the standard. All combined-cycle natural gas powerplants that are in operation, or that have an Energy Commission final permit decision to operate as of June 30, 2007, shall be deemed to be in compliance with the greenhouse gases emission performance standard.

(2) The greenhouse gases emission performance standard shall be adopted by regulation pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(3) In determining the rate of emissions of greenhouse gases for baseload generation, the Energy Commission shall include the net emissions resulting from the production of electricity by the baseload generation.

(4) The Energy Commission shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for cogeneration recognizes the total usable energy output of the process, and includes all greenhouse gases emitted by the facility in the production of both electrical and thermal energy.

(5) In calculating the emissions of greenhouse gases by facilities generating electricity from biomass, biogas, or landfill gas energy, the Energy Commission shall consider net emissions from the process of growing, processing, and generating the electricity from the fuel source.

(6) Carbon dioxide that is captured from the emissions of a powerplant and that is permanently disposed of in geological formations in compliance with applicable laws and regulations, shall not be counted as emissions from the powerplant.

(7) In adopting and implementing the greenhouse gases emission performance standard, the Energy Commission, in consultation with the Independent System Operator, shall consider the effects of the standard on system reliability and overall costs to electricity customers.

(8) In developing and implementing the greenhouse gases emission performance standard, the Energy Commission shall address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.

(9) In developing and implementing the greenhouse gases emission performance standard, the Energy Commission shall consider and act in a manner consistent with any rules adopted pursuant to Section 824a-3 of Title 16 of the United States Code.

(f) The Energy Commission, in a duly noticed public hearing and in consultation with the commission and the State Air Resources Board, shall reevaluate and continue, modify, or replace the greenhouse gases emission performance standard when an enforceable greenhouse gases emissions limit is established and in operation, that is applicable to local publicly owned electric utilities.

(g) The commission, through a rulemaking proceeding and in consultation with the Energy Commission and the State Air Resources Board, shall reevaluate and continue, modify, or replace the greenhouse gases emission performance standard when an enforceable greenhouse gases emissions limit is established and in operation, that is applicable to load-serving entities.

SECTION 1. Section 454.53 is added to the Public Utilities Code, to read:

454.53. (a) The requirements of the section apply to an electrical corporation with a majority of retail customers located outside of California and providing electric service to 75,000 or fewer retail end-use customers in California.

(b) (1) The electrical corporation shall propose, by no later than December 31, 2017, a schedule for no longer serving its retail customers located in California with electricity sourced from any coal-fired generation resources.

(2) The commission shall establish a schedule for removing each specified coal-fired generation resource from the portfolio serving California customers. The schedule shall commence on January 1, 2020, and be completed no later than December 31, 2030. In determining the schedule, the commission shall balance environmental goals with rate impacts on California customers.

(3) The electrical corporation shall submit a procurement plan consistent with the requirements of Section 454.52 to serve its California retail customers with a balanced portfolio of environmentally preferred generation to replace the coal-fired generation resources that will be phased out pursuant to the schedule adopted pursuant to paragraph (2).

(4) The electrical corporation shall identify the estimated remaining operational life for its coal-fired generation resource capacity used to supply California retail customers.

(c) The commission shall permit the recovery of reasonable and prudently incurred capital costs for each coal-fired generation resource in rates on a pro rata basis over the estimated operational life of each asset. If the estimated operational life extends beyond the date when the coal-fired generation resource will no longer serve California customers under the schedule adopted pursuant to paragraph (2) of subdivision (b), the commission shall only permit recovery of the portion of capital costs associated with the period of time the plant serves California customers. If the coal-fired generation resource ceases operations prior to its removal from service to California customers under the schedule adopted pursuant to paragraph (2) of subdivision (b), any unrecovered reasonable and prudently incurred costs associated with that coal-fired generation resource shall be considered abandoned plant for purposes of any recovery permitted in retail rates.

1. Support and Opposition:

Supporters state that this bill is consistent with the state's evolving climate and energy policy goals and will ensure that all utilities serving California customers shift to a cleaner energy mix as rapidly as practicable.

Pacificorp has no position but stated a concern that it should be allowed to recover costs for safety, environmental or otherwise required investments in such facilities only to the extent that those investments would not extend the otherwise depreciable life of the asset.

1. Prior Legislation:

SB 1368 (Perata), Chapter 598, Statutes of 2006: Requires the CPUC and CEC, respectively, to establish a GHG EPS applicable to new long-term financial commitments for baseload electricity generation of load-serving entities and POUs.

SB 180 (Jackson) of 2015: Defined "peaking" and "nonpeaking" electricity generation; required establishment of GHG EPSs for each type of generation; and prohibited long-term financial commitments with generating sources that do not meet the emission standards. Died in the Senate Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Asian Pacific Environmental Network

California Coastal Protection Network

California League of Conservation Voters

Coalition for Clean Air

Sierra Club California

Vote Solar

Opposition

None on file.

Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083

1. Source: California Energy Commission Energy Almanac (http://energyalmanac.ca.gov/electricity/total_system_power.html). ↑

 THIRD READING  

Bill No: SB 1453

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 7-0, 4/5/16

AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley

NO VOTE RECORDED: Morrell, Cannella, Gaines, Wolk

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 4/20/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/16/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Nielsen

NO VOTE RECORDED: Bates

SUBJECT:

SOURCE: Author

DIGEST: This bill requires the California Public Utilities Commission (CPUC) to not allow an investor-owned electrical utility (IOU) to recover in rates the cost of any capital expenditure for baseload generation that does not comply with California’s greenhouse gas (GHG) emission performance standard. This bill also repeals existing statute that effectively allows the Pacific Corp electrical utility, with CPUC permission, to meet the state’s emission performance standard through an alternative form of compliance.

ANALYSIS: Existing law, pursuant to Public Utilities Code Section 8340 et seq.:

1. Prohibits a load-serving entity – IOU, electric service provider and community choice aggregator – or a local publicly-owned utility (POU) from entering into a long-term financial commitment for baseload electricity generation – meaning either a new ownership investment in baseload generation or a new or renewed contract with a term of five or more years for such generation – unless that generation complies with a GHG emission performance standard. Existing law directs the CPUC and the California Energy Commission (CEC) to establish the GHG emission performance standard applicable to load-serving entities and POUs, respectively.
2. Requires the CPUC, by February 1, 2007, in consultation with the CEC and the California Air Resources Board (ARB), to establish a GHG emission performance standard for all baseload generation of load-serving entities and POUs at a rate of emissions of GHG that is no higher than the rate of emissions of such gases for combined-cycle natural gas baseload generation. Existing law defines “baseload generation” as electricity generation from a powerplant that is designed and intended to provide electricity at an annualized plant capacity factor of at least 60 percent.
3. Requires the CEC, by June 30, 2007, in consultation with the CPUC and the ARB, to establish a GHG emission performance standard for all baseload generation of POU at a rate of emissions of GHG that is no higher than the rate of emissions of such gases for combined-cycle natural gas baseload generation. Statute makes requirements of the CEC in relation to its adoption of the emission performance standard with powers and responsibilities regarding its emission performance standard and the POUs that largely parallel the CPUC’s powers and responsibilities regarding its emission performance standard and the load-serving entities.
4. Directs the CEC and the CPUC, each in consultation with ARB, to reevaluate and continue, modify, or replace the GHG emission performance standard once an enforceable standard is in place for POUs and load-serving entities, respectively.
5. Authorizes an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposed alternative for compliance with the emission performance standard. The CPUC may accept upon a showing that (a) the IOU customers are located outside of California and (b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service.

This bill:

1. Repeals from statute the authorization for an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposal for alternative compliance with the state’s emission performance standard.
2. Requires CPUC to review any capital expenditure proposed by an IOU for baseload generation that does not comply with the GHG emission performance standard. Directs CPUC to not allow those costs to be recovered in rates if (a) the proposed capital expenditure will materially extend the service life of the baseload generation; (b) cost-effective alternative resources not already owned or contracted for by the IOU would provide superior long-term value to customers and satisfy the GHG emission performance standard or (c) the accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of GHGs.

Background

The GHG emission performance standard. In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California. (California Energy Commission Energy Almanac (http://energyalmanac.ca.gov/electricity/

total_system_power.html.) Following passage of SB 1368 (Perata, Chapter 598, Statutes of 2006), the CEC and the CPUC adopted an emission performance standard (EPS) for baseload electricity generation, meaning generation from a powerplant designed and intended to provide electricity of at least 60 percent the powerplant’s capacity. The two agencies set the standard at an emissions rate of 1,100 pounds of carbon dioxide (CO2) per megawatt-hour (MWh). This was, according to the agencies’ calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368.

The effect of the EPS was to prevent the state’s retail sellers of electricity and POUs from entering into new contracts for coal-fired generation of electricity or from renewing such contracts. In 2012, the CEC concluded the EPS had:

• Successfully prevented new long-term investments by California utilities in high-emitting baseload resources, such as coal facilities.
• Encouraged the early divestiture of existing high-GHG emitting baseload resources.

In 2013, coal-fired powerplants supplied less than eight percent of the electricity consumed in California. Coal should provide even less of California’s power in coming years as older contracts for coal-generated electricity expire.

PacifiCorp allowed alternative to emission performance standard. SB 1368 allows an IOU that meets certain criteria to file with the CPUC a proposal for alternative compliance with the EPS. The law permits CPUC to accept the proposal if (a) a majority of the IOU’s customers are located outside of California and (b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service. This alternative compliance option applies to any IOU that serves 75,000 or fewer customers in California.

PacifiCorp is large electric utility – it serves 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately only 45,000 customers in Northern California. Thus, PacifiCorp is the only IOU that qualifies for the alternative compliance provisions of SB 1386. The rationale for the PacifiCorp’s’ special treatment is that the IOU has a much smaller customer base over which PacifiCorp could spread the costs of compliance than do the state’s larger IOUs. In addition, a large portion of PacifiCorp’s’ California customers are low income.

Bill proponents argue it is time to end PacifiCorp’s treatment under the emission performance statute.” They note that, today, and unlike other California IOUs, PacifiCorp’s receives most of its electricity from coal-fired powerplants that cannot meet California’s emission performance standard. In addition, proponents complain of PacifiCorp’s’ efforts at the CPUC to recover in rates the costs associated with capital investments in coal-fired power generation. Proponents argue this bill will end a “loophole,” which allows PacifiCorp’s to extend the life of its coal fleet to the detriment of California’s policy goals and, potentially, at the expense of California ratepayers.

Prior/Related Legislation

SB 1368 (Perata, Chapter 598, Statutes of 2006) required CPUC and CEC, respectively, to establish a GHG emission performance standard applicable to new long-term financial commitments for baseload electricity generation of load-serving entities and POUs.

SB 180 (Jackson, 2015) would have (1) defined “peaking” and “nonpeaking” electricity generation, (2) required establishment of GHG emission performance standards for each type of generation and (3) prohibited long-term financial commitments with generating sources that do not meet the emission standards. The bill passed the Senate Energy, Utilities, and Communications Committee on a vote of eight to three and ultimately was held on suspense by Senate Appropriations Committee.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Approximately $131,000 (Public Utilities Commission Utilities Reimbursement Account to the CPUC) for staffing costs.
• Minor and absorbable costs to the ARB.

SUPPORT: (Verified 5/17/16)

Asian Pacific Environmental Network

California Coastal Protection Network

California League of Conservation Voters

Coalition for Clean Air

Sierra Club California

The Utility Reform Network

Vote Solar

OPPOSITION: (Verified 5/17/16)

None received

ARGUMENTS IN SUPPORT: Proponents argue the changes in SB 1453 are necessary to ensure consistent application of California’s GHG policies to all utilities operating in the state. They also contend this bill protects California ratepayers from having to pay the capital costs of PacifiCorp’s’ coal-fired powerplants located in other Western states.

Prepared by:

5/18/16 16:28:12

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SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1453 (De León) - Electrical generation: greenhouse gases emission performance standard

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

SB 1453 repeals from statute the authorization for an investor owned utility (IOU) that provides electric service to 75,000 or fewer customers in California to file with the CPUC a proposal for alternative compliance with the state’s emission performance standard (EPS). The bill also requires the CPUC to review any capital expenditure proposed by an IOU for baseload generation that does not comply with the Greenhouse Gas (GHG) emission performance standard and prohibits the CPUC from allowing those costs to be recovered in rates if certain findings are made.

Fiscal Impact:

• Approximately $131,000 (Public Utilities Commission Utilities Reimbursement Account to the CPUC) for staffing costs.
• Minor and absorbable costs to the Air Resources Board (ARB).

Background:

1. Alternative compliance under SB 1368. SB 1368 allows an IOU that meets certain criteria to file a proposal for alternative compliance with the EPS. The law permits PUC to accept the proposal if a majority of the IOU’s customers are located outside of California and the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service. This alternative compliance option applies to any IOU that serves 75,000 or fewer customers in California.

PacifiCorp. PacifiCorp is a large electric utility serving 1.8 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately only 45,000 customers in Northern California. Thus, PacifiCorp is the only IOU that qualifies for the alternative compliance provisions of SB 1386. The rationale for the PacifiCorp’s special treatment is that the IOU has a much smaller customer base over which PacifiCorp could spread the costs of compliance than do the state’s larger IOUs. In addition, a large portion of PacifiCorp’s California customers are low income.

SB 1453 would eliminate the alternative compliance option, and require all IOUs operating in California to comply with PUC’s established emissions performance standard for GHG emissions. This has the result of prohibiting PacifiCorp from extending or renewing contracts for coal-fired electricity.

Additionally SB 1453 ensures costs associated with extending the life of coal-fired powerplants are not born by the ratepayers. Specifically, the bill requires that any proposed capital expenditures for baseload generation that do not comply with the emissions performance standard for GHGs (i.e., coal powerplants) be reviewed by PUC, and prohibits PUC from allowing costs associated with the capital expenditure be recoverable by rates if the proposal will extend the life of the noncompliant baseload generation, there are other viable options that comply with the GHG emission performance standard, or retirement of the baseload generation would advance state and regional GHG goals.

Proposed Law:

This bill:

1. Repeals from statute the authorization for an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposal for alternative compliance with the state’s emission performance standard.
2. Requires PUC to review any capital expenditure proposed by an IOU for baseload generation that does not comply with the GHG emission performance standard and directs PUC to not allow those costs to be recovered in rates if any of the following are true:
   1. The proposed capital expenditure will materially extend the service life of the baseload generation.
   2. Cost-effective alternative resources not already owned or contracted for by the IOU would provide superior long-term value to customers and satisfy the GHG emission performance standard.
   3. The accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of GHGs.

Related Legislation:

SB 180 (Jackson, 2015) would have defined “peaking” and “nonpeaking” electricity generation, required establishment of GHG emission performance standards for each type of generation and prohibited long-term financial commitments with generating sources that do not meet the emission standards. The bill passed this committee on a vote of eight to three and ultimately was held on suspense by Senate Committee on Appropriations.

SB 1368 (Perata, Chapter 598, Statutes of 2006) required CPUC and CEC, respectively, to establish a GHG emission performance standard applicable to new long-term financial commitments for baseload electricity generation of load-serving entities and POUs.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: SB 1453

SUBJECT: Electrical generation: greenhouse gases emission performance standard

ANALYSIS:

Existing law:

1. Requires California Public Utilities Commission (CPUC), by February 1, 2007, in consultation with California Energy Resources Conservation and Development Commission (CEC) and the California Air Resources Board (ARB), to establish a greenhouse gas (GHG) emission performance standard for all baseload generation of load-serving entities at a rate of emissions of GHG that is no higher than the rate of emissions of GHGs for combined-cycle natural gas baseload generation.
2. Requires CEC, by June 30, 2007, in consultation with CPUC and the ARB, to establish a GHG emission performance standard for all baseload generation of publicly owned utilities (POU) at a rate of emissions of GHG that is no higher than the rate of emissions of GHGs for combined-cycle natural gas baseload generation.
3. Prohibits a load-serving entity, or a POU, from entering into a long-term financial commitment for baseload electricity generation unless that generation complies with the GHG emission performance standard.

1. Directs the CEC and the CPUC, each in consultation with ARB, to reevaluate and continue, modify, or replace the GHG emission performance standard once an enforceable standard is in place for POUs and load-serving entities, respectively.
2. Authorizes an Investor Owned Utility (IOU) that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposed alternative for compliance with the emission performance standard. The CPUC may accept upon a showing that (a) the IOU customers are located outside of California and (b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service.
   

This bill:

1. Repeals from statute the authorization for an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposal for alternative compliance with the state’s emission performance standard.
2. Requires PUC to review any capital expenditure proposed by an IOU for baseload generation that does not comply with the GHG emission performance standard and directs PUC to not allow those costs to be recovered in rates if any of the following are true:
   1. The proposed capital expenditure will materially extend the service life of the baseload generation.
   2. Cost-effective alternative resources not already owned or contracted for by the IOU would provide superior long-term value to customers and satisfy the GHG emission performance standard.
   3. The accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of GHGs.
      

Background

1. SB 1368 and Coal-Generated Electricity. In the early 2000’s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California, with about half of that from coal imports.

From 2007 to 2012, coal energy imports declined by 18%, and energy from in-state coal and petroleum (pet) coke plants declined by 62%.

According to a CEC report on current and expected coal use updated in November of 2014, “Coal-based energy supplies totaled 23,323 gigawatt hours (GWh) in 2012, equal to about 8% of the statewide energy requirements to serve California loads. Nearly all these energy imports are tied to long-term utility power purchase agreements, ownership interests or procurement contracts, some of which have been in place for decades. Publicly owned utilities in Southern California have most of the long-term contracts with out-of-state coal plants.” Specifically, of the coal energy imports in 2012, the largest share, 44% went to Los Angeles Department of Water and Power, followed by 24% to Southern California Edison, 7% to Anaheim, and 5% to California Department of Water Resources.

“The supply of coal-fired energy procured by California utilities from out-of-state plants or generated in California by coal and pet coke plants is expected to decline by 38% between 2012 and 2022. In these years, associated greenhouse gas emissions are expected to drop from about 23.8 million metric tons (MMT) of carbon dioxide equivalent (CO₂e) to 14.8 million metric tons.”

According to CEC, this decline in coal contract deliveries is due in large part to the constraints imposed by the emission performance standard (EPS) created by SB 1368 (Perata, Chapter 598, Statutes of 2006).

Specifically, SB 1368 (Perata, Chapter 598, Statutes of 2006) required CEC and PUC to adopt a greenhouse gas EPS for baseload electricity generation and prohibits the state’s utilities from entering into long-term financial commitments unless the baseload generation supplied under the long-term financial commitment complies with the GHG emission performance standard. SB 1368 required the EPS to be capped at a rate of GHG emissions that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation.

Pursuant to SB 1368, the GHG emission performance standard was set at 1,100 pounds of carbon dioxide (CO₂) per megawatt-hour (MWh) by PUC and CEC. Since all existing contracts with coal-fired generating facilities provide baseload energy supplies that exceed emissions limits defined by the EPS (on average, coal combustion releases approximately 2,250 pounds of carbon dioxide into the atmosphere for each MWh generated), as these contracts expire, they cannot be renewed or extended with another long-term contract.

1. Alternative compliance under SB 1368. SB 1368 allows an IOU that meets certain criteria to file a proposal for alternative compliance with the EPS. The law permits PUC to accept the proposal if a majority of the IOU’s customers are located outside of California and the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service. This alternative compliance option applies to any IOU that serves 75,000 or fewer customers in California.

PacifiCorp. PacifiCorp is a large electric utility serving 1.8 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately only 45,000 customers in Northern California. Thus, PacifiCorp is the only IOU that qualifies for the alternative compliance provisions of SB 1386. The rationale for the PacifiCorp’s special treatment is that the IOU has a much smaller customer base over which PacifiCorp could spread the costs of compliance than do the state’s larger IOUs. In addition, a large portion of PacifiCorp’s California customers are low income.

SB 1453 would eliminate the alternative compliance option, and require all IOUs operating in California to comply with PUC’s established emissions performance standard for GHG emissions. This has the result of prohibiting PacifiCorp from extending or renewing contracts for coal-fired electricity.

Additionally SB 1453 ensures costs associated with extending the life of coal-fired powerplants are not born by the ratepayers. Specifically, the bill requires that any proposed capital expenditures for baseload generation that do not comply with the emissions performance standard for GHGs (i.e., coal powerplants) be reviewed by PUC, and prohibits PUC from allowing costs associated with the capital expenditure be recoverable by rates if the proposal will extend the life of the noncompliant baseload generation, there are other viable options that comply with the GHG emission performance standard, or retirement of the baseload generation would advance state and regional GHG goals.

Comments

1. Purpose of Bill. Bill proponents argue “it is time to end PacifiCorp’s treatment under the emission performance statute.” They note that, today, and unlike other California IOUs, PacifiCorp receives most of its electricity from coal-fired powerplants that cannot meet California’s emission performance standard. In addition, proponents complain of PacifiCorp’s efforts at the CPUC to recover in rates the costs associated with capital investments in coal-fired power generation. Proponents argue this bill will end a “loophole,” which allows PacifiCorp to extend the life of its coal fleet to the detriment of California’s policy goals and, potentially, at the expense of California ratepayers.
   

Related/Prior Legislation

SB 180 (Jackson, 2015) would have defined “peaking” and “nonpeaking” electricity generation, required establishment of GHG emission performance standards for each type of generation and prohibited long-term financial commitments with generating sources that do not meet the emission standards. The bill passed this committee on a vote of eight to three and ultimately was held on suspense by Senate Committee on Appropriations.

SB 1368 (Perata, Chapter 598, Statutes of 2006) required CPUC and CEC, respectively, to establish a GHG emission performance standard applicable to new long-term financial commitments for baseload electricity generation of load-serving entities and POUs.

DOUBLE REFERRAL:

This measure was heard in Senate Energy, Utilities and Communications Committee on April 5, 2016, and passed out of committee with a vote of 7-0.

SOURCE:

Author

SUPPORT:

Asian Pacific Environmental Network

California Coastal Protection Network

Coalition for Clean Air

Sierra Club California

The Utility Reform Network

Vote Solar

OPPOSITION:

None received

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2015 - 2016 Regular

Bill No: Hearing Date: 4/5/2016

SUBJECT:

DIGEST: This bill requires the California Public Utilities Commission (CPUC) to not allow an investor-owned electrical utility (IOU) to recover in rates the cost of any capital expenditure for baseload generation that does not comply with California’s greenhouse gas (GHG) emission performance standard. This bill also repeals existing statute that effectively allows the Pacific Corp electrical utility, with CPUC permission, to meet the state’s emission performance standard through an alternative form of compliance.

ANALYSIS:

Existing law:

Public Utilities Code §8340 et seq.:

1. Prohibits a load-serving entity – IOU, electric service provider (ESP) and community choice aggregator (CCA) – or a local publicly-owned utility (POU) from entering into a long-term financial commitment for baseload electricity generation – meaning either a new ownership investment in baseload generation or a new or renewed contract with a term of five or more years for such generation – unless that generation complies with a GHG emission performance standard. Existing law directs the CPUC and the California Energy Commission (CEC) to establish the GHG emission performance standard applicable to load-serving entities and POUs, respectively.
2. Requires the CPUC, by February 1, 2007, in consultation with the CEC and the California Air Resources Board (ARB), to establish a GHG emission performance standard for all baseload generation of load-serving entities and POUs at a rate of emissions of GHG that is no higher than the rate of emissions of such gases for combined-cycle natural gas baseload generation. Current law defines “baseload generation” as electricity generation from a powerplant that is designed and intended to provide electricity at an annualized plant capacity factor of at least 60 percent.
3. Requires the CEC, by June 30, 2007, in consultation with the CPUC and the ARB, to establish a GHG emission performance standard for all baseload generation of POU at a rate of emissions of GHG that is no higher than the rate of emissions of such gases for combined-cycle natural gas baseload generation. Statute makes requirements of the CEC in relation to its adoption of the emission performance standard with powers and responsibilities regarding its emission performance standard and the POUs that largely parallel the CPUC’s powers and responsibilities regarding its emission performance standard and the load-serving entities.
4. Directs the CEC and the CPUC, each in consultation with ARB, to reevaluate and continue, modify, or replace the GHG emission performance standard once an enforceable standard is in place for POUs and load-serving entities, respectively.
5. Authorizes an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposed alternative for compliance with the emission performance standard. The CPUC may accept upon a showing that (a) the IOU customers are located outside of California and (b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service.

This bill:

1. Repeals from statute the authorization for an IOU that provides electric service to 75,000 or fewer customers in California to file with CPUC a proposal for alternative compliance with the state’s emission performance standard.
2. Requires CPUC to review any capital expenditure proposed by an IOU for baseload generation that does not comply with the GHG emission performance standard. Directs CPUC to not allow those costs to be recovered in rates if (a) the proposed capital expenditure will materially extend the service life of the baseload generation; (b) cost-effective alternative resources not already owned or contracted for by the IOU would provide superior long-term value to customers and satisfy the GHG emission performance standard or (c) the accelerated retirement of the baseload generation unit would promote state and regional goals for the reduction of emissions of GHGs.

Background

The GHG Emission Performance Standard. In the early 2000s, coal-fired powerplants supplied about one-fifth of the electricity consumed in California.^[1] Following passage of SB 1368 (Perata, 2006), the CEC and the CPUC adopted an emission performance standard (EPS) for baseload electricity generation, meaning generation from a powerplant designed and intended to provide electricity of at least 60 percent the powerplant’s capacity. The two agencies set the standard at an emissions rate of 1,100 pounds of carbon dioxide (CO2) per megawatt-hour (MWh). This was, according to the agencies’ calculations, a rate that did not exceed the rate of GHG emitted by a natural gas-fired combined-cycle powerplant used for baseload generation, the standard established by SB 1368.

The effect of the EPS was to prevent the state’s retail sellers of electricity and POUs from entering into new contracts for coal-fired generation of electricity or from renewing such contracts. In 2012, the CEC concluded the EPS had:

• Successfully prevented new long-term investments by California utilities in high-emitting baseload resources, such as coal facilities.
• Encouraged the early divestiture of existing high-GHG emitting baseload resources.

In 2013, coal-fired powerplants supplied less than eight percent of the electricity consumed in California. Coal should provide even less of California’s power in coming years as older contracts for coal-generated electricity expire.

PacifiCorp allowed alternative to emission performance standard. SB 1368 allows an IOU that meets certain criteria to file with the CPUC a proposal for alternative compliance with the EPS. The law permits CPUC to accept the proposal if (a) a majority of the IOU’s customers are located outside of California and (b) the emissions of GHGs to generate electricity for the IOU customers are subject to review by the utility regulatory commission of at least one other state in which the IOU provides regulated retail electric service. This alternative compliance option applies to any IOU that serves 75,000 or fewer customers in California.

PacifiCorp is large electric utility – it serves 1.7 million customers in six states in the Pacific Northwest and Rocky Mountain regions. However, PacifiCorp serves approximately only 45,000 customers in Northern California. Thus, PacifiCorp is the only IOU that qualifies for the alternative compliance provisions of SB 1386. The rationale for the PacifiCorp’s’ special treatment is that the IOU has a much smaller customer base over which PacifiCorp could spread the costs of compliance than do the state’s larger IOUs. In addition, a large portion of PacifiCorp’s’ California customers are low income.

Bill proponents argue it is time to end PacifiCorp’s treatment under the emission performance statute.” They note that, today, and unlike other California IOUs, PacifiCorp’s receives most of its electricity from coal-fired powerplants that cannot meet California’s emission performance standard. In addition, proponents complain of PacifiCorp’s’ efforts at the CPUC to recover in rates the costs associated with capital investments in coal-fired power generation. Proponents argue this bill will end a “loophole,” which allows PacifiCorp’s to extend the life of its coal fleet to the detriment of California’s policy goals and, potentially, at the expense of California ratepayers.

Double-referred. Should this bill be approved by this committee, it has been referred to the Senate Committee on Environmental Quality.

Prior/Related Legislation

SB 1368 (Perata, Chapter 598, Statutes of 2006) required CPUC and CEC, respectively, to establish a GHG emission performance standard applicable to new long-term financial commitments for baseload electricity generation of load-serving entities and POUs.

SB 180 (Jackson, 2015) would have defined “peaking” and “nonpeaking” electricity generation, (2) required establishment of GHG emission performance standards for each type of generation and (3) prohibited long-term financial commitments with generating sources that do not meet the emission standards. The bill passed this committee on a vote of eight to three and ultimately was held on suspense by Senate Committee on Appropriations.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Coalition for Clean Air

Sierra Club California

The Utility Reform Network

Vote Solar

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: Proponents argue the changes in SB 1453 are necessary to ensure consistent application of California’s GHG policies to all utilities operating in the state. They also contend this bill protects California ratepayers from having to pay the capital costs of PacifiCorp’s’ coal-fired powerplants located in other Western states.

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1. Source: California Energy Commission Energy Almanac (http://energyalmanac.ca.gov/electricity/total_system_power.html). ↑