AB 726: Energy.

The existing restructuring of the electrical industry within the Public Utilities Act provides for the establishment of the Electricity Oversight Board and the Independent System Operator (ISO) and requires the ISO to ensure efficient and reliable operation of the electrical transmission grid. Certain existing law prohibits the ISO from entering into a multistate entity or regional organization unless the ISO receives approval from the Electricity Oversight Board. Other existing law states the intent of the Legislature to provide for the evolution of the ISO into a regional organization to promote the development of regional electricity transmission markets in the western states. The Clean Energy and Pollution Reduction Act of 2015 provided for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process, and repealed or made inoperative those other provisions of existing law relating to the ISO entering into a multistate entity or transforming into a regional organization.

This bill would repeal the existing law governing the transformation of the ISO into a regional organization adopted as part of the Clean Energy and Pollution Reduction Act of 2015 and replace it with provisions authorizing the transformation of the ISO into a regional organization if the ISO governing board undertakes certain steps and the Commission on Regional Grid Transformation, which the bill would create, makes specified findings by December 31, 2018. The bill would make inoperative other provisions of existing law relating to the ISO entering into a multistate entity or transforming into a regional organization unless the Commission on Regional Grid Transformation does not make the specified findings by that date. The bill would make existing provisions relating to the formation of advisory committees to the ISO governing board, the adoption of maintenance, repair, and replacement standards for transmission facilities, requiring the ISO to conduct performance reviews following certain major outages, and establishing the Electricity Oversight Board and specifying its responsibilities inoperative if the Commission on Regional Grid Transformation makes the specified findings.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities, as defined, are under the direction of their governing boards. The California Renewables Portfolio Standard Program requires the commission to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatthours of those products sold to their retail end-use customers achieves 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 40% by December 31, 2024, 45% by December 31, 2027, and 50% by December 31, 2030. The program additionally requires each local publicly owned electric utility to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. The program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles, requires that all retail sellers and local publicly owned electric utilities procure a balanced portfolio of electricity products from specified categories of eligible renewable energy resources. The provisions defining these categories and imposing this obligation on retail sellers are referred to as the portfolio content requirements.

This bill would require the commission, by March 31, 2018, to require electrical corporations with more than 100,000 service connections in California to procure tax-advantaged renewable resources, as defined, in an amount specified by the commission that are over and above those resources necessary to meet the procurement requirements for the applicable renewables portfolio standard compliance period if the commission makes specified determinations. The bill would require each electrical corporation, in procuring tax-advantaged renewable resources, to give priority to projects that provide flexible and controllable eligible renewable energy resources that support the grid management needs of the Independent System Operator or that can displace conventional generation in locally constrained resource areas. The bill would require that an electrical corporation submit executed contracts for tax-advantaged renewable resources to the commission for review by no later than September 1, 2018, and require the commission to act on all final contracts by December 31, 2018. The bill would provide that the procurement of tax-advantaged renewable resources pursuant to this authority would be on behalf of retail end-use customers of all retail sellers and would require the commission to authorize an electrical corporation to recover expenses for the procurement subject to certain conditions. The bill would authorize an electric service provider or community choice aggregator meeting certain requirements to elect to provide its proportionate share of tax-advantaged renewable resources specified by the commission that would otherwise be procured by an electrical corporation and would reduce the procurement obligation of the electrical corporation in the event of such an election.