Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

If the California Renewables Portfolio Standard Program requires more than 50% of retail sales of electricity to come from eligible renewable energy resources, this bill would authorize a local publicly owned electric utility, which has a gas-fired powerplant on which public debt is owed and that is operating at less than 20% of capacity, with Energy Commission approval, to adjust its renewable energy procurement targets by a specified amount if additional conditions are met. The bill would require a local publicly owned electric utility intending to act pursuant to that authorization to notify the Energy Commission by April 1, 2019, of that intention.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

If the California Renewables Portfolio Standard Program requires more than 50% of retail sales of electricity to come from eligible renewable energy resources, this bill would authorize a local publicly owned electric utility, which has a gas-fired powerplant on which public debt is owed and that is operating at less than 20% of capacity, with Energy Commission approval, to adjust its renewable energy procurement targets by a specified amount if additional conditions are met. The bill would require a local publicly owned electric utility intending to act pursuant to that authorization to notify the Energy Commission by April 1, 2019, of that intention.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, utility to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

If the California Renewables Portfolio Standard Program requires more than 50% of retail sales of electricity to come from eligible renewable energy resources, this bill would authorize a local publicly owned electric utility, which has a gas-fired powerplant on which public debt is owed and that is operating at less than 20% of capacity, with Energy Commission approval, to adjust its renewable energy procurement targets by a specified amount if additional conditions are met. The bill would require a local publicly owned electric utility intending to act pursuant to that authorization to notify the Energy Commission by April 1, 2019, of that intention.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

If the California Renewables Portfolio Standard Programs procurement requirements are extended or expanded, or if additional requirements are adopted requiring that retail sales of electricity in California come from zero-carbon electricity generating resources, Program requires more than 50% of retail sales of electricity to come from eligible renewable energy resources, this bill would authorize a local publicly owned electric utility utility, which has a gas-fired powerplant on which public debt is owed and that is operating at less than 20% of capacity, to adjust its renewable energy procurement requirements to ensure that the procurement of additional electricity from eligible renewable energy resources or zero-carbon resources, in combination with the procurement of electricity from unavoidable long-term contracts and ownership agreements, as defined, do not exceed the total retail sales of the utility during a California Renewables Portfolio Standard Program compliance period, if specified conditions are met. targets by a specified amount if additional conditions are met. The bill would require a local publicly owned electric utility intending to act pursuant to that authorization to notify the Energy Commission by April 1, 2019, of that intention.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

This bill would authorize local publicly owned electric utilities, upon notifying, and submitting specified findings to to, the State Energy Resources Conservation and Development Commission, to additionally adopt conditions that mitigate against the loss of public revenues if the applicable procurement and related requirements would lead to decreased generation from a powerplant with outstanding public indebtedness, as specified.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

This bill would authorize local publicly owned electric utilities, upon submitting specified findings to the State Energy Resources Conservation and Development Commission, to additionally adopt conditions that mitigate against the loss of public revenues if the applicable procurement and related requirements would lead to decreased generation from a powerplant with outstanding public indebtedness, as specified.

Under existing law, the Public Utilities Commission (PUC) 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 PUC 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 achieve 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, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Existing law requires local publicly owned electric utilities to adopt procurement requirements, but authorizes them to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified.

This bill would authorize local publicly owned electric utilities, upon submitting specified findings to the State Energy Resources Conservation and Development Commission, to additionally adopt conditions that mitigate against the loss of public revenues if the applicable procurement and related requirements would lead to decreased generation from a powerplant with outstanding public indebtedness, as specified.

 UNFINISHED BUSINESS  

Bill No: SB 1110

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 9-0, 4/3/18

AYES: Hueso, Morrell, Bradford, Cannella, Hertzberg, Hill, McGuire, Vidak, Wiener

NO VOTE RECORDED: Skinner, Stern

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 36-0, 5/29/18

AYES: Allen, Anderson, Atkins, Bates, Beall, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stone, Vidak, Wiener, Wilk

NO VOTE RECORDED: Berryhill, Stern, Wieckowski

ASSEMBLY FLOOR: 77-0, 8/27/18 - See last page for vote

SUBJECT:

SOURCE: Northern California Power Agency

DIGEST:

This bill provides local publicly owned electric utilities (POUs) with additional flexibility in complying with the state’s requirements to procure renewable energy. Specifically, this bill authorizes POUs to mitigate against the loss of public revenues if complying with the state’s Renewable Portfolio Standard (RPS) would lead to decreased generation from a power plant with outstanding public indebtedness that meets specified criteria.

Assembly Amendments

authorize POUs to use the additional flexibility afforded by this bill only if the RPS increases to more than 50 percent and if the POUs powerplant is operated at below 20 percent of its total capacity on an average annual basis during a given compliance period. Additional amendments recast the language into a different code section and provide that the POU can adjust its renewable generation procurement between the actual generation from the powerplant and the amount of generation that the powerplant would have produced if it had operated at 20 percent of its total capacity.

ANALYSIS:

Existing law:

1. Establishes the RPS which requires retail sellers of electricity – investor-owned utilities (IOUs), community choice aggregators (CCAs), and energy service providers (ESPs) – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically: 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 40 percent by December 31, 2024, 45 percent by December 31, 2027, and 50 percent by December 31, 2030. (Public Utilities Code §399.11 et seq.)
2. Defines a “renewable electrical generation facility” as one that uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts (MW) or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology. (Public Resources Code §25741)
3. Requires each local POU to procure a minimum quantity of electricity products from eligible renewable resources to achieve the procurement requirements established by the RPS. Authorizes the POU to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified. (Public Utilities Code §399.30)
4. Requires the local POU to report to the California Energy Commission (CEC) on its progress towards meeting the RPS. (Public Utilities Code §9508)

This bill:

1. Requires the provisions of this bill to only apply to a gas-fired powerplant that is located inside the state, is owned by and serves the electrical demands of a single local POU, and meets all of the following conditions:
   1. The local POU has outstanding public indebtedness associated with the powerplant, the powerplant was planned and built after January 1, 2000, and the debt was secured before January 1, 2017.
   2. Operating the powerplant below a 20-percent capacity factor on an annual average on a yearly basis may result in the loss of employment of a powerplant employee who receives a prevailing wage.
   3. The powerplant is subject to and meets the state’s greenhouse gases (GHG) emission performance standard established by the CEC.
   4. The powerplant is not located in a disadvantaged community, as defined by a census tract that has received a score on the California Communities Environmental Health Screening 3.0, also known as the CalEnviroScreen 3.0, in the 81^st to 100^th percentile.
   5. The local POU can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the CEC, that the powerplant was built in response to the energy crisis of 2000-01.
   6. The powerplant has not undergone repowering and is not serving as peaker powerplant.
2. Provides, if the procurement requirements of this article require more than 50 percent of retail sales of electricity to come from eligible renewable energy resources, then a local POU that is the sole owner of a powerplant that both meets the requirements above and is operating below 20 percent of its total capacity on an average annual basis during a given compliance period may, based on the utility’s operations, adjust its renewable energy procurement targets by an amount equal to the difference between the actual generation from the powerplant and the amount of generation that the powerplant would have produced if it had operated at 20 percent of its total capacity, if all of the following conditions are met:
   1. The local POU has procured eligible renewable energy resources as required by existing statute, as it existed on January 1, 2018.
   2. Additional procurement of eligible renewable energy resources or zero-carbon generational resources resulted in the powerplant operating at, or below, a 20-percent capacity factor on an annual average during a compliance period.
   3. The local POU has attempted to mitigate against the reduction of generation to below 20 percent of the powerplant’s total capacity by attempting to sell the powerplant or attempting to sell generation from the powerplant to the extent it is practicable and does not result in resource shuffling.
3. Authorizes the governing board of a local POU to adopt measures that provide conditions that mitigate against the loss of public revenues if the requirements in the RPS would lead to decreased generation from a powerplant with outstanding public indebtedness.
4. Requires a local POU to notify the CEC by April 1, 2019, of its intent to act on the authorization provided by this bill.
5. Requires the CEC to review, and either approve or reject, an POU’s adjustment of its procurement targets as authorized by this bill.
6. Authorizes the CEC to request relevant supporting documentation from a local POU acting pursuant to this bill.
7. Requires the section to only apply until the end of the calendar year during which the powerplant’s original term of bonded indebtedness expires.

Background

Renewable Portfolio Standard (RPS). Statute lists numerous goals of the RPS program, each of which, according to statute, independently justifies the program. Among those goals is meeting the state’s climate change goals by reducing emissions of GHGs associated with electrical generation, meeting the state’s need for a diversified and balanced energy generation portfolio, displacing fossil fuel consumption within the state, and reducing air pollution, particularly criteria pollutant emissions and toxic air contaminants, in the state.

The RPS requires retail sellers of electricity – IOUs, CCAs, and ESPs – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically:

• 25 percent of retail sales by December 31, 2016;
• 33 percent by December 31, 2020;
• 40 percent by December 31, 2024;
• 45 percent by December 31, 2027; and
• 50 percent by December 31, 2030.

POUs and RPS flexibility. POUs must achieve the renewable energy procurement targets stated above. POUs are required to report to the CEC on their progress in meeting the procurement requirements. The CEC is required to refer to the California Air Resources Board (ARB) any POU who does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance. Existing statute provides POUs with some flexibility to comply with the RPS, for example: utilities in a city or county that receives more than 67 percent of its electricity from hydroelectric generation that it owns and is located within the state only need to meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. Further, utilities with a distribution system demand of less than 150 MW, and that receive more than 50 percent of its electricity from hydroelectric generation, and that meet other criteria specified in California Public Utilities Code §399.30, are not required to procure additional renewable energy resources in excess of levels specified in the law.  Public Utilities Code §399.30 also provides a cost limitation consideration, so as to ensure complying with the RPS does not create disproportionate rate impacts.

The California energy crisis. In the late 1990’s, under a national wave of deregulation across many markets – airlines, trucking, telecommunications, banking – California deregulated and restructured its electricity market. Originally initiated with actions at the California Public Utilities Commission (CPUC) and then further formalized through the adoption of AB 1890 (Brulte, Chapter 854, Statutes of 1996), the state required IOUs to divest of most of their generation assets and instituted prohibitions on IOUs to invest in long-term electric generation contracts. In 2000 and 2001, multiple factors, including market manipulation and illegal natural gas pipeline shutdowns, resulted in a shortage of electricity supply that affected California residents (and residents throughout the West) with multiple large-scale blackouts. Additionally, market prices for electric generation skyrocketed resulting in a financial crisis for IOUs, most which also had retail price caps and were not able to pass on the costs to their ratepayers. The culmination of events resulted in Pacific Gas & Electric filing for bankruptcy and Southern California Edison coming close to filing. The state stepped in and utilized the Department of Water Resources (DWR) as the purchaser of electric generation under contracts that California was until recently still paying off. While POUs were largely spared the initial impact of the crisis, and in some cases sold some of their electric generation supplies into the electricity market, the energy crisis affected the reliability and certainty of the wholesale electricity market for most participants. In addition to the DWR contracts, a number of reforms were implemented, including resource adequacy requirements to prevent future electric generation shortages. Some POUs may have also sought to finance their own additional generation so as to protect themselves from the uncertainties of the electric wholesale market.

Which powerplants? Which POUs? This bill allows POUs additional flexibility in complying with the RPS in an effort to mitigate against the loss of public revenues from procuring additional electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill exempts powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state’s GHG emission performance standard. The sponsors of this bill, Northern California Power Agency, have identified three powerplants that would likely meet the criteria included in this bill:

• Silicon Valley Power (Santa Clara) – Donald Von Raesfeld Plant
• Roseville Electric – Roseville Energy Park
• Redding Electric – Redding Natural Gas Plant, Units 5 & 6

Definition of disadvantaged community. The CalEnviroScreen is commonly used to identify disadvantaged communities in many of the state’s policy, particularly related to GHGs. CalEnviroScreen 3.0 incorporates environmental and socioeconomic factors. The state often utilizes a threshold cutoff of the top 25 percent of census tracts, as it does when it allocates funding from the GHG reduction fund, as required by SB 535(De León, Chapter 830, Statutes of 2012). However, the definition for disadvantaged community in this bill reflects the top 20 percent census tracts in the state. In speaking with the sponsors, they acknowledge this difference, but note the desire for a 20 percent cutoff to allow for the powerplant owned by Silicon Valley Power.

Slippery slope? Natural gas power plants can provide electricity reliability resources, but they also contribute to localized air pollution and GHG emissions. While not all the powerplants in the above CEC table would satisfy the requirements of this bill, the table provides an understanding of the universe of powerplants and POUs that could be eligible for the provisions of this bill. This bill is explicit in applying only to POUs and, as such, is not intended for CCAs, a universe of load serving entities that is growing in numbers, but did not exist at the time of the energy crisis. Additionally, this bill is not intended for independently owned natural gas powerplants which are not financed by taxpayers.

Related/Prior Legislation

SB 100 (De León, 2017) establishes a target of generating 100 percent of the state’s retail sales of electricity from renewable energy resources by 2045, accelerates and expands the existing RPS, and requires state agencies to incorporate into existing climate programs the planning goal and regulatory requirement of achieving 100-percent reliance on renewable energy resources or zero-carbon resources by the end of 2045. The bill is pending consideration before the full Assembly.

AB 2693 (Quirk, 2018) requires the CPUC, in consultation with the California Independent System Operator, to analyze and determine which natural gas-fired powerplants are needed to ensure electric reliability in the state. The bill was held in the Senate Committee on Appropriations.

SB 350 (De León, Chapter 547, Statutes of 2015) established the goal of receiving 50 of California’s electricity from eligible renewable energy resources.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, minor absorbable costs to the CEC to review documentation provided by POUs to demonstrate powerplants pursuing the RPS procurement exemption provided by this bill were built in response to the energy crisis. CEC costs should be minimal because (a) existing law does not require more than 50 percent of retail sales of electricity come from eligible renewable resources (b) there are likely few powerplants that could qualify for the exemption and (c) this bill provides the CEC with minor oversight role.

SUPPORT: (Verified 8/13/18)

Northern California Power Agency (source)

California Municipal Utilities Association

California State Association of Electrical Workers

City of Roseville

City of Santa Clara

Coalition of California Utility Employees

Redding Electric Utility

OPPOSITION: (Verified 8/13/18)

California Environmental Justice Alliance

Sierra Club California

ARGUMENTS IN SUPPORT: According to the author:

“SB 1110 protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility — under narrow circumstances — to operate a power plant at a minimal level in order to ensure the bond debt for that plant is paid off, rather than levied directly on customers. Subject to strict criteria, SB 1110 allows some public power plants with outstanding bonds to continue operating temporarily at an average not to exceed 20 percent capacity factor. This may only occur until the bond liability has been satisfied, and is subject to conditions that exclude plants that do not meet California’s emissions standards, that fail to pay prevailing wage, as well as those built in our most disadvantaged communities. The California Energy Commission will review and certify each case before a utility may exercise any authority granted by SB 1110.”

ARGUMENTS IN OPPOSITION: The Sierra Club and the California Environmental Justice Alliance in opposing this bill, state:

“SB 1110 would allow POUs to continue operating certain gas-fired power plants until their construction debt has been repaid, power plants that would otherwise be scheduled to retire. Though the operation criteria outlined in the bill precludes power plants located in disadvantaged communities from qualifying, we know that power plants located outside of disadvantaged communities still can impact the air quality of these communities. This bill would also give these POUs a pass on meeting their RPS requirements by cutting out renewable generation and replacing it with gas-fired generation when meeting its demand.”

ASSEMBLY FLOOR: 77-0, 8/27/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kamlager-Dove, Kiley, Lackey, Levine, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rivas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Gloria, Kalra, Limón

Prepared by:

8/28/18 12:32:43

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1110

Author:(Bradford)

As Amended Ver:August 23, 2018

Majority vote

SENATE VOTE: 36-0

SUMMARY: This bill creates an exemption for local publicly owned utilities (POUs) to the Renewables Portfolio Standard (RPS) if the procurement mandate increases beyond current law which requires that 50% of procurement is from renewable generation by 2030. Specifically, this bill:

1. Allows a POU to reduce its RPS requirements by the difference between the actual generation from a POU-owned, natural-gas-fired powerplant and the amount of generation the powerplant would have produced if it had operated at 20% of its total capacity, if:
   1. The plant is located in the state and is owned by and serves the electrical demand of a single POU;
   2. The POU has outstanding public indebtedness associated with the powerplant, it was planned and built after January 1, 2000, and the debt was secured before January 1, 2017;
   3. Operating the powerplant below a 20% capacity factor on an annual average basis may result in the loss of employment of a powerplant employee who receives a prevailing wage;
   4. The powerplant meets the state's greenhouse gas emissions (GHG) performance standard;
   5. The powerplant is not located in a disadvantaged community;
   6. The POU can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the California Energy Commission (CEC), that the powerplant was built in response to the energy crisis of 2000–01; and
2. The powerplant has not undergone repowering and is not serving as a peaker powerplant.
3. Permits the CEC to accept or reject the RPS exemption authorized in the bill and authorizes the CEC to request additional documentation related to the exemption.

FISCAL EFFECT: According to the Assembly Appropriations Committee, minor absorbable costs to the CEC to review documentation provided by POUs to demonstrate powerplants pursuing the RPS procurement exemption provided by this bill were built in response to the energy crisis. CEC costs should be minimal because a) existing law does not require more than 50% of retail sales of electricity come from eligible renewable resources b) there are likely few powerplants that could qualify for the exemption and c) the bill provides the CEC with minor oversight role.

COMMENTS:

RPS Off-Ramp. This bill would allow POUs additional flexibility in complying with the RPS. The intent is to mitigate the impact of procuring additional renewable electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill would exempt powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state's GHG emissions performance standard.

The sponsor of this bill represents that three powerplants would meet the criteria included in this bill: Roseville Energy Park (owned by Roseville Electric); Redding Natural Gas Plant, Units 5 & 6 (owned by Redding Electric); and Donald Von Raesfeld Plant (owned by Silicon Valley Power in Santa Clara). Each plant was built in response to capacity needs after the energy crisis, is financed with public bonds held by the respective local government, and still has outstanding debt totaling over $300 million.

Stranded Assets. Regardless of capacity needs after deregulation and the energy crisis, many utilities have invested in gas plants in the past 20 years. As the state continues to green its grid and eliminate the use of fossil fuels, gas plants will be stranded. This has already occurred for merchant-owned gas plants under contract (or previously under contract) with investor owned utilities (IOUs). Many merchant-owned gas plants have been retired for many reasons including the growing procurement of renewable generation. The plants at issue in this bill are distinguished from the other retired plants in that there is long-term debt secured by POU ratepayers that must be satisfied regardless of other procurement mandates.

Analysis Prepared by: Kellie Smith / U. & E. / (916) 319-2083 FN: 0004547

SENATE THIRD READING

STR Bill Id:SB 1110

Author:(Bradford)

As Amended Ver:August 6, 2018

Majority vote

SENATE VOTE: 36-0

SUMMARY: This bill creates an exemption for local publicly owned utilities (POUs) to the Renewables Portfolio Standard (RPS) if the procurement mandate increases beyond current law which requires that 50% of procurement is from renewable generation by 2030. Specifically, this bill:

1. Allows a POU to reduce its RPS requirements by the difference between the actual generation from a POU-owned, natural-gas-fired powerplant and the amount of generation the powerplant would have produced if it had operated at 20% of its total capacity, if:
   1. The plant is located in the state and is owned by and serves the electrical demand of a single POU;
   2. The POU has outstanding public indebtedness associated with the powerplant, it was planned and built after January 1, 2000, and the debt was secured before January 1, 2017;
   3. Operating the powerplant below a 20% capacity factor on an annual average basis may result in the loss of employment of a powerplant employee who receives a prevailing wage;
   4. The powerplant meets the state's greenhouse gas emissions (GHG) performance standard;
   5. The powerplant is not located in a disadvantaged community;
   6. The POU can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the California Energy Commission (CEC), that the powerplant was built in response to the energy crisis of 2000–01; and
   7. The powerplant has not undergone repowering and is not serving as a peaker powerplant.

FISCAL EFFECT:

According to the Assembly Appropriations Committee, minor absorbable costs to the CEC to review documentation provided by POUs to demonstrate powerplants pursuing the RPS procurement exemption provided by this bill were built in response to the energy crisis. CEC costs should be minimal because (a) existing law does not require more than 50% of retail sales of electricity come from eligible renewable resources (b) there are likely few powerplants that could qualify for the exemption and (c) the bill provides the CEC with minor oversight role.

COMMENTS:

RPS Off-Ramp. This bill would allow POUs additional flexibility in complying with the RPS. The intent is to mitigate the impact of procuring additional renewable electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill would exempt powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state's GHG emissions performance standard.

The sponsor of this bill represents that three powerplants would meet the criteria included in this bill: Roseville Energy Park (owned by Roseville Electric); Redding Natural Gas Plant, Units 5 & 6 (owned by Redding Electric); and Donald Von Raesfeld Plant (owned by Silicon Valley Power in Santa Clara). Each plant was built in response to capacity needs after the energy crisis, is financed with public bonds held by the respective local government, and still has outstanding debt totaling over $300 million.

Stranded Assets. Regardless of capacity needs after deregulation and the energy crisis, many utilities have invested in gas plants in the past 20 years. As the state continues to green its grid and eliminate the use of fossil fuels, gas plants will be stranded. This has already occurred for merchant-owned gas plants under contract (or previously under contract) with IOUs. Many merchant-owned gas plants have been retired for many reasons including the growing procurement of renewable generation. The plants at issue in this bill are distinguished from the other retired plants in that there is long-term debt secured by POU ratepayers which must be satisfied regardless of other procurement mandates.

Analysis Prepared by: Kellie Smith / U. & E. / (916) 319-2083 FN: 0004244

Date of Hearing: August 8, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 1110

Author:(Bradford) – As Amended Ver:August 6, 2018

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

SUMMARY:

This bill creates an exemption for local publicly owned utilities (POUs) to Renewable Portfolio Standard procurement that the law does not yet require.

More specifically, if statute is changed to require more than 50% of retail sales of electricity come from eligible renewable resources, the bill allows a publicly owned utility (POU) to reduce its renewable energy procurement targets by the difference between the actual generation from a POU-owned natural-gas-fired powerplant and the amount of generation the powerplant would have produced if it had operated at 20% of its total capacity. The bill’s exemption applies only to a gas-fired powerplant that is located in the state, owned by and that serves the electrical demand of a single POU and meets the following additional conditions:

1. The POU has outstanding public indebtedness associated with the powerplant, it was planned and built after January 1, 2000, and the debt was secured before January 1, 2017.
2. Operating the powerplant below a 20% capacity factor on an annual average basis may result in the loss of employment of a powerplant employee who receives a prevailing wage.
3. The powerplant meets the state’s greenhouse gas performance standard.
4. The powerplant is not located in a disadvantaged community.
5. The POU can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the California Energy Commission (CEC), that the powerplant was built in response to the energy crisis of 2000–01.
6. The powerplant has not undergone repowering and is not serving as a peaker powerplant.

FISCAL EFFECT:

Minor absorbable costs to the CEC to review documentation provided by POUs to demonstrate powerplants pursuing the RPS procurement exemption provided by this bill were built in response to the energy crisis. CEC costs should be minimal because (a) existing law does not require more than 50% of retail sales of electricity come from eligible renewable resources (b) there are likely few powerplants that could qualify for the exemption and (c) the bill provides the CEC with minor oversight role.

COMMENTS:

1. Purpose. According to the author, this bill:

Protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility…to operate a power plant at a minimal level (20 % capacity) in order to resolve that plant’s bond debt when it otherwise could close… SB 1110 will keep that debt from competing with essential city services, including in education, housing, and public safety. Because it only applies to public plants that serve base load for their communities, this bill will also prevent energy rates from rising inappropriately.

1. Background—Renewable Portfolio Standard. The RPS requires retail sellers of electricity and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-use customers achieve a specified and escalating percentage of renewable energy resources, specifically: 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.

POUs are required to report to the CEC on their progress in meeting the RPS procurement requirements. The CEC is required to refer to the California Air Resources Board (ARB) any POU that does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance.

Existing statute provides POUs with some flexibility to comply with the RPS, for example: a utility in a city or county that receives more than 67 % of its electricity from hydroelectric generation that it owns and is located within the state only need meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. Further, a utility with a distribution system demand of less than 150 MW, and that receive more than 50 % of its electricity from hydroelectric generation, and that meet other criteria specified in CA Public Utilities Code §399.30, are not required to procure additional renewable energy resources in excess of levels specified in the law. Public Utilities Code §399.30 also provides a cost limitation consideration, so as to ensure complying with the RPS does not create disproportionate rate impacts.

1. Forward Looking. The Legislature has considered increasing the RPS beyond the current statutory 50% procurement requirement. However, to date, the Legislature has not done so.

This bill provides an exemption to RPS requirements that do not exist. That is, the bill allows a POU, under certain circumstances, to reduce its procurement of renewable resources only if statute requires more than 50% of retail sales of electricity come from eligible renewable resources. The author, and the bill’s sponsors, contemplates a day when RPS requirements will force a municipality to operate its gas-fired powerplant uneconomically, thereby preventing the municipality from making debt payments on the powerplant from sales of electricity generated by the powerplant. Bill supporters note such an outcome is unfair if the POU took on the debt burden to construct the powerplant in response to the need for reliable electricity generation following the 2000-01 energy crisis.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: June 25, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

SBPCA Bill Id:SB 1110

Author:(Bradford) – As Amended Ver:April 25, 2018

SENATE VOTE: 36-0

SUBJECT: Energy: California Renewables Portfolio Standard Program

SUMMARY: Authorizes a publicly owned utility (POU) to adopt unspecified conditions that mitigate against the loss of public revenues if the requirements of the California Renewables Portfolio Standard (RPS) would lead to decreased generation from a powerplant with outstanding public indebtedness and meeting other specified conditions.

EXISTING LAW:

1. The RPS requires POUs to procure 50% of their retail electricity sales from eligible renewable energy resources by 2030 and thereafter, including interim targets of 25% by 2016, 33% by 2020, 40% by 2024, and 45% by 2027.
2. Authorizes the governing board of a POU to adopt cost limitations for RPS procurement expenditures, as well as conditions that allow for delaying timely compliance if the POU demonstrates that any of the following conditions are beyond its control and will prevent compliance:
   1. Inadequate transmission capacity for delivery of sufficient renewable energy.
   2. Permitting, interconnection or other delays for renewable energy projects, or an insufficient supply of available renewable energy.
   3. Unanticipated curtailment of renewable energy necessary to address the needs of a balancing authority (e.g., the Independent System Operator).

THIS BILL authorizes the governing board of a POU to adopt conditions that mitigate against the loss of public revenues if RPS requirements would lead to decreased generation from a powerplant with outstanding public indebtedness. Requires the POU to notify the California Energy Commission (CEC), by January 31, 2019, and submit the following findings:

1. The POU has outstanding public indebtedness associated with a powerplant that was planned and built after January 1, 2000, that debt was secured before January 1, 2017, and the term of that debt was not extended by refinancing after December 31, 2016.
2. Based on the POU's operations or forecasts, RPS requirements may lead the powerplant to operate at, or below, a 20 percent capacity factor on an annual average during the upcoming year.
3. Operating the powerplant below a 20 percent capacity factor on an annual average during the upcoming year may risk the employment of a powerplant employee that receives a prevailing wage.
4. The powerplant is subject to and meets the state’s greenhouse gases emission performance standard.
5. The powerplant is not located in a disadvantaged community.
6. The POU will procure electricity products from a combination of eligible renewable energy resources consistent with the RPS.
7. The conditions reasonably mitigate against the loss of public revenues.
8. The POU can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the CEC, that the powerplant was built in response to the energy crisis of 2000–01.
9. The powerplant has not undergone repowering and is not serving as a peaker powerplant.
10. The powerplant is owned by, and serves the energy demands of, a single POU.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS:

1. Background. Current law sets forth numerous goals of the RPS program including meeting the state’s climate change goals by reducing emissions of GHGs associated with electrical generation, meeting the state’s need for a diversified and balanced energy generation portfolio, displacing fossil fuel consumption within the state, and reducing air pollution, particularly criteria pollutant emissions and toxic air contaminants.

The RPS requires POUs and other utility and non-utility electricity suppliers to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail customers achieve a specified and escalating percentage of renewable energy resources, specifically:

• 25 percent of retail sales by December 31, 2016;
• 33 percent by December 31, 2020;
• 40 percent by December 31, 2024;
• 45 percent by December 31, 2027; and
• 50 percent by December 31, 2030.

POUs are required to report to the CEC on their progress in meeting the procurement requirements. The CEC is required to refer to the Air Resources Board (ARB) any POU who does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance. Existing statute provides POUs with some flexibility to comply with the RPS. For example utilities in a city or county that receives more than 67 percent of its electricity from hydroelectric generation that it owns and is located within the state only need to meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. The sponsor of this bill, Northern California Power Agency (NCPA), represent that three powerplants would meet the criteria included in this bill: Roseville Energy Park (owned by Roseville Electric); Redding Natural Gas Plant, Units 5 & 6 (owned by Redding Electric); and Donald Von Raesfeld Plant (owned by Silicon Valley Power in Santa Clara). These plants were financed with public bonds held by the respective local government and still have outstanding debt totaling over $300 million.

1. Author's statement:

The state has already committed to certain cost limitations as our RPS grows stronger. But for plants proactively built in response to the energy crisis, their outstanding bond debt may not be included. SB 1110 protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility — under narrow circumstances — to operate a power plant at a minimal level (20 percent capacity) in order to resolve that plant’s bond debt when it otherwise could close. This may only occur until the bond liability has been satisfied, and is subject to strict supervision by the CEC. SB 1110 will keep that debt from competing with essential city services, including in education, housing, and public safety. Because it only applies to public plants that serve base load for their communities, this bill will also prevent energy rates from rising inappropriately.

1. Double referral. This bill was approved by the Utilities and Energy Committee on June 20, 2018 by a vote of 14-0, with agreement to adopt the following amendments in this committee to rewrite the bill to track the existing RPS "offramp" related to coal-fired powerplants owned by a POU found in subdivision (m) of Section 399.30 of the Public Utilities Code:

Strike out Section 1 (page 2, line 9 through page 10, line 30) and insert:

SECTION 1. Section 399.XX is added to the Public Utilities Code, to read:

1. For purposes of this section, “unavoidable long-term contracts and ownership agreements” means commitments for electricity from a gas-fired powerplant, located inside the state, owned by a local publicly owned electric utility, and that meets the following:
   1. The local publicly owned electric utility has outstanding public indebtedness associated with a powerplant that was planned and built after January 1, 2000, that debt was secured before January 1, 2017, and the term of that debt was not extended by refinancing after December 31, 2016.
   2. Operating the powerplant below a 20 percent capacity factor on an annual average during the upcoming year may risk the employment of a powerplant employee that receives a prevailing wage.
   3. The powerplant is subject to and meets the state’s greenhouse gases emission performance standard established by the commission pursuant to Section 8341.
   4. The powerplant is not located in a disadvantaged community. For purposes of this paragraph, “disadvantaged community” means a census tract that has received a CalEnviroScreen 3.0 score in the 81st to 100th, inclusive, percentile.
   5. The local publicly owned electric utility can demonstrate with official documentation, such as an adopted city council resolution, to the satisfaction of the Energy Commission, that the powerplant was built in response to the energy crisis of 2000–01.
   6. The powerplant has not undergone repowering and is not serving as a peaker powerplant.
   7. The powerplant is owned by, and serves the energy demands of, a single publicly owned electric utility.
2. Based on the local publicly owned electric utility’s operations or forecasts, if the requirements of policies established under this article, as it existed on January 1, 2018, are extended or expanded, or, if there is an additional requirement to require that retail sales of electricity in California come from zero-carbon resources, a local publicly owned electric utility may adjust its renewable energy procurement targets to ensure that the procurement of additional electricity from eligible renewable energy resources or zero-carbon resources, in combination with the procurement of electricity from unavoidable long-term contracts and ownership agreements, does not exceed the total retail sales of the local publicly owned electric utility during a compliance period, if:
   1. The local publicly owned electric utility has procured eligible renewable energy resources as required by Section 399.30, as it existed on January 1, 2018;
   2. Additional procurement may lead the powerplant to operate at, or below, a 20 percent capacity factor on an annual average during the upcoming year.
   3. The local publicly owned electric utility has attempted to mitigate by selling the powerplant or generation from the plant.
3. This section shall only apply only until the end of the year during which the powerplant’s term of bonded indebtedness expires.

REGISTERED SUPPORT / OPPOSITION:

Support

California Municipal Utilities Association

California State Association of Electrical Workers

City of Roseville

City of Santa Clara

Coalition of California Utility Employees

Northern California Power Agency

Redding Electric Utility

Opposition

None on file

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /

Date of Hearing: June 20, 2018

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Chris Holden, Chair

SBPCA Bill Id:SB 1110

Author:(Bradford) – As Amended Ver:April 25, 2018

SENATE VOTE: 36-0

SUBJECT: Energy: California Renewables Portfolio Standard Program

SUMMARY: Authorizes local publicly owned electric utilities (POUs) to reduce procurement requirements under the Renewables Portfolio Standard (RPS) if compliance will adversely impact the ability of the POU to utilize natural-gas fired power plants (gas plants) that are financed with long-term bonds. Specifically, this bill:

1. States the intent of the Legislature that a POU that built a gas plant both in response to the energy crisis of 2000-01 and to improve electrical reliability in the community it serves, should not impose the burden of any outstanding public indebtedness associated with the gas plant on local taxpayers if the gas plant meets specific conditions.
2. Requires the POU to notify the California Energy Commission (CEC) as part of its annual reporting obligation to the CEC of specified findings relative to the continued operation of a gas plant including that RPS compliance may lead the gas plant to operate at, or below, a 20 percent capacity factor on an annual average during the upcoming year.
   

EXISTING LAW:

1. Establishes the RPS which requires retail sellers of electricity – investor-owned utilities (IOUs), community choice aggregators (CCAs), and energy service providers (ESPs) – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically: 25 percent of retail sales by December 31, 2016; 33 percent by December 31, 2020; 40 percent by December 31, 2024; 45 percent by December 31, 2027; and 50 percent by December 31, 2030. (Public Utilities Code § 399.11 et seq.)
2. Authorizes POUs to delay compliance with the RPS due to circumstances beyond the control of the POU including lack of transmission or lack of available RPS eligible resources. (Public Utilities Code § 399.30)
   
3. Authorizes the CEC to reduce a POU’s RPS procurement targets if the POU can show that RPS compliance would result in any cancellation or divestment of the commitment for electricity from a coal-fired powerplant, located outside the state, originally entered into by a POU before June 1, 2010, and the cancellation or divestment would result in significant economic harm to its retail customers that cannot be substantially mitigated through resale, transfer to another entity, early closure of the facility, or other feasible measures. (Public Utilities Code § 399.30[m])
   
4. Requires the POUs to annually report to the CEC on its progress towards meeting the RPS. (Public Utilities Code § 9508)

FISCAL EFFECT: According to the Senate Appropriations Committee, under Senate Rule 28.8 the bill was found to cause no significant reduction in revenues or additional state costs are not significant and do not require the appropriation of additional state funds.

BACKGROUND:

Renewables Portfolio Standard – Current law sets forth numerous goals of the RPS program including meeting the state’s climate change goals by reducing emissions of GHGs associated with electrical generation, meeting the state’s need for a diversified and balanced energy generation portfolio, displacing fossil fuel consumption within the state, and reducing air pollution, particularly criteria pollutant emissions and toxic air contaminants.

The RPS requires retail sellers of electricity – IOUs, CCAs, and ESPs – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically:

• 25 percent of retail sales by December 31, 2016;
• 33 percent by December 31, 2020;
• 40 percent by December 31, 2024;
• 45 percent by December 31, 2027; and
• 50 percent by December 31, 2030.

Locally Owned Public Utilities – must achieve the renewable energy procurement targets stated above. POUs are required to report to the CEC on their progress in meeting the procurement requirements. The CEC is required to refer to the California Air Resources Board (ARB) any POU who does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance. Existing statute provides POUs with some flexibility to comply with the RPS. For example utilities in a city or county that receives more than 67 percent of its electricity from hydroelectric generation that it owns and is located within the state only need to meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. Further, utilities with a distribution system demand of less than 150 megawatts, and that receive more than 50 percent of its electricity from hydroelectric generation, and that meet other criteria specified in Public Utilities Code § 399.30, are not required to procure additional renewable energy resources under the RPS.

COMMENTS:

1. Author’s Statement. According to the author, the State has already committed to certain cost limitations as our Renewables Portfolio Standard grows stronger. But for plants proactively built in response to the energy crisis, their outstanding bond debt may not be included. SB 1110 protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility — under narrow circumstances — to operate a power plant at a minimal level (20 percent capacity) in order to resolve that plant’s bond debt when it otherwise could close. This may only occur until the bond liability has been satisfied, and is subject to strict supervision by the California Energy Commission. SB 1110 will keep that debt from competing with essential city services, including in education, housing, and public safety. Because it only applies to public plants that serve base load for their communities, this bill will also prevent energy rates from rising inappropriately.
   
2. RPS Off-Ramp. This bill would allow POUs additional flexibility in complying with the RPS in an effort to mitigate against the loss of public revenues from procuring additional electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill would exempt powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state’s GHG emissions performance standard.
   
   The sponsor of this bill, Northern California Power Agency (NCPA), represent that three powerplants would meet the criteria included in this bill: Roseville Energy Park (owned by Roseville Electric); Redding Natural Gas Plant, Units 5 & 6 (owned by Redding Electric); and Donald Von Raesfeld Plant (owned by Silicon Valley Power in Santa Clara) – all built in response to capacity needs after the energy crisis and are financed with public bonds held by the respective local government and still have outstanding debt totaling over $300 million.
   
3. Stranded Assets. Regardless of capacity needs after deregulation and the energy crisis, many utilities have invested in gas plants in the past 20 years. As the state continues to green its grid and eliminate the use of fossil fuels, gas plants will be stranded. This has already occurred for independent gas plants under contract (or previously under contract) with IOUs.
   
4. Speculating. Supporters of this bill reference circumstances that have not yet occurred in support of this bill – namely moving beyond 50% RPS. This is likely to occur but until that time, it is not clear that the remedy of this bill is needed.
   
5. Coal Plant Off-Ramp. There is precedent for the RPS adjustment suggested in this bill. In 2015, SB 350 included a provision which permits a POU that obligated itself to a coal plant outside the state before 2010.
   
   The RPS compliance flexibility provided for in this bill is vague appearing to permit a compliance adjustment for the RPS at any time and merely by the utility representing that RPS compliance “would lead to decreased generation from a powerplant with outstanding public indebtedness.” In discussions with the sponsor, they note the particular concern of the ability to cover debt if the state continues to increase procurement requirements under the RPS.
   
   The coal plant accommodation in current law requires a specific showing of harm to the utility and that the utility has attempted to mitigate that harm such as through the sale of the plant or the power. The committee may wish to consider amending this bill to follow the coal plant standard, and permit this off-ramp based on factors currently in the bill but also on the conditions of the adoption of an increase in the RPS to beyond 50% and that the utility has attempted to mitigate that harm such as through the sale of the plant or the power.
   
6. Related Legislation.

AB 64 (Wieckowski) Addresses air emissions associated with startups, shutdowns and cycling of fossil-fueled electrical generating units ("facilities") by (1) requiring collection and reporting of emissions data, (2) requiring air districts to impose operating limits on such facilities, and (3) requiring a study with recommendations on how to reduce electrical generation from, and prioritize the retirement of, such facilities. Status: Set for hearing in Assembly Natural Resources Committee, June 18^th.

AB 2693 (Quirk) Requires the CPUC to determine, as part of an ongoing proceeding and in consultation CARB, which natural gas plants can be retired and which plants are needed to ensure local and system grid reliability while minimizing emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants. Also requires the CPUC to consider revising the rates paid for fuel by natural gas-fired power plants so that the rates are primarily based on capacity charges with the remaining cost based on the volume of gas used by the plant. Status: Senate Energy, Utilities & Communications Committee.

SB 100 (deLeon) Establishes the 100 Percent Clean Energy Act of 2017 which increases the Renewables Portfolio Standard (RPS) requirement from 50% by 2030 to 60%, and creates the policy of planning to meet all of the state's retail electricity supply with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, for a total of 100% clean energy. Status: Set for hearing in the Assembly Utilities & Energy Committee July 3^rd.

1. Prior Legislation.

SB 350 (deLeon) Among other provisions, permits a POU to demonstrate in its renewable energy resources procurement plan that any cancellation or divestment of the commitment entered into for a coal-fired plant before 2010 would result in significant economic harm to its retail customers that cannot be substantially mitigated through resale, transfer to another entity, early closure of the facility, or other feasible measures. Status: Chapter 547, Statutes of 2015.

REGISTERED SUPPORT / OPPOSITION:

Support

Northern California Power Agency (Sponsor)

California Municipal Utilities Association
California State Association of Electrical Workers
City of Roseville
City of Santa Clara
Coalition of California Utility Employees
Redding Electric Utility

Opposition

California Environmental Justice Alliance
Sierra Club California

Analysis Prepared by: Kellie Smith / U. & E. /

 THIRD READING  

Bill No: SB 1110

Author:

Amended: 4/25/18

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 9-0, 4/3/18

AYES: Hueso, Morrell, Bradford, Cannella, Hertzberg, Hill, McGuire, Vidak, Wiener

NO VOTE RECORDED: Skinner, Stern

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: Energy: California Renewables Portfolio Standard Program

SOURCE: Northern California Power Agency

DIGEST:

This bill provides local publicly owned electric utilities (POUs) with additional flexibility in complying with the state’s requirements to procure renewable energy. Specifically, this bill authorizes POUs to mitigate against the loss of public revenues if complying with the state’s Renewable Portfolio Standard (RPS) would lead to decreased generation from a power plant with outstanding public indebtedness that meets specified criteria.

ANALYSIS:

Existing law:

1. Establishes the RPS which requires retail sellers of electricity – investor-owned utilities (IOUs), community choice aggregators (CCAs), and energy service providers (ESPs) – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically: 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 40 percent by December 31, 2024, 45 percent by December 31, 2027, and 50 percent by December 31, 2030. (Public Utilities Code §399.11 et seq.)
2. Defines a “renewable electrical generation facility” as one that uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts (MW) or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology. (Public Resources Code §25741)
3. Requires each local POU to procure a minimum quantity of electricity products from eligible renewable resources to achieve the procurement requirements established by the RPS. Authorizes the POU to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified. (Public Utilities Code §399.30)
4. Requires the local POU to report to the California Energy Commission (CEC) on its progress towards meeting the RPS. (Public Utilities Code §9508)

This bill:

1. Authorizes the governing board of a local POU to adopt measures that provide conditions that mitigate against the loss of public revenues if the requirements in the RPS would lead to decreased generation from a powerplant with outstanding public indebtedness.
2. Requires a local POU to do both the following in order to implement these conditions:
   1. Notify the CEC, by January 31, 2019, that the POU owns a powerplant that may meet the requirements that make it eligible for these conditions. Requires the notification to demonstrate:
      1. POU owns a powerplant that was built in response to the energy crisis of 2000-01;
      2. The powerplant is not located in a disadvantaged community (as defined in this bill); and
      3. There is associated outstanding public indebtedness that was secured before January 31, 2017.
   2. Requires the governing board to submit the conditions to the CEC as part of its report pursuant to Section 9508 with all of the following findings:
      1. The POU has outstanding public indebtedness associated with a powerplant that was planned and built after January 1, 2000, and that debt was secured prior to January 1, 2017, and the term of that debt was not extended by refinancing after December 31, 2016.
      2. The requirements of the RPS may lead the powerplant to operate at, or below, a 20 percent capacity factor on an annual average during the upcoming year, based on the utility’s operations or forecasts.
      3. Operating the powerplant below a 20 percent capacity factor on an annual average during the upcoming year may risk the employment of a powerplant employee that receives prevailing wage.
      4. The powerplant is subject to and meets the state’s greenhouse gas (GHG) emission performance standard.
      5. The powerplant is not located in a disadvantaged community, defined as the top 20 percent of census tracts as scored by the CalEnviroScreen 3.0.
      6. The POU will procure electricity products from a combination of eligible renewable energy resources consistent with the RPS.
      7. The conditions reasonably mitigate against the loss of public revenues.
      8. The powerplant has not undergone repowering and is not serving as a peaker powerplant.
      9. The powerplant is owned by, and serves the energy demands of, a single publicly owned electric utility.
      10. Requires the conditions to apply only until the end of the year during which the powerplant’s term of bonded indebtedness expires.

Background

Renewable Portfolio Standard (RPS). Statute lists numerous goals of the RPS program, each of which, according to statute, independently justifies the program. Among those goals is meeting the state’s climate change goals by reducing emissions of GHGs associated with electrical generation, meeting the state’s need for a diversified and balanced energy generation portfolio, displacing fossil fuel consumption within the state, and reducing air pollution, particularly criteria pollutant emissions and toxic air contaminants, in the state.

The RPS requires retail sellers of electricity – IOUs, CCAs, and ESPs – and POUs to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically:

• 25 percent of retail sales by December 31, 2016;
• 33 percent by December 31, 2020;
• 40 percent by December 31, 2024;
• 45 percent by December 31, 2027; and
• 50 percent by December 31, 2030.

POUs and RPS flexibility. POUs must achieve the renewable energy procurement targets stated above. POUs are required to report to the CEC on their progress in meeting the procurement requirements. The CEC is required to refer to the California Air Resources Board (ARB) any POU who does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance. Existing statute provides POUs with some flexibility to comply with the RPS, for example: utilities in a city or county that receives more than 67 percent of its electricity from hydroelectric generation that it owns and is located within the state only need to meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. Further, utilities with a distribution system demand of less than 150 MW, and that receive more than 50 percent of its electricity from hydroelectric generation, and that meet other criteria specified in California Public Utilities Code §399.30, are not required to procure additional renewable energy resources in excess of levels specified in the law.  Public Utilities Code §399.30 also provides a cost limitation consideration, so as to ensure complying with the RPS does not create disproportionate rate impacts.

The California energy crisis. In the late 1990’s, under a national wave of deregulation across many markets – airlines, trucking, telecommunications, banking – California deregulated and restructured its electricity market. Originally initiated with actions at the California Public Utilities Commission and then further formalized through the adoption of AB 1890 (Brulte, Chapter 854, Statutes of 1996), the state required IOUs to divest of most of their generation assets and instituted prohibitions on IOUs to invest in long-term electric generation contracts. In 2000 and 2001, multiple factors, including market manipulation and illegal natural gas pipeline shutdowns, resulted in a shortage of electricity supply that affected California residents (and residents throughout the West) with multiple large-scale blackouts. Additionally, market prices for electric generation skyrocketed resulting in a financial crisis for IOUs, most which also had retail price caps and were not able to pass on the costs to their ratepayers. The culmination of events resulted in Pacific Gas & Electric filing for bankruptcy and Southern California Edison coming close to filing. The state stepped in and utilized the Department of Water Resources (DWR) as the purchaser of electric generation under contracts that California was until recently still paying off. While POUs were largely spared the initial impact of the crisis, and in some cases sold some of their electric generation supplies into the electricity market, the energy crisis affected the reliability and certainty of the wholesale electricity market for most participants. In addition to the DWR contracts, a number of reforms were implemented, including resource adequacy requirements to prevent future electric generation shortages. Some POUs may have also sought to finance their own additional generation so as to protect themselves from the uncertainties of the electric wholesale market.

Which powerplants, which POUs? This bill allows POUs additional flexibility in complying with the RPS in an effort to mitigate against the loss of public revenues from procuring additional electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill exempts powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state’s GHG emission performance standard. The sponsors of this bill, Northern California Power Agency, have identified three powerplants that would likely meet the criteria included in this bill:

• Silicon Valley Power (Santa Clara) – Donald Von Raesfeld Plant
• Roseville Electric – Roseville Energy Park
• Redding Electric – Redding Natural Gas Plant, Units 5 & 6

Definition of disadvantaged community. The CalEnviroScreen is commonly used to identify disadvantaged communities in many of the state’s policy, particularly related to GHGs. CalEnviroScreen 3.0 incorporates environmental and socioeconomic factors. The state often utilizes a threshold cutoff of the top 25 percent of census tracts, as it does when it allocates funding from the GHG reduction fund, as required by SB 535(De Leon, Chapter 830, Statutes of 2012). However, the definition for disadvantaged community in this bill reflects the top 20 percent census tracts in the state. In speaking with the sponsors, they acknowledge this difference, but note the desire for a 20 percent cutoff to allow for the powerplant owned by Silicon Valley Power.

Slippery slope? Natural gas power plants can provide electricity reliability resources, but they also contribute to localized air pollution and GHG emissions. While not all the powerplants in the above CEC table would satisfy the requirements of this bill, the table provides an understanding of the universe of powerplants and POUs that could be eligible for the provisions of this bill. This bill is explicit in applying only to POUs and, as such, is not intended for CCAs, a universe of load serving entities that is growing in numbers, but did not exist at the time of the energy crisis. Additionally, this bill is not intended for independently owned natural gas powerplants which are not financed by taxpayers.

Related/Prior Legislation

SB 100 (De León, 2017) establishes a target of generating 100 percent of the state’s retail sales of electricity from renewable energy resources by 2045, accelerates and expands the existing RPS, and requires state agencies to incorporate into existing climate programs the planning goal and regulatory requirement of achieving 100-percent reliance on renewable energy resources or zero-carbon resources by the end of 2045. The bill is currently awaiting a hearing in the Assembly Committee on Utilities and Energy.

AB 2693 (Quirk, 2018) requires the CPUC, in consultation with the California Independent System Operator, to analyze and determine which natural gas-fired powerplants are needed to ensure electric reliability in the state. The bill is in the Assembly Committee on Appropriations.

SB 350 (De Leon, Chapter 547, Statutes of 2015) established the goal of receiving 50 of California’s electricity from eligible renewable energy resources.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/23/18)

Northern California Power Agency (source)

California Municipal Utilities Association

California State Association of Electrical Workers

City of Roseville

City of Santa Clara

Coalition of California Utility Employees

Redding Electric Utility

OPPOSITION: (Verified 5/23/18)

California Environmental Justice Alliance

Sierra Club California

ARGUMENTS IN SUPPORT: According to the author:

“SB 1110 protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility — under narrow circumstances — to operate a power plant at a minimal level in order to ensure the bond debt for that plant is paid off, rather than levied directly on customers. Subject to strict criteria, SB 1110 allows some public power plants with outstanding bonds to continue operating temporarily at an average not to exceed 20 percent capacity factor. This may only occur until the bond liability has been satisfied, and is subject to conditions that exclude plants that do not meet California’s emissions standards, that fail to pay prevailing wage, as well as those built in our most disadvantaged communities. The California Energy Commission will review and certify each case before a utility may exercise any authority granted by SB 1110.”

ARGUMENTS IN OPPOSITION: The Sierra Club and the California Environmental Justice Alliance in opposing this bill, state:

“SB 1110 would allow POUs to continue operating certain gas-fired power plants until their construction debt has been repaid, power plants that would otherwise be scheduled to retire. Though the operation criteria outlined in the bill precludes power plants located in disadvantaged communities from qualifying, we know that power plants located outside of disadvantaged communities still can impact the air quality of these communities. This bill would also give these POUs a pass on meeting their RPS requirements by cutting out renewable generation and replacing it with gas-fired generation when meeting its demand.”

Prepared by: Nidia Bautista / E., U., & C. / (916) 651-4107

5/24/18 11:21:43

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 4/3/2018

SUBJECT:

DIGEST: This bill provides local publicly owned electric utilities (POUs) with additional flexibility in complying with the state’s requirements to procure renewable energy. Specifically, this bill would authorize POUs to mitigate against the loss of public revenues if complying with the state’s Renewable Portfolio Standard (RPS) would lead to decreased generation from a power plant with outstanding public indebtedness that meets specified criteria.

ANALYSIS:

Existing law:

1. Establishes the RPS which requires retail sellers of electricity – investor-owned utilities (IOUs), community choice aggregators (CCAs), and energy service providers (ESPs) – and publicly owned utilities (POU) to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically: 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 40 percent by December 31, 2024, 45 percent by December 31, 2027, and 50 percent by December 31, 2030. (Public Utilities Code §399.11 et seq.)
2. Defines a “renewable electrical generation facility” as one that, among other requirements, uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts (MW) or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology. (Public Resources Code §25741)
3. Requires each local publicly owned electric utility to procure a minimum quantity of electricity products from eligible renewable resources to achieve the procurement requirements established by the RPS. Authorizes the POU to adopt conditions allowing for delaying timely compliance and cost limitations for procurement expenditures, as specified. (Public Utilities Code §399.30)
4. Requires the local POU to report to the California Energy Commission (CEC) on its progress towards meeting the RPS. (Public Utilities Code §9508)

This bill:

1. States the intent of the Legislature that a local publicly owned electric utility that built a powerplant both in response to the energy crisis of 2000-01 and to improve electrical reliability in the community it serves should not impose the burden of any outstanding public indebtedness associated with the powerplant on local taxpayers if the powerplant meets specific conditions established by this act.
2. Authorizes the governing board of a local publicly owned electric utility to adopt measures that provides conditions that mitigate against the loss of public revenues if the requirements in RPS would lead to decreased generation from a powerplant with outstanding public indebtedness.
3. Requires the governing board to submit the conditions to the CEC as part of its report pursuant to Section 9508 with all of the following findings:
   1. The utility has outstanding public indebtedness associated with a powerplant that was planned and built after January 1, 2000, and that debt was secured prior to January 1, 2017.
   2. The requirements of the RPS may lead the powerplant to operate at, or below, a 20 percent capacity factor on an annual average during the upcoming year, based on the utility’s operations or forecasts.
   3. Operating the powerplant below a 20 percent capacity factor on an annual average during the upcoming year may risk the employment of a powerplant employee that receives prevailing wage.
   4. The powerplant is subject to and meets the state’s greenhouse gas (GHG) emission performance standard.
   5. The powerplant is not located in a disadvantaged community, defined as the top 20 percent of census tracts as scored by the CalEnviroScreen 3.0.
   6. The utility will procure electricity products from a combination of eligible renewable energy resources consistent with the RPS.
   7. The conditions reasonably mitigate against the loss of public revenues.
   8. Requires the conditions to apply only until the end of the year during which the powerplant’s term of bonded indebtedness expires.

Background

Renewable Portfolio Standard (RPS). Statute lists numerous goals of the RPS program, each of which, according to statute, independently justifies the program. Among those goals is meeting the state’s climate change goals by reducing emissions of GHGs associated with electrical generation, meeting the state’s need for a diversified and balanced energy generation portfolio, displacing fossil fuel consumption within the state, and reducing air pollution, particularly criteria pollutant emissions and toxic air contaminants, in the state.

The RPS requires retail sellers of electricity – IOUs, CCAs, and ESPs – and POU to increase purchases of renewable energy such that total kilowatt hours of those products sold to their retail end-used customers achieve a specified and escalating percentage of renewable energy resources, specifically:

• 25 percent of retail sales by December 31, 2016,
• 33 percent by December 31, 2020;
• 40 percent by December 31, 2024;
• 45 percent by December 31, 2027; and
• 50 percent by December 31, 2030.

Publicly Owned Municipal Utilities (POUs). POUs must achieve the renewable energy procurement targets stated above. POUs are required to report to the CEC on their progress in meeting the procurement requirements. The CEC is required to refer to the California Air Resources Board (ARB) any POU who does not satisfy the procurement requirements across a three-year compliance period. The ARB may then impose penalties on the POU for non-compliance. Existing statute provides POUs with some flexibility to comply with the RPS, for example: utilities in a city or county that receives more than 67 percent of its electricity from hydroelectric generation that it owns and is located within the state only need to meet the procurement requirements based on the amount of its generation that does not come from hydroelectric. Further, utilities with a distribution system demand of less than 150 MW, and that receive more than 50 percent of its electricity from hydrolectic generation, and that meet other criteria specified in CA Public Utilities Code §399.30, are not required to procure additional renewable energy resources in excess of levels specified in the law.  Public Utilities Code §399.30 also provides a cost limitation consideration, so as to ensure complying with the RPS does not create disproportionate rate impacts.

The California electricity crisis. In the late 1990’s, under a national wave of deregulation across many markets – airlines, trucking, telecommunications, banking – California deregulated and restructured its electricity market. Originally initiated with actions at the CPUC and then further formalized through the adoption of AB 1890 (Brulte, Chapter 854, Statutes of 1996), the state required IOUs to divest of most of their generation assets and instituted prohibitions on IOUs to invest in long-term electric generation contracts. In 2000 and 2001, multiple factors, including market manipulation and illegal natural gas pipeline shutdowns, resulted in a shortage of electricity supply that affected California residents (and residents throughout the West) with multiple large-scale blackouts. Additionally, market prices for electric generation skyrocketed resulting in a financial crisis for IOUs, most which also had retail price caps and were not able to pass on the costs to their ratepayers. The culmination of events resulted in Pacific Gas& Electric filing for bankruptcy and Southern California Edison (SCE) coming close to filing. The state stepped in and utilized the Department of Water Resources (DWR) as the purchaser of electric generation under contracts that California was until recently still paying off. While POUs were largely spared the initial impact of the crisis, and in some cases sold some of their electric generation supplies into the electricity market, the electricity crisis affected the reliability and certainty of the electricity market for most participants. In addition to the DWR contracts, a number of reforms were implemented, including resource adequacy requirements to prevent future electric generation shortages. Some POUs may have also sought to finance their own additional generation so as to protect themselves from the uncertainties of the market.

This bill. This bill would allow POUs additional flexibility in complying with the RPS in an effort to mitigate against the loss of public revenues from procuring additional electric generation in cases where the POU financed a natural gas powerplant in response to the electricity crisis and for which they still have bonded indebtedness. This bill would exempt powerplants located in disadvantaged communities, as defined, and require that the power plant is in compliance with the state’s GHG emission performance standard.

The sponsors of this bill, Northern California Power Agency (NCPA), have identified three powerplants that would likely meet the criteria included in this bill:

1. Silicon Valley Power (Santa Clara)

Donald Von Raesfeld Plant

1. Roseville Electric

Roseville Energy Park

1. Redding Electric

Redding Natural Gas Plant, Units 5 & 6

At the request of this Committee’s staff, the CEC provided the table below which identifies all that natural gas powerplants owned by POUs that were built after the electricity crisis.

Slippery slope? While not all the above powerplants would satisfy the requirements of this bill, it’s imperative that committee members have the assurance that the language of this bill would only affect a very narrow set of situations or at least have the awareness that the language could affect a wider universe. This is particular concerns since natural gas power plants can provide electricity reliability resources, but they also contribute to localized air pollution and greenhouse gas emissions. This bill is explicit in applying only to POUs and, as such, is not intended for CCAs a universe of load serving entities that is growing in numbers, but did not exist at the time of the electricity crisis. Additionally, this bill is not intended for independently owned natural gas powerplants which are not financed by taxpayers.

Definition of disadvantaged community. The definition for disadvantaged community in this bill reflects the top most 20 percent census tracts in the state via the CalEnviroScreen 3.0 which incorporates environmental and socioeconomic factors. The CalEnviroScreen is commonly used to identify disadvantaged communities in many of the state’s policy, particularly related to GHGs. However, the state often utilizes a threshold cutoff of the top 25 percent of census tracts, as it does when it allocated funding from cap and trade revenues. In speaking with the sponsors, they acknowledge this difference, but note the desire for a 20 percent cutoff to allow for the powerplant owned by Silicon Valley Power.

Need for amendments. Unfortunately, some of the language in this bill would likely prove difficult for the CEC to verify, in particular the claims regarding the RPS potentially resulting in a given powerplant operating at below 20 percent capacity factor that would then lead to unemployment of the employees at the plant. Additionally, this bill could benefit from some clarifying amendments and additional belts and suspenders to ensure the flexibility afforded to POUs in complying with the RPS meets the narrow intent of the author and sponsor.

Specifically:

• Require POUs to notify the CEC by January 31, 2019 that they may have power plants that may be eligible for this provision, the notification shall include the power plant, the MW, copies of official city resolution or other document to demonstrate the plant was built in response to the electricity crisis in 2000-01, identify that the location is outside of an identified disadvantaged community and demonstrate bond indebtedness to the satisfaction of the CEC.
• Ensure the provisions of this bill:
  • do not apply to repowers or peaker power plants.
  • only apply to financing secured prior to 2017 and refinancing does not extend the provisions.
  • only applies to power plants owned by one POU and serving load for one city (not JPA-owned powerplants)
  • require official city documentation, to the satisfaction of the CEC, that the plant was built in response to the electricity crisis and is still being financed by taxpayers.

Prior/Related Legislation

SB 100 (De León, 2017) would establish a target of generating 100 percent of the state’s retail sales of electricity from renewable energy resources by 2045, accelerates and expands the existing RPS, and requires state agencies to incorporate into existing climate programs the planning goal and regulatory requirement of achieving 100-percent reliance on renewable energy resources or zero-carbon resources by the end of 2045. The bill is currently awaiting a hearing in the Assembly Committee on Utilities and Energy.

SB 350 (De Leon, Chapter 547, Statutes of 2015) established the goal of receiving 50 of California’s electricity from eligible renewable energy resources.

AB 2693 (Quirk, 2018) would require the CPUC, in consultation with the Independent System Operator, to analyze and determine which natural gas-fired powerplants are needed to ensure electric reliability in the state. The bill has been referred to the Assembly Committee on Utilities and Energy.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Northern California Power Agency (Source)

California Municipal Utilities Association

City of Roseville

City of Santa Clara

Redding Electric Utility

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the author:

“SB 1110 protects individual customers of a public utility from extraordinary cost-shifts by allowing that utility — under narrow circumstances — to operate a power plant at a minimal level in order to ensure the bond debt for that plant is paid off, rather than levied directly on customers. Subject to strict criteria, SB 1110 allows some public power plants with outstanding bonds to continue operating temporarily at an average not to exceed 20 percent capacity factor. This may only occur until the bond liability has been satisfied, and is subject to conditions that exclude plants that do not meet California’s emissions standards, that fail to pay prevailing wage, as well as those built in our most disadvantaged communities. The California Energy Commission will review and certify each case before a utility may exercise any authority granted by SB 1110.”

-- END --