UNFINISHED BUSINESS  

Bill No: SB 155

Author: Bradford (D)

Amended: 8/30/19

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-0, 4/24/19

AYES: Hueso, Moorlach, Bradford, Chang, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner, Stern, Stone, Wiener

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 32-4, 5/20/19

AYES: Archuleta, Atkins, Bates, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stone, Umberg, Wieckowski, Wilk

NOES: Beall, Glazer, McGuire, Wiener

NO VOTE RECORDED: Allen, Stern

ASSEMBLY FLOOR: 76-0, 9/3/19 - See last page for vote

SUBJECT: California Renewables Portfolio Standard Program: integrated resource plans

SOURCE: Author

DIGEST:

This bill makes specified requirements concerning the plans for energy procurement by load-serving entities (LSEs) within the jurisdiction of the California Public Utilities Commission (CPUC).

Assembly Amendments remove language that would have expressly stated the CPUC “shall enforce” the requirement that the integrated resources plan (IRP) of each LSE contribute to a diverse and balanced portfolio of resources, and related IRP requirements.

ANALYSIS:

Existing law:

1. Establishes the CPUC has regulatory authority over public utilities, including electrical corporations. (California Constitution, Article XII)
2. Defines “load-serving entity” to mean an electrical corporation (also known as an IOU), energy service provider (ESP) or Community Choice Aggregator (CCA). Requires the CPUC, in consultation with the California Independent System Operator, to establish resource adequacy requirements for all LSEs. (Public Utilities Code §380)
3. Authorizes customers of an IOU to aggregate their electric loads as members of their local community with CCAs. Designates a CCA as solely responsible for all generation procurement activities on behalf of the CCA’s customers, except where other generation procurement arrangements are expressly authorized by statute. (Public Utilities Code §366.2)
4. Authorizes the CPUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. (Public Utilities Code §451)
5. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including IOUs, ESPs, and CCAs, to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
6. Requires the CPUC to direct each retail seller to prepare and submit an annual report that includes specified information on the retail seller’s compliance with requirements related to eligible renewable energy resource procurement. (Public Utilities Code § 399.13)
7. Requires the CPUC to adopt a process for each LSE, defined as IOU, ESP, or CCA, serving end-use customers in the state, to file an IRP and a schedule for a periodic updates to the plan to ensure that LSEs accomplish specified objectives. Requires each LSE to prepare and file an IRP consistent with those objectives on a time schedule directed by the CPUC and subject to CPUC review. (Public Utilities Code §454.52)
8. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for greenhouse gases (GHG) established by the State Air Resources Board for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code §454.54)

This bill:

1. Requires the CPUC to review each RPS annual compliance report filed by a retail seller, to notify a retail seller if the CPUC has determined, based upon its review, that the retail seller may be at risk of not satisfying the renewable procurement requirements for the then-current or future compliance period, and to provide recommendations in that circumstance regarding satisfying those requirements.
2. Requires the CPUC to ensure that LSEs comply with a requirement that at least 65 percent of the procurement that a retail seller counts toward the RPS requirement of each compliance period be from contracts of 10 years or more in duration or from its ownership or ownership agreements from eligible renewable energy resources.

Background

Load-serving Entities: IOUs, ESPs and CCAs. Several types of entities provide electricity service in California. Historically, the main distinction between electricity providers has been whether they are a municipal utility, rural cooperative, or an IOU. Which LSE provides service to your home or businesses largely depends on the location of the home or business. For example, if you live in the City of Los Angeles, the municipal utility, the Los Angeles Department of Water and Power, provides electricity service, but if you live in east Los Angeles, just a block away from the city limits, the community is served by an IOU, namely Southern California Edison. In more recent years, there has been a growth in additional electricity providers within the service territory of the IOU. These entities are referred to in statute as LSEs and also provide electric service within the service territory of the IOU, although the IOU continues to provide distribution, transmission, and billing services to all customers in their service territory. These LSEs include:

• IOUs: privately owned electrical corporations, such as San Diego Gas & Electric (SDG&E) that provide monopoly electric utility services in distinct, defined geographic territories. In addition to providing the distribution and transmission, and billing services, IOUs have historically provided the energy supply. IOUs are rate-regulated by the CPUC to ensure they provide service at a just and reasonable rate. IOUs also have an obligation to serve all customers in their service territory, any customers not served by ESPs or CCAs must, generally, be served by the IOU.
• ESPs: also known as direct access (DA) providers, provide electricity to end-use customers who choose the services of the ESP instead of the incumbent IOU or a CCA. An ESP uses the transmission and distribution infrastructure of the IOU to deliver electricity to the customer. ESP customers are generally large commercial customers (such as a university or a large corporation) who wish to manage their own energy procurement decisions. ESP customers retain the option to return to the service of the incumbent IOU or to a CCA, if a CCA offers services in their area.
• CCAs: entities, such as MCE and Sonoma Clean Power, but includes 17 others operating in the state, where local governments (either cities or counties) elect to buy or generate electricity on behalf of local residents while using the incumbent IOU’s transmission and distribution infrastructure. An individual customer within the territory of a CCA is generally automatically opted-in to receive electric service from the CCA when the customer’s local government elects to join the CCA. However, the customer retains the option to return to the service of the incumbent IOU by electing to opt-out. Customers, especially commercial customers, also may have the option to be served by an ESP, where ESP services are allowed.

Growth of LSEs. The combined procurement between CCA and DA service is anticipated to represent the majority (potentially 85 percent) of the customer load served in the IOU service territory in the coming decade or so.

Growth of CCAs. While IOUs have existed for nearly a century, CCAs are a more recent entity. In 2002, statute first allowed the formation of CCAs. It was not until nearly a decade later that the first CCA—Marin Clean Energy—came into existence. Today, there are 19 CCAs operating in the state with a dozen more communities exploring the formation of a CCA. CCA growth is likely to cover substantial portions of the service territories of the state’s three largest IOUs.

Growth of ESPs. Last year, the Legislature passed and the Governor signed SB 237 (Hertzberg, Chapter 600, Statutes of 2018) which increased the limit of the DA program by 4,000 gigawatt hours for non-residential customers. The bill also directed the CPUC to provide recommendations to the Legislature by June 2020 on the adoption and implementation of a second DA program reopening. The opening of the DA cap creates some additional competition, as well as, uncertainty for the incumbent utility and the CCAs serving energy load that might migrate to an ESP.

SB 350 IRP. SB 350 (De León, Chapter 547, Statutes of 2015) established new targets to increase retail sales of renewable electricity to 50 percent by 2030. SB 350 also required each LSE —meaning an IOU, ESP, or CCA—to file a biennial IRP for approval or certification by the CPUC. The CPUC would then combine all LSEs’ IRPs to ensure the state was on its path to meet the SB 350 goals, including GHG reductions and procurement of at least 50 percent of renewable resources by the year 2030. The CPUC is currently finalizing the first two-year IRP cycle and embarking on initiating the second round of the two-year IRP cycle.

CPUC IRP decision. Earlier this year, the CPUC adopted a decision on the first two-year IRP cycle. The findings of the cycle provides a sense of how LSEs are participating in the process and what potential adjustments may be needed to ensure the state remains on track to achieve its energy procurement-related goals. While recognizing that the first IRP cycle was a learning opportunity for LSEs and the CPUC, the exercise did surface a number of issues, including that the individual resource choices by the LSEs collectively did not result in a diverse and balanced portfolio of resources needed to ensure sufficiently reliable or environmentally beneficial statewide electricity resource portfolio. Additionally, it was often difficult for the CPUC to distinguish between an LSE’s plan for a resource that is aspirational and one that has an executed contract. The CPUC also declined to certify 19 IRPs and required those LSE’s to re-file with the information missing from their plan – generally information about criteria pollution related to their energy procurement.

CPUC IRP procurement track. In furthering the IRP process, the CPUC has initiated the “procurement track” of the IRP proceeding. In the ruling, the CPUC has identified two broad categories: backstop or backup procurement mechanism and those resources that may require collective action to bring to fruition (such as large facilities or new type of resources). The CPUC proposal states “the need to address near- and medium-term renewable integration and reliability resources as a type most in need of the CPUC’s immediate attention.” The CPUC has outlined a timeline to provide for public comments with the goal of initiating these procurement activities by late 2019 or early 2020. Additionally, CPUC intends to address long-term reliability needs with a proposed decision in late 2020 or early 2021. The CPUC has proposed to require all LSEs to procure a proportional share of a total of 2,000 megawatts (MW) new peak capacity statewide to come on line by August 1, 2021 and require SCE to solicit for 500 MW of capacity from existing resources that are without a contract past 2021 to be procured as part of a medium-term contract (two-five years). In the IRP procurement proposal, the CPUC is proposing to have those costs allocated to all LSEs with resource adequacy (RA) requirements, not just those in SCE service territory.

Comments

CPUC review of RPS annual compliance plans. This bill requires the CPUC to review an LSEs annual RPS compliance report and notify LSEs that may be at risk of not satisfying the renewable procurement requirements for the then-current or future RPS compliance period, and to provide recommendations in that circumstance regarding satisfying those requirements. This provision would allay concerns by some that the state’s RPS goals could be delayed by the timing of the enforcement action. Specifically, the CPUC’s ability to take enforcement action must be done after-the-fact in relation to the LSE’s actual performance. As such, the enforcement action is years after the RPS compliance period. However, providing annual monitoring of compliance would provide the state and all parties greater transparency concerning whether an LSE may be off-track.

New IRP provisions. This bill includes as part of the IRP, existing requirements related to resource adequacy and long-term contracts. These requirements would be folded into the IRP as part of the LSE’s IRP filings. As noted in a recent informational hearing by the Senate Committee on Energy, Utilities and Communications, the changing electricity landscape is resulting in a more complicated energy procurement market. As raised at the hearing, the need for more coordination among the growing number of LSEs is necessary to ensure the state remains on track to achieve its policy goals – including goals related to clean energy, reliability and affordability. The author of this bill notes his desire to ensure the IRP process is executed as anticipated.

Related/Prior Legislation

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created 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 percent clean energy.

SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs – IOUs, ESPs, and CCAs – to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and so that there is no cost shifting among LSEs.

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

AB 117 (Migden, Chapter 838, Statutes of 2002) allowed cities and counties to aggregate their electric loads and provide service directly to their residents through formation of CCAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, negligible costs to the CPUC. The CPUC asserts this bill reaffirms its existing statutory authority to enforce IRP requirements on all LSEs, including CCAs, and the only new directive in the bill to the CPUC is to notify an LSE of potential RPS shortfalls based on the LSE’s retrospective RPS compliance report.

SUPPORT: (Verified 9/3/19)

California Wind Energy Association

Coalition of California Utility Employees

Pacific Gas and Electric Company

San Diego Gas & Electric Company

Southern California Edison

The Utility Reform Network

OPPOSITION: (Verified 9/3/19)

California Alliance for Community Energy

Californians for Energy Choice

Pico Rivera Innovative Municipal Energy

Silicon Valley Clean Energy

Solana Energy Alliance

Five individuals

ARGUMENTS IN SUPPORT: According to the author, “California’s energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other elements of the system. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy investments.”

ARGUMENTS IN OPPOSITION: Many of those opposed to this bill express concerns that this bill would expand CPUC authority over CCAs and require CCAs to lock in procurement decisions prematurely. In most cases, the letters received in opposition to this bill are in response to previous versions of this bill. Presumably, the concerns have not been addressed in subsequent amendments.

ASSEMBLY FLOOR: 76-0, 9/3/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Frazier, Eduardo Garcia, Kalra

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

9/3/19 18:13:32

**** END ****

SENATE THIRD READING

STR Bill Id:SB 155

Author:(Bradford)

As Amended Ver:August 30, 2019

Majority vote

SUMMARY:

This bill reinforces and expands the existing statutory authority of the California Public Utilities Commission (CPUC) regarding electricity resource procurement to meet the state's environmental, reliability, performance and cost requirements.

Major Provisions

1. Mandates the California Public Utilities Commission (CPUC) to review each Renewable Portfolio Standard (RPS) annual compliance report filed by a retail seller. The CPUC shall notify a retail seller if the CPUC has determined that they may be at risk of not satisfying the RPS requirements for current or future compliance periods. The CPUC must also provide recommendations about how to satisfying deficiencies.
2. Mandates the CPUC to enforce the requirements that the integrated resource plan of each load-serving entity (investor owned utilities, community choice aggregators and energy service providers) contribute to a diverse and balanced portfolio of resources needed to ensure reliability, meet renewable energy requirements and achieve greenhouse gases (GHG) emission reductions requirements.

COMMENTS:

The CPUC is mandated to ensure that collectively the load serving entities (LSE) (investor owned utilities (IOU), community choice aggregators (CCA), and energy service providers (ESP)) under their jurisdiction, which serve approximately 75% of California's energy needs, operate reliably, safely and comply with the renewable portfolio standard and emission reduction targets for GHG. California's current energy mix and demands differ greatly from the generation that we relied upon to run the grid a decade ago. Today, large scale solar on the wholesale side of grid and distribution side solar generation dominate generation procurement. A critical component in meeting California's climate is for LSE's portfolio's to achieve 60% renewables by 2030 with a goal of achieving zero-carbon electricity by 2045. The variability of many of those generation resources has introduced challenges for grid operation and the introduction of innovative technologies to meet those demands.

This measure enhances the CPUC's authority by adding the requirement that they "shall ensure" each LSE takes actions, specified in current law, to comply with actions related to the LSE's integrated resources plan (IRP). The provision of existing law, modified here, states each LSE's IRP is "to ensure" the LSE take actions, specified in current law, to comply with actions related to the IRP. Existing law does not explicitly direct the CPUC to ensure the LSE takes those actions. The measure also modifies the existing requirement that each LSE's IRP ensure system and local reliability to specify such reliability on both a near-term and long-term basis, including meeting near-term and forecast long-term resources adequacy requirements specified in existing law. Additionally, the CPUC is required to ensure each LSE's IRP include the RPS requirement that 65% of each retail seller's RPS procurement be from resources owned by the retail seller or contracted for at least 10 years.

According to the Author:

"California's energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other components of the grid. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures, because increased consistency will ensure equity across load serving entities and ensure California can continue to make progress on its clean energy goals."

Arguments in Support:

According to Southern California Edison: As a state, we must carefully plan for our energy future and have a comprehensive plan to ensure that all LSEs – CCAs, ESPs, IOUs, and POUs – have equal responsibilities in achieving our goals. SB 350 (De León), Chapter 547, Statutes of 2015) created the IRP process to ensure that needed resources are developed with the appropriate operating characteristics, in needed locations and with enough lead time to ensure they are available to operate when needed.

Arguments in Opposition:

Indivisible South Bay and several local community choice aggregators indicate: The proposed expansion of CPUC authority is an over-reach intended to undermine the ability of Community Choice programs to pursue a decentralized energy model that best meets sustainable climate action and local community needs.

FISCAL COMMENTS:

According to Assembly Appropriations Committee, negligible costs to the CPUC.

VOTES:

SENATE FLOOR: 32-4-2

YES: Archuleta, Atkins, Bates, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stone, Umberg, Wieckowski, Wilk

NO: Beall, Glazer, McGuire, Wiener

ABS, ABST OR NV: Allen, Stern

ASM UTILITIES AND ENERGY: 12-0-3

YES: Holden, Patterson, Burke, Carrillo, Chen, Eggman, Cristina Garcia, Mayes, Quirk, Reyes, Santiago, Ting

ABS, ABST OR NV: Cunningham, Eduardo Garcia, Muratsuchi

ASM NATURAL RESOURCES: 11-0-0

YES: Friedman, Flora, Chau, Eggman, Cristina Garcia, Limón, Mathis, McCarty, Fong, Muratsuchi, Mark Stone

ASM APPROPRIATIONS: 17-0-1

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ABS, ABST OR NV: Diep

UPDATED:

VERSION: August 30, 2019

CONSULTANT: Mary McDonald / U. & E. / (916) 319-2083 FN: 0001581

SENATE THIRD READING

STR Bill Id:SB 155

Author:(Bradford)

As Amended Ver:August 12, 2019

Majority vote

SUMMARY:

This bill reinforces and expands the existing statutory authority of the California Public Utilities Commission (CPUC) regarding electricity resource procurement to meet the state's environmental, reliability, performance and cost requirements.

This measure also expressly states that the CPUC is not authorized within the integrated resource plan (IRP) process to require a load-serving entity (LSE) to procure a specific resource or technology type.

Major Provisions

1. Mandates the California Public Utilities Commission (CPUC) to review each Renewable Portfolio Standard (RPS) annual compliance report filed by a retail seller. The CPUC shall notify a retail seller if the CPUC has determined that they may be at risk of not satisfying the RPS requirements for current or future compliance periods. The CPUC must also provide recommendations about how to satisfying deficiencies.
2. Mandates the CPUC to enforce the requirements that the integrated resource plan of each load-serving entity (investor owned utilities, community choice aggregators and energy service providers) contribute to a diverse and balanced portfolio of resources needed to ensure reliability, meet renewable energy requirements and achieve greenhouse gases (GHG) emission reductions requirements.
3. Specifies the CPUC is not authorized to require any load-serving entity to procure a specific resource or technology type as part of the integrated resource plan.

COMMENTS:

The CPUC is mandated to ensure that collectively the load serving entities (investor owned utilities, community choice aggregators, and energy service providers) under their jurisdiction, which serve approximately 75% of California's energy needs, operate reliably, safely and comply with the renewable portfolio standard and emission reduction targets for GHG. California's current energy mix and demands differ greatly from the generation that we relied upon to run the grid a decade ago. Today, large scale solar on the wholesale side of grid and distribution side solar generation dominate generation procurement. A critical component in meeting California's climate is for LSE's portfolio's to achieve 60% renewables by 2030 with a goal of achieving zero-carbon electricity by 2045. The variability of many of those generation resources has introduced challenges for grid operation and the introduction of innovative technologies to meet those demands.

This measure enhances the CPUC's authority by adding the requirement that they "shall ensure" each LSE takes actions, specified in current law, to comply with actions related to the LSE's IRP. The provision of existing law, modified here, states each LSE's IRP is "to ensure" the LSE take actions, specified in current law, to comply with actions related to the IRP. Existing law does not explicitly direct the CPUC to ensure the LSE takes those actions. The measure also modifies the existing requirement that each LSE's IRP ensure system and local reliability to specify such reliability on both a near-term and long-term basis, including meeting near-term and forecast long-term resources adequacy requirements specified in existing law. Additionally, the CPUC is required to ensure each LSE's IRP include the RPS requirement that 65% of each retail seller's RPS procurement be from resources owned by the retail seller or contracted for at least 10 years.

Recent amendments to the measure diminish the CPUCs authority to require LSEs to procure specific resources or technologies. This limitation could adversely affect the ability of the CPUC to direct LSEs to undertake procurement in compliance with the requirements of the IRP. The authority of the CPUC in the IRP process is fundamental in maintaining overall system reliability and achieving California's critical environmental mandates.

According to the Author:

"California's energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other components of the grid. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures, because increased consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy goals."

Arguments in Support:

According to Southern California Edison: As a state, we must carefully plan for our energy future and have a comprehensive plan to ensure that all LSEs – CCAs, ESPs, IOUs, and POUs – have equal responsibilities in achieving our goals. SB 350 (de León, 2015) created the IRP process to ensure that needed resources are developed with the appropriate operating characteristics, in needed locations and with enough lead time to ensure they are available to operate when needed.

Arguments in Opposition:

Indivisible South Bay and several local community choice aggregators indicate: The proposed expansion of CPUC authority is an over-reach intended to undermine the ability of Community Choice programs to pursue a decentralized energy model that best meets sustainable climate action and local community needs.

FISCAL COMMENTS:

According to Assembly Appropriations Committee, negligible costs to the CPUC.

VOTES:

SENATE FLOOR: 32-4-2

YES: Archuleta, Atkins, Bates, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stone, Umberg, Wieckowski, Wilk

NO: Beall, Glazer, McGuire, Wiener

ABS, ABST OR NV: Allen, Stern

ASM UTILITIES AND ENERGY: 12-0-3

YES: Holden, Patterson, Burke, Carrillo, Chen, Eggman, Cristina Garcia, Mayes, Quirk, Reyes, Santiago, Ting

ABS, ABST OR NV: Cunningham, Eduardo Garcia, Muratsuchi

ASM NATURAL RESOURCES: 11-0-0

YES: Friedman, Flora, Chau, Eggman, Cristina Garcia, Limón, Mathis, McCarty, Fong, Muratsuchi, Mark Stone

ASM APPROPRIATIONS: 17-0-1

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ABS, ABST OR NV: Diep

UPDATED:

VERSION: August 12, 2019

CONSULTANT: Mary McDonald / U. & E. / (916) 319-2083 FN: 0001554

Date of Hearing: August 28, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 155

Author:(Bradford) – As Amended Ver:August 12, 2019

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

SUMMARY:

This bill reiterates, buttresses and expands existing statutory authority of the California Public Utilities Commission (CPUC) regarding electricity resource procurement to meet the state’s environmental, reliability, performance and cost requirements.

Specifically, this bill, in relation to an existing requirement that the CPUC adopt a process for each load-serving entity (meaning an investor-owned utility (IOU), a community choice aggregator (CCA) or an electric service provider (ESP)) to file with the CPUC an integrated resource plan (IRP):

1. States the CPUC “shall ensure” each LSE takes actions, specified in current law, to comply with actions related to the LSE’s IRP. (The provision of existing law modified here states each LSE’s IRP is “to ensure” the LSE take actions, specified in current law, to comply with actions related to the IRP; but the existing provision does not explicitly direct the CPUC to ensure the LSE takes those actions.)
2. Modifies the existing requirement that each LSE’s IRP ensure system and local reliability to specify such reliability is to be on both a near-term and long-term basis, including meeting near-term and forecast long-term resources adequacy requirements specified in existing law.
3. Additionally requires the CPUC to ensure each LSE’s IRP include the RPS requirement that 65% of each retail seller’s RPS procurement be from resources owned by the retail seller or contracted for at least 10 years.
4. Requires the CPUC to review each retail seller of electricity’s annual Renewable Portfolio Standard (RPS) compliance report and directs the CPUC to notify a retail seller if the CPUC has determined the retail seller may be at risk of not satisfying its RPS procurement requirements.

FISCAL EFFECT:

Negligible costs to the CPUC. The CPUC asserts this bill reaffirms its existing statutory authority to enforce IRP requirements on all LSEs, including CCAs, and the only new directive in the bill to the CPUC is to notify an LSE of potential RPS shortfalls based on the LSE’s retrospective RPS compliance report.

COMMENTS:

Background and Purpose. Load-serving entities supply electric power to meet customer demand. State law makes numerous requirements of LSEs. Of particular relevance to this bill, state law requires every retail seller of electricity in California, which includes every LSE, to procure increasing amounts of electricity from statutorily defined renewable energy resources, a requirement known as the renewable portfolio standard, or RPS, and directs the CPUC to require each retail seller to annually report on its compliance with the RPS to date.

In addition, state law requires the electricity sector to meet certain greenhouse emission reduction targets and achieve other objectives related to the environment, reliability, system performance and cost. Statute directs the CPUC to adopt a process for each LSE to file and periodically update an integrated resource plan, or IRP, a plan that is, according to current statute, “to ensure” the LSE meets the specified greenhouse gas emission reduction targets and other objectives related to the environment, reliability, system performance and cost.

Statute generally requires each LSE, of every type, to periodically file an IRP with the CPUC, subject to CPUC review. Statute then differentiates the requirements applicable to an IRP of an IOU and those applicable to an IRP of a CCA. Specifically, statute states the IRP of a CCA is to be “submitted to its governing board for approval and provided to the commission ([the CPUC]) for certification,” and that it achieve a number of particular ends.

This bill changes statutory language regarding IRPs. Specifically, the bill modifies existing statute to explicitly state the CPUC is “to ensure” the IRP of an LSE achieves the state’s goals related to the environment, reliability, system performance and cost. For its part, the CPUC sees this changes as “reaffirming” the CPUC’s existing authority over integrated resource planning enforcement authority over LSEs, including CCAs.

The CPUC bases its understanding of it authority on the code section affected by this bill, as well as other existing code sections. Those code sections, among other things, empower the CPUC to oversee each CCA’s proposals for satisfying its portion of the renewable integration needs as identified by the CPUC, and, if the CPUC finds it necessary, to direct a CCA to make long-term commitments for resources.

In contrast, the CCAs have long interpreted statute as providing the CPUC a much more limited authority over CCA procurement choices. Indeed, the CCAs’ statewide association and many advocates for CCAs oppose this bill, which, undoubtedly makes clear the CPUC’s authority over certain aspects of CCA procurement. According to the author, this clarification of authority, and the bill’s other requirements, are needed in the context of an increasingly fragmented energy procurement environment:

A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the state has already established – particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because increased consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy goals.

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

Date of Hearing: July 8, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

SBPCA Bill Id:SB 155

Author:(Bradford) – As Amended Ver:May 1, 2019

SENATE VOTE: 32-4

SUBJECT: California Renewables Portfolio Standard Program: integrated resource plans

SUMMARY: Directs the Public Utilities Commission (PUC) to review and enforce specified Renewables Portfolio Standard (RPS) and integrated resource plan (IRP) requirements applicable to all load-serving entities (LSEs), including investor-owned utilities (IOUs), energy service providers (ESPs), and community choice aggregators (CCAs).

EXISTING LAW:

1. The RPS requires “retail sellers” of electricity, i.e., IOUs, ESPs and CCAs, as well as publicly-owned utilities (POUs), to procure 60% of their retail electricity sales from eligible renewable energy resources by 2030 and thereafter, including interim targets of 33% by 2020, 44% by 2024, and 52% by 2027.
2. Establishes a policy that eligible renewable energy resources and zero-carbon electric generating facilities will supply all electricity procured to serve California customers by December 31, 2045, and directs the PUC, California Energy Commission (CEC), and the Air Resources Board (ARB) to incorporate this policy into all relevant planning and programs.
3. Requires the PUC to identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner. Requires the portfolio to rely upon zero carbon-emitting resources to the maximum extent reasonable and be designed to achieve any statewide GHG emissions limit established pursuant to the California Global Warming Solutions Act of 2006 or any successor legislation.
4. Requires the PUC to permit CCAs to submit, for PUC approval, proposals for satisfying their portion of the renewable integration need identified by the PUC. If the commission finds this need is best met through long-term procurement commitments for resources, CCAs are required to make long-term commitments for resources. 
5. Requires the PUC to adopt a process for all LSEs to file, and periodically update, an IRP to ensure each LSE:
   1. Meets the GHG emissions reduction targets established by ARB for the electricity sector and each LSE that reflect the electricity sector’s percentage in achieving economy-wide greenhouse gas emissions reductions of 40% from 1990 levels by 2030;
   2. Procures at least 50% eligible renewable energy resources by December 31, 2030, consistent with the RPS;
   3. Enables each IOU to fulfill its obligation to serve its customers at just and reasonable rates;
   4. Minimizes impacts on ratepayers’ bills;
   5. Ensures system and local reliability;
   6. Strengthens the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities;
   7. Enhances distribution systems and demand-side energy management; and
   8. Minimizes localized air pollutants and other GHG emissions.
6. Requires the IRP of a CCA to be submitted to the CCA’s governing board for approval and provided to the PUC for certification.
7. Requires the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner, meets statewide GHG emissions limits, and prevents cost shifting among LSEs.

THIS BILL:

1. Requires the PUC to review the annual RPS compliance report of each LSE, notify the LSE if the PUC has determined that the LSE may be at risk of not satisfying the renewable energy procurement requirements for the then-current or a future compliance period, and provide recommendations regarding satisfying those requirements.
2. Clarifies that the PUC shall ensure that LSEs meet the IRP objectives.
3. Updates the IRP RPS objective to reflect the 60% by 2030 RPS target.
4. Specifies that the IRP reliability objective is on both a near-term and long-term basis, including meeting near-term and forecast long-term resource adequacy requirements. 
5. Adds an IRP objective regarding complying with the RPS requirement that 65% of each retail seller’s RPS procurement be from resources owned by the retail seller or contracted for at least 10 years.
6. Requires the PUC to enforce the requirements that the IRPs of all LSEs contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner, meets statewide GHG emissions limits, and prevents cost shifting among LSEs.

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

COMMENTS:

1. Background. SB 350 (de León), Chapter 547, Statutes of 2015, established new RPS targets to increase retail sales of renewable electricity and required each LSE – IOUs, ESPs, and CCAs – to file a biennial IRP with the PUC. The PUC would then combine all LSEs’ IRPs to ensure the state was on its path to meeting its renewable and GHG reductions goals. The passage of SB 100 (de León), Chapter 312, Statutes of 2018, increased the RPS targets to 44% by 2024, 52% by 2027, and 60% by 2030. SB 100 also established state policy that RPS-eligible and zero-carbon resources supply 100% of all retail sales of electricity to California end-use customers no later than December 31, 2045.

The PUC adopted a decision on the first two-year IRP cycle. The findings of the cycle provide a sense of how LSEs are participating in the process and what potential adjustments may be needed to ensure the state remains on track to achieve its energy procurement-related goals. While recognizing that the first IRP cycle was a learning opportunity for LSEs and the PUC, the exercise did surface a number of issues, including that the individual resource choices by the LSEs collectively did not result in a diverse and balanced portfolio of resources needed to ensure a sufficiently reliable or environmentally beneficial statewide electricity resource portfolio. Additionally, it was often difficult for the PUC to distinguish between an LSE’s plan for a resource that is aspirational and one that has an executed contract. The PUC also declined to certify 19 IRPs and required those LSE’s to re-file with the information missing from their plan – generally information about criteria pollution related to their energy procurement.

On June 20, 2019, the PUC’s assigned Commissioner and Administrative Law Judge initiated a procurement track to develop an electricity IRP framework and to coordinate and refine long-term procurement planning requirements. The first priority task of the procurement track identified is to seek comments on the potential for near-term reliability challenges as analyzed by the PUC. The document states, “First, many market participants have informally observed a tightening of the bilateral market. In addition, according to Commission staff, there is a decline in the robustness of competitive solicitations. Finally, a number of LSEs have not been able to comply with the system requirements for the 2019 resource adequacy compliance year.” The document goes on to express increasing concern with the ability of the bilateral markets to transact and meet 2021 resource adequacy requirements, given limited in-state supply. Also, there is the possibility that additional conventional generating units (natural gas) may mothball/or retire, exacerbating the tightness of in-state supply.

1. Author’s statement:

California’s energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other components of the grid. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the state has already established – particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because increased consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy goals.

1. Arguments in support. According to Southern California Edison, SB 155 would help ensure that California meets its ambitious climate change and clean energy goals while protecting the interests of the state’s energy customers by authorizing the PUC to oversee all LSEs’ compliance with the RPS and the IRP process...For California to achieve its clean energy goals, we need a central planner and a regulatory oversight framework that ensures compliance by all LSEs…CCAs and ESPs have been largely resistant to having their IRP and RPS results directed and regulated by the PUC. This is an untenable position, as California’s electric grid needs to be planned for in a thoughtful, comprehensive manner, and it will fail if dozens of LSEs operate independent of grid needs and central oversight. The Legislature must authorize the PUC to oversee all LSEs’ procurement and development of the substantial amount of new resources needed in the right location and at the right time to successfully meet California’s clean energy objectives in a reliable and affordable manner for all customers.
2. Arguments in opposition. According to the California Community Choice Association, SB 155 would undermine the legislative intent of SB 350…by converting IRPs from planning documents to procurement mandates, force LSEs to prematurely lock in procurement decisions 10 years out, resulting in increased costs to California energy supply customers and increased reliance on natural gas in the long-term…The PUC’s IRP proceeding is still actively under way pursuant to SB 350, with initial LSE plans having been filed in 2018…LSEs are already required to submit biennial IRPs for approval or certification by the PUC, to ensure that LSE planning aligns with the state’s goals. It would be premature for SB 155 to require the procurement of specific resources, when the PUC is still trying to figure out which resource mix is optimal and how to align LSE procurement with its optimal plan. It is crucial that any IRP compliance requirements remain focused on the IRPs as planning documents…LSEs need to retain some flexibility in how they meet the desired IRP plan’s outcome, to avoid impinging upon local programmatic goals and alternatives to procurement such as increased investment in distributed energy resources.
3. Certification vs. enforcement. When SB 350 was debated in 2015, the degree of PUC jurisdiction over CCAs in the new IRP process was a key issue. The controversy was settled at the time by requiring CCAs to meet the same IRP requirements, but requiring a CCA IRP to be submitted to the CCA’s governing board for approval and provided to the PUC for “certification.” Presumably, the PUC could review, certify, or not certify a CCA IRP, but perhaps not direct the CCA in how to change or implement the IRP in the same way it might do with an IOU.

The SB 350 language implies less regulation of CCAs than IOUs, and reflects the fact that CCAs were conceived as an alternative to PUC-regulated electricity procurement. However, it also presents challenges in implementing a coherent approach to meeting common goals associated with electricity procurement, including reliability, renewable energy, and GHG emission reduction. And SB 350 does not say that the PUC can’t enforce the IRP requirements on all LSEs.

This bill tilts the scales toward greater PUC jurisdiction by stating not just that all LSEs must meet the IRP objectives, but that the PUC must ensure that LSEs meet them, as well as by stating not just that the IRPs of all LSEs must contribute to a diverse and balanced portfolio of resources, but that the PUC must enforce this requirement.

1. Should the extent and/or purpose of PUC enforcement be limited? Much of the opposition from CCA advocates revolves around the concern that the PUC will act on the authority granted by this bill to order a CCA to procure specific resources. A potential compromise may be to maintain that the PUC shall enforce the requirement that each LSE’s IRP contribute to a diverse and balanced portfolio of resources, but add that procurement of specific resources by a CCA is not subject to PUC approval. In addition, a statement of legislative intent could be added: That this bill is not intended to grant the PUC new authority to require the procurement of specific resources.
2. Double referral. This bill passed the Assembly Utilities and Energy Committee on June 26 by a vote of 12-0.

REGISTERED SUPPORT / OPPOSITION:

Support

Coalition of California Utility Employees
Pacific Gas and Electric Company
San Diego Gas and Electric Company 
Southern California Edison
The Utility Reform Network

Opposition

350 Bay Area Action
350 South Bay Los Angeles
California Alliance for Community Energy
California Community Choice Association
Center for Climate Protection
City of Monterey
City of Pico Rivera
City of Richmond
City of Solana Beach 
City of South Pasadena
Clean Power Alliance of Southern California
County of San Mateo
County of Santa Barbara
East Bay Community Energy
Indivisible South Bay LA
Marin Conservation League
Peninsula Clean Energy
San Jose Clean Energy
San Jose Community Energy Advocates
San Diego 350
Silicon Valley Clean Energy
Solana Energy Alliance
Sonoma Clean Power
Valley Clean Energy

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

Date of Hearing: June 26, 2019

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Chris Holden, Chair

SBPCA Bill Id:SB 155

Author:(Bradford) – As Amended Ver:May 1, 2019

SENATE VOTE: 32-4

SUBJECT: California Renewables Portfolio Standard Program: integrated resource plans

SUMMARY: Specifically, this bill:

1. Mandates the California Public Utilities Commission (CPUC) to review each Renewable Portfolio Standard (RPS) annual compliance report filed by a retail seller, to notify a retail seller if the CPUC has determined, based upon its review, that the retail seller may be at risk of not satisfying the renewable procurement requirements for the then-current or future compliance period, and to provide recommendations in that circumstance regarding satisfying those requirements.
2. Mandates the CPUC to enforce the requirements that the integrated resource plan of each load-serving entity contribute to a diverse and balanced portfolio of resources needed to ensure a reliability, renewable energy requirements and greenhouse gases (GHG) emission reductions.

EXISTING LAW:

1. Requires all electrical corporations to prepare annual renewable energy procurement plans that demonstrate each will satisfy its RPS obligations; and mandates that the CPUC require electrical corporations to update their renewable energy procurement plans if necessary and establishes criteria for those plans. Mandates the CPUC to direct each retail seller to prepare and submit an annual compliance report with specific elements. (Public Utilities Code §399.13)
2. Authorizes customers of an investor own utility (IOU) to aggregate their electric loads as members of their local community with Community Choice Aggregator (CCA). Designates a CCA as solely responsible for all generation procurement activities on behalf of the CCA’s customers, except where other generation procurement arrangements are expressly authorized by statute. (Public Utilities Code §366.2)
3. Mandates the CPUC, to establish resource adequacy requirements for all load-serving entities (LSEs) to ensure the reliability of electrical service in California while advancing, to the extent possible, the state’s goals for clean energy. Mandates LSEs to maintain physical generating capacity and demand response to meet its load requirements and at a minimum meet the planning reserve and reliability criteria approved by the Western System Coordinating Council. Defines load-serving entity to mean an electrical corporation, electric service provider, or community choice aggregator. (Public Utilities Code §380)
4. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including IOUs, electric service providers (ESPs), and CCAs, to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
5. Authorizes the CPUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. (Public Utilities Code §451)
6. Mandates the CPUC to:

• Identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner. That portfolio shall rely upon zero carbon-emitting resources to the maximum extent possible.
• Direct electrical corporations to propose procurement plan, a strategy for procuring best-fit and least-cost resources. Permits CCAs to submit proposals to California Public Utilities Commission (CPUC) for meeting to the CPUC renewable and GHG mandates.
• Ensure that if net costs of any incremental renewable integration procured by the electrical corporation to meet the requirements of this section are allocated on a fully nonbypassable basis consistent.
• Permit community CCAs to submit proposals for satisfying their portion of the renewable integration need identified in the section. If the CPUC finds the need is best met through long-term commitments for resources, the CCAs shall be required to make long-term commitments for resources. Costs resulting from nonperformance to satisfy the need in the section shall be borne by the CCA or electrical corporation that failed to perform. (Public Utilities Code §454.51)

1. Requires the CPUC to adopt a process for each LSE, defined as IOU, ESP, or CCA, serving end-use customers in the state, to file an integrated resource plan (IRP) and a schedule for periodic updates to the plan to ensure that LSEs accomplish specified objectives. Requires each LSE to prepare and file an IRP consistent with those objectives on a time schedule directed by the CPUC and subject to CPUC review. (Public Utilities Code §454.52)
2. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for GHG established by the State Air Resources Board (ARB) for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code §454.54)

BACKGROUND:

Collectively Meeting Local and System Energy Demands– The CPUC is mandated to ensure that collectively the LSEs under their jurisdiction, which serve approximately 75% of California’s energy needs operate reliably, safely and meet a multitude of state mandates including the renewable portfolio standard and emission reduction targets for GHG. California’s current energy mix and demands differs greatly from the generation that we relied upon to run the grid a decade ago. Today, large scale solar on the wholesale side of grid and distribution side solar generation dominate generation procurement. A critical component in meeting California’s climate is for LSE’s portfolio’s to achieve 60% renewables by 2030 with a goal of achieving zero-carbon electricity by 2045. The variability of many of those generation resources has introduced challenges for grid operation and the introduction of innovative technologies to meet those demands.

Electric Grid Operation – California’s electric grid operates as one synchronized machine which spans parts of 14 western states and portions of three nations (United States, Canada and Mexico). This interconnected grid must collectively maintain the required system frequency at the wholesale and distribution level to meet the reliability needs of the system. Generation portfolios from each of the LSE’s must in totality meet the system needs. Electricity is generated from various sources, including hydro, solar, wind, geothermal, natural gas, nuclear, bio mass and bio gas. Once electricity is generated, it instantaneously flows through a complex system, sometimes called the grid, of electricity substations, transformers, and power lines that connect electricity producers and consumers. Most local grids are interconnected for reliability and commercial purposes, forming larger, networks that enhance the coordination and planning of electricity supply.

Load-serving Entities - IOUs, ESPs and CCAs. Various types of entities provide electricity service in California. Historically, the main distinction between electricity providers has been whether they are a municipal utility, rural cooperative, or an IOU. Which LSE provides service to your home or businesses largely depends on the location of the home or business. For example, if one lives in Sacramento, the municipal utility district serving the area is Sacramento Municipal Utility District (SMUD) SMUD owns the distribution and transmission system along with procuring the generation services required to maintain reliable system operation. Several cities that are adjacent to Sacramento now have their electricity procured by Valley Clean Energy, which is a Community Choice Aggregator (CCA). This CCA provides electric service within the service territory of the IOU, although Pacific Gas and Electric continues to provide distribution, transmission, and billing services to all customers in their service territory. Publicly Owned Utilities such as the SMUD are not under the jurisdiction of the CPUC.

Load Serving Entities include:

• Investor Owned Utility (IOU): Privately owned electrical corporations, such as San Diego Gas & Electric, (SDG&E), Southern California Edison (SCE) and Pacific Gas and Electric (PG&E), are also known as investor owned utilities (IOUs) and provide monopoly electric utility services in distinct, defined geographic territories. In addition to providing the distribution and transmission, and billing services, IOUs have historically provided the energy supply. IOUs are rate-regulated by the CPUC to ensure they provide service at a just and reasonable rate. IOUs also have an obligation to serve all customers in their service territory, any customers not served by ESPs or CCAs must, generally, be served by the IOU.
• Energy Service Provider (ESP): Also known as direct access providers (DA), provide electricity to end-use customers who choose the services of the ESP instead of the incumbent IOU or a CCA. An ESP also uses the transmission and distribution infrastructure of the IOU to deliver electricity to the customer. ESP customers are generally large commercial customers (such as a university or a large corporation) who wish to manage their own energy procurement decisions. ESP customers retain the option to return to the service of the incumbent IOU or to a CCA, if a CCA offers services in their area.
• Growth of Load Serving Entities (LSE). The combined procurement between CCA and DA service is anticipated to represent the majority (potentially 85 percent) of the customer load served in the IOU service territory in the coming decade or so.
• Growth of Community Choice Aggregators (CCA). While IOUs have existed for nearly a century, CCAs are a more recent entity. In 2002, statute first allowed the formation of CCAs. It was not until nearly a decade later that the first CCA—Marin Clean Energy—came into existence. Today, there are 19 CCAs operating in the state with a dozen more communities exploring the formation of a CCA. CCA growth is likely to cover substantial portions of the service territories of the state’s three largest IOUs. An individual customer within the territory of a CCA is generally automatically opted-in to receive electric service from the CCA when the customer’s local government elects to join the CCA. However, the customer retains the option to return to the service of the incumbent IOU by electing to opt-out. Customers, especially commercial customers, also may have the option to be served by an ESP, where ESP services are allowed.
• Growth of ESPs. Last year, the Legislature passed and the Governor signed SB 237 (Hertzberg, Chapter 600, Statutes of 2018), which increased the limit of the direct access program by 4,000 gigawatt hours for non-residential customers. The expansion of the DA cap creates some additional competition, as well as, uncertainty for the incumbent utility and the CCAs serving energy load that might migrate to an ESP.
• Integrated Resource Plan (IRP) and Renewable Portfolio Standard (RPS). SB 350 (De León, Chapter 547, Statutes of 2015) established new targets to increase retail sales of renewable electricity and requires each LSE —meaning an IOU, ESP, or CCA—to file a biennial IRP for approval or certification by the CPUC. The CPUC would then combine all LSEs’ IRPs to ensure the state was on its path to meeting its renewable and GHG reductions goals. The passage of SB 100 (De León, Chapter 312, Statutes of 2018) increased the renewable procurement mandates to 44% by 2024; 52% by 2027 and 60% by 2030. That measure also provides state policy that RPS-eligible and zero-carbon resources supply 100 of all retail sales of electricity to California end-use customers no later than December 31, 2045.
• CPUC IRP decision. The CPUC adopted a decision on the first two-year IRP cycle. The findings of the cycle provides a sense of how LSEs are participating in the process and what potential adjustments may be needed to ensure the state remains on track to achieve its energy procurement-related goals. While recognizing that the first IRP cycle was a learning opportunity for LSEs and the CPUC, the exercise did surface a number of issues, including that the individual resource choices by the LSEs collectively did not result in a diverse and balanced portfolio of resources needed to ensure sufficiently reliable or environmentally beneficial statewide electricity resource portfolio. Additionally, it was often difficult for the CPUC to distinguish between an LSE’s plan for a resource that is aspirational and one that has an executed contract. The CPUC also declined to certify 19 IRPs and required those LSE’s to re-file with the information missing from their plan – generally information about criteria pollution related to their energy procurement.
• Initiating Procurement. On 6/20/19 the CPUC’s assigned Commissioner and Administrative Law Judge initiated a procurement track to develop an electricity integrated resource planning framework and to coordinate and refine long-term procurement planning requirements. The first priority task of the procurement track identified is to seek comments on the potential for near-term reliability challenges as analyzed by the CPUC. The document states,” First, many market participants have informally observed a tightening of the bilateral market. In addition, according to Commission staff, there is a decline in the robustness of competitive solicitations. Finally, a number of LSEs have not been able to comply with the system requirements for the 2019 resource adequacy compliance year.”^[1] The document goes on to express increasing concern with the ability of the bilateral markets to transact and meet 2021 resources adequacy requirements, given limited in-state supply. Also, there is the possibility that additional conventional generating units (natural gas) may mothball/or retire, exacerbating the tightness of in-state supply.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

COMMENTS:

1. Author’s Statement: “California’s energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other components of the grid. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because increased consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy goals.”
2. Approaching our RPS Goals: The CPUC has identified that, as the State gets closer to its 2030 to increase retail sales of renewable electricity to meet RPS mandates, the IRP process will assume an increased level of significance over the RPS — especially after 2030 and before the 2045 100% zero-carbon energy goal. “The IRP proceeding may determine that the state needs more renewables than the required RPS mandate to meet California’s GHG emissions reduction targets and zero carbon goals. The RPS program will continue to be the policy driver for renewable procurement until retail sellers reach a 60% RPS, at which point more renewable and zero-carbon procurement, driven by the state’s GHG goals and aggressive IRP planning, will occur.” ^[2]
3. The Crux of the Debate: The current provision of the Public Utilities Code mandate the CPUC to adopt a process for all load serving entities (IOUs, CCAs and ESPs) to file an integrated resource plan and ensure that all LSE’s meet the broad provisions which include ensuring local and system reliability and meeting renewable and GHG reduction goals.^[3] SB 155 reinforces the CPUC’s current authority to enforce the requirement that the integrated resource plan of each load-serving entity contribute to a diverse and balanced portfolio of resources as provided in current provisions of the statute. This bill further mandates the CPUC to review all retail seller’s compliance reports and to prospectively inform them that the retail seller may be at risk of not satisfying the renewable energy procurement requirements for a current or a future compliance period. The CPUC must provide “recommendations” regarding satisfying the requirements. The measure’s intent is to substantiate the CPUC’s authority to enforce the provisions of the integrated resources plan submitted by all load serving entities so that collectively all LSE’s do their part to maintain system reliability and meet California’s important environmental mandates.

REGISTERED SUPPORT / OPPOSITION:

Support

Coalition of California Utility Employees
San Diego Gas and Electric Company 
Sempra Energy Utilities
Southern California Edison
The Utility Reform Network

Support If Amended

California Wind Energy Association

Opposition

350 Bay Area Action
350 South Bay Los Angeles
California Community Choice Association
Center for Climate Protection
Indivisible South Bay La

Indivisible California Green Team
Mayor Clyde Roberson/ City of Monterey
San Jose Clean Energy
San Jose Community Energy Advocates
San Mateo; County Of
San Diego 350
Silicon Valley Clean Energy
Sonoma Clean Power

44 People on behalf of Community Choice Aggregator

Oppose Unless Amended

Clean Power Alliance of Southern California
East Bay Community Energy (Ebce)
Valley Clean Energy Alliance

Analysis Prepared by: Mary McDonald / U. & E. /

1. CPUC: Order Instituting Rulemaking to Develop an Electricity Integrated Resource Planning Framework and to Coordinate and Refine Long-Term Procurement Planning Requirements. ↑

2. CPUC: 2018 Renewable Portfolio Standard Annual Report to the Legislature. ↑

3. PUC §454.52 ↑

 THIRD READING  

Bill No: SB 155

Author: Bradford (D)

Amended: 5/1/19

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-0, 4/24/19

AYES: Hueso, Moorlach, Bradford, Chang, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner, Stern, Stone, Wiener

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: California Renewables Portfolio Standard Program: integrated resource plans

SOURCE: Author

DIGEST:

This bill makes specified requirements concerning the plans for energy procurement by load-serving entities (LSEs) within the jurisdiction of the California Public Utilities Commission (CPUC).

ANALYSIS:

Existing law:

1. Establishes the CPUC has regulatory authority over public utilities, including electrical corporations. (California Constitution, Article XII)
2. Defines “load-serving entity” to mean an electrical corporation (also known as an IOU), energy service provider (ESP) or Community Choice Aggregator (CCA). Requires the CPUC, in consultation with the California Independent System Operator, to establish resource adequacy requirements for all LSEs. (Public Utilities Code §380)
3. Authorizes customers of an IOU to aggregate their electric loads as members of their local community with CCAs. Designates a CCA as solely responsible for all generation procurement activities on behalf of the CCA’s customers, except where other generation procurement arrangements are expressly authorized by statute. (Public Utilities Code §366.2)
4. Authorizes the CPUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. (Public Utilities Code §451)
5. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including IOUs, ESPs, and CCAs, to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
6. Requires the CPUC to direct each retail seller to prepare and submit an annual report that includes specified information on the retail seller’s compliance with requirements related to eligible renewable energy resource procurement. (Public Utilities Code § 399.13)
7. Requires the CPUC to adopt a process for each LSE, defined as IOU, ESP, or CCA, serving end-use customers in the state, to file an integrated resource plan (IRP) and a schedule for a periodic updates to the plan to ensure that LSEs accomplish specified objectives. Requires each LSE to prepare and file an IRP consistent with those objectives on a time schedule directed by the CPUC and subject to CPUC review. (Public Utilities Code §454.52)
8. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for greenhouse gases (GHG) established by the State Air Resources Board for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code §454.54)

This bill:

1. Requires the CPUC to review each RPS annual compliance report filed by a retail seller, to notify a retail seller if the CPUC has determined, based upon its review, that the retail seller may be at risk of not satisfying the renewable procurement requirements for the then-current or future compliance period, and to provide recommendations in that circumstance regarding satisfying those requirements.
2. Requires the CPUC to ensure that LSEs do what is required to be done by their IRP, and ensure that LSEs comply with a requirement that at least 65 percent of the procurement that a retail seller counts toward the RPS requirement of each compliance period be from contracts of 10 years or more in duration or from its ownership or ownership agreements from eligible renewable energy resources.

Background

Load-serving Entities: IOUs, ESPs and CCAs. Several types of entities provide electricity service in California. Historically, the main distinction between electricity providers has been whether they are a municipal utility, rural cooperative, or an IOU. Which LSE provides service to your home or businesses largely depends on the location of the home or business. For example, if you live in Los Angeles City, the municipal utility, the Los Angeles Department of Water and Power, provides electricity service, but if you live in east Los Angeles, just a block away from the city limits, the community is served by an IOU, namely Southern California Edison. In more recent years, there has been a growth in additional electricity providers within the service territory of the IOU. These entities are referred to in statute as LSEs and also provide electric service within the service territory of the IOU, although the IOU continues to provide distribution, transmission, and billing services to all customers in their service territory. These LSEs include:

• IOUs: privately owned electrical corporations, such as San Diego Gas & Electric (SDG&E) that provide monopoly electric utility services in distinct, defined geographic territories. In addition to providing the distribution and transmission, and billing services, IOUs have historically provided the energy supply. IOUs are rate-regulated by the CPUC to ensure they provide service at a just and reasonable rate. IOUs also have an obligation to serve all customers in their service territory, any customers not served by ESPs or CCAs must, generally, be served by the IOU.
• ESPs: also known as direct access (DA) providers, provide electricity to end-use customers who choose the services of the ESP instead of the incumbent IOU or a CCA. An ESP uses the transmission and distribution infrastructure of the IOU to deliver electricity to the customer. ESP customers are generally large commercial customers (such as a university or a large corporation) who wish to manage their own energy procurement decisions. ESP customers retain the option to return to the service of the incumbent IOU or to a CCA, if a CCA offers services in their area.
• CCAs: entities, such as MCE and Sonoma Clean Power, but includes 17 others operating in the state, where local governments (either cities or counties) elect to buy or generate electricity on behalf of local residents while using the incumbent IOU’s transmission and distribution infrastructure. An individual customer within the territory of a CCA is generally automatically opted-in to receive electric service from the CCA when the customer’s local government elects to join the CCA. However, the customer retains the option to return to the service of the incumbent IOU by electing to opt-out. Customers, especially commercial customers, also may have the option to be served by an ESP, where ESP services are allowed.

Growth of LSEs. The combined procurement between CCA and DA service is anticipated to represent the majority (potentially 85 percent) of the customer load served in the IOU service territory in the coming decade or so.

Growth of CCAs. While IOUs have existed for nearly a century, CCAs are a more recent entity. In 2002, statute first allowed the formation of CCAs. It was not until nearly a decade later that the first CCA—Marin Clean Energy—came into existence. Today, there are 19 CCAs operating in the state with a dozen more communities exploring the formation of a CCA. CCA growth is likely to cover substantial portions of the service territories of the state’s three largest IOUs.

Growth of ESPs. Last year, the Legislature passed and the Governor signed SB 237 (Hertzberg, Chapter 600, Statutes of 2018) which increased the limit of the DA program by 4,000 gigawatt hours for non-residential customers. The bill also directed the CPUC to provide recommendations to the Legislature by June 2020 on the adoption and implementation of a second DA program reopening. The opening of the DA cap creates some additional competition, as well as, uncertainty for the incumbent utility and the CCAs serving energy load that might migrate to an ESP.

SB 350 IRP. SB 350 (De León, Chapter 547, Statutes of 2015) established new targets to increase retail sales of renewable electricity to 50 percent by 2030. SB 350 also required each LSE —meaning an IOU, ESP, or CCA—to file a biennial IRP for approval or certification by the CPUC. The CPUC would then combine all LSEs’ IRPs to ensure the state was on its path to meet the SB 350 goals, including GHG reductions and procurement of at least 50 percent of renewable resources by the year 2030. The CPUC is currently finalizing the first two-year IRP cycle and embarking on initiating the second round of the two-year IRP cycle.

CPUC IRP decision. Late last month, the CPUC adopted a decision on the first two-year IRP cycle. The findings of the cycle provides a sense of how LSEs are participating in the process and what potential adjustments may be needed to ensure the state remains on track to achieve its energy procurement-related goals. While recognizing that the first IRP cycle was a learning opportunity for LSEs and the CPUC, the exercise did surface a number of issues, including that the individual resource choices by the LSEs collectively did not result in a diverse and balanced portfolio of resources needed to ensure sufficiently reliable or environmentally beneficial statewide electricity resource portfolio. Additionally, it was often difficult for the CPUC to distinguish between an LSE’s plan for a resource that is aspirational and one that has an executed contract. The CPUC also declined to certify 19 IRPs and required those LSE’s to re-file with the information missing from their plan – generally information about criteria pollution related to their energy procurement.

Comments

CPUC review of RPS annual compliance plans. This bill requires the CPUC to review an LSEs annual RPS compliance report and notify LSEs that may be at risk of not satisfying the renewable procurement requirements for the then-current or future RPS compliance period, and to provide recommendations in that circumstance regarding satisfying those requirements. This provision would allay concerns by some that the state’s RPS goals could be delayed by the timing of the enforcement action. Specifically, the CPUC’s ability to take enforcement action must be done after-the-fact in relation to the LSE’s actual performance. As such, the enforcement action is years after the RPS compliance period. However, providing annual monitoring of compliance would provide the state and all parties greater transparency concerning whether an LSE may be off-track.

New IRP provisions. This bill includes as part of the IRP, existing requirements related to resource adequacy and long-term contracts. These requirements would be folded into the IRP as part of the LSE’s IRP filings.

Enforcement of IRP. As noted in a recent informational hearing by the Senate Committee on Energy, Utilities and Communications, the changing electricity landscape is resulting in a more complicated energy procurement market. As raised at the hearing, the need for more coordination among the growing number of LSEs is necessary to ensure the state remains on track to achieve its policy goals – including goals related to clean energy, reliability and affordability. The author of this bill notes his desire to ensure the IRP process is executed as anticipated and seeks to reinforce the CPUC’s existing authority to enforce the IRP. However, some LSEs take issue with whether this bill expands the CPUC’s existing authority. This debate is at the crux of this bill. The issue is largely a debate about whether the CPUC can enforce the outcomes of the IRP or the IRP process itself. In opposing this bill, California Community Choice Association expresses concerns that the IRP remain focused as a planning activity and not otherwise convert IRP planning documents into procurement compliance plans that could force LSEs to lock in procurement decisions.

Related/Prior Legislation

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created 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 percent clean energy.

SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs – IOUs, ESPs, and CCAs – to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and so that there is no cost shifting among LSEs.

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

AB 117 (Migden, Chapter 838, Statutes of 2002) allowed cities and counties to aggregate their electric loads and provide service directly to their residents through formation of CCAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 5/15/19)

California Wind Energy Association

Coalition of California Utility Employees

San Diego Gas & Electric Company

Southern California Edison

The Utility Reform Network

OPPOSITION: (Verified 5/15/19)

California Alliance for Community Energy

California Community Choice Association

Californians for Energy Choice

Solana Energy Alliance

ARGUMENTS IN SUPPORT: According to the author, “California’s energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other elements of the system. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy investments.”

ARGUMENTS IN OPPOSITION: In opposition to this bill, the California Community Choice Association expresses concerns that this bill would “force LSEs to prematurely lock in procurement decision that may be 10 years out, resulting in increased costs to California energy supply customers and increased reliance on natural gas in the long-term.” They argue for “the need to retain some flexibility in how they meet the desired IRP plan’s outcome, to avoid impinging upon local programmatic goals and alternatives to procurement such as increased investment in distributed energy resources.”

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

5/15/19 15:21:18

**** END ****

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2019 - 2020 Regular

Bill No: SB 155 Hearing Date: 4/24/2019

SUBJECT: California Renewables Portfolio Standard Program: integrated resource plans

DIGEST: This bill makes specified requirements concerning the plans for energy procurement by entities within the jurisdiction of the California Public Utilities Commission (CPUC).

ANALYSIS:

Existing law:

1. Establishes the CPUC) has regulatory authority over public utilities, including electrical corporations. (California Constitution, Article XII)
2. Defines “load-serving entity” to mean an electrical corporation (also known as an IOU), energy service provider (ESP) or Community Choice Aggregator (CCA). Requires the CPUC, in consultation with the California Independent System Operator (CAISO), to establish resource adequacy requirements for all load-serving entities (LSEs). (Public Utilities Code §380)
3. Authorizes customers of an IOU to aggregate their electric loads as members of their local community with CCAs. Designates a CCA as solely responsible for all generation procurement activities on behalf of the CCA’s customers, except where other generation procurement arrangements are expressly authorized by statute. (Public Utilities Code §366.2)
4. Authorizes the CPUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. (Public Utilities Code §451)
5. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including IOUs, ESPs, and CCAs, to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
6. Requires the CPUC to adopt a process for each LSE, defined as IOU, ESP, or CCA, serving end-use customers in the state, to file an integrated resource plan (IRP) and a schedule for a periodic updates to the plan to ensure that LSEs accomplish specified objectives. Requires each LSE to prepare and file an IRP consistent with those objectives on a time schedule directed by the CPUC and subject to CPUC review. (Public Utilities Code §454.52)
7. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for greenhouse gases (GHG) established by the State Air Resources Board (ARB) for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code §454.54)

This bill:

1. Authorizes the CPUC to audit any retail seller to assess its compliance with the program’s RPS procurement requirements for the current or any prior compliance period and to issue mandates and recommendations to ensure sufficient corrective action is taken to achieve full compliance with those procurement requirements.
2. Requires the CPUC to ensure that LSEs do what is required to be done by their IRP, and to enforce, as if it were a requirement in the plan, a requirement that at least 65 percent of the procurement that a retail seller counts toward the RPS requirement of each compliance period be from contracts of 10 years or more in duration or from its ownership or ownership agreements from eligible renewable energy resources.

Background

Load-serving Entities: IOUs, ESPs and CCAs. Several types of entities provide electricity service in California. Historically, the main distinction between electricity providers has been whether they are a municipal utility, rural cooperative, or an IOU. Who provides service to your home or businesses largely depends on the location of the home or business. For example, if you live in Los Angeles City, the municipal utility, the Los Angeles Department of Water and Power, provides electricity service, but if you live in east Los Angeles, just a block away from the City limits, the community is served by an IOU. In more recent years, there has been a growth in additional electricity providers within the service territory of the IOU. These entities are referred to in statute as LSEs and also provide electric service within the service territory of the IOU, although the IOU continues to provide distribution, transmission, and billing services to all customers in their service territory. These LSEs include:

• IOUs: privately owned electrical corporations, such as Southern California Edison (SCE), that provide monopoly electric utility services in distinct, defined geographic territories. In addition to providing the distribution and transmission, and billing services, IOUs have historically provided the energy supply. IOUs are rate-regulated by the CPUC to ensure they provide service at a just and reasonable rate. IOUs also have an obligation to serve to all customers, any customers not served by ESPs or CCAs must, generally, be served by the IOU.
• ESPs: also known as direct access (DA) providers, provide electricity to end-use customers who choose the services of the ESP instead of the incumbent IOU or a CCA. An ESP uses the transmission and distribution infrastructure of the IOU to deliver electricity to the customer. ESP customers are generally large commercial customers (such as a university or large corporation) who wish to manage their own energy procurement decisions. ESP customers retain the option to return to the service of the incumbent IOU or to a CCA, if a CCA offers services in their area.
• CCAs: entities, such as MCE and Sonoma Clean Power, where local governments (either cities or counties) elect to buy or generate electricity on behalf of local residents while using the incumbent IOU’s transmission and distribution infrastructure. An individual customer within the territory of a CCA is generally automatically opted-in to receive electric service from the CCA when the customer’s local government elects to join the CCA. However, the customer retains the option to return to the service of the incumbent IOU. Customers, especially commercial customers, can opt to be served by an ESP, where ESP services are allowed.

Growth of LSEs. The combined procurement between CCA and DA service is anticipated to represent the majority (potentially 85 percent) of the customer load served in the IOU service territory in the coming decade or so.

Growth of CCAs. While IOUs have existed for nearly a century, CCAs are a more recent entity. In 2002, statute first allowed the formation of CCAs. It was not until nearly a decade later that the first CCA—Marin Clean Energy—came into existence. Today, there are 19 CCAs operating in the state with a dozen more communities exploring the formation of a CCA. CCA growth is likely to cover substantial portions of the service territories of the state’s three largest IOUs.

Growth of ESPs. Last year, the Legislature passed and the governor signed SB 237 (Hertzberg, Chapter 600, Statutes of 2018) which increased the limit of the DA program by 4,000 gigawatt hours for non-residential customers. The bill also directs the CPUC to provide recommendations to the Legislature by June 2020 on the adoption and implementation of a second DA program reopening. The opening of the DA cap creates some additional competition, as well as, uncertainty for the incumbent utility and the CCAs serving energy load that might migrate to an ESP.

SB 350 IRP. SB 350 (De León, Chapter 547, Statutes of 2015) established new targets to increase retail sales of renewable electricity to 50 percent by 2030. SB 350 also required each LSE —meaning an IOU, ESP, or CCA—to file a biennial IRP for approval or certification by the CPUC. The CPUC would then combine all LSEs’ IRPs to ensure the state was on its path to meet the SB 350 goals, including GHG reductions and procurement of at least 50 percent of renewable resources by the year 2030. The CPUC is currently finalizing the first two-year IRP cycle and embarking on initiating the second round of the two-year IRP cycle.

CPUC IRP Proposed Decision. The findings from the first IRP two-year cycle provides a sense of how LSEs are participating in the process and what potential adjustments may be needed to ensure the state remains on track to achieve its energy procurement-related goals. While recognizing that the first IRP cycle was a learning opportunity for LSEs and the CPUC, the exercise did surface a number of issues, including that the individual resource choices by the LSEs collectively did not result in a diverse and balanced portfolio of resources needed to ensure sufficiently reliable or environmentally beneficial statewide electricity resource portfolio. Additionally, it was often difficult for the CPUC to distinguish between an LSE’s plan for a resource that is aspirational and one that has an executed contract. The CPUC also declined to certify 19 IRPs and required those LSE’s to re-file with the information missing from their plan – generally information about criteria pollution.

Comments. As noted in a recent informational hearing by this committee, the changing electricity landscape is resulting in a more complicated energy procurement landscape. As raised at the hearing, the need for more coordination among the growing number of LSEs is necessary to ensure the state remains on track to achieve its policy goals–including clean energy, reliability and affordability. The author of this bill notes his desire to ensure the IRP process is executed as anticipated and seeks to reinforce the CPUC’s existing authority to enforce the IRP. However, some LSEs take issue with whether this bill expands the CPUC’s existing authority. To address those concerns the language in relation to the existing RPS is better located in the statute where annual compliance reports are required of each LSE. A concern raised by the author and some of the supporters is the delay in the RPS program where the CPUC enforcement action happens after the three-year compliance period has ended and the filings have been reviewed potentially years after the fact. Such a delay may not be in the best interest to ensure the state stays on track to meet its goals. However, the CPUC can not take enforcement action prior to the full compliance period has ended. As a compromise, the author and committee may wish to strike the language in this bill concerning the RPS and instead require that as part of the annual compliance filings the CPUC must determine whether an LSE is on track. In cases where an LSE is not, the CPUC should notify the LSE that they are behind on their RPS obligation. Additionally, the components in this bill related to incorporating resource adequacy procurement and long-term RPS contracts in the IRP are useful additions. However, the author and committee may wish to move the language related to compliance with the long-term contract requirements into the IRP section, under the addition of resource adequacy. It is the author’s intent to make more explicit the CPUC’s existing authority to enforce the IRP. Nonetheless, some LSEs dispute this authority. This debate is at the crux of this bill the answer which should help clarify the weight of the IRP to inform procurement coordination for the state.

Prior/Related Legislation

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, 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 percent clean energy.

SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs – IOUs, ESPs, and CCAs – to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and so that there is no cost shifting among LSEs.

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

AB 117 (Migden, Chapter 838, Statutes of 2002) allowed cities and counties to aggregate their electric loads and provide service directly to their residents through formation of CCAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Coalition of California Utility Employees

Southern California Edison

The Utility Reform Network

OPPOSITION:

California Community Choice Association (Cal CCA)

ARGUMENTS IN SUPPORT: According to the author:

“California’s energy markets continue to evolve in both how power is generated and how it is delivered. But we are already seeing troubling signs about how this evolution impacts reliability and procurement, among other elements of the system. A rapidly changing grid demands more, not less, supervision of how market participants live up to the existing rules and procedures the State has already established — particularly in the Renewables Portfolio Standard and in Integrated Resource Planning. SB 155 clarifies and improves existing compliance procedures because consistency will ensure equity across Load Serving Entities and ensure California can continue to make progress on its clean energy investments.”

ARGUMENTS IN OPPOSITION: In opposition to this bill, Cal CCA expresses concerns that this bill would “force LSEs to prematurely lock in procurement decision that may be 10 years out, resulting in increased costs to California energy supply customers and increased reliance on natural gas in the long-term.” Furthermore, CalCCA argues that the CPUC’s IRP proceeding is still actively under way and that the CPUC already has the ability to enforce compliance with its RA program; therefore, suggesting this bill is not needed.

-- END --