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AB-920 California Renewables Portfolio Standard Program.(2017-2018)

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Date Published: 04/17/2017 09:00 PM
AB920:v97#DOCUMENT

Amended  IN  Assembly  April 17, 2017
Amended  IN  Assembly  March 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 920


Introduced by Assembly Member Aguiar-Curry
(Principal coauthor: Senator McGuire)
(Coauthors: Assembly Members Bigelow, Dahle, Eggman, and Gallagher, Eduardo Garcia Garcia, and Wood)
(Coauthor: Senator Bradford)

February 16, 2017


An act to amend Sections 399.12 and 399.16 of the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 920, as amended, Aguiar-Curry. California Renewables Portfolio Standard Program.
The California Renewables Portfolio Standard Program requires the Public Utilities Commission to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatthours of those products sold to their retail end-use customers achieves 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 40% by December 31, 2024, 45% by December 31, 2027, and 50% by December 31, 2030. The program additionally requires each local publicly owned electric utility, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. The program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles, requires that all retail sellers and local publicly owned electric utilities procure a balanced portfolio of electricity products from eligible renewable energy resources, as specified, referred to as the portfolio content requirements.
This bill would require, for the compliance period ending December 31, 2024, and for each compliance period thereafter, that not less than 20% of the electricity products procured by a retail seller through renewable energy resource contracts executed on or after June 1, 2010, are for renewable baseload generation, as defined, and meet a specified product content requirement.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) California is at the forefront of national and global efforts to address climate change through reducing emissions of greenhouse gases, and has prioritized reducing emissions of greenhouse gases in the electrical industry through the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 3.2 of Part 1 of Division 1 of the Public Utilities Code).
(2) The California Renewables Portfolio Standard Program has established an effective framework for increasing the use of electricity generated from renewable energy sources by requiring the state’s retail suppliers and local publicly owned electric utilities to obtain an increasing percentage of the electricity supplied to their retail customers from defined eligible renewable energy resources.
(3) The state is ahead of schedule to meet its 2020 goal of generating 33 percent of the electricity sold to retail end users from eligible renewable energy resources and has set the goal of generating 50 percent of the electricity sold to retail end users from those resources by 2030.
(4) Obtaining at least 50 percent of the electricity sold to retail end users in California from eligible renewable energy resources to meet the state’s objectives for clean energy, clean air, and pollution reduction depends on a reliable, resilient, and secure electrical grid.
(5) To meet the requirements of the California Renewables Portfolio Standard Program requires the development and procurement of a balanced portfolio of electricity products from eligible renewable energy resources that focuses on reliability, with incidental job creation and retention benefits.
(6) The California Renewables Portfolio Standard Program also requires that the renewables portfolio standard reflect an optimal mix of eligible renewable energy resources with deliverability characteristics that include peaking, dispatchable baseload, firm, and as-available capacity, a requirement that necessitates occasional adjustments to the optimal mix of resources as the renewables portfolio standard procurement requirements increase.
(7) The state’s Independent System Operator has noted increased spikes in the supply of electricity that are not aligned with when electricity is consumed, due to the high penetration of intermittent generation as the percentage of electricity supplied by eligible renewable energy resources has surpassed the 20 percent renewables portfolio standard requirement, and notes that this misalignment of electrical supply will increase as the state moves to a 33-percent and 50-percent renewables portfolio standard and beyond.
(8) The state has significant existing and potential sources of renewable energy that can provide baseload or flexible generation that not only can contribute to the achievement of the state’s clean energy goals, but will be needed to cost-effectively maintain electrical grid reliability and resiliency by counterbalancing increasing amounts of new, intermittent generation from eligible renewable energy resources.
(9) These existing and potential sources of renewable energy that offer baseload or flexible generation also provide significant, measurable, life-cycle reductions in emissions of greenhouse gases and short-lived climate pollutants by diversion of their fuel stocks from open burning or flaring and by preventing the discharge of treated wastewater into rivers by using it in energy production that would reduce overall emissions of greenhouse gases and short-lived climate pollutants before and during the generation of electricity.
(10) Many of the potential sources of renewable energy that offer baseload or flexible generation are located in areas of the state that are environmentally or economically challenged, including within the Counties of Lake, Sonoma, Imperial, and Inyo.
(11) These existing and potential sources of renewable energy that offer baseload or flexible generation are also major employers in the communities where projects are located, providing a diverse range of full-time employment opportunities as well as contractor jobs throughout all phases of development and operation.
(12) These existing and potential sources of renewable energy that offer baseload or flexible generation already or would make significant financial contributions to the local economies where they are located, including from the payment of property taxes, royalty payments, sales, and employment taxes.
(13) The state’s clean air and pollution reduction objectives have prioritized investment in, and achievement of, reductions in emissions of air contaminants and toxic air contaminants in environmentally and economically challenged regions of the state.
(14) The portfolio content requirements of the California Renewables Portfolio Standard Program place the highest priority upon procuring generation from eligible renewable energy resources that actually serve end users within California by establishing as the eligibility requirements for the first content category that the eligible renewable energy resource have a first point of interconnection with a California balancing authority, have a first point of interconnection with distribution facilities used to serve end users within a California balancing authority area, be scheduled from the eligible renewable energy resource into a California balancing authority without substituting electricity from another source, or have an agreement to dynamically transfer electricity to a California balancing authority.
(15) It is the objective of this act to achieve the clean energy, clean air, pollution reduction, and environmental justice goals of the state by ensuring, beginning June 1, 2010, that not less than 20 percent of the generation procured to meet the renewables portfolio standard procurement requirements shall be from dispatchable renewable baseload, firm, and as-available capacity resources, and that all necessary approvals for projects utilizing and developing eligible renewable energy resources in economically or environmentally disadvantaged areas of the state be expedited.
(16) It is the intent of the Legislature that the objectives described in paragraph (15) be achieved while protecting natural and working lands.
(b) This act shall be known, and may be cited, as the California Reliable Renewable Energy Act of 2017.

SEC. 2.

 Section 399.12 of the Public Utilities Code is amended to read:

399.12.
 For purposes of this article, the following terms have the following meanings:
(a) “Conduit hydroelectric facility” means a facility for the generation of electricity that uses only the hydroelectric potential of an existing pipe, ditch, flume, siphon, tunnel, canal, or other manmade conduit that is operated to distribute water for a beneficial use.
(b) “Balancing authority” means the responsible entity that integrates resource plans ahead of time, maintains load-interchange generation balance within a balancing authority area, and supports interconnection frequency in real time.
(c) “Balancing authority area” means the collection of generation, transmission, and loads within the metered boundaries of the area within which the balancing authority maintains the electrical load-resource balance.
(d) “California balancing authority” is a balancing authority with control over a balancing authority area primarily located in this state and operating for retail sellers and local publicly owned electric utilities subject to the requirements of this article and includes the Independent System Operator (ISO) and a local publicly owned electric utility operating a transmission grid that is not under the operational control of the ISO. A California balancing authority is responsible for the operation of the transmission grid within its metered boundaries which is not limited by the political boundaries of the State of California.
(e) “Eligible renewable energy resource” means an electrical generating facility that meets the definition of a “renewable electrical generation facility” in Section 25741 of the Public Resources Code, subject to the following:
(1) (A) An existing small hydroelectric generation facility of 30 megawatts or less shall be eligible only if a retail seller or local publicly owned electric utility procured the electricity from the facility as of December 31, 2005. A new hydroelectric facility that commences generation of electricity after December 31, 2005, is not an eligible renewable energy resource if it will cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(B) Notwithstanding subparagraph (A), a conduit hydroelectric facility of 30 megawatts or less that commenced operation before January 1, 2006, is an eligible renewable energy resource. A conduit hydroelectric facility of 30 megawatts or less that commences operation after December 31, 2005, is an eligible renewable energy resource so long as it does not cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(C) A facility approved by the governing board of a local publicly owned electric utility prior to June 1, 2010, for procurement to satisfy renewable energy procurement obligations adopted pursuant to former Section 387, shall be certified as an eligible renewable energy resource by the Energy Commission pursuant to this article, if the facility is a “renewable electrical generation facility” as defined in Section 25741 of the Public Resources Code.
(D) (i) A small hydroelectric generation unit with a nameplate capacity not exceeding 40 megawatts that is operated as part of a water supply or conveyance system is an eligible renewable energy resource only for the retail seller or local publicly owned electric utility that procured the electricity from the unit as of December 31, 2005. No unit shall be eligible pursuant to this subparagraph if an application for certification is submitted to the Energy Commission after January 1, 2013. Only one retail seller or local publicly owned electric utility shall be deemed to have procured electricity from a given unit as of December 31, 2005.
(ii) Notwithstanding clause (i), a local publicly owned electric utility that meets the criteria of subdivision (j) of Section 399.30 may sell to another local publicly owned electric utility electricity from small hydroelectric generation units that qualify as eligible renewable energy resources under clause (i), and that electricity may be used by the local publicly owned electric utility that purchased the electricity to meet its renewables portfolio standard procurement requirements. The total of all those sales from the utility shall be no greater than 100,000 megawatthours of electricity.
(iii) The amendments made to this subdivision by the act adding this subparagraph are intended to clarify existing law and apply from December 10, 2011.
(2) (A) A facility engaged in the combustion of municipal solid waste shall not be considered an eligible renewable energy resource.
(B) Subparagraph (A) does not apply to generation before January 1, 2017, from a facility located in Stanislaus County that was operational prior to September 26, 1996.
(f) “Procure” means to acquire through ownership or contract.
(g) “Procurement entity” means any person or corporation authorized by the commission to enter into contracts to procure eligible renewable energy resources on behalf of customers of a retail seller pursuant to subdivision (f) of Section 399.13.
(h) “Renewable baseload generation” means an eligible renewable energy resource that is capable of generating electricity at a capacity factor greater than 60 percent, relative to its capacity, on an annual average basis.
(i) (1) “Renewable energy credit” means a certificate of proof associated with the generation of electricity from an eligible renewable energy resource, issued through the accounting system established by the Energy Commission pursuant to Section 399.25, that one unit of electricity was generated and delivered by an eligible renewable energy resource.
(2) “Renewable energy credit” includes all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, except for an emissions reduction credit issued pursuant to Section 40709 of the Health and Safety Code and any credits or payments associated with the reduction of solid waste and treatment benefits created by the utilization of biomass or biogas fuels.
(3) (A) Electricity generated by an eligible renewable energy resource attributable to the use of nonrenewable fuels, beyond a de minimis quantity used to generate electricity in the same process through which the facility converts renewable fuel to electricity, shall not result in the creation of a renewable energy credit. The Energy Commission shall set the de minimis quantity of nonrenewable fuels for each renewable energy technology at a level of no more than 2 percent of the total quantity of fuel used by the technology to generate electricity. The Energy Commission may adjust the de minimis quantity for an individual facility, up to a maximum of 5 percent, if it finds that all of the following conditions are met:
(i) The facility demonstrates that the higher quantity of nonrenewable fuel will lead to an increase in generation from the eligible renewable energy facility that is significantly greater than generation from the nonrenewable fuel alone.
(ii) The facility demonstrates that the higher quantity of nonrenewable fuels will reduce the variability of its electrical output in a manner that results in net environmental benefits to the state.
(iii) The higher quantity of nonrenewable fuel is limited to either natural gas or hydrogen derived by reformation of a fossil fuel.
(B) Electricity generated by a small hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (A) or (D) of paragraph (1) of subdivision (e).
(C) Electricity generated by a conduit hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (B) of paragraph (1) of subdivision (e).
(D) Electricity generated by a facility engaged in the combustion of municipal solid waste shall not result in the creation of a renewable energy credit. This subparagraph does not apply to renewable energy credits that were generated before January 1, 2017, by a facility engaged in the combustion of municipal solid waste located in Stanislaus County that was operational prior to September 26, 1996, and sold pursuant to contacts entered into before January 1, 2017.
(j) “Renewables portfolio standard” means the specified percentage of electricity generated by eligible renewable energy resources that a retail seller or a local publicly owned electric utility is required to procure pursuant to this article.
(k) “Retail seller” means an entity engaged in the retail sale of electricity to end-use customers located within the state, including any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. A community choice aggregator shall participate in the renewables portfolio standard program subject to the same terms and conditions applicable to an electrical corporation.
(3) An electric service provider, as defined in Section 218.3. The electric service provider shall be subject to the same terms and conditions applicable to an electrical corporation pursuant to this article. This paragraph does not impair a contract entered into between an electric service provider and a retail customer prior to the suspension of direct access by the commission pursuant to Section 80110 of the Water Code.
(4) “Retail seller” does not include any of the following:
(A) A corporation or person employing cogeneration technology or producing electricity consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity pursuant to Division 27 (commencing with Section 80000) of the Water Code.
(C) A local publicly owned electric utility.
(l) “WECC” means the Western Electricity Coordinating Council of the North American Electric Reliability Corporation, or a successor to the corporation.

SEC. 3.

 Section 399.16 of the Public Utilities Code is amended to read:

399.16.
 (a) Various electricity products from eligible renewable energy resources located within the WECC transmission network service area shall be eligible to comply with the renewables portfolio standard procurement requirements in Section 399.15. These electricity products may be differentiated by their impacts on the operation of the grid in supplying electricity, as well as meeting the requirements of this article.
(b) Consistent with the goals of procuring the least-cost and best-fit electricity products from eligible renewable energy resources that meet project viability principles adopted by the commission pursuant to paragraph (4) of subdivision (a) of Section 399.13 and that provide the benefits set forth in Section 399.11, a balanced portfolio of eligible renewable energy resources shall be procured consisting of the following portfolio content categories:
(1) Eligible renewable energy resource electricity products that meet either of the following criteria:
(A) Have a first point of interconnection with a California balancing authority, have a first point of interconnection with distribution facilities used to serve end users within a California balancing authority area, or are scheduled from the eligible renewable energy resource into a California balancing authority without substituting electricity from another source. The use of another source to provide real-time ancillary services required to maintain an hourly or subhourly import schedule into a California balancing authority shall be permitted, but only the fraction of the schedule actually generated by the eligible renewable energy resource shall count toward this portfolio content category.
(B) Have an agreement to dynamically transfer electricity to a California balancing authority.
(2) Firmed and shaped eligible renewable energy resource electricity products providing incremental electricity and scheduled into a California balancing authority.
(3) Eligible renewable energy resource electricity products, or any fraction of the electricity generated, including unbundled renewable energy credits, that do not qualify under the criteria of paragraph (1) or (2).
(c) In order to achieve a balanced portfolio, all retail sellers shall meet the following requirements for all procurement credited toward each compliance period:
(1) Not less than 50 percent for the compliance period ending December 31, 2013, 65 percent for the compliance period ending December 31, 2016, and 75 percent for each compliance period thereafter, of the eligible renewable energy resource electricity products associated with contracts executed after June 1, 2010, shall meet the product content requirements of paragraph (1) of subdivision (b).
(2) Not more than 25 percent for the compliance period ending December 31, 2013, 15 percent for the compliance period ending December 31, 2016, and 10 percent for each compliance period thereafter, of the eligible renewable energy resource electricity products associated with contracts executed after June 1, 2010, shall meet the product content requirements of paragraph (3) of subdivision (b).
(3) Any renewable energy resources contracts executed on or after June 1, 2010, not subject to the limitations of paragraph (1) or (2), shall meet the product content requirements of paragraph (2) of subdivision (b).
(4) For purposes of electric service providers only, the restrictions in this subdivision on crediting eligible renewable energy resource electricity products to each compliance period shall apply to contracts executed after January 13, 2011.
(5) For the compliance period ending December 31, 2024, and for each compliance period thereafter, not less than 20 percent of the electricity products procured through renewable energy resource contracts executed on or after June 1, 2010, shall be for renewable baseload generation and shall meet the product content requirements of paragraph (1) of subdivision (b).
(d) Any contract or ownership agreement originally executed prior to June 1, 2010, shall count in full toward the procurement requirements established pursuant to this article, if all of the following conditions are met:
(1) The renewable energy resource was eligible under the rules in place as of the date when the contract was executed.
(2) For an electrical corporation, the contract has been approved by the commission, even if that approval occurs after June 1, 2010.
(3) Any contract amendments or modifications occurring after June 1, 2010, do not increase the nameplate capacity or expected quantities of annual generation, or substitute a different renewable energy resource. The duration of the contract may be extended if the original contract specified a procurement commitment of 15 or more years.
(e) A retail seller may apply to the commission for a reduction of a procurement content requirement of subdivision (c). The commission may reduce a procurement content requirement of subdivision (c) to the extent the retail seller demonstrates that it cannot comply with that subdivision because of conditions beyond the control of the retail seller as provided in paragraph (5) of subdivision (b) of Section 399.15. The commission shall not, under any circumstance, reduce the obligation specified in paragraph (1) of subdivision (c) below 65 percent for any compliance period obligation after December 31, 2016.