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AB-56 Electricity: procurement by the California Alternative Energy and Advanced Transportation Financing Authority.(2019-2020)

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Date Published: 04/30/2019 09:00 PM
AB56:v96#DOCUMENT

Amended  IN  Assembly  April 30, 2019
Amended  IN  Assembly  April 12, 2019
Amended  IN  Assembly  March 18, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 56


Introduced by Assembly Member Eduardo Garcia
(Coauthor: Assembly Member Burke)

December 03, 2018


An act to add Chapter 5 (commencing with Section 26100) to Division 16 of the Public Resources Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


AB 56, as amended, Eduardo Garcia. Electricity: procurement by the California Alternative Energy and Advanced Transportation Financing Authority.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The California Renewables Portfolio Standard Program requires the commission to establish a renewables portfolio standard requiring all retail sellers, defined as including electrical corporations, electric service providers, and community choice aggregators, 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, 44% by December 31, 2024, 52% by December 31, 2027, and 60% by December 31, 2030. Existing law establishes a policy of the state that eligible renewable energy resources and zero-carbon resources supply 100% of retail sales of electricity to California end-use customers and 100% of electricity procured to serve all state agencies by December 31, 2045. Existing law requires the commission, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities, as defined, and requires each load-serving entity to maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including peak demand and planning and operating reserves, deliverable to locations and at times as may be necessary to provide reliable electric service.
The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority to advance the state’s goals of reducing emissions of greenhouse gases, increasing the deployment of sustainable and renewable energy sources, implementing measures that increase the efficient use of energy, creating high quality employment opportunities, and lessening the state’s dependence on fossil fuels.
This bill would authorize the commission, if it makes certain findings, to require authorize the California Alternative Energy and Advanced Transportation Financing Authority to undertake procurement of electricity to meet the state’s climate, clean energy, and reliability goals that are not satisfied by load-serving entities. The bill would authorize the authority to undertake procurement consistent with specified objectives and to manage the resale of electricity for its contracted resources. The bill would provide for the reduction in procurement compliance obligations for load-serving entities for the electricity procured by the authority. The bill would require the authority to develop and submit annual revenue requirements for review and approval by the commission to recover specified costs, would provide that the authority is entitled to recover revenue requirements approved by the commission for costs incurred on behalf of retail customers of a load-serving entity, and provide that those costs are a direct obligation of the retail end-use customers of load-serving entities, with all payments to be remitted to the authority by load-serving entities. The bill would require the commission to approve a method for recovering revenue requirements from retail end-use customers of load-serving entities by a rate component that is a nonbypassable element of the local distribution service and collected on the basis of usage.
Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of an order or decision of the commission implementing the requirements of the bill would be a crime, this bill would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Chapter 5 (commencing with Section 26100) is added to Division 16 of the Public Resources Code, to read:
CHAPTER  5. Clean Electricity Procurement
Article  1. General Provisions and Definitions

26100.
 In enacting this chapter, it is the intent of the Legislature to do all of the following:
(a) Authorize the Public Utilities Commission to require authorize the California Alternative Energy and Advanced Transportation Financing Authority to undertake procurement of electricity to meet the state’s climate, clean energy, and reliability goals that are not satisfied by load-serving entities.
(b) Provide jurisdiction to the Public Utilities Commission to approve procurement by the authority that creates cost responsibility for end-use retail customers of load-serving entities.
(c) Authorize procurement by the authority to support the achievement of the following objectives:
(1) To accelerate the development of clean energy resources.
(2) To reduce the emissions of greenhouse gases associated with the production of electricity that serves California customers.
(3) To minimize the emissions of criteria air pollutants and toxic air contaminants in the state.
(4) To reduce fossil fuel consumption within the state.
(5) To protect public health and safety.
(6) To meet system and local resource adequacy requirements at least cost.
(7) To stimulate economic development and job creation.
(8) To promote stable electricity rates.
(9) To reduce the cost to ratepayers of procuring new clean energy resources through economies of scale, bulk procurement, and identifying available sources of federal, state, and local incentives.
(10) To assist retail sellers to comply with their obligations under the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code).
(d) Promote the rapid transition to complete reliance on clean energy resources at the lowest cost consistent with the policy objectives established pursuant to Section 454.53 of the Public Utilities Code.

26101.
 For purposes of this chapter, the following definitions apply:
(a) “Commission” means the Public Utilities Commission.
(b) “Eligible renewable energy resources” has the same meaning as defined in Section 399.12 of the Public Utilities Code.
(c) “Load-serving entity” has the same meaning as defined in Section 380 of the Public Utilities Code.
(d) “Retail seller” has the same meaning as set forth in Section 399.12 of the Public Utilities Code.

Article  2. Electricity Procurement by the Authority

26105.
 The commission may authorize the authority to undertake procurement of electricity to meet the state’s climate, clean energy, and reliability goals if the commission makes all of the following findings:
(a) The empowerment of the authority to procure electricity pursuant to this chapter can assist the state with the timely achievement of the state’s clean energy and climate policy objectives.
(b) The empowerment of the authority to procure electricity would assist in addressing shortfalls or gaps identified in the integrated resource planning of load-serving entities.
(c) The authority could successfully serve as a procurement entity for retail sellers pursuant to subdivision (f) of Section 399.13 of the Public Utilities Code.
(d) The authority could reasonably manage power supply commitments previously executed by an electrical corporation.

26106.
 The president of the commission shall recuse themselves from participating in any commission determinations relating to the California Alternative Energy and Advanced Transportation Financing Authority, including any discussion or vote concerning the authorization of procurement conducted by the authority pursuant to this chapter.

Article  3. Responsibilities of the Authority as a Procurement Entity

26110.
 The authority may undertake procurement to support the following objectives:
(a) The development of new generating or storage resources mandated by state law or policy on behalf of the state where a specific procurement obligation is not deemed appropriate to assign to a load-serving entity by the commission.
(b) The efficient achievement of local reliability and resource adequacy requirements for customers of load-serving entities.
(c) The satisfaction of residual or unmet needs relating to the integrated resource planning process that include both of the following:
(1) Achieving optimized long-term planning goals for the state after accounting for the long-term commitments made by load-serving entities.
(2) Assembling a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply pursuant to Section 454.51 of the Public Utilities Code and achieve the goals of the integrated resource plans developed pursuant to Section 454.52 of the Public Utilities Code on a statewide basis.
(d) Serving as a voluntary procurement entity on behalf of one or more retail sellers for purposes of the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code) pursuant to subdivision (f) of Section 399.13 of the Public Utilities Code.
(e) Managing electric generating resources previously under contract with a load-serving entity, including any resources procured pursuant to subdivision (c) of Section 365.1 of the Public Utilities Code. The authority may accept contractual assignments for those resources to the extent authorized by the commission.

(f)Any additional objectives authorized by the commission.

26111.
 The authority shall manage the resale of electricity for its contracted resources. All resale shall occur pursuant to a procurement plan approved by the commission, consistent with the objective of realizing maximum revenues to reduce the net above-market costs of those resources to end-use retail customers.

26112.
 Unless otherwise directed by the commission, the authority shall acquire all environmental, renewable energy, and resource adequacy attributes associated with the electricity procured from its contracted resources. Attributes acquired by the authority shall be retired and shall not be resold or transferred.

26113.
 The authority shall limit the procurement of new eligible renewable energy resources to products that satisfy the requirements of paragraph (1) of subdivision (b) of Section 399.16 of the Public Utilities Code.

26114.
 New construction work resulting from the procurement of newly developed resources under this division shall be deemed public works for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.

Article  4. Adjustment to Compliance Obligations

26120.
 (a) (1) The retirement of renewable, environmental, or resource adequacy attributes by the authority shall result in adjustments to specific compliance obligations for a load-serving entity assigned to collect the costs incurred for the procurement of those attributes.
(2) The retirement of renewable energy credits associated with electricity procured from eligible renewable energy resources shall be used to reduce the obligations of retail sellers pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code). Reduction in compliance obligations shall apply to all of the following:
(A) The procurement quantity requirements established pursuant to subdivision (b) of Section 399.15 of, or subdivision (b) of Section 399.30 of, of the Public Utilities Code.
(B) The portfolio content category requirements established pursuant to subdivision (b) of Section 399.16 of, and paragraph (3) of subdivision (c) of Section 399.30 of, of the Public Utilities Code. Reduction shall be based on the original portfolio content category of the procurement conducted by the authority.
(C) The contract duration requirement pursuant to subdivision (b) of Section 399.13 of, and paragraph (1) of subdivision (d) of Section 399.30 of, of the Public Utilities Code. Reduction shall be based on the original contract duration procurement conducted by the authority for newly developed resources.
(3) The retirement of resource adequacy attributes shall be used to reduce, by an equivalent amount, the requirements applied to load-serving entities pursuant to Section 380 of the Public Utilities Code.
(b) The commission shall ensure that procurement by the authority and the adjustment pursuant to this section of a retail seller’s compliance obligations do not do any of the following:
(1) Infringe on the flexibility of a load-serving entity to procure electricity resources to serve end-use customer loads.
(2) Prevent a load-serving entity from voluntary overcompliance with a state standard or requirement.
(3) Affect the calculation of emissions of greenhouse gases attributable to the procurement of a load-serving entity.
(4) Affect reporting by retail suppliers under the power source disclosure program pursuant to Section 398.4 of the Public Utilities Code.

Article  5. Cost Recovery

26125.
 The authority shall develop and submit annual revenue requirements for review and approval by the commission to recover the net costs associated with the activities resulting from previously approved procurement plans. The revenue requirements shall include, at a minimum, all of the following:
(a) Reasonable administrative, overhead, and transaction costs associated with the operation of the authority. activities and procurement authorized by the commission pursuant to this chapter.
(b) Procurement costs associated with approved contracts.
(c) Anticipated revenues from the resale of electricity.
(d) Approved reserves in an amount determined by the commission to be necessary or desirable to support credit and collateral requirements associated with procurement activities.
(e) An adjustment to account for prior year over- or under-collections.

26126.
 (a) For costs incurred on behalf of retail customers of a load-serving entity, the authority shall be entitled to recover revenue requirements approved by the commission. Approved requirements shall, notwithstanding subdivision (f) of Section 399.13, be a direct obligation of the retail end-use customers of load-serving entities, with all payments to be remitted to the authority by load-serving entities.
(b) The commission shall approve a method for recovering revenue requirements from retail end-use customers of load-serving entities by a rate component that is a nonbypassable element of the local distribution service and collected on the basis of usage. Cost approved on behalf of customers of each load-serving entity shall be recovered from those customers. The recovery method shall ensure that all end-use retail customers pay a fair and reasonable share of the cost obligations and that those obligations cannot be avoided if a customer migrates to another load-serving entity or installs new self-generation resources.

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.