California Senate Bill SB32 Amended / Bill

 BILL NUMBER: SB 32AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 31, 2009 AMENDED IN ASSEMBLY JULY 13, 2009 AMENDED IN ASSEMBLY JULY 1, 2009 AMENDED IN SENATE JUNE 2, 2009 AMENDED IN SENATE APRIL 29, 2009 AMENDED IN SENATE APRIL 14, 2009 INTRODUCED BY Senator Negrete McLeod DECEMBER 2, 2008 An act to amend Section 399.20 of, and to add Section 387.6 to, the Public Utilities Code, relating to energy. LEGISLATIVE COUNSEL'S DIGEST SB 32, as amended, Negrete McLeod. Renewable electric generation facilities. Under existing law, the Public Utilities Commission is vested with regulatory authority over public utilities, including electrical corporations. The Public Utilities Act imposes various duties and responsibilities on the commission with respect to the purchase of electricity by electrical corporations and requires the commission to review and adopt a procurement plan and a renewable energy procurement plan for each electrical corporation pursuant to the California Renewables Portfolio Standard Program. The program requires that a retail seller of electricity, including electrical corporations, purchase a specified minimum percentage of electricity generated by eligible renewable energy resources, as defined, in any given year as a specified percentage of total kilowatthours sold to retail end-use customers each calendar year (renewables portfolio standard). Under existing law, the governing board of a local publicly owned electric utility is responsible for implementing and enforcing a renewables portfolio standard for the utility that recognizes the intent of the Legislature to encourage renewable resources, while taking into consideration the effect of the standard on rates, reliability, and financial resources and the goal of environmental improvement. Existing law requires every electrical corporation to file with the commission a standard tariff for electricity generated by an electric generation facility, as defined, that is owned and operated by a retail customer of the electrical corporation. Existing law requires that the electric generation facility: (1) have an effective capacity of not more than 1.5 megawatts and be located on property owned or under the control of the customer, (2) be interconnected and operate in parallel with the electric transmission and distribution grid, (3) be strategically located and interconnected to the electric transmission system in a manner that optimizes the deliverability of electricity generated at the facility to load centers, and (4) meet the definition of an eligible renewable energy resource under the renewables portfolio standard program. Existing law requires that the tariff provide for payment for every kilowatthour of electricity generated by an electric generation facility at a market price referent established by the commission pursuant to the renewables portfolio standard program. Existing law requires the electrical corporation to make this tariff available to customers that own and operate an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until the combined statewide cumulative rated generating capacity of those electric generation facilities equals 500 megawatts, or the electrical corporation meets its proportionate share of the 500 megawatt limit based upon the ratio of its peak demand to total statewide peak demand of all electrical corporations. Existing law authorizes the commission to modify or adjust the above-described requirements for any electrical corporation with less than 100,000 service connections, as individual circumstances merit. Existing law provides that the electricity generated by an electric generation facility counts toward the electrical corporation's renewables portfolio standard and provides that the physical generating capacity counts toward meeting the electrical corporation's resource adequacy requirements. This bill would require an electrical corporation to file with the commission a standard tariff for the electricity purchased from an electric generation facility that is located within the service territory of, and developed to sell electricity to, the electrical corporation. The bill would revise the first requirement, discussed above, to instead require that the electric generation facility have an effective capacity of not more than 3 megawatts, subject to the authority of the commission to reduce this megawatt limitation, discussed below, and would delete the requirement that the facility be located on property owned or under the control of the customer.  The bill would revise the third requirement, discussed above, to require that the electric generation facility be strategically located and interconnected to the electric grid in a manner that is considered deliverable to load, pursuant to the deliverability assessments of the Independent System Operator (ISO).  The bill would require that the tariff provide for payment for every kilowatthour of electricity purchased from an electric generation facility for a period of 10, 15, or 20 years, as authorized by the commission. The bill would require that the payment be the market price referent established by the commission pursuant to the renewables portfolio standard program  and would   require the price to include all current and anticipated environmental compliance costs  . The bill would authorize the commission to adjust the payment to reflect the value of the electricity on a time-of-delivery basis  and any other attributes of renewable generation  and require, with respect to rates and charges, that ratepayers that do not receive service pursuant to the tariff are indifferent to whether other ratepayers receive service pursuant to the tariff. The bill would require the commission to consider, and would authorize the commission to establish, a value for an electric generation facility located on a distribution circuit that offsets the peak demand on that circuit.  The bill would require an electrical corporation to provide expedited interconnection procedures to an electric generation facility located on a distribution circuit that offsets peak demand on that circuit, if the electrical corporation determines that the electric generation facility will not adversely affect the distribution grid. The bill would require the electrical corporation to make the tariff available to the owner or operator of an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until either the corporation meets its proportionate share of a statewide cap of 750 megawatts cumulative  rate   rated  generation capacity served under the tariffs adopted pursuant to the requirements of the bill or the electrical corporation has reached or exceeds its above-market cost limitation, as specified. The bill would provide that the electricity purchased from an electric generation facility counts toward meeting the electrical corporation's renewables portfolio standard and that  electricity generated by   the physical generating capacity of  the electric generation facility counts toward meeting the electrical corporation's resource adequacy requirements. The bill would  require the commission, in consultation with the ISO, to monitor and examine the impact on the transmission and distribution grid and any effects upon ratepayers resulting from electric generation facilities operating pursuant to the bill's provisions, would  require the commission to establish performance standards for any electric generation facility that has a capacity greater than one megawatt to ensure that those facilities are constructed, operated, and maintained to generate the expected annual net production of electricity and do not impact system reliability, and would authorize the commission to reduce the 3 megawatt capacity limitation if the commission finds that a reduced capacity limitation is necessary to maintain system reliability within that electrical corporation's service territory. The bill would recast the existing authority of the commission to modify or adjust the above-described requirements for any electrical corporation with less than 100,000 service connections, as individual circumstances merit. This bill would provide that an owner or operator of an electric generation facility that received ratepayer-funded incentives and participated in a net metering program prior to January 1, 2010, would be eligible for a tariff or standard contract filed by an electrical corporation pursuant to the above-described provisions, but would require the commission to require reimbursement of funds in some circumstances. An owner or operator that receives service pursuant to a tariff or standard contract adopted by an electrical corporation pursuant to the above-described provisions is not eligible to participate in any net metering program. This bill would require a local publicly owned electric utility that sells electricity at retail to 75,000 or more customers to adopt and implement a tariff for electricity purchased from an electric generation facility meeting certain size, deliverability, and interconnection requirements and to consider certain factors. The bill would require the local publicly owned electric utility to make the tariff available to owners and operators of an electric generation facility within the service territory of the utility, upon request, on a first-come-first-served basis, until the utility meets its proportionate share of a statewide cap of 750 megawatts cumulative  rate   rated  generation capacity served under the tariffs adopted pursuant to the requirements of this bill. The bill would provide that the electricity purchased from an electric generation facility counts towards meeting the local publicly owned electric utility's renewables portfolio standard annual procurement targets. Under existing law, a violation of the Public Utilities Act or an order or direction of the commission is a crime. Because this bill would require an order or other action of the commission to implement its provisions, and a violation of that order or action would be a crime, the bill would impose a state-mandated local program by creating a new crime. By placing additional requirements upon local publicly owned electric utilities, which are entities of local government, the bill would impose a state-mandated local program. 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   reasons  . Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) While the first goal in meeting the state's energy needs should be to reduce energy demand through cost-effective improvements in energy efficiency, the state should also encourage the location of clean generation close to load centers in order to meet increases in the demand for electricity. (b) Some tariff structures and regulatory structures are presenting a barrier to meeting the requirements and goals of the California Renewables Portfolio Standard Program (Section 387 of, and Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code). (c) Small projects of less than three megawatts that are otherwise eligible renewable energy resources may face difficulties in participating in competitive solicitations under the renewables portfolio standard program. (d) A tariff that allows owners or operators of electric generation facilities that are eligible renewable energy resources to sell electricity generated by those facilities to electrical corporations and local publicly owned electric utilities would address these barriers and could assist in the achievement of the renewables portfolio standard and the state's goals for reducing emissions of greenhouse gases pursuant to the California Global Warming Solutions Act of 2006. (e) A tariff for electricity generated by renewable technologies should recognize the environmental attributes of the renewable technology, the characteristics that contribute to peak electricity demand reduction, reduced transmission congestion, avoided transmission and distribution improvements, and in a manner that accelerates the deployment of renewable energy resources. (f) It is the policy of this state and the intent of the Legislature to encourage the generation of electricity from eligible renewable energy resources  located in close proximity to where the electricity will be utilized.   strategically located and interconnected to the electrical transmission and distribution grid in a manner that optimizes the deliverability of electricity generated at the facility to load centers.   (g) Electric generation facilities that qualify for tariffs pursuant to this act are sophisticated high-voltage electric generating facilities that need to be properly constructed and maintained to protect the health and safety of utility personnel, operator personnel, and the public, and to ensure proper operation over the life of the project.   (h) In implementing this act, the Public Utilities Commission, electrical corporations, and local publicly owned electric utilities should ensure that electric generation facilities are designed to operate lawfully and safely and in accordance with all applicable state and local laws and building standards, and utility interconnection requirements.  SEC. 2. Section 387.6 is added to the Public Utilities Code, to read: 387.6. (a) It is the policy of the state and the intent of the Legislature to encourage electrical generation from eligible renewable energy resources. (b) As used in this section, "electric generation facility" means an electric generation facility located within the service territory of, and developed to sell electricity to, a local publicly owned electric utility, and that meets all of the following criteria: (1) Has an effective capacity of not more than three megawatts. (2) Is interconnected and operates in parallel with the  electric   electrical  transmission and distribution grid. (3) Is strategically located and interconnected to the  electric transmission system   electrical transmission and distribution grid  in a manner that optimizes the deliverability of electricity generated at the facility to load centers. (4) Is an eligible renewable energy resource pursuant to Article 16 (commencing with Section 399.11). (c) A local publicly owned electric utility that sells electricity at retail to 75,000 or more customers shall adopt a standard tariff for electricity purchased from an electric generation facility. (d) The governing board of the local publicly owned electric utility shall ensure that the tariff adopted pursuant to subdivision (c) reflects the value of every kilowatthour of electricity generated on a time-of-delivery basis. The governing board may adjust this value based on the other attributes of renewable generation. The governing board shall ensure, with respect to rates and charges, that ratepayers that do not receive service pursuant to the tariff are indifferent to whether a ratepayer with an electric generation facility receives service pursuant to the tariff. (e) A local publicly owned electric utility that sells electricity at retail to 75,000 or more customers shall make the tariff available to the owner or operator of an electric generation facility within the service territory of the utility, upon request, on a first-come-first-served basis, until the utility meets its proportionate share of a statewide cap of 750 megawatts cumulative  rate   rated  generation capacity served under this section and Section 399.20. The proportionate share shall be calculated based on the ratio of the utility's peak demand compared to the total statewide peak demand. (f) The local publicly owned electric utility may make the terms of the tariff available to owners and operators of an  electrical   electric  generation facility in the form of a standard contract. (g) Every kilowatthour of electricity purchased from an electric generation facility shall count toward meeting the local publicly owned electric utility's renewables portfolio standard annual procurement targets for purposes of Section 387. (h) (1) A local publicly owned electric utility may establish performance standards for any electric generation facility that has a capacity greater than one megawatt to ensure that those facilities are constructed, operated, and maintained to generate the expected annual net production of electricity and do not impact system reliability. (2) A local publicly owned electric utility may reduce the three megawatt capacity limitation of paragraph (1) of subdivision (b) if the utility finds that a reduced capacity limitation is necessary.  (i) Within 10 days of receipt of a request for a tariff pursuant to this section from an owner or operator of an electric generation facility, the local publicly owned electric utility that receives the request shall post a copy of the request on its Internet Web site. The information posted on the Internet Web site shall include the name of the city in which the facility is located, but information that is proprietary and confidential, including, but not limited to, address information beyond the name of the city in which the facility is located, shall be redacted.   (j) A local publicly owned electric utility may deny a tariff request pursuant to this section if the local publicly owned electric utility makes any of the following findings:   (1) The electric generation facility does not meet the requirements of this section.   (2) The transmission or distribution grid that would serve as the point of interconnection is inadequate.   (3) The electric generation facility does not meet all applicable state and local laws and building standards, and utility interconnection requirements.   (4) The aggregate of all electric generating facilities on a distribution circuit would adversely impact utility operation and load restoration efforts of the distribution system.   (k) Upon receiving a notice of denial from a local publicly owned electric utility, the owner or operator of the electric generation facility denied a tariff pursuant to this section shall have the right to appeal that decision to the governing board of the local publicly owned electric utility.   (l) In order to ensure the safety and reliability of electric generation facilities, the owner of an electric generation facility receiving a tariff pursuant to this section shall provide an inspection and maintenance report to the local publicly owned electric utility at least once every other year. The inspection and maintenance report shall be prepared at the owner's or operator's expense by a California licensed contractor who is not the owner or operator of the electric generation facility. A California licensed electrician shall perform the inspection of the electrical portion of the generation facility.   (m) The contract between the electric generation facility receiving the tariff and the local publicly owned electric utility shall contain provisions that ensure that construction of the electric generating facility complies with all applicable state and local laws and building standards, and utility interconnection requirements.   (n) (1) All construction and installation of facilities of the local publicly owned electric utility, including at the point of the output meter or at the transmission or distribution grid, shall only be performed by that local publicly owned electric utility.   (2) All interconnection facilities installed on the local publicly owned electric utility's side of the transfer point for electricity between the local publicly owned electric utility and the electrical conductors of the electric generation facility shall be owned, operated, and maintained only by the local publicly owned electric utility. The ownership, installation, operation, reading, and testing of revenue metering equipment for electric generating facilities shall only be performed by the local publicly owned electric utility.  SEC. 3. Section 399.20 of the Public Utilities Code is amended to read: 399.20. (a) It is the policy of this state and the intent of the Legislature to encourage electrical generation from eligible renewable energy resources. (b) As used in this section, "electric generation facility" means an electric generation facility located within the service territory of, and developed to sell electricity to, an electrical corporation that meets all of the following criteria: (1) Has an effective capacity of not more than three megawatts. (2) Is interconnected and operates in parallel with the  electric   electrical  transmission and distribution grid. (3) Is strategically located and interconnected to the  electric   electrical transmission and distribution  grid in a manner that  is considered deliverable to load, pursuant to the Independent System Operator deliverability assessments   optimizes the deliverability of electricity generated at the facility to load centers  . (4) Is an eligible renewable energy resource. (c) Every electrical corporation shall file with the commission a standard tariff for electricity purchased from an electric generation facility. The commission may modify or adjust the requirements of this section for any electrical corporation with less than 100,000 service connections, as individual circumstances merit. (d) (1) The tariff shall provide for payment for every kilowatthour of electricity purchased from an electric generation facility for a period of 10, 15, or 20 years, as authorized by the commission. The payment shall be the market price determined by the commission pursuant to Section 399.15  and shall include all current and anticipated environmental compliance costs, including, but not limited to, mitigation of emissions of greenhouse gases and air pollution offsets associated with the operation of new   generating facilities in the local air pollution control or air quality management district where the electric generation facility is located  . (2) The commission may adjust the payment rate to reflect the value of every kilowatthour of electricity generated on a time-of-delivery basis  and any other attributes of renewable generation. The commission shall consider and may establish a value for an electric generation facility located on a distribution circuit that generates electricity at a time and in a manner so as to offset the peak demand on the distribution circuit. The commission, in consultation with the Energy Commission, shall establish the cost of generation values and costs for each technology that is an eligible renewable energy resource.   .  (3) The commission shall ensure, with respect to rates and charges, that ratepayers that do not receive service pursuant to the tariff are indifferent to whether a ratepayer with an electric generation facility receives service pursuant to the tariff. (e) An electrical corporation shall provide expedited interconnection procedures to an electric generation facility located on a distribution circuit that generates electricity at a time and in a manner so as to offset the peak demand on the distribution circuit, if the electrical corporation determines that the electric generation facility will not adversely affect the distribution grid.  The commission shall consider and may establish a value for an electric generation facility located on a distribution circuit that generates electricity at a time and in   a manner so as to offset the peak demand on the distribution circuit.  (f) An electrical corporation shall make the tariff available to the owner or operator of an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until either of the following conditions is met: (1) The electrical corporation meets its proportionate share of a statewide cap of 750 megawatts cumulative  rate  rated  generation capacity served under this section and Section 387.6. The proportionate share shall be calculated based on the ratio of the electrical corporation's peak demand compared to the total statewide peak demand. (2) The electrical corporation has reached or exceeds its above-market cost limitation established pursuant to subdivision (d) of Section 399.15. (g) The electrical corporation may make the terms of the tariff available to owners and operators of an  electrical   electric  generation facility in the form of a standard contract subject to commission approval. (h) Every kilowatthour of electricity purchased from an electric generation facility shall count toward meeting the electrical corporation's renewables portfolio standard annual procurement targets for purposes of paragraph (1) of subdivision (b) of Section 399.15. (i) The electricity generated by an electric generation facility, consistent with Section 380,   physical generating capacity of an electric generation facility  shall count toward the electrical corporation's resource adequacy requirement  for purposes of Section 380  .  (j) (1) The commission, in consultation with the Independent System Operator, shall monitor and examine the impact on the transmission and distribution grid and any effects upon ratepayers resulting from electric generation facilities operating pursuant to a tariff or contract approved by the commission pursuant to this section.   (2)   (j)     (1)    The commission shall establish performance standards for any electric generation facility that has a capacity greater than one megawatt to ensure that those facilities are constructed, operated, and maintained to generate the expected annual net production of electricity and do not impact system reliability.  (3)   (2)  The commission may reduce the three megawatt capacity limitation of paragraph (1) of subdivision (b) if the commission finds that a reduced capacity limitation is necessary to maintain system reliability within that electrical corporation's service territory. (k) (1) Any owner or operator of an electric generation facility that received ratepayer-funded incentives in accordance with Section 379.6, or with Section 25782 of the Public Resources Code, and participated in a net metering program pursuant to Sections 2827, 2827.9, and 2827.10 prior to January 1, 2010, shall be eligible for a tariff or standard contract filed by an electrical corporation pursuant to this section. (2) In establishing the tariffs or standard contracts pursuant to this section, the commission shall consider ratepayer-funded incentive payments previously received by the generation facility pursuant to Section 379.6 or Section 25782 of the Public Resources Code. The commission shall require reimbursement of any funds received from these incentive programs to  a electrical   an electric  generation facility, in order for that facility to be eligible for a tariff or standard contract filed by an electrical corporation pursuant to this section, unless the commission determines ratepayers have received sufficient value from the incentives provided to the facility based on how long the project has been in operation and the amount of renewable electricity previously generated by the facility. (3) A customer that receives service under a tariff or contract approved by the commission pursuant to this section is not eligible to participate in any net metering program. (l) An owner or operator of an electric generation facility electing to receive service under a tariff or contract approved by the commission shall continue to receive service under the tariff or contract until either of the following occurs: (1) The owner or operator of an electric generation facility no longer meets the eligibility requirements for receiving service pursuant to the tariff or contract. (2) The period of service established by the commission pursuant to subdivision (d) is completed.  (m) The commission shall not order or otherwise require an electrical corporation to implement a must-buy renewable feed-in tariff except as required by this section or as otherwise expressly authorized by statute.   (m) Within 10 days of receipt of a request for a tariff pursuant to this section from an owner or operator of an electric generation facility, the electrical corporation that receives the request shall post a copy of the request on its Internet Web site. The information posted on the Internet Web site shall include the name of the city in which the facility is located, but information that is proprietary and confidential, including, but not limited to, address information beyond the name of the city in which the facility is located, shall be redacted.   (n) An electrical corporation may deny a tariff request pursuant to this section if the electrical corporation makes any of the following findings:   (1) The electric generation facility does not meet the requirements of this section.   (2) The transmission or distribution grid that would serve as the point of interconnection is inadequate.   (3) The electric generation facility does not meet all applicable state and local laws and building standards, and utility interconnection requirements.   (4) The aggregate of all electric generating facilities on a distribution circuit would adversely impact utility operation and load restoration efforts of the distribution system.   (o) Upon receiving a notice of denial from an electrical corporation, the owner or operator of the electric generation facility denied a tariff pursuant to this section shall have the right to appeal that decision to the commission.   (p) In order to ensure the safety and reliability of electric generation facilities, the owner of an electric generation facility receiving a tariff pursuant to this section shall provide an inspection and maintenance report to the electrical corporation at least once every other year. The inspection and maintenance report shall be prepared at the owner's or operator's expense by a California licensed contractor who is not the owner or operator of the electric generation facility. A California licensed electrician shall perform the inspection of the electrical portion of the generation facility   (q) The contract between the electric generation facility receiving the tariff and the electrical corporation shall contain provisions that ensure that construction of the electric generating facility complies with all applicable state and local laws and building standards, and utility interconnection requirements.   (r) (1) All construction and installation of facilities of the electrical corporation, including at the point of the output meter or at the transmission or distribution grid, shall only be performed by that electrical corporation.   (2) All interconnection facilities installed on the electrical corporation's side of the transfer point for electricity between the electrical corporation and the electrical conductors of the electric generation facility shall be owned, operated, and maintained only by the electrical corporation. The ownership, installation, operation, reading, and testing of revenue metering equipment for electric generating facilities shall only be performed by the electrical corporation.  SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because certain 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. With respect to certain other costs, no reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.