California Assembly Bill AB1698 Introduced / Bill

 BILL NUMBER: AB 1698INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Hadley JANUARY 25, 2016 An act to amend Section 39719 of the Health and Safety Code, to amend Sections 25710, 25711, and 25711.5 of, and to amend the heading of Chapter 8.1 (commencing with Section 25710) of Division 15 of, the Public Resources Code, and to amend Section 399.15 of the Public Utilities Code, relating to energy, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1698, as introduced, Hadley. Renewable energy. Existing decisions of the Public Utilities Commission (PUC) institute an Electric Program Investment Charge (EPIC) that requires electric utility corporations to collect a surcharge on their ratepayers' electricity bills to fund renewable energy research, development, and demonstration projects with the aim of making electricity service cheaper, safer, and more reliable for the corporations' own ratepayers. Existing law creates in the State Treasury the EPIC Fund to be administered by the State Energy Resources Conservation and Development Commission (Energy Commission) and requires moneys received by the PUC for those programs the PUC has determined should be administered by the Energy Commission to be forwarded by the PUC to the Energy Commission at least quarterly for deposit in the fund. Existing law requires all moneys, except for fines and penalties, collected by the State Air Resources Board from the auction or sale of allowances as part of a market-based compliance mechanism relative to reduction of greenhouse gas emissions to be deposited in the Greenhouse Gas Reduction Fund. Existing law continuously appropriates specified portions of the annual proceeds in the Greenhouse Gas Reduction Fund to various programs related to transportation, affordable housing, and sustainable communities. This bill would discontinue the EPIC surcharge and repeal the EPIC Fund. The bill would create the Green and Renewable Energy Enlisting New Technologies (GREEN) Fund to fund the GREEN program. The bill would transfer previously collected EPIC moneys to a specified account within the GREEN Fund. The bill would convey the Legislature' s intent that the EPIC program's renewable energy research, development, and demonstration projects continue under the GREEN program. The bill would continuously appropriate $200,000,000 of the annual proceeds of the Greenhouse Gas Reduction Fund to a specified account within the GREEN Fund to fund the GREEN program. Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. It is the intent of the Legislature that the Public Utilities Commission and public utilities corporations no longer charge or collect the Electric Program Investment Charge instituted by the Public Utilities Commission pursuant to Decision 11-12-035 and subsequent decisions. Instead, it is the intent of the Legislature that the Electric Program Investment Charge program's renewable energy research, development, and demonstration projects continue under the Green and Renewable Energy Enlisting New Technologies program and be funded through a continuous appropriation of cap and trade funds. SEC. 2. Section 39719 of the Health and Safety Code is amended to read: 39719. (a) The Legislature shall appropriate the annual proceeds of the fund for the purpose of reducing greenhouse gas emissions in this state in accordance with the requirements of Section 39712. (b) To carry out a portion of the requirements of subdivision (a), annual proceeds are continuously appropriated for the following: (1) Beginning in the 2015-16 fiscal year, and notwithstanding Section 13340 of the Government Code, 35 percent of annual proceeds are continuously appropriated, without regard to fiscal years, for transit, affordable housing, and sustainable communities programs as following: (A) Ten percent of the annual proceeds of the fund is hereby continuously appropriated to the Transportation Agency for the Transit and Intercity Rail Capital Program created by Part 2 (commencing with Section 75220) of Division 44 of the Public Resources Code. (B) Five percent of the annual proceeds of the fund is hereby continuously appropriated to the Low Carbon Transit Operations Program created by Part 3 (commencing with Section 75230) of Division 44 of the Public Resources Code. Funds shall be allocated by the Controller, according to requirements of the program, and pursuant to the distribution formula in subdivision (b) or (c) of Section 99312 of, and Sections 99313 and 99314 of, the Public Utilities Code. (C) Twenty percent of the annual proceeds of the fund is hereby continuously appropriated to the Strategic Growth Council for the Affordable Housing and Sustainable Communities Program created by Part 1 (commencing with Section 75200) of Division 44 of the Public Resources Code. Of the amount appropriated in this subparagraph, no less than 10 percent of the annual proceeds, shall be expended for affordable housing, consistent with the provisions of that program. (2) Beginning in the 2015-16 fiscal year, notwithstanding Section 13340 of the Government Code, 25 percent of the annual proceeds of the fund is hereby continuously appropriated to the High-Speed Rail Authority for the following components of the initial operating segment and Phase I Blended System as described in the 2012 business plan adopted pursuant to Section 185033 of the Public Utilities Code: (A) Acquisition and construction costs of the project. (B) Environmental review and design costs of the project. (C) Other capital costs of the project. (D) Repayment of any loans made to the authority to fund the project.  (3) Beginning in the 2017-18 fiscal year, notwithstanding Section 13340 of the Government Code, two hundred million dollars ($200,000,000) of the annual proceeds of the fund are hereby continuously appropriated to the Green and Renewable Energy Enlisting New Technologies Account created by Chapter 8.1 (commencing with Section 25710) of Division 15 of the Public Resources Code.  (c) In determining the amount of annual proceeds of the fund for purposes of the calculation in subdivision (b), the funds subject to Section 39719.1 shall not be included. SEC. 3. The heading of Chapter 8.1 (commencing with Section 25710) of Division 15 of the Public Resources Code is amended to read: CHAPTER 8.1.  ELECTRIC PROGRAM INVESTMENT CHARGE   GREEN AND RENEWABLE ENERGY E   NLISTING NEW TECHNOLOGIES  FUND SEC. 4. Section 25710 of the Public Resources Code is amended to read: 25710.  For   (a)     This chapter shall be known and may be cited as the GREEN Act.   (b)    For  the purposes of this chapter,  the following terms have the following meanings:   "fund" means the   Green and Renewable Energy   Enlisting New Technologies Fund created by Section 25711.   (a) "Electric Program Investment Charge" means the surcharge instituted by the Public Utilities Commission pursuant to Decision 11-12-035 or any subsequent decisions to collect funds for renewable energy programs and research, development, and demonstration programs.   (b) "Fund" means the portion of the Electric Program Investment Charge Fund created by Section 25711.  SEC. 5. Section 25711 of the Public Resources Code is amended to read: 25711.  (a)    For the purposes of implementing this chapter, the  Electric Program Investment Charge     Green and Renewable Energy Enlisting New Technologies  Fund is hereby created in the State Treasury.  (a)   (1)  The commission shall administer the fund.  (b) At least quarterly, moneys received by the Public Utilities Commission pursuant to the Electric Program Investment Charge for those programs the Public Utilities Commission has determined should be administered by the Energy Commission shall be forwarded by the Public Utilities Commission to the commission for deposit in the fund.   (c)   (2)  The Controller shall, as directed by the commission, disburse moneys in the fund for purposes of this chapter.  (d)   (3)  The commission may use moneys in the fund for the administration of this chapter, as authorized by the Public Utilities Commission and appropriated by the Legislature in the annual Budget Act.  (b) There shall be two accounts within the fund:   (1) The Green and Renewable Energy Enlisting New Technologies Account.   (2) The Electric Program Investment Charge Account. Moneys in the Electric Program Investment Charge Account shall be expended consistent with any applicable requirements of Southern California Edison Company v. Public Utilities Commission (2014) 227 Cal.App.4th 172.  SEC. 6. Section 25711.5 of the Public Resources Code is amended to read: 25711.5. In administering moneys in the fund for research, development, and demonstration programs under this chapter, the commission shall develop and implement the  Electric Program Investment Charge (EPIC)   Green and Renewable Energy Enlisting New Technologies (GREEN)  program to do all of the following: (a) Award funds for projects that will benefit electricity ratepayers and lead to technological advancement and breakthroughs to overcome the barriers that prevent the achievement of the state's statutory energy goals and that result in a portfolio of projects that is strategically focused and sufficiently narrow to make  advancement   advancements  on the most significant technological challenges that shall include, but not be limited to, energy storage, renewable energy and its integration into the electrical grid, energy efficiency, integration of electric vehicles into the electrical grid, and accurately forecasting the availability of renewable energy for integration into the grid. (b) In consultation with the Treasurer, establish terms that shall be imposed as a condition to receipt of funding for the state to accrue any intellectual property interest or royalties that may derive from projects funded by the  EPIC   GREEN  program. The commission, when determining if imposition of the proposed terms is appropriate, shall balance the potential benefit to the state from those terms and the effect those terms may have on the state achieving its statutory energy goals. The commission shall require each reward recipient, as a condition of receiving moneys pursuant to this chapter, to agree to any terms the commission determines are appropriate for the state to accrue any intellectual property interest or royalties that may derive from projects funded by the  EPIC   GREEN  program. (c) Require each applicant to report how the proposed project may lead to technological advancement and potential breakthroughs to overcome barriers to achieving the state's statutory energy goals. (d) Establish a process for tracking the progress and outcomes of each funded project, including an accounting of the amount of funds spent by program administrators and individual grant recipients on administrative and overhead costs and whether the project resulted in any technological advancement or breakthrough to overcome barriers to achieving the state's statutory energy goals. (e) Notwithstanding Section 10231.5 of the Government Code, prepare and submit to the Legislature no later than April 30 of each year an annual report in compliance with Section 9795 of the Government Code that shall include all of the following: (1) A brief description of each project for which funding was awarded in the immediately prior calendar year, including the name of the recipient and the amount of the award, a description of how the project is thought to lead to technological advancement or breakthroughs to overcome barriers to achieving the state's statutory energy goals, and a description of why the project was selected. (2) A brief description of each project funded by the  EPIC   GREEN  program that was completed in the immediately prior calendar year, including the name of the recipient, the amount of the award, and the outcomes of the funded project. (3) A brief description of each project funded by the EPIC   GREEN  program for which an award was made in the previous years but that is not completed, including the name of the recipient and the amount of the award, and a description of how the project will lead to technological advancement or breakthroughs to overcome barriers to achieving the state's statutory energy goals. (4) Identification of the award recipients that are California-based entities, small businesses, or businesses owned by women, minorities, or disabled veterans. (5) Identification of which awards were made through a competitive bid, interagency agreement, or sole source method, and the action of the Joint Legislative Budget Committee pursuant to paragraph (2) of subdivision (g) for each award made through an interagency agreement or sole source method. (6) Identification of the total amount of administrative and overhead costs incurred for each project. (f) Establish requirements to minimize program administration and overhead costs, including costs incurred by program administrators and individual grant recipients. Each program administrator and grant recipient, including a public entity, shall be required to justify actual administration and overhead costs incurred, even if the total costs incurred do not exceed a cap on those costs that the commission may adopt. (g) (1) The commission shall use a sealed competitive bid as the preferred method to solicit project applications and award funds pursuant to the  EPIC   GREEN  program. (2) (A) The commission may use a sole source or interagency agreement method if the project cannot be described with sufficient specificity so that bids can be evaluated against specifications and criteria set forth in a solicitation for bid and if both of the following conditions are met: (i) The commission, at least 60 days prior to making an award pursuant to this subdivision, notifies the Joint Legislative Budget Committee and the relevant policy committees in both houses of the Legislature, in writing, of its intent to take the proposed action. (ii) The Joint Legislative Budget Committee either approves or does not disapprove the proposed action within 60 days from the date of notification required by clause (i). (B) It is the intent of the Legislature to enact this paragraph to ensure legislative oversight for awards made on a sole source basis, or through an interagency agreement. (3) Notwithstanding any other law, standard terms and conditions that generally apply to contracts between the commission and any entities, including state entities, do not automatically preclude the award of moneys from the fund through the sealed competitive bid method. SEC. 7. Section 399.15 of the Public Utilities Code is amended to read: 399.15. (a) In order to fulfill unmet long-term resource needs, the commission shall establish a renewables portfolio standard requiring all retail sellers to procure a minimum quantity of electricity products from eligible renewable energy resources as a specified percentage of total kilowatthours sold to their retail end-use customers each compliance period to achieve the targets established under this article. For any retail seller procuring at least 14 percent of retail sales from eligible renewable energy resources in 2010, the deficits associated with any previous renewables portfolio standard shall not be added to any procurement requirement pursuant to this article. (b) The commission shall implement renewables portfolio standard procurement requirements only as follows: (1) Each retail seller shall procure a minimum quantity of eligible renewable energy resources for each of the following compliance periods: (A) January 1, 2011, to December 31, 2013, inclusive. (B) January 1, 2014, to December 31, 2016, inclusive. (C) January 1, 2017, to December 31, 2020, inclusive. (D) January 1, 2021, to December 31, 2024, inclusive. (E) January 1, 2025, to December 31, 2027, inclusive. (F) January 1, 2028, to December 31, 2030, inclusive. (2) (A) No later than January 1, 2017, the commission shall establish the quantity of electricity products from eligible renewable energy resources to be procured by the retail seller for each compliance period. These quantities shall be established in the same manner for all retail sellers and result in the same percentages used to establish compliance period quantities for all retail sellers. (B) In establishing quantities for the compliance period from January 1, 2011, to December 31, 2013, inclusive, the commission shall require procurement for each retail seller equal to an average of 20 percent of retail sales. For the following compliance periods, the quantities shall reflect reasonable progress in each of the intervening years sufficient to ensure that the procurement of electricity products from eligible renewable energy resources achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 40 percent by December 31, 2024, 45 percent by December 31, 2027, and 50 percent by December 31, 2030. The commission shall establish appropriate three-year compliance periods for all subsequent years that require retail sellers to procure not less than 50 percent of retail sales of electricity products from eligible renewable energy resources. (C) Retail sellers shall be obligated to procure no less than the quantities associated with all intervening years by the end of each compliance period. Retail sellers shall not be required to demonstrate a specific quantity of procurement for any individual intervening year. (3) The commission may require the procurement of eligible renewable energy resources in excess of the quantities specified in paragraph (2). (4) Only for purposes of establishing the renewables portfolio standard procurement requirements of paragraph (1) and determining the quantities pursuant to paragraph (2), the commission shall include all electricity sold to retail customers by the Department of Water Resources pursuant to Division 27 (commencing with Section 80000) of the Water Code in the calculation of retail sales by an electrical corporation. (5) The commission shall waive enforcement of this section if it finds that the retail seller has demonstrated any of the following conditions are beyond the control of the retail seller and will prevent compliance: (A) There is inadequate transmission capacity to allow for sufficient electricity to be delivered from proposed eligible renewable energy resource projects using the current operational protocols of the Independent System Operator. In making its findings relative to the existence of this condition with respect to a retail seller that owns transmission lines, the commission shall consider both of the following: (i) Whether the retail seller has undertaken, in a timely fashion, reasonable measures under its control and consistent with its obligations under local, state, and federal laws and regulations, to develop and construct new transmission lines or upgrades to existing lines intended to transmit electricity generated by eligible renewable energy resources. In determining the reasonableness of a retail seller's actions, the commission shall consider the retail seller's expectations for full-cost recovery for these transmission lines and upgrades. (ii) Whether the retail seller has taken all reasonable operational measures to maximize cost-effective deliveries of electricity from eligible renewable energy resources in advance of transmission availability. (B) Permitting, interconnection, or other circumstances that delay procured eligible renewable energy resource projects, or there is an insufficient supply of eligible renewable energy resources available to the retail seller. In making a finding that this condition prevents timely compliance, the commission shall consider whether the retail seller has done all of the following: (i) Prudently managed portfolio risks, including relying on a sufficient number of viable projects. (ii) Sought to develop one of the following: its own eligible renewable energy resources, transmission to interconnect to eligible renewable energy resources, or energy storage used to integrate eligible renewable energy resources. This clause shall not require an electrical corporation to pursue development of eligible renewable energy resources pursuant to Section 399.14. (iii) Procured an appropriate minimum margin of procurement above the minimum procurement level necessary to comply with the renewables portfolio standard to compensate for foreseeable delays or insufficient supply. (iv) Taken reasonable measures, under the control of the retail seller, to procure cost-effective distributed generation and allowable unbundled renewable energy credits. (C) Unanticipated curtailment of eligible renewable energy resources if the waiver would not result in an increase in greenhouse gas emissions. (D) Unanticipated increase in retail sales due to transportation electrification. In making a finding that this condition prevents timely compliance, the commission shall consider all of the following: (i) Whether transportation electrification significantly exceeded forecasts in that retail seller's service territory based on the best and most recently available information filed with the State Air Resources Board, the Energy Commission, or other state agency. (ii) Whether the retail seller has taken reasonable measures to procure sufficient resources to account for unanticipated increases in retail sales due to transportation electrification. (6) If the commission waives the compliance requirements of this section, the commission shall establish additional reporting requirements on the retail seller to demonstrate that all reasonable actions under the control of the retail seller are taken in each of the intervening years sufficient to satisfy future procurement requirements. (7) The commission shall not waive enforcement pursuant to this section, unless the retail seller demonstrates that it has taken all reasonable actions under its control, as set forth in paragraph (5), to achieve full compliance. (8) If a retail seller fails to procure sufficient eligible renewable energy resources to comply with a procurement requirement pursuant to paragraphs (1) and (2) and fails to obtain an order from the commission waiving enforcement pursuant to paragraph (5), the commission shall assess penalties for noncompliance. A schedule of penalties shall be adopted by the commission that shall be comparable for electrical corporations and other retail sellers. For electrical corporations, the cost of any penalties shall not be collected in rates. Any penalties collected under this article shall be deposited into the  Electric Program Investment Charge   Green and Renewable Energy Enlisting New Technologies  Fund and used for the purposes described in Chapter 8.1 (commencing with Section 25710) of Division 15 of the Public Resources Code. (9) Deficits associated with the compliance period shall not be added to a future compliance period. (c) The commission shall establish a limitation for each electrical corporation on the procurement expenditures for all eligible renewable energy resources used to comply with the renewables portfolio standard. This limitation shall be set at a level that prevents disproportionate rate impacts. (d) If the cost limitation for an electrical corporation is insufficient to support the projected costs of meeting the renewables portfolio standard procurement requirements, the electrical corporation may refrain from entering into new contracts or constructing facilities beyond the quantity that can be procured within the limitation, unless eligible renewable energy resources can be procured without exceeding a de minimis increase in rates, consistent with the long-term procurement plan established for the electrical corporation pursuant to Section 454.5. (e) (1) The commission shall monitor the status of the cost limitation for each electrical corporation in order to ensure compliance with this article. (2) If the commission determines that an electrical corporation may exceed its cost limitation prior to achieving the renewables portfolio standard procurement requirements, the commission shall do both of the following within 60 days of making that determination: (A) Investigate and identify the reasons why the electrical corporation may exceed its annual cost limitation. (B) Notify the appropriate policy and fiscal committees of the Legislature that the electrical corporation may exceed its cost limitation, and include the reasons why the electrical corporation may exceed its cost limitation. (f) The establishment of a renewables portfolio standard shall not constitute implementation by the commission of the federal Public Utility Regulatory Policies Act of 1978 (Public Law 95-617). SEC. 8. (a) On and after the effective date of this act, the Public Utilities Commission shall discontinue the surcharge for renewable energy programs imposed by Decision 11-12-035 and subsequent decisions. (b) The funds collected pursuant to the surcharge instituted by the Public Utilities Commission pursuant to Decision 11-12-035 and subsequent decisions related to renewable energy programs not already deposited into the Electric Program Investment Charge Fund established pursuant to former Section 25711 of the Public Resources Code by the effective date of this act shall be transferred to the Treasurer for deposit in the Electric Program Investment Charge Account within the Green and Renewable Energy Enlisting New Technologies Fund established pursuant to Section 25711 of the Public Resources Code. Any moneys in the Electrical Program Investment Charge Fund on the effective date of this act shall be transferred to the Electric Program Investment Charge Account. (c) The former Electric Program Investment Charge (EPIC) program developed and implemented pursuant to former Section 25711.5 of the Public Utilities Code shall be continued as the Green and Renewable Energy Enlisting New Technologies (GREEN) program pursuant to Section 25711.5 of the Public Utilities Code.