Bill Text: CA SB760 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: California Renewables Portfolio Standard Program.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2014-01-09 - From committee with author's amendments. Read second time and amended. Re-referred to Com. on U. & C. [SB760 Detail]

Download: California-2013-SB760-Amended.html

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BILL NUMBER: SB 760	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 30, 2013
	AMENDED IN ASSEMBLY  AUGUST 19, 2013
	AMENDED IN ASSEMBLY  AUGUST 7, 2013
	AMENDED IN SENATE  MAY 20, 2013
	AMENDED IN SENATE  APRIL 29, 2013
	AMENDED IN SENATE  APRIL 1, 2013

INTRODUCED BY   Senator Wright
    (   Principal coauthor:   Assembly Member
  V. Manuel Pérez   ) 

                        FEBRUARY 22, 2013

   An act to  add Section 40709.8 to the Health and Safety
Code, relating to nonvehicular air pollution   amend
Sections 399.11, 399.13, 399.15, and 399.16 of the Public Utilities
Code, relating to energy  .



	LEGISLATIVE COUNSEL'S DIGEST


   SB 760, as amended, Wright.  Electrical generation
facility: emission reduction credits.   California
Renewables Portfolio Standard Program.  
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
as defined, while local publicly owned electric utilities, as
defined, are under the direction of their governing board. The Public
Utilities Act imposes various duties and responsibilities on the
Public Utilities Commission with respect to the purchase of
electricity 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 California Renewables Portfolio
Standard Program requires a retail seller, as defined, and local
publicly owned electric utilities to purchase specified minimum
quantities of electricity products from eligible renewable energy
resources, as defined, for specified compliance periods, sufficient
to ensure that the procurement of electricity products from eligible
renewable energy resources achieves 20% of retail sales for the
period January 1, 2011, to December 31, 2013, inclusive, 25% of
retail sales by December 31, 2016, and 33% of retail sales by
December 31, 2020, and in all subsequent years. The program requires
the commission to direct each retail seller to prepare and submit an
annual compliance report that includes specified matter.  
   This bill would additionally require the commission to direct a
retail seller to include in its annual compliance report the current
status of the retail seller's procurement to ensure a balanced mix of
eligible renewable energy resources required to maintain the
reliability of the electrical grid without increasing fossil fuel
consumption.  
   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 procure a
balanced portfolio of electricity products from eligible renewable
energy resources, as specified referred to as the portfolio content
requirements. The program requires the commission to adopt, by
rulemaking, a process that provides criteria for the rank ordering
and selecting of least-cost and best-fit eligible renewable energy
resources to comply with the program obligations on a total cost
basis, taking into account specified matter.  
   This bill would additionally require that the process providing
criteria for the rank ordering and selecting of least-cost and
best-fit eligible renewable energy resources to comply with the
program obligations include procurement of specific types of eligible
renewable energy resources necessary to maintain the reliability of
the electrical grid to meet electrical demand on a 24-hour basis,
consider the attributes of utilizing geothermal resources, as
specified, and consider eligible renewable energy resources in the
area of the Salton Sea that provide additional environmental benefits
that should be encouraged to meet the state's mitigation
requirements for the region. The bill would revise the portfolio
content requirements.  
   Existing law requires that a renewable energy procurement plan
submitted by an electrical corporation to the commission include
specified matter, including an assessment of annual or multiyear
portfolio supplies and demand to determine the optimal mix of
eligible renewable energy resources with deliverability
characteristics.  
   This bill would additionally require that the renewable energy
procurement plan submitted by an electrical corporation to the
commission identify each source of supply by resource type and detail
how the mix of resources will maintain reliability of the electrical
grid throughout each 24-hour period. The bill would require each
electrical corporation, in soliciting and procuring eligible
renewable energy resources, to give preference to resource types that
will contribute toward ensuring a balanced resource mix that
maintains reliability of the electrical grid throughout each 24-hour
period without increasing consumption of fossil fuels.  
   Existing law authorizes the commission to waive compliance with
the renewables portfolio standard for a retail seller if the
commission finds that the retail seller has demonstrated specified
conditions are beyond the control of the retail seller that will
prevent compliance.  
   This bill would revise certain criteria the commission considers
when determining whether to waive compliance with the renewables
portfolio standard.  
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.  
   Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by expanding what is a 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.  
   Existing law requires every air pollution control and air quality
management district board to establish a system by which all
reductions in the emission of air contaminants that are to be used to
offset certain future increases in the emission of air contaminants
to be banked prior to use to offset future increases in emissions.
Existing law designates the State Air Resources Board as the
responsible agency for the preparation of the state implementation
plan required by the federal Clean Air Act.  
   This bill would prohibit every air pollution control and air
quality management district that has established an emission
reduction credit program, as specified, from imposing any conditions
to physically destroy existing equipment that may be currently
operating or not operating that is or will be retired at an
electrical generation facility unless the owner or operator retires
that equipment to provide emission reduction credits, emission
offsets, or an offset exemption from the district or the new source
review program of the federal Clean Air Act otherwise requires. By
imposing new duties on air pollution control and air quality
management districts, this 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. 
   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.    Section 399.11 of the   Public
Utilities Code   is amended to read: 
   399.11.  The Legislature finds and declares all of the following:
   (a) In order to attain a target of generating 20 percent of total
retail sales of electricity in California from eligible renewable
energy resources by December 31, 2013, and 33 percent by December 31,
2020, it is the intent of the Legislature that the commission and
the Energy Commission implement the California Renewables Portfolio
Standard Program described in this article.
   (b) Achieving the renewables portfolio standard through the
procurement of various electricity products  from 
 representing a   balanced mix of  eligible
renewable energy resources is intended to provide unique benefits to
California, including all of the following, each of which
independently justifies the program:
   (1) Displacing fossil fuel consumption within the state.
   (2) Adding new electrical generating facilities in the
transmission network within the Western Electricity Coordinating
Council service area.
   (3) Reducing air pollution in the state.
   (4) Meeting the state's climate change goals by reducing emissions
of greenhouse gases associated with electrical generation.
   (5) Promoting stable retail rates for electric service.
   (6) Meeting the state's need for a diversified and balanced energy
generation portfolio.
   (7) Assistance with meeting the state's resource adequacy
requirements  in both the near and long term  .
   (8) Contributing to the safe and reliable operation of the
electrical grid, including providing predictable electrical supply,
voltage support, lower line losses, and congestion relief  , and
ensuring resource availability and characteristics that match the
demand for electricity  .
   (9) Implementing the state's transmission and land use planning
activities related to development of eligible renewable energy
resources.
   (c) The California Renewables Portfolio Standard Program is
intended to complement the Renewable Energy Resources Program
administered by the Energy Commission and established pursuant to
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code.
   (d) New and modified electric transmission facilities may be
necessary to facilitate the state achieving its renewables portfolio
standard targets.
   (e) (1) Supplying electricity to California end-use customers that
is generated by eligible renewable energy resources is necessary to
improve California's air quality and public health, and the
commission shall ensure rates are just and reasonable, and are not
significantly affected by the procurement requirements of this
article. This electricity may be generated anywhere in the
interconnected grid that includes many states, and areas of both
Canada and Mexico.
   (2) This article requires generating resources located outside of
California that are able to supply that electricity to California
end-use customers to be treated identically to generating resources
located within the state, without discrimination.
   (3) California electrical corporations have already executed, and
the commission has approved, power purchase agreements with eligible
renewable energy resources located outside of California that will
supply electricity to California end-use customers. These resources
will fully count toward meeting the renewables portfolio standard
procurement requirements. In addition, there are nearly 7,000
megawatts of additional proposed renewable energy resources located
outside of California that are awaiting interconnection approval from
the Independent System Operator. All of these resources, if
procured, will count as eligible renewable energy resources that
satisfy the portfolio content requirements of paragraph (1) of
subdivision (c) of Section 399.16.
   SEC. 2.    Section 399.13 of the   Public
Utilities Code   is amended to read: 
   399.13.  (a) (1) The commission shall direct each electrical
corporation to annually prepare a renewable energy procurement plan
that includes the matter in paragraph (5), to satisfy its obligations
under the renewables portfolio standard. To the extent feasible,
this procurement plan shall be proposed, reviewed, and adopted by the
commission as part of, and pursuant to, a general procurement plan
process. The commission shall require each electrical corporation to
review and update its renewable energy procurement plan as it
determines to be necessary.
   (2) Every electrical corporation that owns electrical transmission
facilities shall annually prepare, as part of the Federal Energy
Regulatory Commission Order 890 process, and submit to the
commission, a report identifying any electrical transmission
facility, upgrade, or enhancement that is reasonably necessary to
achieve the renewables portfolio standard procurement requirements of
this article. Each report shall look forward at least five years
and, to ensure that adequate investments are made in a timely manner,
shall include a preliminary schedule when an application for a
certificate of public convenience and necessity will be made,
pursuant to Chapter 5 (commencing with Section 1001), for any
electrical transmission facility identified as being reasonably
necessary to achieve the renewable energy resources procurement
requirements of this article. Each electrical corporation that owns
electrical transmission facilities shall ensure that project-specific
interconnection studies are completed in a timely manner.
   (3) The commission shall direct each retail seller to prepare and
submit an annual compliance report that includes all of the
following:
   (A) The current status and progress made during the prior year
toward procurement of eligible renewable energy resources as a
percentage of retail sales, including, if applicable, the status of
any necessary siting and permitting approvals from federal, state,
and local agencies for those eligible renewable energy resources
procured by the retail seller, and the current status of compliance
with the portfolio content requirements of subdivision (c) of Section
399.16, including procurement of eligible renewable energy resources
located outside the state and within the WECC and unbundled
renewable energy credits.
   (B) If the retail seller is an electrical corporation, the current
status and progress made during the prior year toward construction
of, and upgrades to, transmission and distribution facilities and
other electrical system components it owns to interconnect eligible
renewable energy resources and to supply the electricity generated by
those resources to load, including the status of planning, siting,
and permitting transmission facilities by federal, state, and local
agencies.
   (C) Recommendations to remove impediments to making progress
toward achieving the renewable energy resources procurement
requirements established pursuant to this article. 
   (D) The current status of the retail seller's procurement to
ensure a balanced mix of eligible renewable energy resources required
to maintain the reliability of the electrical grid without
increasing fossil fuel consumption. 
   (4) The commission shall adopt, by rulemaking, all of the
following:
   (A) A process that provides criteria for the rank ordering and
 selection   selecting  of least-cost and
best-fit eligible renewable energy resources to comply with the
California Renewables Portfolio Standard Program obligations on a
total cost basis. This process shall take into account all of the
following:
   (i) Estimates of indirect costs associated with needed
transmission investments and ongoing electrical corporation expenses
resulting from integrating and operating eligible renewable energy
resources.
   (ii) The cost impact of procuring the eligible renewable energy
resources on the electrical corporation's electricity portfolio.
   (iii) The viability of the project to construct and reliably
operate the eligible renewable energy resource, including the
developer's experience, the feasibility of the technology used to
generate electricity, and the risk that the facility will not be
built, or that construction will be delayed, with the result that
electricity will not be supplied as required by the contract.
   (iv) Workforce recruitment, training, and retention efforts,
including the employment growth associated with the construction and
operation of eligible renewable energy resources and goals for
recruitment and training of women, minorities, and disabled veterans.

   (v) Procurement of specific types of eligible renewable energy
resources necessary to maintain the reliability of the electrical
grid to meet electrical demand on a 24-hour basis, including
identifying the eligible renewable energy resources by type and
operating characteristics.  
   (vi) Consideration of the attributes of utilizing geothermal
resources, including their system inertia, small footprint in terms
of surface land requirements, habitat and other environmental
impacts, their ability to provide baseload generation while reducing
emissions resulting from the burning of fossil fuels in an air basin
designated as including a federal extreme nonattainment area, and
their ability to act as a hedge against fuel price increases to
ensure a balanced portfolio.  
   (vii) Consideration of eligible renewable energy resources in the
area of the Salton Sea that provide additional environmental benefits
that should be encouraged to meet the state's mitigation
requirements for the region. 
   (B) Rules permitting retail sellers to accumulate, beginning
January 1, 2011, excess procurement in one compliance period to be
applied to any subsequent compliance period. The rules shall apply
equally to all retail sellers. In determining the quantity of excess
procurement for the applicable compliance period, the commission
shall deduct from actual procurement quantities, the total amount of
procurement associated with contracts of less than 10 years in
duration. In no event shall electricity products meeting the
portfolio content of paragraph (3) of subdivision (b) of Section
399.16 be counted as excess procurement.
   (C) Standard terms and conditions to be used by all electrical
corporations in contracting for eligible renewable energy resources,
including performance requirements for renewable generators. A
contract for the purchase of electricity generated by an eligible
renewable energy resource, at a minimum, shall include the renewable
energy credits associated with all electricity generation specified
under the contract. The standard terms and conditions shall include
the requirement that, no later than six months after the commission's
approval of an electricity purchase agreement entered into pursuant
to this article, the following information about the agreement shall
be disclosed by the commission: party names, resource type, project
location, and project capacity.
   (D) An appropriate minimum margin of procurement above the minimum
procurement level necessary to comply with the renewables portfolio
standard to mitigate the risk that renewable projects planned or
under contract are delayed or canceled  or to achieve the
required balanced mix of eligible renewable energy resources  .
This paragraph does not preclude an electrical corporation from
voluntarily proposing a margin of procurement above the appropriate
minimum margin established by the commission.
   (5) Consistent with the goal of increasing California's reliance
on eligible renewable energy resources, the renewable energy
procurement plan submitted by an electrical corporation shall include
all of the following:
   (A) An assessment of annual or multiyear portfolio supplies and
demand to determine the optimal mix of eligible renewable energy
resources with deliverability characteristics that may include
peaking, dispatchable, baseload, firm, and as-available capacity 
, with identification of each   source of supply by
resource type and detail on how the mix of resources will maintain
reliability of the electrical grid throughout each 24-hour period
 .
   (B) Potential compliance delays related to the conditions
described in paragraph (4) of subdivision (b) of Section 399.15.
   (C) A bid solicitation setting forth the need for eligible
renewable energy resources of each deliverability characteristic,
required online dates, and locational preferences, if any.
   (D) A status update on the development schedule of all eligible
renewable energy resources currently under contract.
   (E) Consideration of mechanisms for price adjustments associated
with the costs of key components for eligible renewable energy
resource projects with online dates more than 24 months after the
date of contract execution.
   (F) An assessment of the risk that an eligible renewable energy
resource will not be built, or that construction will be delayed,
with the result that electricity will not be delivered as required by
the contract.
   (6) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall offer contracts of no
less than 10 years duration, unless the commission approves of a
contract of shorter duration.
   (7) In soliciting and procuring eligible renewable energy
resources for California-based projects, each electrical corporation
shall give preference to renewable energy projects that provide
environmental and economic benefits to communities afflicted with
poverty or high unemployment, or that suffer from high emission
levels of toxic air contaminants, criteria air pollutants, and
greenhouse gases. 
   (8) In soliciting and procuring eligible renewable energy
resources, each electrical corporation shall give preference to
resource types that will contribute toward ensuring a balanced
resource mix that maintains reliability of the electrical grid
throughout each 24-hour period without increasing consumption of
fossil fuels. 
   (b) A retail seller may enter into a combination of long- and
short-term contracts for electricity and associated renewable energy
credits. The commission may authorize a retail seller to enter into a
contract of less than 10 years' duration with an eligible renewable
energy resource, if the commission has established, for each retail
seller, minimum quantities of eligible renewable energy resources to
be procured through contracts of at least 10 years' duration.
   (c) The commission shall review and accept, modify, or reject each
electrical corporation's renewable energy resource procurement plan
prior to the commencement of renewable energy procurement pursuant to
this article by an electrical corporation.
   (d) Unless previously preapproved by the commission, an electrical
corporation shall submit a contract for the generation of an
eligible renewable energy resource to the commission for review and
approval consistent with an approved renewable energy resource
procurement plan. If the commission determines that the bid prices
are elevated due to a lack of effective competition among the
bidders, the commission shall direct the electrical corporation to
renegotiate the contracts or conduct a new solicitation.
   (e) If an electrical corporation fails to comply with a commission
order adopting a renewable energy resource procurement plan, the
commission shall exercise its authority pursuant to Section 2113 to
require compliance. The commission shall enforce comparable penalties
on any retail seller that is not an electrical corporation that
fails to meet the procurement targets established pursuant to Section
399.15.
   (f) (1) The commission may authorize a procurement entity to enter
into contracts on behalf of customers of a retail seller for
electricity products from eligible renewable energy resources to
satisfy the retail seller's renewables portfolio standard procurement
requirements. The commission shall not require any person or
corporation to act as a procurement entity or require any party to
purchase eligible renewable energy resources from a procurement
entity.
   (2) Subject to review and approval by the commission, the
procurement entity shall be permitted to recover reasonable
administrative and procurement costs through the retail rates of
end-use customers that are served by the procurement entity and are
directly benefiting from the procurement of eligible renewable energy
resources.
   (g) Procurement and administrative costs associated with contracts
entered into by an electrical corporation for eligible renewable
energy resources pursuant to this article and approved by the
commission are reasonable and prudent and shall be recoverable in
rates.
   (h) Construction, alteration, demolition, installation, and repair
work on an eligible renewable energy resource that receives
production incentives pursuant to Section 25742 of the Public
Resources Code, including work performed to qualify, receive, or
maintain production incentives, are "public works" for the purposes
of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2
of the Labor Code.
   SEC. 3.    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.
   (2) (A) No later than January 1, 2012, 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, and 33
percent of retail sales by December 31, 2020. The commission shall
require retail sellers to procure not less than 33 percent of retail
sales of electricity products from eligible renewable energy
resources in all subsequent years.
   (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 shall not require the procurement of eligible
renewable energy resources in excess of the quantities identified in
paragraph (2)  , except to the extent necessary to ensure a
balanced mix of eligible renewable energy resources with attributes
necessary to ensure an adequate and reliable supply of electrical
generation from eligible renewable energy resources that best matches
the demand for electricity and maintains the reliability of the
electrical grid  . A retail seller may voluntarily increase its
procurement of eligible renewable energy resources beyond the
renewables portfolio standard procurement requirements.
   (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  and   procuring a
sufficiently balanced mix of different types of eligible  
renewable energy resources with characteristics   sufficient
to maintain reliability of the electrical grid, including system
inertia  .
   (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 necessary to address the needs of a balancing authority
 , but only to the extent that the retail seller has demonstrated
that it has procured a balanced mix of different resource types with
characteristics sufficient to maintain reliability of the electrical
grid   , including system inertia  .
   (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 exercise its authority pursuant to Section 2113.
   (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. In establishing this limitation, the
commission shall rely on the following:
   (1) The most recent renewable energy procurement plan.
   (2) Procurement expenditures that approximate the expected cost of
building, owning, and operating eligible renewable energy resources.

   (3) The potential that some planned resource additions may be
delayed or canceled. 
   (4) The amount of additional eligible renewable energy resources
of specific characteristics required to be procured to ensure
reliability of the electrical grid. 
   (d) In developing the limitation pursuant to subdivision (c), the
commission shall ensure all of the following:
   (1) The limitation is set at a level that prevents
disproportionate rate impacts.
   (2) The costs of all procurement credited toward achieving the
renewables portfolio standard are counted towards the limitation.
   (3) Procurement expenditures do not include any indirect expenses,
including imbalance energy charges, sale of excess energy, decreased
generation from existing resources, transmission upgrades, or the
costs associated with relicensing any utility-owned hydroelectric
facilities.
    (e) (1) No later than January 1, 2016, the commission shall
prepare a report to the Legislature assessing whether each electrical
corporation can achieve a 33-percent renewables portfolio standard
by December 31, 2020, and maintain that level thereafter, within the
adopted cost limitations. If the commission determines that it is
necessary to change the limitation for procurement costs incurred by
any electrical corporation after that date, it may propose a revised
cap consistent with the criteria in subdivisions (c) and (d). The
proposed modifications shall take effect no earlier than January 1,
2017.
   (2) Notwithstanding Section 10231.5 of the Government Code, the
requirement for submitting a report imposed under paragraph (1) is
inoperative on January 1, 2021.
   (3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
   (f) 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.
   (g) (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.
   (h) 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. 4.    Section 399.16 of the   Public
Utilities Code   is amended to read: 
   399.16.  (a) Various electricity products  , with various
characteristics,  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  and
characteristics, including system inertia,  may be
differentiated by their impacts on the operation of the 
electrical  grid in supplying electricity  and maintaining
the reliability of the electrical grid  , 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
 and characteristics  :
   (1) Eligible renewable energy resource electricity products that
meet  either   any  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. 
   (C) Have characteristics that are capable of providing a diverse
and balanced mix of eligible renewable energy resources that can
contribute to maintaining reliability of the electrical grid to meet
the demand for electricity in every 24-hour period and can include
electrical generation produced on an as-available, firm,
dispatchable, or ramping basis, providing system inertia benefits,
whether from the generating facility alone or in combination with
additional technologies, including energy storage. 
   (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 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 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.
   (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 obligation after December 31,
2016.
   SEC. 5.    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.  
  SECTION 1.    Section 40709.8 is added to the
Health and Safety Code, to read:
   40709.8.  A district that has established a system pursuant to
Section 40709 by which reductions in emissions may be banked or
otherwise credited to offset future increases in the emissions of air
contaminants, or that utilizes a calculation method that enables
internal emissions reductions to be credited against increases in
emissions, shall not impose any conditions to physically destroy
existing equipment that may be currently operating or not operating
that is or will be retired at an electrical generation facility
unless either of the following applies:
   (a) The owner or operator retires that equipment to provide
emission reduction credits, emission offsets, or an offset exemption
from the district.
   (b) The new source review program of the federal Clean Air Act (42
U.S.C. Sec. 7401 et seq.) requires the imposition of such a
condition.  
  SEC. 2.    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.