HomeMy WebLinkAbout1G1CITY COUNCIL STAFF REPORT DATE: April 22, 2021 CONSENT AGENDA SUBJECT: AUTHORIZE CITY TO ISSUE LETTER OF SUPPORT FOR SENATE BILL 612 -ELECTRICAL CORPORATIONS AND OTHER LOAD-SERVING ENTITIES: ALLOCATION OF LEGACY RESOURCES FROM: Justin Clifton, City Manager BY: Department of Development Services, Office of Sustainability SUMMARY: Over the last decade, more than 11 million investor-owned utility (IOU) customers have transitioned from IOU electric service to Community Choice Aggregators (CCAs), which are local government-owned utilities that purchase electricity on behalf of their communities. The City of Palm Springs is a member of a CCA, Desert Community Energy (DCE), and DCE became the default energy provider for all Palm Springs customers in 2020. Southern California Edison (SCE), an IOU, still distributes power to customers. As part of the transition, all CCA customers must share in the cost responsibility with IOU customers for the resource contracts entered into by IOUs prior to their departure for CCA service. While CCA customers must pay their fair share of these legacy resources, they do not have access to any of the benefits the resources from these contracts provide as those benefits are retained by the IOU for their customers. Senate Bill (SB) 612 would help ensure that all customers are treated equally by providing all customers with fair access and fair value for the legacy resource benefits. A letter of support will improve the chances that this important legislation will pass. RECOMMENDATION: Support Senate Bill 612 and authorize the City to sign letters of support and advocate for its approval. STAFF ANALYSIS: The California Community Choice Association (CalCCA) has been supporting community choice aggregators (CCAs) across the state by developing proposals for long-term fixes to the Power Charge Indifference Adjustment (PCIA). Under existing law, CCA customers pay for legacy resources through the PCIA, which is commonly called the "exit fee," but are not allowed to access the benefits of the resources themselves. In February 2021, ITEMNO. 1,~
2City Council Staff Report April 22, 2021 --Page 2 Resolution for Commercial Recycling Fines California Senator Anthony Portantino introduced Senate Bill 612 to ensure fair and equal access to the benefits of legacy energy resources held in investor-owned utility (IOU) portfolios, and to ensure these resources are managed to maximize value for all customers. The issue of legacy resources relates to contracts entered into by the IOUs to procure renewable energy and resource adequacy for their customers. Some of these contracts were executed a long time ago, in response to the Renewable Portfolio Standard that became law in 2002. These renewable resources were very expensive at the time and, as renewable prices have declined, the result has been billions of dollars in stranded costs. With the progress of CCAs, more than 11 million customers have transitioned from IOU service to CCAs, including the residents and businesses in the City of Palm Springs that are now served by DCE. CCA customers share in the responsibility and cost of the "legacy" resources purchased prior to the transition to CCA service by paying the PCIA. The utility's full-service customers pay through their generation charges. Due to the significant increase in recent years, the PCIA impact on ratepayers continues to be a major concern. According to advocates for SB 612, the legislation would help ensure that all customers are treated equally by providing all customers with fair access and fair value for legacy resource benefits. The bill would add new sections to the Public Utilities Code to: • Require the IOUs to offer their excess power from legacy resources to CCAs when their customers are paying for it, in proportion to their share of the load. • Require the utilities to offer in an annual solicitation any remaining excess to the wholesale market for sale and credit customers for any funds recovered. • Require the CPUC to recognize the value of carbon-free electricity and credit customers for the full value, including the value of carbon-free energy. • Require IOUs to manage their legacy contracts to maximize the value for all customers and to make efforts to minimize the amount of excess power and costs in their supply contracts. This is not the first time that there's been an effort to address the issue of legacy energy resources as it pertains to CCAs. The CPUC initiated an effort to address the issue in 2017, with CalCCA taking the lead with CCAs and IOUs. The effort focused on developing a strategy that would allow CCAs to increase transparency into the PCIA rate setting process. Central to this effort was finding a way to reduce PCIA charges and benefit all customers in the form of lower charges. A proposal was submitted to the CPUC in February 2020 for consideration, but the recommendations have not been acted on yet. The bill is scheduled for its first legislative hearing when the Senate's Energy, Utilities and Communications Committee meets on April 26, 2021. DCE staff and City Staff recommend that the City of Palm Springs adopt a support position for SB 612, which would authorize the City Manager and City Council to advocate for its. adoption through letters and outreach to lawmakers. CalCCA is also working with stakeholders to
3City Council Staff Report April 22, 2021 --Page 3 Resolution for Commercial Recycling Fines encourage support for the bill, and the League of California Cities recently adopted a support position. ENVIRONMENTAL ASSESSMENT: Adoption of the Resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines sections 15060(c)(2) and (c)(3) because it has no potential of creating a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. FISCAL IMPACT: There is no cost to the City for adopting a support position for SB 612. Marcus L. Fuller Assistant City Manager Attachments: 1. Letter of Support 2. SB 612 Full Text :t t 1 ? \ -~ Flihn Fagg \ Director, Development Services City Manager
4ATTACHMENT 1 LETTER OF SUPPORT
5April 22, 2021 City of Palm Springs Office of the City Manager 3200 E. Tahquitz Canyon Way • Palm Springs, California 92262 Tel: (760) 322-8362 • Fax: (760) 323-8207 • Web: www.palmspringsca.gov The Honorable Anthony Portantino State Capitol, Room 3086 Sacramento, CA 95814 RE: SB 612 (Portantino)-SUPPORT Dear Senator Portantino, The City of Palm Springs is pleased to submit a letter of support for your SB 612, which would ensure that resources held in the Investor-Owned Utility (IOU) portfolios are managed to maximize value for all customers and would ensure fair and equal access to the benefits of these legacy resources. Over the last ten years, millions of utility customers have transitioned from IOUs to Community Choice Aggregators (CCAs). The City of Palm Springs is a proud member of Desert Community Energy in Southern California, with most residential, commercial, and municipal customers in Palm Springs receiving 100% clean power from the entity. Our city has made a commitment to reducing our carbon footprint and offering a choice in electricity service providers for the first time to our residents and businesses. When a customer transitions to a CCA, the customer continues to pay for resources, like energy, that were procured on their behalf through the power charge indifference adjustment (PCIA). However, unlike an IOU customer, CCA customers receive no benefits from these resources. This inequity has been exacerbated in recent years as the cost of this payment has risen by hundreds of millions of dollars, with no sign of decreasing. The impacts of COVID-19 have made the importance of righting this inequity and lowering costs for all customers even more urgent. This bill would ensure fair and equal access to the benefits of the resources that all customers pay for and would ensure that these legacy contracts are managed in a way that maximizes benefits for everyone. The bill would also require the California Public Utilities Commission (CPUC) to recognize
6the value of GHG-free energy in legacy contracts. However, time is of the essence. The longer the Legislature takes to act, the less valuable these legacy contracts will be, and the less value customers will gain from access to them. That is why we strongly support this bill and thank you for moving forward with this important legislation. If you have questions, or wish to discuss our position, please do not hesitate to contact Geoff Kors, Palm Springs City Council Member, at Geoff.Kors@palmsprinqsca.gov. Sincerely, Justin Clifton, City Manager City of Palm Springs, California CC: Senator Ben Hueso, 40th Assembly District Assemblymember Chad Mayes, 42nd Assembly District Senator Melissa Melendez, 28th Senate District Honorable Members of the Senate Energy, Utilities and Communications Committee
7ATTACHMENT 2 FULL TEXT OF SB 612
8AMENDED IN SENATE APRIL 13, 2021 AMENDED IN SENATE MARCH 9, 2021 SENATE BILL Introduced by Senator Portantino No. 612 (Coauthors: Senators Allen, Becker, Limon, McGuire, Stern, and · Wiener) (Coauthors: Assembly Members Bauer-Kahan, Berman, Bloom, Boemer Horvath, Chiu, Kalra, Lee, Levine, Mullin, Muratsuchi, Robert Rivas, Stone, Ting, and Wood) February 18, 2021 An act to a.mend Section 454.5 of, and to add Section 366.4-ttr, to the Public Utilities Code, relating to electricity. LEGISLATIVE COUNSEL'S DIGEST SB 612, as amended, Portantino. Electrical corporations and other load-serving entities: allocation of legacy resources. Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. Existing law requires the commission to authorize and facilitate direct transactions between electric service providers and retail end-use customers, but suspends direct transactions except as expressly authorized. Existing law expressly requires the commission to authorize direct transactions for nonresidential end-use customers, subject to an annual maximum allowable total kilowatthour limit established, as specified, for each electrical corporation, to be achieved following a now-completed 3-to-5-year phase-in period. Existing law requires the 97
9SB612 -2-commission, on or before June 1, 2019, to issue an order specifying, among other things, an increase in the annual maximum allowable total kilowatthour limit by 4,000 gigawatthours and to apportion that increase among the service territories of the electrical corporations. Existing law requires the commission, by June 1, 2020, to provide the Legislature with recommendations on the adoption and implementation of a 2nd direct transactions reopening schedule and requires that the commission make specified findings with respect to those recommendations, including that the recommendations do not cause undue shifting of costs to bundled service customers of an electrical corporation or to direct transaction customers. Existing law authorizes a community choice aggregator to aggregate the electrical load of interested electricity consumers within its boundaries and requires a community choice aggregator to file an implementation plan with the Pttblic Utilities Cem-missien commission in order for the commission to determine a cost-recovery mechanism to be imposed on the community choice aggregator to prevent a shifting of costs to an electrical corporation's bundled customers. Existing law requires that the bundled retail customers of an electrical corporation not experience any cost increase as a result of the implementation of a community choice aggregator program and requires the commission to ensure that the departing load does not experience any cost increases as a result of an allocation of costs that were not incurred on behalf of the departing load. Pursuant to existing law, the commission has adopted decisions and orders imposing certain costs on customers of an electrical corporation that depart from receiving bundled electrical service from an electrical corporation to instead receive electric service from an electric service provider or a community choice aggregator. This bill would require an electrical corporation, by July 1, 2022, and by each Jttly 1 thereafter, te, annttaHy effer, for the foHe vv ing year, not less than once every 3 years thereafter, to offer an allocation of each product, as defined, arising from legacy resources, as defined, to its bundled customers and to other load-serving entities, defined to include electric service providers and community choice aggregators, serving departing lead departing load customers, as defined, who bear cost responsibility for those resources. The bill would authorize a load-serving entity within the service territory of the electrical corporation to elect to receive all or a portion of the vintaged proportional share of products allocated to its end-use customers and, 97
10-3-SB612 if so, require it to pay to the electrical corporation the commission-established market price benchmark for the vintage proportional share of products received. The bill would require that an electrical corporation offer-tmy the products allocated to departing load departing load customers that a load-serving entity declines to elect to receive in the wholesale market in ttn annual solieittttioft through regular solicitations and require that all revenues received through the an-nual solieitatioft these solicitations be credited toward reducing any nonbypassable charge fur all tlistribtttion eustomers of the eleetrieal eoff')oratioft. paid by bundled and departing load customers to recover the costs of legacy resources. The bill would require the commission to recognize and account for the value of all products in the electrical corporation's legacy resource portfolio in determining--tmy the nonbypassable charge to be paid by departing load eustomers. bundled and departing load customers to recover the costs of legacy resources. Existiftg lavv requires that the eommission revien anti aeeept, motliey, or rejeet a pmeuremeftt plttn fur etteh eleetrieal eoff')ortttioft ift aeeortlttnee nith speeifietl elements, ineentive mechttftisms, anti objeetives, exeept that an eleetrieal COff)Offltion that sen es less than 500,000 eleetrie retail eustomers vv ithin the state ma, file n ith the eommissioft a request for exemption from the reqttiremeftt to file a proeuremeftt plaft anti the comm:issioft is required to grant the exemption upoft a sho..riftg ofgMtl eattse. Existing lavv requires that an approved pmettt'emeftt plaft elimiflttte the need for after the fttet reasonableftess rev ie vv s of an eleetrieal eoff')oratioft's aetions in eomplittnee vv ith the plaft, but attthorizes the eommissioft to establish a regulatory proeess to verify afttl ensure that each eontraet eftteretl into pursuMt to ttn appm v etl plaft n as administered in aceortlttnee vv ith the terms of the eontraet, afttl eontract disputes that ma, arise are reasoftttbl~ resolved. This bill vv oultl require ttn eleetrieal COff)Oratioft ·vv ith a eommissioft appro v etl plttn to eofttluct a request fur offers oft Jttnuaey 1, 2023, ttntl b, Jttftuaey I of eaeh odd numbered ,ear thereafter, from an, pa~ to ttn existing eleetrieiey purchase sgreement, at that part, 's full tliseretion, to motliey the agreement to retluee the eleetrieal eoff')oratioft 's total proeuremeftt eosts Oft a present value basis over the remaiftiftg life of the eontraet ttntl that is reeo v eretl from both bundled anti tlepartiftg load eustomers. The bill n oultl require ttn eleetrieal coff')ortttioft to pttbliel' report the results of the request fur offers in its allflual proeeetliftg for rev ie vv of eontract atlmiftistratioft established b:Y the eofflfflission pursuant to the ttbo v e tleseribetl attthorizatioft. The bill 97
11SB612 -4-VY 6ttld reqttire the ee,ffl:fflissi6ll te, determine in its annttal pre,eeeding for review e,f ee,ntract administratie,n, if the electrical ee,rpe,ratie,n 's actie,ns e,r inactie,ns in respe,nse te, the reqttest for e,tfers were rease,nal,le and in the interest e,f bttndled and departing le,ad ettste,mcrs. 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 e,rcler e,r deeisie,n e,f the a commission action implementing its requirements would be a crime, the bill would impose a state-mandated local pregram by creating a ne VY crime. 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: 1 SECTION 1. Section 366.4 is added to the Public Utilities 2 Code, to read: 3 366.4. (a) For purposes of this section, the following--terms 4 have the folle,wing meanings. definitions apply: 5 ( 1) "Departing lmtd "Departing Load customer" means a 6 customer of an electrical corporation that departs from receiving 7 electric service from an electrical corporation to instead receive 8 electric service from another load-serving entity. 9 (2) "Legacy resource" means any generation resource or 10 agreement to purchase electricity for delivery to end-use customers 11 in California that was procured by an electrical corporation solely 12 on behalf of the electrical corporation's end-use customers it served 13 at the time of procurement and that is· eligible for recovery to 14 prevent cost shifting among the customers ofload-serving entities. 15 (3) "Load-serving entity" has the same meaning as defined in 16 Section 380. 17 ( 4) "Product" means electrical resources procured to meet the 18 resource adequacy requirements of Section 380, electrical resources 19 procured to meet the requirements of the California Renewables 97
12-5-SB 612 1 Portfolio Standard Program (Article 16 ( commencing with Section 2 399.11)), electrical resources that do not emit greenhouse gases, 3 and any new generating attributes identified after January 1, 2021, 4 that have regulatory compliance or other identified market value. 5 (5) "Vintage" means the cost responsibility allocated by the 6 commission, for purposes of legacy resource cost responsibility, 7 to clcpa-rting load departing load customers, which the commission 8 allocates to those departing load departing load customers 9 corresponding to the year the customer departs from receiving 10 electric service from the electrical corporation. 11 (b) (1) By July 1, 2022, and by each Jttly 1 not less than once 12 every three years thereafter, the commission shall require an 13 electrical corporation to aftflttaHy oirer, for the foHo vv ing y car, 14 offer an allocation of each product arising from legacy resources 15 to its bundled customers and to other load-serving entities serving 16 departing load departing load customers who bear cost 17 responsibility for those resources. 18 (2) The electrical corporation shall offer this allocation in an 19 amount up to each customer's proportional share of legacy 20 resources in the customer's vintage, as determined by the 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 commission. (3) The electrical corporation shall offer the products for a term and in a manner that maximizes the value of the legacy rcsottrccs. resources and promotes stable long-term resource and reliability planning. (c) (1) A load-serving entity within the service territory of the electrical corporation may elect to receive all or a portion of the vintaged proportional share of products allocated to its end-use customers and shall pay to the electrical corporation the commission-established market price benchmark for the vintage proportional share of products received. (2) The electrical corporation shall offer to load sen ing entities sen ing departing load cttstomcrs vv ithin its sen ice territory the same long term. rcnc vv ttblc portfulio standard v alttc av ailttblc to bttncllecl customers by oiiering an allocation of eligible renewable portfolio stanclarcl energy resources with a remaining contract or ownership term of at least 10 years to load-serving entities for a term duration equal to the proportionate share of the remaining term of the eligible renevvttblc energy resottrees. These term. A load-serving entity may apply these allocated resources shall cottnt 97
13SB612 -6-1 toVYard a loatl sening entiey 's to its long-term procurement 2 requirement pursuant to subdivision (b) of Section 3 99 .13. 3 (3) To enable a load-serving entity to effectively align its supply 4 with its customers' requirements, the electrical corporation shall, 5 at a minimum, provide each load-serving entity electing to receive 6 an allocation the following information for each allocated product: 7 (A) Not less than seven months before the beginning of the 8 production year, the most recent three-year historical production 9 data for the allocated products and the estimated annual production 10 profile by vintage and resource type in all hours. 11 (B) Within 15 days following the end of each production month, 12 actual production data for the prior month. 13 (d) (1) An electrical corporation shall offer--ttny the products 14 allocated to elef'al'ting loael departing load customers that a 15 load-serving entity declines to elect to receive pursuant to 16 subdivision ( c) in the wholesale market in an annttal solieitation. 17 through regular solicitations. All revenues received through-the 18 annual solieitation these solicitations shall be credited toward 19 reducing any nonbypassable charge for all distribution eustomers 20 of the eleetrieal eOfl"Oration. paid by bundled and departing load 21 customers to recover the costs of legacy resources. 22 (2) The commission shall recognize and account for the value 23 of all products in the electrical corporation's legacy resource 24 portfolio in determining-any the nonbypassable charge to be paid 25 by elef'al'ting loael eustomers. the bundled and departing load 26 customers to recover the costs of legacy resources. 27 SEC. 2. Seetion 454.5 of the Publie Utilities Coele is ameneleel 28 to reael: 29 454.5. (a) The eommission shall Sf'eeify the alloeation of 30 eleetrieiey, ineltteling quantiey, eharaeteristies, anel duration of 31 eleetrieiey eleli v eey, that the Def'al'tment of Water Resourees shall 3 2 f'rO v iele under its f'O VY er f'Urehase agreements to the eustomers of 3 3 eaeh eleetrieal eofl"oration, VY h:ieh shall be refteeteel in the eleetrieal 34 eOfl"Oration's f'rOf'OSeei l"roettrement f'lan. Eaeh eleetrieal 3 5 eofl"oration shall file a f'rOf'OSeel l"roeurement f'lan VY ith the 36 eommission not later than 60 elay s after the emnmission Sf'eeiiies 3 7 the alloeation of eleetrieiey. The l"fflf'Oseel l"roeurement f'lan shall 38 Sf'eeiey the elate that the eleetrieal eofl"oration intends to resume 39 f'rOettrement ofeleetrieiey for its retail eustomers, eonsistent vvith 40 its obligation to serve. After the eommission's aelof'tion of a 97
14-7-SB612 1 pre>ettremeflt phm., the ee,mmissie>fl shall alle, vv fl.e>t less thttfl 60 2 dtey s 6efore the eleetrieal ee>ff'6ffltie>fl resttmes pre,ettremeflt 3 pttrsttaflt te, this seetie>fl. 4 (6) AH eleetrieal ee,rpe,ratie,H's pre,pe,sed pre,ettremeflt plttH shall 5 iHelttde, 6ttt He>t 6e limited te,, all e,fthe foHe>vviHg. 6 (1) AH assessmeflt e,fthe priee risk asse,eiated vv ith the eleetrieal 7 ee,rpe>ffltie>H's pe,rtfolie,, iHelttdiHg atry tttility retaiHed geHeratie>fl, 8 existiflg pe>vv er pttrehase ttfld exehaHge ee>Htraets, ttfld pre,pe,sed 9 ee>Htraets e,r purehases ttfl.der vv hieh afl. eleetrieal ee,rpe,ratie>fl vv ill 10 pre,ettre eleetrieiey, eleetrieiey demafld redttetie>Hs, afld 11 eleetrieiey related pre,dttets ttfld the remaifliflg e,peH pe,sitie>fl te, 6e 12 sen ed 6) spe,t mftt'ket trafl.saetie>fls. 13 (2) A defiflitie>fl e,f eaeh eleetrieity pre,dttet, eleetrieiey related 14 pre,dttet, ttfld pre>ettremeflt related fiflafleial pre,dttet, iflelttdiflg 15 sttppe,rt ttfld jttstifietttie>fl for the pre,dttet type afl.d ame>ttflt te, 6e 16 pre>ettred ttflder the plafl. 17 (3) The ttttffltie,H e,f the plafl. 18 (4) The dttratie>fl, timing, afl.d rflfl:ge e,fqttttfltities e,feaeh pre,dttet 19 te, 6e pre>ettred. 20 (5) A ee,mpetith e pre,ettremeflt pre,eess ttfl.der vvhieh the 21 eleetrieal ee,rpe,ratie>fl may reqttest 6ids for pre>ettremeflt related 22 sen iees, iHelttdiHg the format afld criteria e,f that pre,ettremeflt 23 pre,eess. 24 (6) A.fl iHeeHti v e meehaHism, if atry iHeeHti v e meehaflism is 25 pre,pe,sed, iflelttdiHg the t) pc e,f traHsaetie>Hs te, 6e ee, v ered 6) that 26 meehaflism, their respeetive pre>ettremefl.t 6Cflehmarks, Md e,ther 27 parameters Heeded te, detennifle the shariflg e,f risks afl.d 6Cflefits. 28 (7) The ttpfrefl.t stafldards Md eriteria 6) vv hieh the aeeeptaeiliey 29 afld eligi6ilit) for rate reee, very e,f a pre,pe,sed pmettremeflt 30 traflsaeti6fl YV ill 6e kne, YV fl 6) the eleetrieal e6rp6fflti6fl 6efore 31 exeetttie>fl e,f the tfftflsaetie>fl. This shall iflelttde afl expedited 32 appre>val pre,eess for the ee,mmissie,H's revievv e,fpre,pe,sed ee,fl.traets 33 afl.d stt6seqttefl.t appre>val e,r rcjeetie>fl e,f a ee>Htraet. The eleetrieal 34 ee,rpe,ratie>fl shall pre,pe,se altemati v e pre,ettremefl.t ehe,iees ifl the 35 eveflt a ee>Htraet is rcjeeted. 36 (8) Pre,eedttres for ttpdttting the pre,ettremeflt plttfl. 3 7 (9) A she, vv iflg that the pre,ettremefl.t plafl vv ill aehie v e the 3 8 folfo vv iHg. 39 (A) The. eleetrieal ee,rpe,ffttie>fl, ifl e,rder te, fttlfiH its ttfl.met 40 rese,ttree Heeds, shall pre,ettre reS6ttfCCS fre,m eligi61C refle YV a6le 97
15SB 612 -8-1 ene~ resottrees in a:n a:mottnt sttffi.eient to meet its proettrement 2 reqttirements pttrstta:nt to the California Rene o ables Portfolio 3 Standard Program (Artiele 16 (eommeneing o ith Seetion 3 99 .11) 4 of Chapter 2.3). 5 (B) The eleetrieal eorporation shall ereate or maintain a 6 div efsified proettfement portfolio eonsisting of both short term 7 and long term eleetrieiey and eleetrieiey related and demand 8 redttetion prodttets. 9 (C) (i) The eleetriea:l eorporation shall first meet its ttnmet 1 O resottree needs tltt:ottgh all available energy effieieney and demand 11 redttetion resottrees that are eost dieeti v e, feliable, and feasible. 12 (ii) In determining the availability of eost etieetive, reliable, 13 and feasible demand redttetion resottrees, the eommission shall 14 eonsider the findings regarding teehniea:Hy and eeonomiea:lly 15 a:ehie v able demand redttetion in the Demand Response Potential 16 Sttteey reqttired pttrsttant to Commission Order D .14 12 024, to 17 the extent those flfl:dings are not sttperseded b) other demand 18 redttetion stttdies eondtteted b) a:ea:tiemie instittttions or gov efftffl:ent 19 ageneies, and to the extent that a:n) demand redttetion is eonsistent 20 with eommission polie,,. 21 (D) (i) The eleetriea:l eorporation, in soliciting bids for ne o 22 gas fired generating ttnits, shall aefrtel) seek bids for resottrees 23 that are not gas fired generating ttnits loeated in eommttnities that 24 sttff-cr from ettmttlati v e poHtttion bttrdens, inelttding, bttt not limited 25 to, high emission levels of toxie air eontaminants, eriteria air 26 polltttants, and greenhottse gases. 27 (ii) In eonsidering bids fer, or negotiating eontraets for, n_eo 28 gas fired generating ttnits, the eleetriea:l eorpora:tion shall prov 1de 29 greater preference to resottrces that are not gas fire~ genera:t~ng 30 ttnits loeated in eomfflttftities that sttfier from cttmttla:tt v e poHtttton 31 bttrdens, inelttding, bttt not limited to, high emission levels oftoxie 32 air contaminants, criteria: air polltttants, and greenhottse gases. 33 (iii) This sttbpa:ragraph does not appl) to contra:ets signed b) 34 an electrical corporation and approved b) the eommission before 35 Jantta:ey 1, 2017. . 36 (10) The eleetriea:l eorporation's risk management poh~), 3 7 stra:teg), and praetiees, inelttding speeifie mea:sttres of pnee 38 stability. 97
16-9-SB 612 1 ( 11 ) A plat1 te achic v c ttpprepriate it1ereases it1 di v ersiey ef 2 e VY t1ership at1d div ersiey ef fuel sttpply ef t1et1utiliey electrical 3 get1eratiet1. 4 ( 12) A mechat1ism for rece v cry ef reaset1ttble admit1istrati v e 5 cests related t6 r,recuremet1t it1 the gct1eratiet1 eempet1et1t efmtes. 6 (c) The cemmissiet1 shall revicVY at1d accept, medify, er reject 7 each electricttl cerpertttiet1's precttremeflt plan tlflfl aft) ftfflendments 8 er ttpdates t6 the plat1. The eemmissien shall ensure that the plan 9 cet1tains the elcmct1ts required b) this seetien, including the 10 clements described in subparagfflJ'hS (C) at1d (D) efparagrttph (9) 11 ef sttbdidsien (b). The cefflfflissiet1's redcVY shall censider eaeh 12 electrical eerperatiet1 's incliv idttal r,recurement situatien, and shall 13 give streng censideratien te that situatiet1 in determining VY hich 14 ene er mere ef the features set forth it1 this sttbclivisien shall ttppl) 15 te that electrical cerperatien. A precurement plan ttppre v ed b) the 16 cemmissien shall centain et1e er mere ef the folle VY ing features, 1 7 pre v ided that the cemmissien ma, net ttppre v e a feature er 18 mechanism for ftfl electrieal cerpemtien if it finds that the feature 19 er meehttnism VY euld impair the resteratien ef ftfl electrical 20 cerperatien's creditVYerthiness er VYeuld lead tea deterieratien ef 21 an electrical cerperatiet1 's credit VY erthiness. 22 (1) A cempetitwc precurcment precess under v;hich the 23 electrical cerperatien fflft) request bids for precuremet1t related 24 sen ices. The cemmissien shall specif; the format ef that 25 precurement precess, as VY ell as criteria te ensttre that the B:ttctien 26 precess is epcn at1d adequatel) subscribed. Aft) pttrchases made 27 in cempliance VY ith the eemmissien B:tttheri:z-:ed precess shall be 28 reee v ered in the gcncratien cempenent ef rates. 29 (2) At1 incentive mechanism that establishes a prncttrement 30 bet1ehmttrk er benchm.arks and tttttheri:z-:es the electrical cerpertttien 31 te precurc frem the market, sttbj ect te cemparing the electrical 32 cerperatiet1's performance te the cemmissien atrtheri:z-:ed 33 benchmark er benchmarks. The incentive meehat1ism shall be 34 dear, achicvttble, and cet1tain quttntifittblc ebjcctivcs ftfld stftfldards. 3 5 The inccnti v c mcchftflism shall eentain balanced risk ftfld re VY arcl 3 6 inccflti v es that limit the risk and re vv ard ef ftfl electrical cerperatien. 3 7 (3) Upffent achie v ttblc standards and criteria b) VY hich the 3 8 acccptabiliey and eligibility for rate rcce, v cry ef a prepescd 3 9 precttremet1t trftflsactien VY ill be kne VY fl b) the electrical cerpemtien 40 before the eX:eeutiet1 ef the bilateral eentract for the tmnsactien. 97
17SB 612 -10-1 The eemmissien shall pre v ide for expedited rev ie VY and either 2 appre v e er reject the indi v idttal eentraets sttbmitted b) the electrical 3 eefPeffltien te ensttre eemplianee vv ith its preettrement plan. 'F6 4 the extent the eemmissien rejects a pr6pesed eentraet pttrsttant te 5 this criteria, the eemmissien shall designate altemati v e preettremcnt 6 eheiees ebtained in the precttt=ement plan that v. ill be reee v erable 7 for ratemaking pttfPeses. 8 (d) A preettrement plan appffl v ed b) the cemmissien shall 9 accemplish eaeh efthe folleVYing ebjeetives. 10 ( l) Enable the eleetrieal eefPemtien te fttHHI its ebligatien te 11 sen e its cttstemers at jttst and reasenable mtes. 12 (2) Eliminate the need for after the fttet reasenableness rev ie VY s 13 ef an electrical eefPeratien's aetiens in eemplianee VY ith an 14 appreved preettrement plan, inelttding resttlting electricity 15 preettrement eentfaets, praetiees, and related expenses. I fo VY ever, 16 the eemmissien ma) establish a regttlateey precess te verify and 1 7 ensttre that each eentraet VY as administered in aecerdanee VY ith the 18 terms ef the eentraet, and eentmet disptttes that may arise are 19 reasenabl) resel v'ed. 20 (3) Ensttre timel) reee very ef prespeeti v e preettrement eests 21 inettffed pttrsttant te an appffl v ed preettrement plan. The 22 cemmissien shall establish rates based en fore easts ef preettt=ement 23 eests adepted b) the eemmissien, aetttal pr6ettrement eests 24 inettffed, er a eembinatien thereef, as determined b) the 25 eemmissien. The eemm:issien shall establish pe VY er preettrement 26 balancing aeeettnts te tfaek the differences between recerded 2 7 rev enttes and eests incttrred pttrsttant te an appre v ed preettrement 28 plan. The cemmissien shall revie~v the peVYef pr6ettrement 29 balancing aeemmts, net less than semiannttall), and shall adjttst 30 rates er erder refttnds, as necessary, te premptl) amertize a 31 balancing aceettnt, aeeerding te a sehedttle determined b) the 32 eemmissien. Until Janttaf) 1, 2006, the eemmissien shall ensttre 3 3 that Mt) e v ereelleetien er ttftdercelleetien in the pe VY er preettrement 34 balancing aeeettnt dees net exceed 5 percent ef the eleetrieal 35 eefPeratien's aetttal reeerded generatien reventtes for the prier 36 calendar )Cftf exelttding reventtes eelleeted for the Department ef 3 7 Water Resettrees. The eemm:issien shall determine the sehedttle 3 8 for amertizing the e v ereelleetien er ttndereelleetien in the 39 balancing aeeettnt te ensttre that the 5 percent thresheld is net 40 exceeded. After Janttary 1, 2006, this adjttstment shall eeettr VY hen 97
18-11-SB 612 1 clccmccl appropriate h:Y the commission consistent vv ith the 2 objectives of this section. 3 f4) Moderate the price risk associated vv ith sen ing its retail 4 customers, including the price risk cmhccldccl in its long term 5 suppl:Y contracts, h:Y authoriz:ing an electrical corporation to enter 6 into financial Mcl other clcctriciey related product contracts. 7 (5) Prov idc f-Or just ancl reasonable rates, vv ith an appropriate 8 halMeing of price stahiliey ancl price le v cl in the electrical 9 corporation's procurement plan. 10 (c) The commission shall prov iclc f-Or the periodic rev ic w ancl 11 prospccti v c moclifi:cation of 8ft electrical corporation's procurement 12 plMr. 13 (f) The commission ma, engage an independent consultant or 14 advisory sen ice to C\i aluatc risk management ancl strategy. The 15 reasonable cost of an, consultant or advisory scr vice is a 16 reimbursable expense ancl eligible fur funding pursuant to Section 17 63-t 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 (g) The coffl'fflission shall adopt appropriate procedures to ensure the confi:clcntialiey of an, market scnsiti v c infurmation submitted in an electrical corporation's proposed procurement plan or resulting from or related to its appro v ccl procurement plan, including, but not limited to, proposed or executed po•o er purchase agreements, data request responses, or consultant reports, or an, combination of these, prov icled that the Public Acl v oeatc 's Office of the Public Utilities Commission ancl other consumer groups that arc nonmarkct participants shall he prov iclccl access to this inf-Ormation tmdcr eonfi:clcntialiey procedures authoriz:ccl h'.'Y the commission. (h) Each electrical corporation vv ith an appre v ccl plan shall conduct a request for offers from an, parry to an existing clcctriciey purchase agreement, at that parey 's full discretion, to mocliey the agreement to reduce the electrical corporation's total procurement costs on a present value basis over the remaining life of the contract ancl that is rceo v crecl fmm both huncllccl ancl departing load customers, as dcfi:nccl in Section 366.4. Each electrical corporation shall issue a request fur offer on January 1, 2023, ancl h:Y JaHUaey 1 of each oclcl ftttftlbcrccl '.Y car thereafter. The electrical corporation shall puhlicl:Y report the results of the request for offers m its aootml proceeding for rcvicvv of contract administration pursuant to paragraph (2) of suhcli vis ion (cl), iclcntiey ing the total cost savings 97
19SB 612 -12-1 to ettstomers, vv ithottt eliselosing eompetiti v eey sensiti v e priee 2 infofflltttion for ineli v ielttal eontraets. The eemmission shall 3 determine in its amtt1al proeeeeling for re v ie vv ef eontraet 4 aelministmtion pttrsttant to pamgrftl'h (2) of sttbeli vision (el) if the 5 eleetrieal eerporation' s aetiens or inaetions in response to the 6 reqttest for offers v1ere reasonable and in the interest of bttnelleel 7 and departing load ettstomers. 8 (i) This seetion does not alter, moeliey, or amend the 9 eommission 's oversight of affiliate transaetions ttneler its rttles and 10 eleeisions or tfl:e eommission 's existing ottthoriey to ittvestigote and 11 penali~e aH eleetrieal eorporation 's allege el frattelttleHt aeti v ities, 12 or to elisaHo vv eosts inettffeel as a resttlt of gross ineompetence, 13 frattel, abttse, or similar grottnels. This sectioH does not expand, 14 moeliey, or limit the Energ:, Commission's existing ottthority onel 15 responsibilities as set forth in Sections 25216, 25216.5, and 25323 16 of tfl:e Pttblic Resottrees Code. 17 6) Afl eleetrieal corporation tfl:at sen es less tfl:an 500,000 electrie 18 retail ettstomers vv ithin the state ma:, file \\"tith the eommissioH a 19 rcqttest for exemption from this seetion, vv hieh the commission 20 shall grant ttpoH a shovving of good cattse. 21 (k) (I) Before its approval pttrsttant to SectioH 851 of an, 22 eli v estitttrc of generation assets owned b:, on electrical eorporation 23 on or after September 24, 2002, the commission shall determine 24 the impaet of the proposed eli v estitttre on the electrical 25 eorporatioH 's proettrement rates and shall appr6 v e a eliv estitttrc 26 only to the extent it finds, toking into oecottHt the effeet of the 27 eli v estitttre on proettrement rates, that the eli v estitttre is in the pttblic 28 iHterest and vv ill result in net ratepa:, er benents. 29 (2) Aft) eleetrieal eorporation's proettrement Heeessitateel as a 30 resttlt of the divestiture ofgeHeration assets OH or after September 31 24, 2002, shall be sttl,-jeet to the meehanisms aHel proeeelttres set 32 forth ifl this section onl:, if its aetttal cost is less thaH the reeent 33 historical cost of the eli v esteel generation assets. 34 (3) ~fotvv itfl:staneling paragraph (2), the commission mo:, deem 3 5 pr6poseel pf6ettrement eligible to ttse the proeeelttres iH this seetion 36 ttpon its ftPpro val of asset eli v estitttre pttrsttont to Section 851. 3 7 (/) The commission shall elireet eleetrieal eorpomtions to inelttele 3 8 iH their proposed proettrement plans the integration costs eleseribeel 3 9 and eleteffllineel pttrsttant to elattse ( v) of sttbparagra:ph (A) of 40 paragraph (5) of sttbeli v isioH (a) of Seetion 3 99 .13. 97
20-13-SB 612 1 (m) Before appreviHg aft eleetrieal cerperatien's centract iflr 2 any ne o gas fifed genefating unit, the cemmissien shall reqttire 3 the electrical cerperatien te demenstrate cempliance o ith its 4 appre" ed precurement plan. 5 SEC. 3. 6 7 8 9 10 11 12 13 14 SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution. 0 97