SB 32 Update – Signed into Law requiring utilities to purchase electricity from solar farms up to 3MW

SB 32 Update – Signed into Law
November 9, 2009
Sacramento, CA – On October 11, 2009 Senate Bill 32 (Negrete McLeod) was signed into law. SB 32 expands California’s current feed-in-tariff (FIT) program by requiring Investor Owned Utilities (IOUs) to procure all renewable energy generated in their service area. The amount of eligible renewable energy is increased from 1.5 MW to 3 MW. The IOUs are not required to offer additional FITs once the utility reaches its proportionate share of statewide total capacity cap of 750 MWs.
Senator Gloria Negrete McLeod (D-Chino) believes California is missing opportunities to expand the use of solar energy because “excellent sites with space and interest in installing solar energy equipment cannot use solar because they cannot participate in either the California Solar Initiative incentive program or the RPS solicitation program.”
SB 32 will also require all Publicly Owned Utilities (POUs) that serve more than 75,000 customers to create a program to purchase all available renewable energy in their service area that is less than 3 MWs.
California Assembly passes SB 32: 37 – 0
California Senate passes SB 32: 62 – 16

BILL BACKGROUND AND DETAILS

SB 32 (Negrete McLeod)
Renewable electric generation facilities.
LEGISLATIVE COUNSEL’S DIGEST
SB 32, as amended, Negrete McLeod. Renewable electric generation facilities. Under existing law, the Public Utilities Commission is vested with regulatory authority over public utilities, including electrical corporations. The Public Utilities Act imposes various duties and responsibilities on the commission with respect to the purchase of electricity by electrical corporations and requires the commission to review and adopt a procurement plan and a renewable energy procurement plan for each electrical corporation pursuant to the California Renewables Portfolio Standard Program. The program requires that a retail seller of electricity, including electrical corporations, purchase a specified minimum percentage of electricity generated by eligible renewable energy resources, as defined, in any given year as a specified percentage of total kilowatt hours sold to retail end-use customers each calendar year (renewables portfolio standard).

Under existing law, the governing board of a local publicly owned electric utility is responsible for implementing and enforcing a renewables portfolio standard for the utility that recognizes the intent of the Legislature to encourage renewable resources, while taking into consideration the effect of the standard on rates, reliability, and financial resources and the goal of environmental improvement. Existing law requires every electrical corporation to file with the commission a standard tariff for electricity generated by an electric generation facility, as defined, that is owned and operated by a retail customer of the electrical corporation.

Existing law requires that the electric generation facility: (1) have an effective capacity of not more than 1.5 megawatts and be located on property owned or under the control of the customer, (2) be interconnected and operate in parallel with the electric transmission and distribution grid, (3) be strategically located and interconnected to the electric transmission system in a manner that optimizes the deliverability of electricity generated at the facility to load centers, and (4) meet the definition of an eligible renewable energy resource under the renewables portfolio standard program. Existing law requires that the tariff provide for payment for every kilowatt hour of electricity generated by an electric generation facility at a market price referent established by the commission pursuant to the renewables portfolio standard program. Existing law requires the electrical corporation to make this tariff available to customers that own and operate an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until the combined statewide cumulative rated generating capacity of those electric generation facilities equals 500 megawatts, or the electrical corporation meets its proportionate share of the 500 megawatt limit based upon the ratio of its peak demand to total statewide peak demand of all electrical corporations. Existing law authorizes the commission to modify or adjust the above-described requirements for any electrical corporation with less than 100,000 service connections, as individual circumstances merit.
Existing law provides that the electricity generated by an electric generation facility counts toward the electrical corporation’s renewables portfolio standard and provides that the physical generating capacity counts toward meeting the electrical corporation’s resource adequacy requirements.

This bill would require an electrical corporation to file with the commission a standard tariff for the electricity purchased from an electric generation facility that is located within the service territory of, and developed to sell electricity to, the electrical corporation. The bill would revise the first requirement, discussed above, to instead require that the electric generation facility have an effective capacity of not more than 3 megawatts, subject to the authority of the commission to reduce this megawatt limitation, discussed below, and would delete the requirement that the facility be located on property owned or under the control of the customer. The bill would require that the tariff provide for payment for every kilowatthour of electricity purchased from an electric generation facility for a period of 10, 15, or 20 years, as authorized by the commission. The bill would require that the payment be the market price referent established by the commission pursuant to the renewables portfolio standard program and would require the price to include all current and anticipated environmental compliance costs.

The bill would authorize the commission to adjust the payment to reflect the value of the electricity on a time-of-delivery basis and require, with respect to rates and charges, that ratepayers that do not receive service pursuant to the tariff are indifferent to whether other ratepayers receive service pursuant to the tariff. The bill would require an electrical corporation to provide expedited interconnection procedures to an electric generation facility located on a distribution circuit that offsets peak demand on that circuit, if the electrical corporation determines that the electric generation facility will not adversely affect the distribution grid.

The bill would require the electrical corporation to make the tariff available to the owner or operator of an electric generation facility within the service territory of the electrical corporation, upon request, on a first-come-first-served basis, until either the corporation meets its proportionate share of a statewide cap of 750 megawatts cumulative rated generation capacity served under the tariffs adopted pursuant to the requirements of the bill or the electrical corporation has reached or exceeds its above-market cost limitation, as specified. The bill would make this requirement contingent on certain conditions relating to the enactment of SB 14, and would provide an alternate requirement if those conditions do not occur.

The bill would provide that the electricity purchased from an electric generation facility counts toward meeting the electrical corporation’s renewables portfolio standard and that the physical generating capacity of the electric generation facility counts toward meeting the electrical corporation’s resource adequacy requirements. The bill would require the commission to establish performance standards for any electric generation facility that has a capacity greater than one megawatt to ensure that those facilities are constructed, operated, and maintained to generate the expected annual net production of electricity and do not impact system reliability, and would authorize the commission to reduce the 3 megawatt capacity limitation if the commission finds that a reduced capacity limitation is necessary to maintain system reliability within that electrical corporation’s service territory.

The bill would recast the existing authority of the commission to modify or adjust the above-described requirements for any electrical corporation with less than 100,000 service connections, as individual circumstances merit.

This bill would provide that an owner or operator of an electric generation facility that received ratepayer-funded incentives and participated in a net metering program prior to January 1, 2010, would be eligible for a tariff or standard contract filed by an electrical corporation pursuant to the above-described provisions, but would require the commission to require reimbursement of funds in some circumstances. An owner or operator that receives service pursuant to a tariff or standard contract adopted by an electrical corporation pursuant to the above-described provisions is not eligible to participate in any net metering program.

This bill would require a local publicly owned electric utility that sells electricity at retail to 75,000 or more customers to adopt and implement a tariff for electricity purchased from an electric generation facility meeting certain size, deliverability, and interconnection requirements and to consider certain factors.

The bill would require the local publicly owned electric utility to make the tariff available to owners and operators of an electric generation facility within the service territory of the utility, upon request, on a first-come-first-served basis, until the utility meets its proportionate share of a statewide cap of 750 megawatts cumulative rated generation capacity served under the tariffs adopted pursuant to the requirements of this bill. The bill would provide that the electricity purchased from an electric generation facility counts towards meeting the local publicly owned electric utility’s renewables portfolio standard annual procurement targets.

Under existing law, a violation of the Public Utilities Act or an order or direction of the commission is a crime. Because this bill would require an order or other action of the commission to implement its provisions, and a violation of that order or action would be a crime, the bill would impose a state-mandated local program by creating a new crime. By placing additional requirements upon local publicly owned electric utilities, which are entities of local government, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

About Sy Richardson

Sy Richardson is one of the principals at Commercial Solar Design. He brings years of high level client interaction. He is an expert in strategic thinking, problem solving, negotiation and logistics. His first solar company was started in the 80s in Miami Fl where his company installed over 3,000 residential solar systems. In 2008 Mr. Richardson refocused on utility scale solar projects and has many connections in the industry. He founded Commercial Solar Design, a company focused solely on solar farm development projects. Sy is involved in all stages of the solar farm project life. He is also on the research and development team designing a cutting edge customer sited solar thermal electricity generation technology using helium in a closed loop to drive a turbine generator. He is currently designing a distributed urban solar farm smart grid implementation. He loves working with the Maine Island Trail Association, Sierra Club and other earth friendly organizations. He sits on the Solar Leaders Circle and the Climate Protection Campaign Stakeholders Wheel. He has a wealth of information regarding solar and industrial technical issues.
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