California

Note: AB 2196, signed in September 2012, made some changes to the eligibility requirements for generation facilities fueled by landfill gas, digester gas, or other renewable fuels delivered through a common carrier pipeline. The bill also provides that biomethane procurement contracts entered into prior to March 29, 2012 will be eligible for compliance with the RPS if certain conditions are met.

California’s Renewables Portfolio Standard (RPS) was originally established by legislation enacted in 2002. Subsequent amendments to the law have resulted in a requirement for California’s electric utilities to have 33% of their retail sales derived from eligible renewable energy resources in 2020 and all subsequent years. The law established interim targets for the utilities as shown below:

• 20% of retail sales by December 31, 2013
• 25% of retails sales by December 31, 2016

Publicly owned municipal utilities (POUs) are not regulated by the CPUC but are affected by the law nonetheless, and their governing boards are charged with establishing procurement requirements based on the interim goals above.

Regulatory Roles
The Energy Commission's roles are to:

• Certify eligible renewable resources procured by retail sellers (investor-owned utilities, electricity service providers, and community choice aggregators) that meet statutory requirements
• Design and implement a tracking and verification system to ensure that renewable energy output is counted only once for the purpose of the RPS and for verifying retail product claims in California or other states
• Adopt regulations specifying procedures for enforcement of the RPS for POUs
• Certify and verify eligible renewable energy resources procured by POUs and to monitor their compliance with the RPS
• Refer the compliance failure of a POU to the Air Resources Board, which may impose penalties.

The Energy Commission has two adopted Guidebooks which describe its RPS program requirements:

• The Renewables Portfolio Standard Eligibility Guidebook describes the eligibility requirements and process for certifying renewable resources as eligible for California's RPS and describes the Energy Commission’s implementation of a tracking system to verify compliance with the RPS.
• The Overall Program Guidebook describes how the Energy Commission's Renewable Energy Program is administered.

The CPUC is charged with:

• Determining procurement targets and enforcing compliance
• Reviewing investor owned utilities’ contracts for RPS-eligible energy for rate recovery
• Calculating and administering a cost limitation on renewable procurement for investor-owned utilities
• Establishing the standard terms and conditions to be used by all IOUs in contracting for eligible renewable energy resources.
• Implementing flexible rules for compliance with annual renewable procurement targets
• Reviewing and approving each IOU’s procurement plan and its process for selecting the least cost bidders of renewable energy that best fit that utility’s resource needs. IOUs use these processes to select winning bidders from their solicitations to procure renewable electricity. 

For more information about the CPUC’s role and data on RPS progress, see http://www.cpuc.ca.gov/PUC/energy/Renewables/

Eligible Technologies
Technologies eligible for the RPS include photovoltaics; solar thermal electric; wind; certain biomass resources; geothermal electric; certain hydroelectric facilities*; ocean wave, thermal and tidal energy; fuel cells using renewable fuels; landfill gas; and municipal solid waste conversion, not the direct combustion of municipal solid waste. The CEC voted in March 2012 to suspend the eligibility of biomethane. As several contracts for biomethane had been executed prior to the CEC's vote, AB 2196 of 2012 provides that biomethane contracts signed before March 29, 2012 will be eligible for compliance if certain conditions are met.

Legislation (AB 2514) enacted in September 2010 allows for the adoption of requirements for utilities to procure energy storage systems. The legislation instructs the CPUC to open a proceeding by March 1, 2012, to consider the adoption of these requirements which would have to be met by the investor-owned utilities in two phases: by December 31, 2015, and December 31, 2020. The CPUC has broad authority for considering these requirements. The legislation also requires the governing boards of municipal utilities with more than 60,000 customers to consider similar requirements according to the same time schedule.

Renewable Energy Credits
To meet California’s RPS reporting requirements and the renewable energy tracking needs of 14 states and two Canadian provinces in the Western Electricity Coordinating Council (WECC), the Energy Commission and the Western Governors’ Association have jointly developed the Western Renewable Energy Generation Information System (WREGIS), which began operation in June 2007. WREGIS tracks renewable energy generation and creates WREGIS certificates for every renewable energy credit (REC) generated, which are used to demonstrate compliance with state RPS policies. One REC represents one megawatt-hour (MWh) of electricity generated from a renewable resource.

The California Public Utilities Commission issued a decision on January 13, 2011, to authorize the use of tradable renewable energy credits (TRECS) for RPS compliance. From the 2010 compliance year through December 31, 2013, the use of TRECS was capped at 25% of a utility's RPS requirement, and the price of a TREC was capped at $50. SBX1-2 of 2011 appears to have put new restrictions on the use of TRECs which the CPUC will implement. According to the law, the use of TREC transactions signed after June 10, 2010 will be capped at 25% for the compliance period ending December 31, 2013, and will shrink to 10% of the requirement by 2017.


Background
Prior to the passage of SBX1-2 in April 2011, the RPS approved by the California Legislature stopped at 20% required in 2010 and all future years. Legislation that would have expanded the RPS beyond 20% failed to become law in 2009. In the absence of legislation, California's Governor signed Executive Order S-21-09 in September 2009, which required the California Air Resources Board to adopt a renewable energy program requiring 33% renewable energy by 2020. With SBX1-2 of 2011, the legislature has codified the 33% requirement in state law, requiring the CPUC and the CEC to implement the 33% RPS. SBX1-2 imparts some powers to the Air Resources Board to enforce the requirements on publicly-owned utilities, but the CPUC will be serving as the primary rule-making authority for carrying out the RPS.



* Refer to the current Energy Commission Renewables Portfolio Standard Eligibility Guidebook at www.energy.ca.gov/renewables/documents/index.html#rps for information on eligible renewable energy resources and fuels. SBX1-2 expanded the criteria for hydro facilities to qualify for the RPS. The bill also charged the Energy Commission with advising the legislature about whether or not run-of-river hydroelectric generating facilities in British Columbia should qualify for the RPS. See SBX1-2 for full details about the treatment of hydro power under the RPS.