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On September 15, 2017, as this year’s California legislative session came to an end, bills foundered that would have laid out plans to transform the state’s electric grid into a regional market, directed investor-owned electric utilities to accelerate renewables procurement in a manner that could adversely impact the continued growth of community choice aggregators ("CCAs") and required 100 percent renewable energy by 2045. Another measure passed that directs certain measures to be taken in response to the natural gas leak at the Aliso Canyon storage facility. 

Assembly Bills (“A.B.”) Nos. 726 and 813, both with identical language, sought to facilitate the transformation of the California Independent System Operator Corporation (“CAISO”) into a regional organization to promote the development of regional electricity transmission markets in the western states.  The bills would require the CAISO to propose a new governance structure by October 31, 2018, which would be approved by a committee made up of representatives from the California Energy Commission, the California Public Utilities Commission, and the Legislature.

These two bills also included language that would have increased the procurement requirements of renewable energy resources by investor-owned electric companies in order to take advantage of temporary federal investment tax credits and production tax credits.  The state has estimated that buying 4,000 megawatts of eligible renewable energy now, rather than after 2020 when the federal tax credits will begin to ramp down, could save approximately $633 million.  However, this measure was seen as an obstacle to the formation of new (“CCAs”) in California, through the potential increase of charges paid by CCAs.  Assemblymember Chris Holden issued a statement stating that both bills are subject to revival and will likely be considered during the second half of this two-year legislative session.  The full text of A.B. 726 can be found here and the full text of A.B. 813 can be found here.

California legislators, unable to overcome strong opposition from labor unions, also failed to pass Senate Bill (“S.B.”) 100.  The bill sought to amend the existing California Renewables Portfolio Standard Program, which requires utilities to meet a 50 percent renewable energy target by 2030.  S.B. 100 would have accelerated the state’s current renewable energy goal  “to achieve that 50% renewable resources target by December 31, 2026, and to achieve a 60% target by December 31, 2030,” to ultimately reach a 100 percent renewable energy goal no later than December 31, 2045.  The full text of S.B. 100 can be found here.  It is unclear whether this bill will be revisited in the second half of the legislative session.

On the other hand, the California legislature passed S.B. 801, which directs the Los Angeles Department of Water and Power (“LADWP”) to maximize the use of energy efficiency, demand response, and renewable energy in order to reduce demand in the area where electric reliability could be adversely affected by the gas deliverability issues arising from the well failure at the Aliso Canyon natural gas storage facility.  By June 1, 2018, LADWP must determine the cost-effectiveness and feasibility of deploying a minimum aggregate of 100 megawatts of alternative energy storage solutions to help address operational limitations from the Aliso Canyon natural gas storage facility.  The full text of S.B. 801 can be found here.

For more information please contact Sean Neal and Andrew Art.