The major issue in energy was advancing the state’s Renewables Portfolio Standard (RPS) to 33% by 2020. In 2002, SB 1078 (Sher) was enacted establishing the California Renewables Portfolio Standard Program, which requires the California Energy Commission (CEC) and the Public Utilities Commission (PUC) to work collaboratively to implement the RPS Program. SB 1078 established a renewable energy standard and required electrical corporations to increase their latest procurement of eligible renewable energy resources by at least 1% per year so that 20% of their retail sales are procured from eligible renewable energy resources by 2017. In 2003, the Governor called for 20% of California ’s electricity to come from renewable sources by 2010, rather than 2017, and this standard became law with the enactment of SB 107 (Simitian) of 2006. In 2003, the PUC and the CEC adopted the 2003 Energy Action Plan 1, which accelerated the RPS 20% renewable energy goal to 2010. In 2006, SB 107 and SB 1037 (Kehoe) were enacted, which defined further the roles and responsibilities of the CEC and PUC and accelerated the implementation of the RPS. Since 2006, Senators Kehoe and Simitian have worked on legislation to increase the RPS to 33%. The Legislature passed a package of bills in 2009: SB 14 (Simitian), SB 62 (Simitian), AB 21 (Krekorian), and AB 64 (Krekorian) increasing the RPS to 33% by 2020. However, the Governor vetoed those bills because he, instead, issued Executive Order S-21-09 directing the Air Resources Board to adopt regulations increasing the state’s RPS to 33% by 2020. The order is to ensure California will have the flexibility needed to use renewable energy sources for 33% of our energy consumption by 2020, and places the highest priority on renewable resources that will provide the greatest environmental benefits that can be developed quickly and support reliable, efficient and cost-effective electricity system operations including resources and facilities located throughout the Western Interconnection. The Governor also signed a memorandum of understanding (MOU) with the United States Secretary of the Interior Ken Salazar, which expedites the siting of California ’s renewable energy projects. The MOU commits the federal government to work with California on a science-based process for reviewing, approving and permitting renewable energy applications in California , which will greatly help the state achieve its goal of reaching 33% renewable energy by 2020. The Department of the Interior and the California Natural Resources Agency will develop detailed maps of the best areas for development and conservation -- allowing for expedited project siting and habitat protection. The agreement also facilitates the identification of transmission corridors by December 2010, and includes the Department of Defense (DOD) in the process because some transmission lines may need to cross DOD lands. Also, the Legislature passed and the Governor signed AB 1351 (Blakeslee) revising certification conditions for hydroelectric facilities eligible for the RPS to permit certification from an agency other than the State Water Resources Control Board, such as if the facility is located in another state.

Another major energy policy which became law is the establishment of a smart grid. The Legislature passed and the Governor signed into law, SB 17 (Padilla) requiring the PUC to determine the requirements for a smart grid deployment plan no later than July 1, 2011. Smart grid refers to a distribution system that allows for the flow of information from a customer’s meter in two directions and modernizes the electric distribution and transmission grid with a goal of using advanced, information-based technologies to increase power grid efficiency, reliability, and flexibility, and reduce the rate at which additional electric utility infrastructure needs to be built. A smart grid is a key element to the greening of California ’s grid due to the intermittent nature of renewable electricity resources and will lead to lower customer prices, stimulate innovation and new green job creation, and reduce emissions of greenhouse gas.

Another energy issue of importance concerns H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA), which provides $3.1 billion for state energy efficiency programs. Of this amount, the CEC expects to receive $226 million for State Energy Programs and $56 million for energy efficiency and conservation grants to local governments. Federal law (and current state law) allows the CEC to use federal stimulus funds for grants or loans, with specified requirements on the use of repayment proceeds from any loans made with federal funds. AB 4XXXX (Evans), Chapter 4, Statutes of 2009-10, Fourth Extraordinary Session, allows the use of ARRA funds within existing CEC programs for energy efficiency and conservation projects and workforce development. It allows the issuance of grants, in addition to contracts, for the program and sets a cap on funds that can be used for administration. Lastly, it establishes parameters for the State Property Energy Efficiency Revolving Fund, which will use ARRA funds for cost-effective energy efficiency projects in state-owned buildings.

In September 2009, the Legislature passed AB 262 (Bass) and the Governor signed it on October 11th, requiring that any monies received by the state, pursuant to ARRA, that are directed for energy-related activities, programs, or projects, be administered by the state’s energy and water agencies, and providing that those activities, programs, or projects should adhere to the principle of accountability while also adhering to existing state policies to promote energy efficiency, promote water conservation, promote the development and use of renewable energy resources, protect the environment, and provide green job training. It appropriates $113,093,000 to the CEC for expenditure consistent with ARRA and applicable provisions of state law, including the provisions of the bill. On September 19, 2009, California received $49.6 million to advance local energy efficiency programs under the ARRA Energy Efficiency Conservation Block Grant (EECBG) program. The CEC estimates that energy efficiency investments from this program can save 61.2 million kilowatt-hours of electricity; reduce carbon dioxide emissions by 22,541 tons, save local jurisdictions in excess of $9 million per year and create over 500 new jobs for local communities.

The CEC is responsible for administering the EECBG program in California and funds will be available to 265 eligible small cities and 44 eligible small counties. The funds will be allocated on a per capita basis with a minimum of $25,000 for cities and $50,000 for counties. Local jurisdictions will also receive an unemployment adjustment so that communities hardest hit by the economic downturn will get more funds to help in their recovery. Cities and counties will have until approximately September 2012 to complete their projects.

The EECBG program is one of two ARRA funded energy-related programs focused on assisting local governments and public entities invest in energy efficiency, clean energy systems and green jobs. In March 2009, the CEC was allocated $226 million under State Energy Program (SEP) ARRA funds to implement public and private sector programs. The bulk of the SEP funding ($195.8 million) will be aimed at combining grants, contracts and loans to fund activities that concentrate on green jobs training, clean energy systems and energy efficiency measures and upgrades for residential and non-residential structures. The CEC estimates that retrofitting California ’s aged and inefficient residential and non-residential structures could save the state’s consumers 2.7 billion British thermal units annually and create over 2,100 jobs.

Eligible small cities and counties are encouraged to leverage their energy efficiency block grant funds with other programs, such as the SEP and low interest loans, to make them go further. Jurisdictions can apply for either the new 1% interest loan (funded from ARRA money) or the current 3% Energy Conservation Assistant Account program (funded from the existing state-funded loan program). Four local governments, the County of Marin , City of Los Angeles , City of Carlsbad and the town of Hillsborough , have already successfully applied to the CEC for more than $5.8 million in low interest loans to help leverage their block grants.

Other energy legislation of significance, which was chaptered into law, included SB 32 (Negrete McLeod) expanding the current feed-in-tariff (FIT) program to allow for renewable resources that are up to three megawatts in size to qualify and requiring the PUC to include the value of environmental compliance costs in the rate paid to generators under FIT to help ensure that renewables are properly valued for their locations’ benefits, time-of-delivery attributes, and furtherance of the goals of RPS; SB 176 (Simitian) extending until 2015, the law allowing nonprofits to receive free electricity, as specified; SB 412 (Kehoe) extending the sunset date of the Self-Generation Incentive Program through January 1, 2016; SB 488 (Pavley) requiring publicly-owned utilities and investor-owned utilities that provide individual residential electricity or gas customers with information comparing their energy use with similar residences to report to the state on the energy savings resulting from such programs; SB 626 (Kehoe) requiring the PUC, in consultation with specified parties, to evaluate policies to provide fueling infrastructure for plug-in hybrid and electric vehicles; SB 695 (Kehoe) making changes in the state’s regulation of electricity, including allowing for increases in some residential electricity rates, increasing the ability of retail customers to purchase electricity directly from generators, prohibiting mandatory time-variant pricing, and making some changes to existing energy efficiency programs; AB 45 (Blakeslee) reenacting a lapsed authorization for local governments to provide, by ordinance, for the installation of small wind energy options; AB 531 (Saldana) revising a provision of current law that requires that an owner or operator of a nonresidential building to disclose Energy Star Portfolio Manager benchmarking data to a prospective buyer, lessee of the entire building, or lender to instead do so based on a schedule of compliance established by the CEC; AB 758 (Skinner) requiring the CEC to develop and implement a comprehensive program to achieve greater energy savings in existing residential and nonresidential building stock, including energy assessments, cost-effective energy efficiency improvements, financing options, public outreach, and education efforts; AB 920 (Huffman) expanding the current net-metering programs for wind and solar, to allow the net-metered customers to sell any excess electricity they produce over the course of a year to their electric utility; and AB 1031 (Blumenfield) reducing barriers to place renewable energy systems on all colleges and universities.

Vetoed energy legislation of significance included SB 279 (Hancock) which would have added the acquisition, installation, and improvement of energy efficiency, water conservation, and renewable energy improvements to the types of facilities that a Community Facilities District may finance, or refinance, regardless of whether the buildings or property are privately or public owned; AB 3 (V. Manuel Perez) which would have required the establishment of the Renewable Energy Workforce Readiness Initiative; and AB 42 (Blakeslee) which would have required Pacific Gas and Electric Company to conduct seismic fault studies or surveys in areas at or near the Diablo Canyon Nuclear Power Plant in order to maintain reliable operation of the electrical grid and mitigate impacts to customer rates that could result from a seismic event.