The major issue in Energy was the attempt to increase California’s Renewable Portfolio Standard Program (RPS) from 20% to 33%. The RPS requires investor-owned utilities (IOUs) and certain other retail energy providers, collectively referred to as “retail sellers,” to buy renewable electricity to the extent funds are available to pay for any costs exceeding a market price set by the Public Utilities Commission (PUC). Each IOU is required to increase its renewable procurement each year by at least 1% of total sales, so that 20% of its sales are renewable energy sources by December 31, 2010. Once a 20% portfolio is achieved, no further increase is required. The PUC is required to adopt comparable requirements for direct access energy service providers and community choice aggregators. The RPS requires the PUC to adopt processes for determining market prices, ranking renewable bids according to cost and fit, flexible compliance rules and standard contract terms. The RPS requires IOUs to offer contracts of at least 10 years, unless the PUC approves shorter contracts. This is intended to support the development of new renewable resources. The original RPS bill was SB 1078 (Sher), Chapter 516, Statutes of 2002, which set a goal of 20% by 2017. SB 107 (Simitian), Chapter 464, Statutes of 2006, accelerated the deadline for 20% to 2010. Nearly eight years after the RPS was enacted, IOUs have advanced beyond their 2002 average starting point of 12% RPS, but are not on pace to achieve 20% by the end of this year, and intend to rely on flexible compliance rules to delay attainment of 20% until 2013. According to the PUC, in 2009, the IOUs served 15.4% of their load with renewable energy, up from 13% in 2008. PG&E achieved 14.4%, SCE 17.4% and San Diego Gas & Electric 10.5%.

Last year, the Governor vetoed two bills passed by the Legislature to establish a 33% RPS – SB 14 (Simitian) and AB 64 (Krekorian). Following the vetoes, the Governor issued an executive order directing the Air Resources Board (ARB) to implement a 33% RPS as a greenhouse gas reduction measure pursuant to its authority under AB 32. The ARB has initiated a rulemaking to establish a “renewable electricity standard” (RES), with adoption by ARB scheduled for July 2010. However, questions have been raised regarding the permanence and legality of an RES regulation based on an executive order. Near the end of the 2010 Session, attempts were made legislatively to increase the RPS goal to 20% by 2010 to 33% by 2020 through SB 722 (Simitian). This bill would have required the PUC to monitor and enforce the IOU and energy service producers (ESP) compliance with the RPS targets, including directing each IOU to prepare and annually update a renewable energy procurement plan to be reviewed and approved by the PUC, and an annual RPS compliance report. It would have authorized the PUC to approve an IOU’s application to construct, own and operate the eligible renewable energy resources in order to meet the RPS targets, so that such facilities represent no more than 8.25% of the IOU’s retail sales by December 1, 2020. Lastly, it would have required the PUC to adopt regulations specifying procedures to ensure publicly owned utilities (POUs) meet RPS targets and to monitor their compliance, and assigns the ARB-not the PUC-responsibility to enforce POU compliance with the RPS. SB 722 passed the Assembly but was unable to be taken up in the Senate. On September 23, 2010, ARB adopted a regulation establishing the 33% to be reached by 2020. The regulation adopted is the product of coordination and cooperation by ARB, PUC, the California Energy Commission, and the California Independent System Operator. Work on the standard began immediately following the Governor’s RES Executive Order, signed on September 15, 2009. The goal of 33% renewable electricity was also a major measure in the Scoping Plan, adopted by ARB in December 2008, toward fulfilling AB 32, the requirements of California’s climate change legislation. The regulation ramps up the amount of electricity from wind, solar, geothermal and other renewable sources of energy while preserving the existing authorities of the energy agencies and the grid operator. ARB oversight will ensure that the renewable standard delivers substantial reductions in greenhouse gas emissions and achieves clean air goals by reducing smog-forming pollution.

Important elements include that the regulation applies to all entities that deliver electricity, including IOUs and POUs including municipal utilities.

The regulation creates a program that is consistent for all electrical entities.

The phased-in approach provides for interim targets for renewable energy: 20% for 2012-14; 24% for 2015-2017; 28% for 2018-19; 33% for 2020 and beyond.

The program employs the procedures and mechanisms already used by electrical entities.

The smallest electricity providers (sales of less than 200,000 megawatt-hours per year) are only subject to recordkeeping and reporting requirements.

The standard is expected to reduce greenhouse gas emissions by about the equivalent of 12 to 13 million metric tons of carbon dioxide per year in 2020. In addition to reducing greenhouse gas emissions, the regulation will result in hundreds of tons of statewide reductions in smog-forming and toxic air pollutants by displacing the use of dirtier fossil fueled generation, providing a range of health related benefits.

Other legislation which was enacted to enhance clean energy development in the state included SB 71 (Padilla) expanding the range of projects which may be approved for a sales tax exclusion to include equipment used to manufacture products that produce energy from alternative sources such as solar, wind and biomass; SB 77 (Pavley) enacting a state Property Assessed Clean Energy program to assist local jurisdictions in financing the installation of distributed generation of renewable energy sources or energy or water efficiency improvements; SB 34 X8 (Padilla) structuring renewable energy projects proposed for siting in the California desert that are eligible for federal American Recovery and Reinvestment Act funding, by allowing eligible project developers to pay in-lieu fees that would then be used by the Department of Fish and Game to acquire and restore habitat lands for species impacted by the projects; AB 510 (Skinner) increasing a cap on the amount of solar or wind-generated electricity can be generated under the net-energy metering program from 2.5% to 5% of each utility aggregate demand; AB 1873 (Huffman) authorizing the State Treasurer, the California Public Employees’ Retirement System (CalPERS), and the State Compensation Insurance Fund to invest in Property Assessed Clean Energy bonds; and AB 2724 (Blumenfield) expanding, until January 1, 2013, the California Solar Initiative Program eligibility for any state agency for uncertain payments for facilities up to five megawatts with a cap of 26 megawatts.

The major issue relating to Utilities was the placing, in statute, of the California Broadband Council to promote broad band development for the benefit of all Californians -- SB 1462 (Padilla). In October 2006, the Governor issued an executive order (S-21-06) and established the California Broadband Task Force to utilize California’s Internet technology for education, health care, and the other relevant applications. The Task Force was intended to bring together public and private stakeholders to remove barriers to broadband access, identify opportunities for increased broadband adoption, and enable the creation and deployment of new advanced communication technologies. On January 17, 2008, the Task Force published its final report and found that 96% of households have basic broadband access, placing California as a leader in broadband availability among all 50 states. The report also revealed that nearly 2,000 communities were still unable to access high-speed internet, only half of Californians have access to broadband at speeds greater than 10 Mbps, and even though availability rates are at 96%, just over half of California households use broadband. Among the report’s recommendations was that the governor continue to periodically convene the task force, in order to “monitor and provide feedback on both the recommendations contained in this report and other broadband initiatives underway in the state.” According to the author, SB 1462 will help the state continue its commitment to bring the economic benefits of high-speed Internet access to all of its citizens. The author states that the bill will maximize California’s opportunities to receive federal funds under the new National Broadband Plan, increase coordination of state resources for broadband networks, and ensure continuation of California’s leadership in broadband deployment and adoption.

Other Energy-related activities of note in 2010 included (1) the California Building Standards Commission adoption of the first-in-the-nation’s statewide Green Building Standard Code; (2) establishment of a California Solar Initiative Thermal Program by the Public Utilities Commission to provide incentives to promote the installation of solar water heaters by the U.S. Department of Energy awarding of up to $122 million over five years to the Joint Center for Artificial Photosynthesis to establish an Energy Innovation Hub led by the California Institute of Technology; (3) the awarding by the U.S. Department of Energy of $50 million to boost industrial carbon, capture and storage research and development; and (4) the awarding of $5 million by the U.S. Department of Energy for projects that could improve energy offering in buildings by reducing loads on air conditioners; reduce costs associated with generating electricity from solar power and power density of electric machines; and (5) the approval by the California Energy Commission (CEC) to provide $33 million to the Statewide Community Development Authority to administer the energy upgrade California and approval by the CEC of the loans totaling $13.4 million for the state’s Clean Energy Business Financing Program for California based manufacturers of solar products. Also, California has currently over 270 renewable energy projects seeking to build and run facilities in the state. The CEC has approved seven solar projects and 12 large wind and photosynthesis projects to break ground.

Other Energy/Utilities legislation of note that was enacted included SB 1035 (Hancock) authorizing a municipal utility district to collect delinquent fees incurred by a commercial or residential lessee, tenant, or subtenant by charging the delinquent fees to the property owner’s tax roll; SB 1040 (Padilla) allowing telecommunications carriers to collect an additional $125 million for the California Advanced Services Fund to encourage deployment of advanced communications services in California; SB 1198 (Huff) delaying implementation of the CEC’s television energy use labeling requirement until July 1, 2011, to allow the Federal Trade Commission (FTC) time to develop and adopt its own national energy efficiency labeling rule for televisions, and after that time, if the FTC acts, FTC rules suspend CEC rules. If the FTC does not act, CEC rules prevail; SB 1340 (Kehoe) expanding the use of the voluntary contractual assessment to finance electric vehicle charging infrastructure affixed on real property and expanding the Property Assessed Clean Energy Reserve program to assist local jurisdictions in financing the installation of electric vehicle charging infrastructure; SB 1375 (Price) requiring local telephone corporations to provide every subscriber of tariffed residential basic exchange service, rather than every existing and newly installed residential telephone connection, with access to 911 emergency services, and allowing a local telephone corporation to provide access to 911 emergency services for at least 120 days after disconnection of residential basic phone service for nonpayment of any delinquent account, instead of indefinitely; SB 1455 (Kehoe) requiring the CEC, by July 1, 2011, in consultation with the PUC, to develop and maintain an Internet Web site containing specific links to electrical corporation or local, publicly-owned electric utility Internet Web sites that contain information specific to plug-in hybrid or fully electric vehicles, or other Internet Web sites that include specified information; SB 1476 (Padilla) requiring an investor-owned utility (IOU) or publicly-owned utility (POU) using advanced metering (smart meters) to protect consumers energy usage data from an unauthorized access or disclosure, and prohibiting IOUs and POUs from certain activities; AB 510 (Skinner) increasing a cap on the amount of solar or wind-generated electricity that can be generated under the net-energy metering program from 2.5% to 5% of each utility’s aggregate peak demand; AB 1106 (Fuentes) authorizing the CEC to contract with small business financial development corporations to expend Alternative and Renewable Fuels and Vehicle Technology Program funds; AB 1315 (Fuentes) ensuring that the PUC fully participates in the Federal Communications Commission’s (FCC) proceeding when a forbearance petition is filed for a California Metropolitan Statistical Area (MSA) and providing the FCC with thorough and impartial data on the level of competition in that MSA; AB 1873 (Huffman) authorizing the State Treasurer, CalPERS, and the State Compensation Insurance Fund to invest in Property Assessed Clean Energy bonds; AB 1918 (Davis) requiring the PUC to require specified wireless telecommunications service providers to annually report on their progress in increasing contracting with women- and minority-owned businesses and disabled veteran business enterprises; AB 1947 (Fong) permitting a POU to implement a solar program that allows customers to offset part or all of their electricity demand, with a solar energy system not located on the premises of the consumer; AB 1954 (Skinner) authorizing the PUC to provide administrative pre-approval of utility costs for transmission lines that facilitate achieving the Renewables Portfolio Standard; AB 2037 (V. Manuel Perez) prohibiting a load-serving entity or local, publicly-owned electric utility from entering into, and the PUC from approving a long-term financial commitment for a new electrical generating facility constructed in California or in a shared pollution area, if that facility does not meet Best Available Control Technology standards and air pollution emission requirements; AB 2213 (Fuentes) replacing the definition of “residential” for California’s low-income residential telephone service with a definition of “household” and defining “household” as a residential dwelling that is the principal place of residence of the lifeline telephone service subscriber; AB 2514 (Skinner) requiring the PUC to determine appropriate targets, if any, for load-serving entities to procure energy storage systems; AB 2724 (Blumenfield) expanding, until January 1, 2013, the California Solar Initiative Program eligibility for any state agency for incentive payments for facilities sized up to five megawatts with a cap of 26 megawatts; and AB 2758 (Bradford) requiring the PUC to include in their required report to the Legislature, the renewable energy, wireless telecommunications, broadband, smart grid and rail projects as categories for which utilities should increase procurement from women, minority and disabled veteran business enterprises, as specified.

Vetoed Energy/Utilities legislation included SB 730 (Wiggins) which would have required the PUC to ensure that local and regional interests are considered when evaluating energy-efficiency investments; SB 1154 (Cedillo) which would have required the PUC to ensure that all applications for PUC-administered low-income programs include information about the applicant’s eligibility to qualify for the federal Earned Income Tax Credit; SB 1414 (Kehoe) which would have clarified the timeline and manner in which the PUC may extend the review period for a rehearing application; SB 1437 (Kehoe) which would have required a representative of the California Independent System Operator to annually appear before the appropriate policy committees of the Senate and Assembly; AB 1879 (Beall) which would have required the PUC to reconsider a 1986 decision that allows a utility to backbill small commercial customers for up to three years; and AB 1923 (Evans) which would have authorized the PUC to use funds dedicated for research and development from the California Solar Initiative for anti-theft technology to protect investments in solar energy systems.