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Copyright 2008-10,
CaliforniaPHOTON.com
V 1.06
site last updated: 6/26/2010

C a l i f o r n i a   P H O T O N

Proposition 7 Language

How it Changes California Law

Supporters and opponents of Proposition 7 have filed lawsuits in Sacramento Superior Court regarding the wording of the arguments that will appear in the Official Voter Information Guide which is mailed to registered California voters. The language of the Proposition itself was finalized in late 2007. The following attempts to clarify questions about the meaning of the Proposition's provisions by examining that language.

"With a generating capacity of 30 megawatts or more"

One of the points raised by opponents is that the Proposition defines phrase "solar and clean energy" in a way that suggests that solar electric generation facilities "with a generating capacity of 30 megawatts or more", will be excluded from counting toward the Renewable Energy Portfolio Standard. Rooftop photovoltaic panels, whose installations typically range from 1 to 100 kilowatts, would be excluded from the Proposition's subsidies.

Ralph Cavanaugh of the Natural Resources Defense Council, has criticized the language of the Proposition:

The opposition hinges on points that might seem rather obscure to the average voter. The initiative would make important changes to the sighting process for new power plants. But the main bone of contention is the assertion that the initiative would change the definition of an "eligible renewable resource."

"For reasons that I still don't understand, and the campaign has never explained, they changed the definition of 'eligible renewable resource' under the California Renewable Energy Mandate," said Cavanaugh, who is an attorney. "They added the phrase 'solar and clean energy,' which is the initiative brand. Solar and clean energy plants are defined as '30 megawatts of greater.'"

Cavanaugh and McMahon said this would mean that solar projects smaller than that wouldn't count towards [ ] the total Renewable Energy Portfolio (RPS). Government and business could lose out on subsidies, especially since the majority of solar projects are smaller than that. Part of the promise of solar is that it is small and modular, they said, capable of advancing one rooftop at a time. Cavanaugh said there could also be implications for wind energy, which also often happens on a small scale. The very biggest single wind turbines on [averge] create three megawatts of energy, he said.

1  

"Solar and clean energy" = 30 Megawatts Plus ?

The passage of the Proposition that defines a "Solar and clean energy plant" reads as follows:

An "eligible renewable energy resource" is one whose use by a utility counts toward the renewable energy portfolio targets. Here, the Proposition equates it with a "solar and clean energy facility" which differs by only one word from a "solar and clean energy plant", whose definition includes the 30 megawatt threshold:

"Eligible renewable energy resource" means an electric generating a solar and clean energy facility that meets the definition of "in-state renewable electricity generation facility" in Section 25741 of the Public Resources Code, ...
Proposition 7, SEC. 6

Is the term "facility" in the definition of "eligible renewable energy resource" a term of art designed to give Proposition supporters a basis for denying that the measure excludes small renewable energy producers from counting towards the Renewable Energy Portfolio Standard?

"Retail Seller" Replaces "Electrical Corporation"

Proposition 7 expands the definition of "retail seller" to include a class of entities that existing law excludes: "local publicly owned electric utilit[ies]". It also replaces "electrical corporation" with "retail seller" in many instances, most of them specifying powers given the "commission" (CPUC) or the "energy commission" (CEC) to regulate the entity in question. "Retail seller" is far more inclusive than "electrical corporation", the former being defined as:

... an entity engaged in the retail sale of electricity to end-use customers located within the state, ...
Proposition, SEC. 7

Might the definition of "retail seller" be construed to include micro-power generators selling electricity back to the utilities -- as would be commonplace under a reformed net metering regime? Is the language of Proposition 7 crafted to pre-empt the changes to net metering that would level the playing field in favor of micro-power generators?

Meager, Discretionary Penalty Structure

Proposition 7 limits the fines that the CPUC can impose on utilities that fail to purchase enough "solar and clean energy" to 1 cent per kWh -- less than one-tenth the retail price of electricity in California in the current market.

(i) The commission shall impose annual penalties up to the amount of the shortfall in kilowatt hours multiplied by 1 cent ($0.01) per kilowatt hour on any retail seller that fails to meet the annual procurement targets established pursuant to Section 399.15. The commission shall not cap the penalty that may be imposed on a retail seller under this section.
Proposition 7, SEC. 9 (emphasis added)

Does "up to" mean that the commission is free to impose any penalty so long as it is not greater than the 1 cent per kWh times the shortfall? If so, the cap mentioned in the second sentence is meaningless. Even if the commission were to assess the maximum penalty for shortfalls, would the specified rate amount to anything but a mild incentive to meet the target?

Waste Incinerator in Stanislaus County = "solar and clean energy facility"

Although Proposition 7 makes significant changes to Section 399.11, it does not change the special exemption given to of a geographically-limited class of solid waste incinerators, which meet its definition of a "solar and clean energy facility".

(3) A facility engaged in the combustion of municipal solid waste shall not be considered an eligible renewable energy resource unless it is located in Stanislaus County and was operational prior to September 26, 1996.
Proposition 7, SEC. 7

Effect on Electricity Rates

The Proposition, while claiming that it will limit rate increases to more than 3 percent, allows costs for long-term contracts with its "clean and solar"-brand energy suppliers to be passed on as rate increases to rise to "no more than to 10 percent over the market price".

The Legislative Analyst Office finds the that effect on electricity rates will be unpredictable:

Declares Limited Impact on Ratepayer Electricity Bills. In its findings and declarations, the measure states that, in the “short term,” California’s investment in solar and clean energy (which would include the implementation of the measure) will result in no more than a 3 percent increase in electricity rates for consumers. However, the measure includes no specific provisions to implement or enforce this declaration. 2  

Unequal Playing Field, by Decree

Proposition 7's only mention of distributed generation (the alternative to industrial-scale solar) is to say that it should be considered as an alternative to the building of transmission facilities (the need for which distributd generation reduces) except when such facilities are needed for "solar and clean energy plants". In other words, industrial-scale solar is to be built in preference to distributed solar, even if it can't compete on the merits of cost, reliability, and environmental impact.

25563. In considering an application for a certificate for an electric transmission facility pursuant to Section 25560, the commission shall consider cost-effective alternatives to transmission facilities that meet the need for an efficient, reliable, and affordable supply of electricity, including, but not limited to, demand-side alternatives such as targeted energy efficiency, ultraclean distributed generation, as defined in Section 353.2 of the Public Utilities Code, and other demand reduction resources. The provisions of this section shall not apply to any electrical transmission line required to be constructed, modified or upgraded to provide transmission from a solar and clean energy plant.
Proposition 7, SEC. 24

Public Utilities to Comply With RPS

Under the current Public Utilities Code, public utilities -- primarily municipal utilities -- are not required to comply with the state's Renewable Portfolio Standard (RPS). Proposition changes this, making public utilities comply with the RPS defined in Section 387.

(e) Institute a rulemaking proceeding to determine the manner in which a local publicly owned electric utility will comply with Section 387 and implement the renewables portfolio standard program. The Energy Commission shall utilize the same processes and have the same powers to enforce the renewables portfolio standard program with respect to local publicly owned electric utilities as the commission has with respect to retail sellers, including but not limited to those processes and powers specified in Sections 399.14 and 399.15 related to the review and adoption of a renewable energy procurement plan, establishment of flexible rules for compliance, and imposition of annual penalties for failure to comply with a local publicly owned electric utility's renewable energy procurement plan. The Energy Commission shall not have any authority to approve or disapprove the terms, conditions or pricing of any renewable energy resources contract entered into by a local publicly owned electric utility, or authority pursuant to Section 2113.
Proposition 7, SEC. 8

Subsidy for Powerlines

Proposition 7 establishes a "Solar and Clean Energy Transmission Account" to be used for the procurement of property necessary for and the construction of new power lines.

Proposition 7 pays penalties against the utilities for missing RPS targets to the Transmission Account:

(i) ... All penalties assessed and collected pursuant to this section shall be paid or transferred annually to the Solar and Clean Energy Transmission Account administered by the Energy Commission pursuant to Section 25751.5 of the Public Resources Code and shall be used for programs designed to foster the development of new in-state transmission and renewable electricity generation facilities.
Proposition 7, SEC. 9

Proposition 7 allows the Energy Commission to transfer property bought with the Transmission Account to a private entity without a public bidding process:

25790. The Energy Commission may, for the purposes of this chapter, purchase and subsequently sell, lease to another party for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber, or otherwise dispose of any real or personal property or any interest in property. Any such lease or sale shall be conditioned on the development and use of the property for the generation and/or transmission of renewable energy. 25791. Any lease or sale made pursuant to this chapter may he made without public bidding but only after a public hearing.
Proposition 7, SEC. 30

References

1. Ballot language battle could be key for Prop. 7, CapitolWeekly.net, 8/6/2008 [cached]
2. Renewable Energy. Statute., lao.ca.gov,