Packet Materials. DATE: March 22, 2017 Item No. 5. LOCAL AGENCY FORMATION COMMISSION Agenda Packet Contents List

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1 Packet Materials DATE: March 22, 2017 Item No. 5 LOCAL AGENCY FORMATION COMMISSION Agenda Packet Contents List Memorandum from Jason Fried, Executive Officer Senate Bill No. 618 Load Serving Entities: Integrated Resource Plans California Community Choice Association Letter, dated 3/1/2017 Completed by: Alisa Somera Date: March 17, 2017 (This list reflects the explanatory documents provided.)

2 San Francisco Local Agency Formation Commission City Hall 1 Dr. Carlton B. Goodlett Place, Room 244 San Francisco, CA Tel Fax COMMISSONERS Cynthia Pollock, Vice-Chair Member of the Public TO: FROM: LAFCo Commissioners and Alternate Commissioner Jason Fried, Executive Officer Sandra Lee Fewer Board of Supervisors Hillary Ronen Board of Supervisors Edwin Lindo Member of the Public- Alternate DATE: March 22, 2017 SUBJECT: Item 5: Community Choice Aggregation (CCA) Activates Report - C. Status update on state legislation Jason Fried Executive Officer Nancy Miller Legal Counsel Alisa Somera Clerk On February 17, 2017 State Senator Steven Bradford (Inglewood) introduced SB 618 (attachment) that would change the rules on how CCA integrated resource plans (IRP) are handled by the CPUC. Currently IRP s only need to be certified by the CPUC and this bill would also require the CPUC give them final approval. This runs counter to one of the key pillars of CCA programs, that they be locally controlled. If this bill gets enacted SFPUC would lose local control over parts of its CCA program, possible impacting its ability to deliver on the goals of the program. For this reason the City and County of San Francisco and California Community Choice Association (CalCCA) have already taken an Oppose position to this bill. Attached is the letter from CalCCA which goes into more detail on how this impacts CCA and why we should oppose the bill. RECOMMENDATION: Take an Oppose position to SB 618 (Bradford). Attachments

3 SENATE BILL No. 618 Introduced by Senator Bradford February 17, 2017 An act to amend Section of the Public Utilities Code, relating to electricity. legislative counsel s digest SB 618, as introduced, Bradford. Load-serving entities: integrated resource plans. Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to adopt a process for each load-serving entity, defined as including electrical corporations, electric service providers, and community choice aggregators, to file an integrated resource plan and a schedule for periodic updates to the plan to ensure that load-serving entities accomplish specified objectives. Existing law requires each load-serving entity to prepare and file an integrated resource plan consistent with those objectives on a time schedule directed by the commission and subject to commission review. This bill would require that the integrated resource plan filed by a load-serving entity be reviewed and approved by the commission. The bill would require that the plans of all load-serving entities contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner and meets the specified emissions limits for greenhouse gases in proportion to each load-serving entity s load share so that there is no cost shifting among load-serving entities. The bill would declare that these revisions are declaratory of existing law. 99

4 SB Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime. Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. The people of the State of California do enact as follows: line 1 SECTION 1. Section of the Public Utilities Code is line 2 amended to read: line (a) (1) Commencing in 2017, and to be updated line 4 regularly thereafter, the commission shall adopt a process for each line 5 load-serving entity, as defined in Section 380, to file an integrated line 6 resource plan, and a schedule for periodic updates to the plan, to line 7 ensure that load-serving entities do the following: line 8 (A) Meet the greenhouse gas emissions reduction targets line 9 established by the State Air Resources Board, in coordination with line 10 the commission and the Energy Commission, for the electricity line 11 sector and each load-serving entity that reflect the electricity line 12 sector s percentage in achieving the economywide greenhouse gas line 13 emissions reductions of 40 percent from 1990 levels by line 14 (B) Procure at least 50 percent eligible renewable energy line 15 resources by December 31, 2030, consistent with Article 16 line 16 (commencing with Section ) of Chapter 2.3. line 17 (C) Enable each electrical corporation to fulfill its obligation to line 18 serve its customers at just and reasonable rates. line 19 (D) Minimize impacts on ratepayers bills. line 20 (E) Ensure system and local reliability. line 21 (F) Strengthen the diversity, sustainability, and resilience of the line 22 bulk transmission and distribution systems, and local communities. 99

5 3 SB 618 line 1 (G) Enhance distribution systems and demand-side energy line 2 management. line 3 (H) Minimize localized air pollutants and other greenhouse gas line 4 emissions, with early priority on disadvantaged communities line 5 identified pursuant to Section of the Health and Safety Code. line 6 (2) (A) The commission may authorize all source procurement line 7 for electrical corporations that includes various resource types line 8 including demand-side resources, supply side resources, and line 9 resources that may be either demand-side resources or supply side line 10 resources, taking into account the differing electrical corporations line 11 geographic service areas, to ensure that each load-serving entity line 12 meets the goals set forth in paragraph (1). line 13 (B) The commission may approve procurement of resource line 14 types that will reduce overall greenhouse gas emissions from the line 15 electricity sector and meet the other goals specified in paragraph line 16 (1), but due to the nature of the technology or fuel source may not line 17 compete favorably in price against other resources over the time line 18 period of the integrated resource plan. line 19 (b) (1) Each load-serving entity shall prepare and file an line 20 integrated resource plan consistent with paragraph (2) of line 21 subdivision (a) on a time schedule directed by the commission and line 22 subject to commission review. review and approval. line 23 (2) Each electrical corporation s plan shall follow the provisions line 24 of Section line 25 (3) The plan of a community choice aggregator shall be line 26 submitted to its governing board for approval and provided to the line 27 commission for certification, certification and approval, consistent line 28 with paragraph (5) of subdivision (a) of Section 366.2, and shall line 29 achieve the following: line 30 (A) Economic, reliability, environmental, security, and other line 31 benefits and performance characteristics that are consistent with line 32 the goals set forth in paragraph (1) of subdivision (a). line 33 (B) A diversified procurement portfolio consisting of both line 34 short-term and long-term electricity and electricity-related and line 35 demand reduction products. line 36 (C) The resource adequacy requirements established pursuant line 37 to Section 380. line 38 (4) The plan of an electric service provider shall achieve the line 39 goals set forth in paragraph (1) of subdivision (a) through a 99

6 SB line 1 diversified portfolio consisting of both short-term and long-term line 2 electricity, electricity-related, and demand reduction products. line 3 (5) The plans of all load-serving entities shall contribute to a line 4 diverse and balanced portfolio of resources needed to ensure a line 5 reliable electricity supply that provides optimal integration of line 6 renewable energy in a cost-effective manner and meets the line 7 emissions limits for greenhouse gases described in subdivision (a) line 8 of Section in proportion to each load-serving entity s load line 9 share so that there is no cost shifting among load-serving entities. line 10 (c) To the extent that additional procurement is authorized for line 11 the electrical corporation in the integrated resource plan or the line 12 procurement process authorized pursuant to Section 454.5, the line 13 commission shall ensure that the costs are allocated in a fair and line 14 equitable manner to all customers consistent with , that line 15 there is no cost-shifting among customers of load-serving entities, line 16 and that community choice aggregators may self-provide renewable line 17 integration resources consistent with Section line 18 (d) In order to eliminate redundancy and increase efficiency, line 19 the process adopted pursuant to subdivision (a) shall incorporate, line 20 and not duplicate, any other planning processes of the commission. line 21 SEC. 2. The amendment of Section of the Public line 22 Utilities Code made by this act does not constitute a change in, line 23 but is declaratory of, existing law. line 24 SEC. 3. No reimbursement is required by this act pursuant to line 25 Section 6 of Article XIIIB of the California Constitution because line 26 the only costs that may be incurred by a local agency or school line 27 district will be incurred because this act creates a new crime or line 28 infraction, eliminates a crime or infraction, or changes the penalty line 29 for a crime or infraction, within the meaning of Section of line 30 the Government Code, or changes the definition of a crime within line 31 the meaning of Section 6 of Article XIII B of the California line 32 Constitution. O 99

7 California Califoia Community Choice Association March 1, 2017 Board Officers Barbara Hale, CleanPowerSF President Geof Syphers, Sonoma Clean Power Vice President The Honorable Ben Hueso, Chair Senate Energy, Utilities & Communications Committee State Capitol, Room 4035 Sacramento, CA Re: SB 618 (Bradford) OPPOSE Dawn Weisz, MCE Secretary Tom Habashi, Silicon Valley Clean Energy Treasurer Joseph Moon, Apple Valley Choice Energy Jason Caudle, Lancaster Choice Energy Jan Pepper, Peninsula Clean Energy Matthew Marshall, Redwood Coast Energy Authority Affiliate Members Central Coast Power (Santa Barbara, San Louis Obispo, and Ventura County) City of Corona City of Hermosa Beach City of San Jose County of Los Angeles County of Placer Valley Clean Energy (City of Davis and Yolo County) California Community Choice Association 1125 Tamalpais Ave San Rafael, CA (415) Dear Senator Hueso, The California Community Choice Association (CalCCA) writes to oppose SB 618 (Bradford), because it is unnecessary and contrary to the legislative and regulatory framework governing local control of Community Choice Aggregators (CCAs). The California Public Utilities Commission (CPUC) is already charged with certifying the resource plan of each CCA to ensure that it meets State law requirements. CCAs have a mission to provide reliable, clean and affordable power while addressing the local needs of their communities. CalCCA's membership consists of 7 preoperational and 8 CCA members operating in more than 10 coastal and inland counties currently serving a peak load of 1917 MW and growing. CCAs are local, non-profit agencies that are formed to respond to and invest in the needs of their communities. They are established by local governments to advance local policy priorities including procuring GHG-free renewable energy beyond the renewable portfolio standard, providing ratepayers with energy choice, providing less expensive energy and creating local programs for energy efficiency, storage and distributed generation, all while exercising local control over energy procurement. CCAs are governed and operated by boards consisting entirely of local elected officials who are directly accountable to their ratepayers/voters. Members of the community and public are active in this process and often show up to participate in city council meetings to hold accountable those ultimately responsible for the CCA. In contrast, Investor Owned Utilities (IOUs) are for-profit corporations with a legal obligation to maximize profits for their shareholders. CPUC and CEC regulators exist, in part, to balance this motivation with the public interest. The CPUC must regulate IOUs to provide a degree of consumer protection including in the context of resource planning compliance with the RPS. The CCAs were proud to support SB 350 (DeLeon, Clean Energy and Pollution Reduction Act of 2015), as it shared our mission of procuring more in-state renewable resources, while encouraging energy efficiency programs for our customers. SB 350 requires CCAs to participate in the same renewable portfolio standard program, subject to the same terms and conditions as an investor owned utility (IOU). In addition, all CCAs must submit an Integrated Resource Plan (IRP)

8 Page 2 of 2 with the CPUC demonstrating that the CCA will meet regulatory mandates related to RPS, Greenhouse Gas reductions and Resource Adequacy. These plans are thoughtfully and substantively deliberated upon then approved by our own public governing boards in an open process. Given CCAs are locally governed electricity providers without profit motive, SB 350 did not require CPUC approval of CCA IRPs. Rather, CCAs are required to submit these plans to the CPUC for certification. This ensures that CCAs meet the requirements of state law. Thus, like the California Energy Commission in the case of publicly owned utilities, the CPUC is already charged with ensuring that CCAs meet their statutory obligations. SB 618 vests the CPUC with authority to approve or disapprove a CCA's IRP beyond assuring compliance with the requirements of state law. This unduly interferes with the ability of CCAs to locally control electricity procurement, subject to state mandates applicable to all load serving entities. Finally, SB 350 became effective law on January 1, 2015, only 14 months ago. The CPUC is still in the process of implementing the CCA IRP process as directed in SB 350 and approved by the Senate. Thus, nothing has occurred since the passage of SB 350 that would warrant a change to the CCA IRP process established in The Legislature should allow the CCA IRP process it created in SB 350 to operate before determining whether changes are needed. For the above reasons, CalCCA must respectfully oppose SB 618 and asks that you not support the bill when it comes before your committee. Sincerely, Barbara Hale President CalCCA Cc: Members of the Senate Energy, Utilities & Communications Committee Jay Dickinson, Consultant, Senate Energy, Utilities & Communications Committee Nidia Bautista, Consultant, Senate Energy, Utilities & Communications Committee Kerry Yoshida, Republican Consultant, Senate Energy, Utilities & Communications Committee 2