AB 401

Under current law, an electric utility or retail electric cooperative (electric

provider) is subject to certain requirements for ensuring that, in a given year, a

specified percentage of the electricity that the electric provider sells to retail

customers or members is derived from renewable resources. Such requirements are

commonly referred to as renewable portfolio standards (RPSs). Current law also

allows an electric provider to create a credit based on the amount of electricity

derived from renewable resources that the electric provider provides to its customers

or members in a year and that exceeds the RPS for that year. Subject to certain

restrictions, an electric provider that creates a credit may use the credit in a

subsequent year to help comply with an RPS, or sell the credit to another electric

provider to help the buyer comply with an RPS.

This bill allows an electric provider to create an additional credit that the

electric provider can use or sell like the credit allowed under current law. The bill

requires the Public Service Commission (PSC) to promulgate rules that allow an

electric provider to create a credit based on the electric provider's use in a year of the

following resources: solar energy, including solar water heating and direct solar

applications such as solar light pipe technology; geothermal energy; biomass or

biogas. However, the electric provider's use of the foregoing resources is eligible for

a credit only if both of the following are satisfied: 1) the use displaces the electric

provider's use of electricity that is derived from coal, oil, nuclear power or natural

gas, except for natural gas used in a fuel cell; and 2) the displacement is verifiable

and measurable, as determined by the PSC. In addition, the PSC's rules must also

allow an electric provider to create a credit based on a customer's or member's use

of resources that satisfies the foregoing requirements.

The bill also eliminates a requirement under current law that a credit must be

used in a year subsequent to the year in which the credit is created or purchased.

As a result, under the bill, a credit may be used in the same year that it is created

or purchased, or in a subsequent year.