**SENATE FLOOR ALERT**
August 20, 2018

TO:

Members, California State Senate

FROM:

California Chamber of Commerce
Building Owners and Managers Association of California
California Business Properties Association
California League of Food Producers
Greater Riverside Chamber of Commerce
International Council of Shopping Centers
Modesto Irrigation District
NAIOP – Commercial Real Estate Development Association
National Federation of Independent Business
Shell Energy North America

SUBJECT:

AB 893 (GARCIA, E.) CALIFORNIA RENEWABLES PORTFOLIO STANDARD
PROGRAM
THIRD READING
OPPOSE – AS AMENDED JULY 5, 2018

The California Chamber of Commerce and the organizations listed above must OPPOSE AB 893 (Garcia, E.),
which would impose a 3,000 megawatt (MW) geothermal procurement mandate on both public and investorowned utilities. This bill will significantly increase costs to selected California ratepayers by requiring the
utilities to invest in as-yet unbuilt and unplanned geothermal projects. It also threatens California jobs by
potentially forcing the utilities to meet the procurement mandate by purchasing out-of-state power and
purchasing geothermal at the expense of other renewable resources.
Unrealistic Procurement Numbers
As of the June 20 amendments, the procurement mandate under AB 893 was increased to 3,500 MW from an
already challenging 2,500 MW. Although we appreciate the author’s amendment of that number to 3,000 MW,
the fact remains that this is a significant amount of procurement that will challenge ratepayers and affect other
renewable jobs.
AB 893 requires all of this procurement on an expedited timeline. There are currently no large projects
underway, and, even the potential projects this bill seems to target—the Salton Sea in the Imperial Irrigation
District—are not projected to be this large, or built this fast.
This mandate will throw a wrench in the SB 350 (DeLeon, 2015) process, which requires that the Public Utilities
Commission (PUC) take a holistic approach to resource planning to ensure California meets its ambitious

 greenhouse gas (GHG) goals at the lowest possible cost while maintaining grid reliability. 1 While we appreciate
the author’s clarification that this procurement may be utilized to meet Renewable Portfolio Standard (RPS)
goals, the “least-cost, best-fit” project selection process is still the ideal to meet California’s ambitious goals. 2
AB 893’s mandate thwarts that process and goal by creating a procurement process outside of competitive
bidding and forcing geothermal over other renewables. In addition, AB 893 does not recognize the legislature’s
directive to the PUC, now codified at PUC § 913.1, to undertake and report on attempts to reduce and contain
utility cost and rate increases. 3
Reduces Investment in Renewables and Threatens California Jobs
If the utilities are forced into this new procurement scheme, two things are likely: (1) utilities will not be able to
procure other renewable resources, such as solar, because the 3,000 MW goal will be challenging to meet;
and (2) they will likely need to purchase power from out-of-state geothermal to satisfy this amount on this
timeline. California has made strides to ensure that the RPS requirements are technology-neutral, not favoring
one industry over another, while meeting our ambitious renewable goals. This bill would throw that process
out the window, and force the utilities to shift toward a majority geothermal system, threatening ongoing
renewable projects and California jobs in the process.
Per kilowatt hour electricity rates in California are already among the highest in the nation. Without competitive
bidding and cost containment, both of which are impeded by AB 893, utilities will be forced to purchase more
expensive power and pass the increased rates along to California ratepayers. The outsized procurement
number of 3,000 MW seems unrealistic, and imposes geothermal above all others in the RPS process.
California should continue to be technology-neutral to encourage innovation in the development of renewable
energy resources.
For these reasons and others, we must respectfully OPPOSE AB 893 (Garcia, E.).
cc:

The Honorable Eduardo Garcia
Catalina Hayes-Bautista, Office of the Governor
Nidia Bautista, Senate Energy, Utilities & Communications Committee
Senate Republican Caucus
District Office, Members, California State Senate

LBS: mm

1
The legislature has already mandated that the PUC “identify a diverse and balanced portfolio of resources needed to ensure a reliable
electricity supply that provides optimal integration of renewables in a cost-effective manner.” PUC § 454.51. This directive includes,
among other factors, minimizing impacts on ratepayers’ bills and ensuring system and local reliability. PUC § 454.52.
2
http://cpuc.ca.gov/Utility_Scale_RFO/
3
http://www.cpuc.ca.gov/uploadedFiles/CPUCWebsite/Content/About_Us/Organization/Divisions/Office_of_Governmental_Affairs/Legisl
ation/2018/SB%20695%20Report%202018%20FINAL.pdf