After holding a series of workshops and publishing two draft regulations, California’s Air Resources Board (ARB) is poised to adopt new regulations governing the assessment of penalties against publicly owned utilities (POUs) for failure to comply with the state’s Renewables Portfolio Standard (RPS). Last month, the California Energy Commission (CEC), also updated its regulations governing RPS enforcement against POUs. Together, efforts made by state agencies to revamp enforcement regulations could signal a new regulatory focus on POU compliance with the state’s renewable energy procurement mandates.

Background:

Initially, California’s RPS included only voluntary targets for renewable energy procurement by POUs. Under Senate Bill 2 (2011) POUs and retail electricity sellers were required to meet hard procurement targets for the first time:

  • 20% eligible renewable energy by December 31, 2013
  • 25% eligible renewable energy by December 31, 2016
  • 33% eligible renewable energy by December 31, 2020

Senate Bill 350, signed by Governor Brown in October 2015, imposed even more aggressive mandatory targets on POUs and retail sellers beyond 2020:

  • 40% eligible renewable energy by December 31, 2024
  • 45% eligible renewable energy by December 31, 2027
  • 50% eligible renewable energy by December 31, 2030

New Enforcement Regulations:

By statute, the CEC and ARB have enforcement authority over POUs, while the California Public Utilities Commission (CPUC) oversees enforcement against investor-owned utilities and all other retail sellers. Statutes require that the CEC first determine whether a POU has violated the RPS, and then refer the violation to ARB. The ARB’s most recent draft regulation indicates that it will assess civil penalties against non-compliant POUs at a level “comparable, but not necessarily identical” to the penalties assessed by the CPUC against retail sellers. The CPUC caps penalties against retail sellers at $50 per REC, times 50 percent of the number of RECs required for the compliance period in which the retail seller was deficient.

ARB expects to begin the formal comment period later this spring, and adopt its final regulation this Summer.