Senate BillPassed first housePublic Utilities
SB 540: Independent System Operator: independent regional organization: California Renewables Portfolio Standard Program.
What SB 540 does, verified December 7, 2025
This bill aims to establish an independent regional organization for managing California's energy markets. The organization will oversee voluntary energy markets, ensuring they serve the state's interests. The bill also establishes a regional energy market oversight council, which will approve or disapprove participation in these markets. The California Renewables Portfolio Standard program will remain unchanged, requiring all retail sellers to procure a minimum amount of electricity from eligible renewable energy resources. However, the independent regional organization will not be considered a balancing authority for this program. The bill also revises the rules governing the power exchange, which is responsible for providing an efficient competitive auction for electricity sales. Some of these provisions are deleted. Finally, the bill imposes a state-mandated local program, which req…
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Last action: Joint Rule 61(a)(13) suspended. (Ayes 60. Noes 20. Page 3128.) (2025-09-09)Alert me
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| Sep. 09, 2025 | Joint Rule 61(a)(13) suspended. (Ayes 60. Noes 20. Page 3128.) |
| Sep. 09, 2025 | Joint Rule 61(a)(13) suspended. |
| Jul. 15, 2025 | July 16 set for first hearing canceled at the request of author. |
| Jul. 10, 2025 | Re-referred to Coms. on U. & E. and APPR. pursuant to Assembly Rule 51. |
| Jun. 05, 2025 | In Assembly. Read first time. Held at Desk. |
Latest bill textAmended version, May 29, 2025 · 5,489 words
| Amended IN Senate May 29, 2025 |
| Amended IN Senate May 28, 2025 |
| Amended IN Senate May 01, 2025 |
| Amended IN Senate March 24, 2025 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Senate Bill
No. 540
| Introduced by Senators Becker and Stern |
February 20, 2025 |
An act to amend Sections 337 and 399.12 of, to add Sections 345.6 and 399.16.5 to, to repeal Section 352 of, and to repeal Article 4 (commencing with Section 355), Article 5 (commencing with Section 359), and Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
SB 540, as amended, Becker. Independent System Operator: independent regional organization: California Renewables Portfolio Standard Program.
(1) Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to ensure efficient use and reliable operation of the electrical transmission grid consistent with achieving planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. Existing law, the Clean Energy and Pollution Reduction Act of 2015, provides for the transformation of the ISO into a regional organization, with the approval of the Legislature, pursuant to a specified process. That process provides that modifications to the ISO’s governance structure, through changes to its bylaws or other corporate governance documents, will not become effective until the ISO, the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission (Energy Commission), the State Air Resources Board (state board), the Governor, and the Legislature take specified actions on or before January 1, 2019.
This bill would delete the above-described provisions providing for the transformation of the ISO into a regional organization. The bill would authorize the ISO and the electrical corporations that are participating transmission owners whose transmission systems are operated by the ISO, in lieu of the ISO managing related energy markets, as provided, ISO to use voluntary energy markets governed by an independent regional organization, only if specified requirements are satisfied. The bill would authorize the ISO, on or after January 1, 2028, to implement tariff modifications accepted by the Federal Energy Regulatory Commission to operate the energy markets whose rules are governed by an independent regional organization if the governing board of the ISO adopts a resolution, as specified, finding that each of the specified requirements have been, or will be, adopted by the independent regional organization. The bill would require the ISO to maintain the necessary technical capability to operate energy markets, as specified, and would require the ISO to continue its functions and responsibilities as a balancing authority, as provided.
This bill would establish the Regional Energy Market Oversight Council, which would be responsible for ensuring that participation in regional energy markets serves the interests of the state. The bill would require the council to approve or disapprove initial participation in the independent regional organization by electrical corporations and any other participating load-serving entities and determine whether electrical corporations and any other participating load-serving entities should be required to withdraw from an energy market governed by the independent regional organization. The bill would require the council to convene a duly noticed public meeting to make a finding of approval or withdrawal of participation in the independent regional organization and would require the council to disapprove of initial participation in the independent regional organization, or order withdrawal, if the council makes any of specified findings.
(2) Existing law establishes the California Renewables Portfolio Standard Program, which requires the PUC to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, at specified percentages of the total kilowatthours sold to their retail end-customers during specified compliance periods. Existing law defines “California balancing authority” and “balancing authority area” for purposes of the program.
This bill would provide that the above-described independent regional organization is not a California balancing authority and its geographic footprint is not a balancing authority area for purposes of the program.
The program, consistent with the goals of procuring the least-cost and best-fit eligible renewable energy resources that meet project viability principles, requires that all retail sellers procure a balanced portfolio of electricity products from eligible renewable energy resources, as specified, referred to as the portfolio content requirements.
This bill would require, in making determinations regarding the eligibility of products to satisfy the portfolio content requirements, the Energy Commission to require, at a minimum, resources that do not have a first point of interconnection to a California balancing authority to demonstrate either that the resource operates under a pseudo-tie agreement or dynamic scheduling agreement with the Independent System Operator of another California balancing authority, or that the resource has secured, and exercised its rights to, firm transmission necessary to deliver its output to a California balancing authority without substituting electricity from another source.
(3) Existing law requires the Power Exchange to provide an efficient competitive auction, open on a nondiscriminatory basis to all suppliers, that meets the loads of all exchange customers at efficient prices, and authorizes the Power Exchange governing board to form appropriate technical advisory committees composed of market and nonmarket participants to advise the governing board on relevant issues.
This bill would delete these provisions.
(4) Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because certain provisions of this bill would be part of the act and a violation of a PUC action implementing the bill’s requirements would be a crime, the bill would impose a state-mandated local program.
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.
The people of the State of California do enact as follows:
SECTION 1.
Section 337 of the Public Utilities Code is amended to read:337.
(a) The Independent System Operator governing board shall comprise a five-member independent governing board of directors appointed by the Governor and subject to confirmation by the Senate. Any reference in this chapter or in any other provision of law to the Independent System Operator governing board means the independent governing board appointed under this subdivision.(b) A member of the independent governing board appointed under subdivision (a) may not be affiliated with any actual or potential participant in any market administered by the Independent System Operator.
(c) (1) All appointments shall be for three-year terms.
(2) There is no limit on the number of terms that may be served by any member.
(d) The Oversight Board shall require the articles of incorporation and bylaws of the Independent System Operator to be revised in accordance with this section, and shall make filings with the Federal Energy Regulatory Commission as the Oversight Board determines to be necessary.
(e) For purposes of the initial appointments to the Independent System Operator governing board, as provided in subdivision (a), the Governor shall appoint one member to a one-year term, two members to a two-year term, and two members to a three-year term.
SEC. 2.
Section 345.6 is added to the Public Utilities Code, to read:345.6.
(a)(1) The independent regional organization is a nonprofit corporation whose governance documents, and the tariff approved by the Federal Energy Regulatory Commission, include obligations to do both of the following: an obligation to
(B)Manage energy markets in a manner that is consistent with all of the following:
(i)Making the most efficient use of available energy resources.
(ii)Reducing, to the extent possible, overall economic cost to consumers.
(iii)Complying with applicable state laws intended to protect the public’s health and the environment.
(iv)Maximizing availability of existing electrical generation resources necessary to meet the needs of electricity consumers.
(v)Conducting internal operations in a manner that minimizes cost impacts on ratepayers to the extent practicable and consistent with state law.
(vi)Communicating with all balancing area authorities participating in the independent regional organization in a manner that supports electrical reliability.
(2) The governing board of the independent regional organization maintains a public policy committee consisting of members of the governing board of the independent regional organization that engages with states, local power authorities, and federal power marketing administrations about potential impacts to state, local, or federal policies before it approves a tariff change for filing at the Federal Energy Regulatory Commission.
(3) The governing board of the independent regional organization maintains a relationship with and seeks input from a body of state regulators or similar body to receive the views of state regulators.
(4) The independent regional organization makes funding available for a consumer advocate organization that represents the interests of one or more consumer advocate offices authorized in state law, including the Public Advocate’s Office of the Public Utilities Commission, and facilitates engagement by those offices in the markets governed by the independent regional organization.
(5) The independent regional organization maintains an office of public participation to provide information and education to members of the public about issues and initiatives at the independent regional organization, including facilitating engagement in those processes.
(6) In addition to any independent market monitoring activity required by a Federal Energy Regulatory Commission order, the independent regional organization maintains access to independent market analysis for the governing board of the independent regional organization on the impacts of market dynamics or rule changes to minimize overall costs to end-use consumers.
(7) Market Subject to reasonable confidentiality provisions, market data is available to the commission and the Public Advocate’s Office of the Public Utilities Commission, and other states’ commissions and public advocate offices, to the same or greater extent as existed on December 31, 2024, for the markets governed by the Independent System Operator.
(8) There is a stakeholder process designed to provide nonbinding advice to the governing board of the independent regional organization.
(9) The independent regional organization is obligated to conduct meetings and make decisions in an open process with transparent, documented rationales, and all meetings of the governing board of the independent regional organization are publicly noticed and, excluding executive sessions, are available to remote participants, recorded and posted on the independent regional organization’s internet website, open to the public, and subject to open record requirements. The obligations in this paragraph shall be at least as stringent as substantially similar to those that apply to the Independent System Operator. Operator at the time a resolution is adopted pursuant to subdivision (b).
(10) The Independent System Operator continues to operate the energy markets, subject to the market rules determined by the independent regional organization as accepted by the Federal Energy Regulatory Commission.
(11) The market rules of the independent regional organization provide greenhouse gas emissions information and protocols sufficient to enable compliance with the requirements of any state agency.
(12) The independent regional organization does not do either of the following:
(A) Establish, operate, or rely on a centralized capacity market, or separate energy markets for dispatchable, firm, and intermittent resources.
(B) Establish any mandatory requirements relating to resource adequacy or reserve margins.
(13) Nothing in the tariff filed with the Federal Energy Regulatory Commission for the independent regional organization, or any other aspect of participating in energy markets overseen by the independent regional organization, shall cause California electrical corporations that are participating transmission owners, or load-serving entities, to be assessed any costs of fossil fuel generation resources that are not dispatched to serve California end-use loads or any costs to subsidize fossil fuel generation resources.
(14) The tariff filed with approved by the Federal Energy Regulatory Commission for the independent regional organization provides a procedure for unilateral withdrawal from the independent regional organization’s energy markets by any state or participant on their own accord, or as required by an applicable regulatory authority, with reasonable prior notice and without any penalties, unreasonable costs, or further approvals.
(15) The governance documents of the independent regional organization and the tariff approved by the Federal Energy Regulatory Commission authorize the use of the process outlined in subdivision (c) for determining initial participation in, and voluntary withdrawal from, the independent regional organization by electrical corporations and any other participating load-serving entities subject to the jurisdiction of the state.
(b) On or after January 1, 2028, the Independent System Operator may implement tariff modifications accepted by the Federal Energy Regulatory Commission to operate the energy markets whose rules are governed by an independent regional organization, as provided in subdivision (a), if the governing board of the Independent System Operator adopts a resolution finding that each of the requirements of paragraphs (1) to (15), inclusive, of subdivision (a) have been or will be adopted by the independent regional organization. The governing board of the Independent System Operator may adopt the resolution if the Independent System Operator satisfies all of the following requirements before adopting the resolution:
(1) The meeting is open to the public, available to remote participants, recorded, and posted on the Independent System Operator’s internet website.
(2) The Independent System Operator issues a notice of the meeting and proposed findings not less than 90 days before the meeting.
(3) The notice explains the basis for finding that each requirement of paragraphs (1) to (15), inclusive, of subdivision (a) will be met.
(4) The notice provides an opportunity for written comments on the proposed findings.
(5) The Independent System Operator issues written responses to any comments not less than 20 days before the meeting.
(6) After issuing the written responses described in paragraph (5), but before adopting the resolution, the Independent System Operator shall offer to provide testimony to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations on its proposed findings and responses and shall provide testimony to a joint hearing of those committees if those committees request testimony.
(c) (1) There is hereby created in the state government the Regional Energy Market Oversight Council, which shall be responsible for ensuring that participation in a regional energy market serves the interests of the state.
(2) The council shall be composed of the President of the Public Utilities Commission, the Chair of the Energy Commission, the Chair of Senate Committee on Energy, Utilities and Communications, the Chair of the Assembly Committee on Utilities and Energy, and the Attorney General. The Attorney General shall serve as chair of the council.
(3) The council shall approve or disapprove initial participation in the independent regional organization by electrical corporations and any other participating load-serving entities, and, at any point after initial approval, determine whether electrical corporations and any other participating load-serving entities should be required to withdraw from an energy market governed by the independent regional organization.
(4) The council shall convene a duly noticed public meeting to make a finding of approval or withdrawal of participation in the independent regional organization. The council shall review the proposed initial tariff filed by the independent regional organization, the tariff approved by the Federal Energy Regulatory Commission, and any subsequent actions that implicate the outcomes or requirements described in subparagraphs (A) to (E), inclusive. The council shall disapprove of initial participation in the independent regional organization, and shall order withdrawal, if the council finds that any of the conditions of subdivision (a) have not been satisfied or that participation in the independent regional organization causes or imposes any of the following outcomes or requirements:
(A) Any weakening or invalidation of requirements of the California Renewable Portfolio Standard (Article 16 (commencing with Section 399.11)), including, but not limited to, the requirements of Section 399.16, or of Section 454.53 or any other applicable renewable energy, resource adequacy, or integrated resource planning requirement in state law.
(B) Any requirement that the State of California, the Independent System Operator, or any participating load-serving entity, is required to procure or subsidize coal, natural gas, or any other fossil generation resources located outside of California.
(C) Any other requirement that results in adverse impacts on California’s resource planning, procurement, environmental, reliability, or other applicable public interest policies.
(D) Any requirement adopted by the independent regional organization or the federal government that results in costs to California ratepayers that exceed the economic benefits over a two-year period, and any requirement that imposes costs to California ratepayers for withdrawal from the independent regional organization, other than de minimis, necessary, and reasonable costs.
(E) Any requirement that does not fully compensate California ratepayers for costs they bear for the Independent System Operator to provide the independent regional organization any services, facilities, equipment, and property, including intellectual property, that does not hold California ratepayers and the Independent System Operator harmless, through indemnity or insurance, for claims arising from the operation of the independent regional market, and that does not provide for the first lien on all revenues associated with the transactions affecting California ratepayers.
(5) The Independent System Operator shall not implement tariff modifications pursuant to subdivision (b) unless the council makes a finding approving participation in the independent regional organization.
(6) Upon a determination by the council that withdrawal is required pursuant to paragraph (4), any participating load-serving entity shall unilaterally withdraw from the independent regional organization within 120 days.
(7) In addition to meeting on its own motion, the council shall meet and make a finding and determination within 30 days of receiving a resolution approved by both houses of the California State Legislature requesting that it meet to determine if the conditions justifying withdrawal have occurred.
(d) (1) The Independent System Operator shall maintain the necessary technical capability to operate energy markets in a manner that enables California electrical corporations, local publicly owned electric utilities, and other applicable market participants to withdraw from the markets governed by the independent regional organization and instead the Independent System Operator would provide separate market services for those entities.
(2) On or before February 1, 2028, Beginning two years after the implementation of the independent regional organization’s markets, and every two years thereafter, the Independent System Operator shall report to the commission, Energy Commission, and the legislative committees with primary jurisdiction over electrical corporations, in compliance with Section 9795 of the Government Code, on the status of the development and compliance with this section.
(3) (A) The Independent System Operator shall conduct a study of the impacts of implementing subdivision (a) on the creation or retention of jobs in California. The study shall specifically include the impact on jobs constructing and maintaining powerplants in California.
(B) The Independent System Operator shall host public workshops on the study methodology and the results of the study.
(C) The Independent System Operator shall complete the study on or before December 31, 2026. Upon completion, the Independent System Operator shall provide the study to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations.
(D) The results of the study shall be included in the Independent System Operator’s findings and resolution described in subdivision (b).
(E) The study submitted pursuant to subparagraph (C) shall be in compliance with Section 9795 of the Government Code.
(e) (1) The Independent System Operator shall continue its functions and responsibilities as a balancing authority as they existed before enactment of this section, and maintain compliance with applicable reliability standards as developed, adopted, and enforced by the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, or the Federal Energy Regulatory Commission.
(2) The Independent System Operator shall not change its balancing authority area from that which existed on December 31, 2024, except as follows:
(A) Standard accretion of new transmission lines, substations, and other equipment by participating transmission owners.
(B) The Independent System Operator may combine its balancing authority area with another California balancing authority if the combination is mutually agreed upon.
(C) The Independent System Operator may use its subscriber participating transmission owner tariff.
(3) Except as provided in subdivision (a) with respect to managing energy markets as provided in this section, this section does not change the responsibilities of the Independent System Operator under Section 345.5, including managing the transmission grid, planning for transmission expansion, reliability, resource adequacy, and complying with Section 25308 of the Public Resources Code.
(f) (1) This section does not change any requirement related to the California Renewables Portfolio Standard Program as provided in Article 16 (commencing with Section 399.11).
(2) This section does not change the policy of the state to reach specified targets by specified dates for supplying eligible renewable energy resources and zero-carbon resources as provided in subdivision (a) of Section 454.53.
(3) This section does not change the authority of the commission regarding resource adequacy, integrated resource planning, or procuring resources under Section 380, 454.51, 454.52, or any other law.
(g) The Independent System Operator may act as a vendor, through a contract with the independent regional organization, of market operation services, generation dispatch services, transmission operation services, transmission planning services, reliability coordination, balancing authority compliance or operation services, or other electrical system services.
(h) For purposes of this section, both of the following definitions apply:
(1) “Balancing authority,” “balancing authority area,” and “California balancing authority” have the same meanings as provided in Section 399.12.
(2) “Load-serving entity” has the same meaning as provided in Section 380.
SEC. 3.
Section 352 of the Public Utilities Code is repealed.SEC. 4.
Article 4 (commencing with Section 355) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.SEC. 5.
Article 5 (commencing with Section 359) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.SEC. 6.
Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code is repealed.SEC. 7.
Section 399.12 of the Public Utilities Code is amended to read:399.12.
For purposes of this article, the following terms have the following meanings:(a) “Conduit hydroelectric facility” means a facility for the generation of electricity that uses only the hydroelectric potential of an existing pipe, ditch, flume, siphon, tunnel, canal, or other manmade conduit that is operated to distribute water for a beneficial use.
(b) “Balancing authority” means the responsible entity that integrates resource plans ahead of time, maintains load-interchange generation balance within a balancing authority area, and supports interconnection frequency in real time.
(c) “Balancing authority area” means the collection of generation, transmission, and loads within the metered boundaries of the area within which the balancing authority maintains the electrical load-resource balance. The geographic footprint of the independent regional organization described in Section 345.6 is not a balancing authority area.
(d) “California balancing authority” means a balancing authority with control over a balancing authority area primarily located in this state and operating for retail sellers and local publicly owned electric utilities subject to the requirements of this article and includes the Independent System Operator (ISO) and a local publicly owned electric utility operating a transmission grid that is not under the operational control of the ISO. A California balancing authority is responsible for the operation of the transmission grid within its metered boundaries, which is not limited by the political boundaries of the State of California. The independent regional organization described in Section 345.6 is not a California balancing authority.
(e) “Eligible renewable energy resource” means an electrical generating facility that meets the definition of a “renewable electrical generation facility” in Section 25741 of the Public Resources Code, subject to the following:
(1) (A) An existing small hydroelectric generation facility of 30 megawatts or less shall be eligible only if a retail seller or local publicly owned electric utility procured the electricity from the facility as of December 31, 2005. A new hydroelectric facility that commences generation of electricity after December 31, 2005, is not an eligible renewable energy resource if it will cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(B) Notwithstanding subparagraph (A), a conduit hydroelectric facility of 30 megawatts or less that commenced operation before January 1, 2006, is an eligible renewable energy resource. A conduit hydroelectric facility of 30 megawatts or less that commences operation after December 31, 2005, is an eligible renewable energy resource so long as it does not cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(C) A facility approved by the governing board of a local publicly owned electric utility prior to June 1, 2010, for procurement to satisfy renewable energy procurement obligations adopted pursuant to former Section 387, shall be certified as an eligible renewable energy resource by the Energy Commission pursuant to this article, if the facility is a “renewable electrical generation facility” as defined in Section 25741 of the Public Resources Code.
(D) (i) A small hydroelectric generation unit with a nameplate capacity not exceeding 40 megawatts that is operated as part of a water supply or conveyance system is an eligible renewable energy resource only for the retail seller or local publicly owned electric utility that procured the electricity from the unit as of December 31, 2005. No unit shall be eligible pursuant to this subparagraph if an application for certification is submitted to the Energy Commission after January 1, 2013. Only one retail seller or local publicly owned electric utility shall be deemed to have procured electricity from a given unit as of December 31, 2005.
(ii) Notwithstanding clause (i), a local publicly owned electric utility that meets the criteria of subdivision (j) of Section 399.30 may sell to another local publicly owned electric utility electricity from small hydroelectric generation units that qualify as eligible renewable energy resources under clause (i), and that electricity may be used by the local publicly owned electric utility that purchased the electricity to meet its renewables portfolio standard procurement requirements. The total of all those sales from the utility shall be no greater than 100,000 megawatthours of electricity.
(iii) The amendments made to this subdivision by the act adding this subparagraph are intended to clarify existing law and apply from December 10, 2011.
(2) (A) A facility engaged in the combustion of municipal solid waste shall not be considered an eligible renewable energy resource.
(B) Subparagraph (A) does not apply to generation before January 1, 2017, from a facility located in the County of Stanislaus that was operational before September 26, 1996.
(f) “Procure” means to acquire through ownership or contract.
(g) “Procurement entity” means any person or corporation authorized by the commission to enter into contracts to procure eligible renewable energy resources on behalf of customers of a retail seller pursuant to subdivision (f) of Section 399.13.
(h) (1) “Renewable energy credit” means a certificate of proof associated with the generation of electricity from an eligible renewable energy resource, issued through the accounting system established by the Energy Commission pursuant to Section 399.25, that one unit of electricity was generated and delivered by an eligible renewable energy resource.
(2) “Renewable energy credit” includes all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, except for an emissions reduction credit issued pursuant to Section 40709 of the Health and Safety Code and any credits or payments associated with the reduction of solid waste and treatment benefits created by the usage of biomass or biogas fuels.
(3) (A) Electricity generated by an eligible renewable energy resource attributable to the use of nonrenewable fuels, beyond a de minimis quantity used to generate electricity in the same process through which the facility converts renewable fuel to electricity, shall not result in the creation of a renewable energy credit. The Energy Commission shall set the de minimis quantity of nonrenewable fuels for each renewable energy technology at a level of no more than 2 percent of the total quantity of fuel used by the technology to generate electricity. The Energy Commission may adjust the de minimis quantity for an individual facility, up to a maximum of 5 percent, if it finds that all of the following conditions are met:
(i) The facility demonstrates that the higher quantity of nonrenewable fuel will lead to an increase in generation from the eligible renewable energy facility that is significantly greater than generation from the nonrenewable fuel alone.
(ii) The facility demonstrates that the higher quantity of nonrenewable fuels will reduce the variability of its electrical output in a manner that results in net environmental benefits to the state.
(iii) The higher quantity of nonrenewable fuel is limited to either natural gas or hydrogen derived by reformation of a fossil fuel.
(B) Electricity generated by a small hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (A) or (D) of paragraph (1) of subdivision (e).
(C) Electricity generated by a conduit hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (B) of paragraph (1) of subdivision (e).
(D) Electricity generated by a facility engaged in the combustion of municipal solid waste shall not result in the creation of a renewable energy credit. This subparagraph does not apply to renewable energy credits that were generated before January 1, 2017, by a facility engaged in the combustion of municipal solid waste located in the County of Stanislaus that was operational before September 26, 1996, and sold pursuant to contacts entered into before January 1, 2017.
(i) “Renewables portfolio standard” means the specified percentage of electricity generated by eligible renewable energy resources that a retail seller or a local publicly owned electric utility is required to procure pursuant to this article.
(j) “Retail seller” means an entity engaged in the retail sale of electricity to end-use customers located within the state, including any of the following:
(1) An electrical corporation, as defined in Section 218.
(2) A community choice aggregator. A community choice aggregator shall participate in the renewables portfolio standard program subject to the same terms and conditions applicable to an electrical corporation.
(3) An electric service provider, as defined in Section 218.3. The electric service provider shall be subject to the same terms and conditions applicable to an electrical corporation pursuant to this article. This paragraph does not impair a contract entered into between an electric service provider and a retail customer before the suspension of direct access by the commission pursuant to Section 80110 of the Water Code.
(4) “Retail seller” does not include any of the following:
(A) A corporation or person employing cogeneration technology or producing electricity consistent with subdivision (b) of Section 218.
(B) The Department of Water Resources acting in its capacity pursuant to Division 27 (commencing with Section 80000) of the Water Code.
(C) A local publicly owned electric utility.
(k) “WECC” means the Western Electricity Coordinating Council of the North American Electric Reliability Corporation, or a successor to the corporation.
SEC. 8.
Section 399.16.5 is added to the Public Utilities Code, to read:399.16.5.
In making determinations regarding the eligibility of products to satisfy the requirements of paragraph (1) of subdivision (b) of Section 399.16, the Energy Commission shall require, at a minimum, either of the following demonstrations for resources that do not have a first point of interconnection to a California balancing authority:(a) The resource operates under a pseudo-tie agreement or dynamic scheduling agreement with the Independent System Operator of another California balancing authority.
(b) The resource has secured, and exercised its rights to, firm transmission necessary to deliver its output to a California balancing authority without substituting electricity from another source.
SEC. 9.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.Text of SB 540 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions