By Marc Campopiano and Tim Henderson

On May 9, 2012, the California Energy Commission (CEC) adopted a revised Renewables Portfolio Standard (RPS) Eligibility Guidebook.  The update implements several key modifications to the RPS eligibility criteria, including but not limited to:

  •  Incorporating changes required by Senate Bill X1-2, which raised the RPS to 33 percent by 2020.  Signed by Governor Brown on April 12, 2011, Senate Bill X1-2 made other significant revisions to the RPS, including covering publicly-owned utilities for the first time, changing renewable delivery requirements, and expediting permit review for renewable projects by the California Department of Fish and Game.  Senate Bill X1-2 represented a substantial new statutory requirement that will have significant ramifications on energy markets, electricity generation and transmission line development in California and throughout the western states. The California Public Utilities Commission has estimated that a 33 percent by 2020 RPS will require almost a tripling of renewable generation from 27 terawatt hours in 2009 to 75 terawatt hours in 2020, potentially necessitating $115 billion in new infrastructure investment including at least seven new major transmission lines at a cost of $12 billion.  For a more detailed discussion of Senate Bill X1-2, see the recent Latham & Watkins Client Alert.
  • Reflecting the recent suspension of biomethane as an RPS-eligible renewable fuel source.  The suspension is discussed further in a recent Latham & Watkins Client Alert
  • Limiting the amount of nonrenewable fuel that can be counted as renewable under the RPS. 
  • Allowing facilities serving onsite load (distributed generation) to be RPS-certified and generate renewable energy credits (RECs), as long as they meet all eligibility requirements for the specific renewable fuel source used at the facility. 
  • Allowing facilities serving publicly owned utilities to count resources generated since January 1, 2011, for RPS purposes, as long as they apply to the CEC for RPS certification by October 1, 2012. 

The CEC also adopted a revised Overall Program Guidebook, which describes requirements and information related to the RPS and broader renewable energy programs at the CEC.