California’s Renewables Portfolio Standard (“RPS”) was originally established by the Legislature in 2002. Subsequent amendments resulted in a requirement for California’s investor-owned electric utilities (“IOUs”) to increase their sales of eligible renewable-energy resources by at least one percent of retail sales per year, so that 20% of their retail sales are derived from eligible renewable energy resources by 2010. Although Senate Bill 14 was approved by the Legislature and sent to Governor Schwarzenegger for signature on September 12, 2009, he expressed dissatisfaction with certain provisions and did not sign the Legislation. Instead the Governor issued Executive Order S-21-09 to establish the 33% by 2020 requirement applicable to all utilities, including publicly-owned municipal utilities and IOUs. Prior to the Executive Order, the California Public Utilities Commission (“CPUC”) and the California Energy Commission (“CEC”) were responsible for implementing and overseeing the RPS. However, the Executive Order shifted that responsibility to the California Air Resources Board (“CARB”), requiring it to adopt regulations by July 31, 2010. Under AB 32, CARB is required to regulate sources of greenhouse gasses to meet a state goal of reducing such emissions to 1990 levels by 2020, and to 80% below 1990 levels by 2050.
The Executive Order also stipulates that CARB may delegate to the CPUC and CEC any policy development or program implementation responsibilities that would reduce duplication and improve consistency with other energy programs. CARB is also authorized to increase the target and accelerate and expand the time frame. Until the CARB regulations are adopted, the CEC and CPUC will continue serving in their current roles to administer the 20% by 2010 standard. Technologies eligible for the RPS include photovoltaics, wind, solar thermal electric, biomass, geothermal, certain hydroelectric facilities, ocean wave, thermal and tidal energy, fuel cells using renewable fuels, landfill gas, and municipal solid waste conversion (not combustion). To qualify for the RPS the electricity either needs to be produced in-state, or produced out-of-state and delivered into the state. For most technologies, the facility must have been constructed after September 26, 1996 to be counted towards the RPS. Qualifying small power production facilities either located in California, or that began selling electricity to a California utility prior to September 26, 1996 under a standard contract authorized by the CEC, may also be counted for compliance with the RPS.