Governor Brown Signs Landmark Bill Raising California’s Renewables Portfolio Standard (RPS) to 33% by 2020

By David B. Amerikaner, Marc T. Campopiano, Michael J. Gergen, Laura Godfrey, David A. Goldberg and Jared W. Johnson

On April 12, 2011, Governor Jerry Brown signed Senate Bill 2 to increase California’s Renewables Portfolio Standard (RPS) to 33% by 2020, among the most aggressive renewable energy goals in the United States.  Originally enacted in 2002, California’s RPS previously set a 20% by 2010 standard.  The new RPS requires regulated sellers of electricity to procure 33% of their total energy supplies from certified renewable resources according to the following schedule:

Senate Bill 2 represents 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 (CPUC) has estimated that a 33% by 2020 RPS will require almost a tripling of current renewable generation, potentially necessitating $115 billion in new infrastructure investment and at least seven new major transmission lines.

In addition to raising the RPS to 33% by 2020, Senate Bill 2 implements a number of other important changes that will impact how renewable resources are developed, transmitted and purchased under the RPS program, including but not limited to:

• Expands the RPS to cover publicly owned utilities.
• Creates a new division within the California Department of Fish & Game to expedite review of renewable energy projects.
• Establishes maximum and minimum allocations of certain types of in-state and out-of-state renewable energy resources to satisfy RPS compliance.
• Allows the California Public Utilities Commission to delay compliance obligations if certain conditions occur that are beyond the control of regulated utilities.

Senate Bill 2 would also likely preempt a regulation promulgated last year by the California Air Resources Board (CARB), known as the Renewable Electricity Standard (RES).  CARB adopted the RES pursuant to its mandate to reduce greenhouse gases under the 2006 Global Warming Solutions Act after Governor  Schwarzenegger vetoed the 2009 RPS bills, as analyzed in a prior Client Alert by Latham & Watkins.

Latham & Watkins will be issuing a more detailed Client Alert addressing this legislation in the near future.  Please visit the Latham & Watkins website or contact any one of the authors of this post directly if you would like a copy of the Client Alert.