(a) (1) The Legislature finds and declares that, in addition to other ratepayer protection objectives, a principal goal of electric and natural gas utilities’ resource planning and investment shall be to minimize the cost to society of the reliable energy services that are provided by natural gas and electricity, and to improve the environment and to encourage the diversity of energy sources through improvements in energy efficiency, the development of renewable energy resources, such as wind, solar, biomass, and geothermal energy, and widespread transportation electrification.

(2) The amendment made to this subdivision by the Clean Energy and Pollution Reduction Act of 2015 (Chapter 547 of the Statutes of 2015) does not expand the authority of the commission beyond that provided by other law.

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(b) The Legislature further finds and declares that, in addition to any appropriate investments in energy production, electrical and natural gas utilities should seek to exploit all practicable and cost-effective conservation and improvements in the efficiency of energy use and distribution that offer equivalent or better system reliability and that are not being exploited by any other entity.

(c) In calculating the cost-effectiveness of energy resources, including conservation and load management options, the commission shall include, in addition to other ratepayer protection objectives, a value for any costs and benefits to the environment, including air quality. The commission shall ensure that any values it develops pursuant to this section are consistent with values developed by the Energy Commission pursuant to § 25000.1 of the Public Resources Code. However, if the commission determines that a value developed pursuant to this subdivision is not consistent with a value developed by the Energy Commission pursuant to subdivision (c) of § 25000.1 of the Public Resources Code, the commission may nonetheless use this value if, in the appropriate record of its proceedings, it states its reasons for using the value it has selected.

(d) In determining the emission values associated with the current operating capacity of existing electric powerplants pursuant to subdivision (c), the commission shall adhere to the following protocol in determining values for air quality costs and benefits to the environment. If the commission finds that an air pollutant that is subject to regulation is a component of residual emissions from an electric powerplant and that the owner of that powerplant is either of the following:

(1) Using a tradable emission allowance, right, or offset for that pollutant, which (A) has been approved by the air quality district regulating the powerplant, (B) is consistent with federal and state law, and (C) has been obtained, authorized, or acquired in a market-based system.

(2) Paying a tax per measured unit of that pollutant.

The commission shall not assign a value or cost to that residual pollutant for the current operating capacity of that powerplant because the alternative protocol for dealing with the pollutant operates to internalize its cost for the purpose of planning for and acquiring new generating resources.

(e) (1) The values determined pursuant to subdivision (c) to represent costs and benefits to the environment shall not be used by the commission, in and of themselves, to require early decommissioning or retirement of an electric utility powerplant that complies with applicable prevailing environmental regulations.

(2) Further, the environmental values determined pursuant to subdivision (c) shall not be used by the commission in a manner that, when those values are aggregated, will result in advancing an electric utility’s need for new powerplant capacity by more than 15 months.

(f) This subdivision shall apply whenever a powerplant bid solicitation is required by the commission for an electric utility and a portion of the amount of new powerplant capacity, which is the subject of the bid solicitation, is the result of the commission’s use of environmental values to advance that electric utility’s need for new powerplant capacity in the manner authorized by paragraph (2) of subdivision (e). The affected electric utility may propose to the commission any combination of alternatives to that portion of the new powerplant capacity that is the result of the commission’s use of environmental values as authorized by paragraph (2) of subdivision (c). The commission shall approve an alternative in place of the new powerplant capacity if it finds all of the following:

(1) The alternative has been approved by the relevant air quality district.

(2) The alternative is consistent with federal and state law.

(3) The alternative will result in needed system reliability for the electric utility at least equivalent to that which would result from bidding for new powerplant capacity.

(4) The alternative will result in reducing system operating costs for the electric utility over those that would result from the process of bidding for new powerplant capacity.

(5) The alternative will result in equivalent or better environmental improvements at a lower cost than would result from bidding for new powerplant capacity.

(g) This section does not require an electric utility to alter the dispatch of its powerplants for environmental purposes.

(h) This section does not preclude an electric utility from submitting to the commission any combination of alternatives to meet a commission-identified need for new capacity, if the submission is otherwise authorized by the commission.

(i) This section does not change or alter any provision of commission Decision 92-04-045 (April 22, 1992), Application of Pacific Gas and Electric Company for an Ex Parte Order Approving Settlement Agreements Between Pacific Gas and Electric Company and Certain Winning Bidders in Pacific Gas and Electric Company’s Biennial Resource Plan Update Auction.

(Amended by Stats. 2019, Ch. 396, Sec. 24. (AB 1513) Effective January 1, 2020.)