(a) (1) The department shall procure eligible renewable energy resources and zero-carbon resources to satisfy the state agency obligations imposed on the State Water Resources Development System, commonly known as the State Water Project, pursuant to subdivision (a) of § 454.53 of the Public Utilities Code.

(2) If the department determines that the full achievement of the state agency obligations imposed on the State Water Resources Development System would require the early termination of an existing contract to procure fossil generation entered before January 1, 2010, and that early termination would result in significant uneconomic costs, the department may defer procuring zero-carbon electricity resource quantities equal to the amount of electricity provided under the existing contract until no later than December 31, 2040.

(3) In the event that extraordinary circumstances, catastrophic events, considerable supply chain disruptions and equipment shortages, or threats of significant economic harm render full achievement of the obligations imposed on the State Water Resources Development System pursuant to subdivision (a) of § 454.53 of the Public Utilities Code infeasible, the Governor may adjust the applicable deadline for the department’s compliance to the earliest feasible date, but that date shall be no later than December 31, 2040.

(b) The department may satisfy all or a portion of the obligation on the State Water Resources Development System pursuant to subdivision (a) of § 454.53 of the Public Utilities Code by installing or connecting zero-carbon resources or eligible renewable energy resources behind the meter on State Water Resources Development System property or properties to service its load.

(c) All resources procured pursuant to subdivision (a) after February 1, 2022, shall satisfy both of the following criteria:

(1) The eligible renewable energy resources and zero-carbon resources shall either be newly developed as a result of contracting by the department or constitute incremental production from existing resources and reach initial commercial operations on or after January 1, 2023. This requirement may be satisfied if the resource is newly developed by a local publicly owned electric utility with the expectation that the output would be sold to the department in support of the State Water Resources Development System.

(2) The eligible renewable energy resources and zero-carbon resources shall be located within California or have a first point of interconnection to a California balancing authority.

(d) In conducting procurement pursuant to subdivision (a), the department shall consider all of the following:

(1) Procurement commitments that may yield maximum long-term employment, stimulate new economic activity, generate local and state tax revenues, and assist with the development of new industries.

(2) Attributes, including resource adequacy, flexibility, and integration value, the ability to provide firm clean electricity, and local air quality benefits.

(3) The results of integrated resource planning modeling conducted by the Public Utilities Commission pursuant to § 454.52 of the Public Utilities Code.

(e) The department shall consider doing all of the following to reduce the costs of any procurement made pursuant to this section:

(1) Coordinate with the California Infrastructure and Economic Development Bank to make low-cost financing assistance available to new projects included in any procurement commitments.

(2) Coordinate with other state agencies to identify incentives from existing programs for new projects included in any procurement commitments.

(3) (A) If reasonably expected to provide incremental benefits, secure an ownership stake or royalties for any project or economic activity resulting from a contractual commitment.

(B) (i) Incremental benefits of ownership may include the election by the department of payment of applicable credits pursuant to the federal Inflation Reduction Act of 2022 (Public Law 117-169). If the department elects for direct payment of those applicable credits, those payments shall be deposited directly into the California Water Resources Development Bond Account created pursuant to Section 12935.5.

(ii) Within 10 days of any payments being deposited in the California Water Resources Development Bond Account, described in clause (i), the department shall provide written notice to the Joint Legislative Budget Committee, who shall provide a copy of the notice to the relevant policy committees. The notice shall include the source, purpose, timeliness, and other relevant information as determined by the department.

(f) All resources procured pursuant to this section shall be used first to meet the department’s own electricity needs. A renewable energy credit, as defined in § 399.12 of the Public Utilities Code, associated with the electricity used to satisfy the obligations of the department and the State Water Resources Development System under this section shall be retired and shall not be transferred or resold.

(g) The department shall enter into an agreement to procure energy from a new energy generation facility only if the seller requires its contractors to use a multicraft project labor agreement, as defined in paragraph (1) of subdivision (b) of § 2500 of the Public Contract Code, for construction of the facility. Those project labor agreements shall conform to the industry standard agreements recently used for other similar private projects, including side letters for high-voltage transmission and related work.

(Amended by Stats. 2023, Ch. 53, Sec. 13. (SB 124) Effective July 10, 2023.)