BILL NUMBER: AB 1613 CHAPTERED
BILL TEXT
CHAPTER 713
FILED WITH SECRETARY OF STATE OCTOBER 14, 2007
APPROVED BY GOVERNOR OCTOBER 14, 2007
PASSED THE SENATE SEPTEMBER 11, 2007
PASSED THE ASSEMBLY SEPTEMBER 12, 2007
AMENDED IN SENATE SEPTEMBER 7, 2007
AMENDED IN SENATE SEPTEMBER 4, 2007
AMENDED IN SENATE AUGUST 20, 2007
AMENDED IN SENATE JULY 10, 2007
AMENDED IN SENATE JUNE 27, 2007
AMENDED IN ASSEMBLY JUNE 1, 2007
AMENDED IN ASSEMBLY MAY 1, 2007
AMENDED IN ASSEMBLY APRIL 17, 2007
INTRODUCED BY Assembly Member Blakeslee
(Coauthors: Assembly Members Adams, Emmerson, Huffman, Parra, and
Torrico)
FEBRUARY 23, 2007
An act to add Chapter 8 (commencing with Section 2840) to Part 2
of Division 1 of the Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1613, Blakeslee. Energy: Waste Heat and Carbon Emissions
Reduction Act.
(1) Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. Existing law authorizes the PUC to fix the
rates and charges for every public utility, and requires that those
rates and charges be just and reasonable. The existing Public
Utilities Act requires the PUC to review and adopt a procurement plan
for each electrical corporation in accordance with specified
elements, incentive mechanisms, and objectives. The act additionally
requires the PUC, in consultation with the Independent System
Operator, to establish resource adequacy requirements for all
load-serving entities, as defined, in accordance with specified
objectives.
The existing Warren-Alquist State Energy Resources Conservation
and Development Act establishes the State Energy Resources
Conservation and Development Commission (Energy Commission) and
requires it to undertake a continuing assessment of trends in the
consumption of electricity and other forms of energy and to analyze
the social, economic, and environmental consequences of those trends
and to collect from electric utilities, gas utilities, and fuel
producers and wholesalers and other sources, forecasts of future
supplies and consumption of all forms of energy.
This bill would enact the Waste Heat and Carbon Emissions
Reduction Act. The bill would state the intent of the Legislature:
(A) to dramatically advance the efficiency of the state's use of
natural gas by capturing unused waste heat, (B) to reduce wasteful
consumption of energy through improved residential, commercial,
institutional, industrial, and manufacturer utilization of waste heat
whenever it is cost effective, technologically feasible, and
environmentally beneficial, particularly when this reduces emissions
of carbon dioxide and other carbon-based greenhouse gases, and (C) to
support and facilitate both customer- and utility-owned combined
heat and power systems.
This bill would authorize the PUC to require an electrical
corporation to purchase excess electricity, as defined, delivered by
a combined heat and power system, as defined, that complies with
certain sizing, energy efficiency, and air pollution control
requirements, but would authorize the PUC to establish a maximum
kilowatthours limitation on the amount of excess electricity that an
electrical corporation is required to purchase if the PUC finds that
the anticipated excess electricity generated has an adverse effect on
long-term resource planning or the reliable operation of the grid.
The bill would require the PUC to establish, in consultation with the
Independent System Operator, tariff provisions that facilitate the
provisions of the act and the reliable operation of the grid. The
bill would require every electrical corporation to file a standard
tariff with the PUC for the purchase of excess electricity from an
eligible customer-generator, as defined, would require the electrical
corporation to make the tariff available to eligible
customer-generators within the service territory of the electrical
corporation upon request, and would authorize the electrical
corporation to make the terms of the tariff available in the form of
a standard contract. The bill would require that the costs and
benefits associated with any tariff or contract be allocated to
benefiting customers, as defined. The bill would require the PUC to
establish for each electrical corporation, a pay-as-you-save pilot
program, meeting certain goals, for eligible customers, as defined,
to finance all of the upfront costs for the purchase and installation
of combined heat and power systems. The bill would require the PUC,
in approving an electrical corporation's procurement plan, to require
the plan to assess the reliability of incorporating combined heat
and power solutions to the maximum degree that is cost effective
compared to other competing forms of wholesale generation,
technologically feasible, and environmentally beneficial,
particularly as it pertains to reducing emissions of carbon dioxide
and other greenhouse gases. The bill would authorize the PUC to
modify or adjust the requirements of the act for any electrical
corporation with less than 100,000 service connections, as individual
circumstances merit.
This bill would require a local publicly owned electric utility
serving retail end-use customers to establish a program that allows
retail end-use customers to utilize combined heat and power systems
that reduce emissions of greenhouse gases by achieving improved
efficiencies utilizing heat that would otherwise be wasted in
separate energy applications and that provides a market for the
purchase of excess electricity generated by a combined heat and power
system, at a just and reasonable rate, to be determined by the
governing body of the utility. By placing additional requirements
upon local publicly owned electric utilities, the bill would impose a
state-mandated local program.
This bill would require the Energy Commission, by January 1, 2010,
to adopt guidelines that require combined heat and power systems be
designed to reduce waste energy, be sized to meet the eligible
customer-generator's thermal load, operate continuously in a manner
that meets the expected thermal load and optimizes the efficient use
of waste heat, and are cost effective, technologically feasible, and
environmentally beneficial. The bill would authorize the Energy
Commission to adopt temporary guidelines for combined heat and power
systems prior to January 1, 2010. The bill would require an eligible
customer-generator's combined heat and power system to meet certain
efficiency and emissions requirements. The bill would require an
eligible customer-generator to adequately maintain and service the
combined heat and power system so that during operation, the system
continues to meet or exceed the efficiency and emissions
requirements.
(2) The existing California Global Warming Solutions Act of 2006,
requires the State Air Resources Board (state board) to adopt
regulations to require the reporting and verification of statewide
greenhouse gas emissions and to monitor and enforce compliance with
the reporting and verification program, as specified, and requires
the state board to adopt a statewide greenhouse gas emissions limit
equivalent to the statewide greenhouse gas emissions levels in 1990
to be achieved by 2020. The act requires the state board to adopt
rules and regulations in an open public process to achieve the
maximum technologically feasible and cost-effective reduction in
emissions of greenhouse gases and authorizes the state board to adopt
market-based compliance mechanisms, as defined, meeting specified
requirements. Existing law requires the PUC, by February 1, 2007,
through a rulemaking proceeding and in consultation with the Energy
Commission and the state board, to establish a greenhouse gases
emission performance standard for all baseload generation of
load-serving entities.
This bill would require that a combined heat and power system
comply with the greenhouse gases emission performance standard
established by the PUC.
(3) This bill would require the state board to report to the
Governor and the Legislature by December 31, 2011, on the reduction
in emissions of greenhouse gases resulting from the increase of new
electrical generation that utilizes excess waste heat through
combined heat and power systems and recommend policies that further
the goals of the bill.
(4) Existing law makes any public utility, as defined, and any
corporation other than a public utility, that violates or that fails
to comply with any part of any order, decision, rule, direction,
demand, or requirement of the PUC, guilty of a crime.
Because certain provisions of the bill would require PUC action to
implement and a violation or failure to comply with any part of any
order, decision, rule, direction, demand, or requirement of the PUC
would be a crime, the bill would impose a state-mandated local
program by creating a new crime.
(5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 8 (commencing with Section 2840) is added to
Part 2 of Division 1 of the Public Utilities Code, to read:
CHAPTER 8. ENERGY EFFICIENCY SYSTEMS
Article 1. Waste Heat and Carbon Emissions Reduction Act
2840. This article shall be known and may be cited as the Waste
Heat and Carbon Emissions Reduction Act.
2840.2. For purposes of this article, the following terms have
the following meanings:
(a) "Combined heat and power system" means a system that produces
both electricity and thermal energy for heating or cooling from a
single fuel input that meets all of the following:
(1) Is interconnected to, and operates in parallel with, the
electric transmission and distribution grid.
(2) Is sized to meet the eligible customer-generator's onsite
thermal demand.
(3) Meets the efficiency standards of subdivisions (a) and (d),
and the greenhouse gases emissions performance standard of
subdivision (f) of Section 2843.
(b) "Eligible customer-generator" means a customer of an
electrical corporation that meets both of the following requirements:
(1) Uses a combined heat and power system with a generating
capacity of not more than 20 megawatts, that first commences
operation on or after January 1, 2008.
(2) Uses a time-of-use meter capable of registering the flow of
electricity in two directions. If the existing electrical meter of an
eligible customer-generator is not capable of measuring the flow of
electricity in two directions, the eligible customer-generator shall
be responsible for all expenses involved in purchasing and installing
a meter that is able to measure electricity flow in two directions.
If an additional meter or meters are installed, the electricity flow
calculations shall yield a result identical to that of a time-of-use
meter.
(c) "Electrical corporation" has the same meaning as defined in
Section 218.
(d) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(e) "Excess electricity" means the net electricity exported to the
electrical grid, generated by a combined heat and power system that
is in compliance with Section 2843.
(f) "Greenhouse gas" or "greenhouse gases" includes all of the
following gases: carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
2840.4. The Legislature finds and declares all of the following:
(a) Combined heat and power systems produce both electricity and
thermal energy from a single fuel input, thus achieving much greater
efficiency than the usual separate systems for producing these forms
of energy, and reducing consumption of fuel.
(b) Combined heat and power systems recover heat that would
otherwise be wasted in separate energy applications, and use this
heat to avoid consumption of fuel that would otherwise be required to
produce heat.
(c) Gigawatthours of potential useful electricity and millions of
British thermal units of thermal energy could be derived from unused
waste heat that is currently being vented into the atmosphere.
2840.6. (a) It is the intent of the Legislature that state
policies dramatically advance the efficiency of the state's use of
natural gas by capturing unused waste heat, and in so doing, help
offset the growing crisis in electricity supply and transmission
congestion in the state.
(b) It is the intent of the Legislature to reduce wasteful
consumption of energy through improved residential, commercial,
institutional, industrial, and manufacturer utilization of waste heat
whenever it is cost effective, technologically feasible, and
environmentally beneficial, particularly when this reduces emissions
of carbon dioxide and other carbon-based greenhouse gases.
(c) It is the intent of the Legislature to support and facilitate
both customer- and utility-owned combined heat and power systems.
(d) This article does not apply to, and shall not impact, combined
heat and power systems in operation prior to January 1, 2008, or
combined heat and power systems with a generating capacity greater
than 20 megawatts.
2841. (a) The commission may require an electrical corporation to
purchase from an eligible customer-generator, excess electricity
that is delivered to the grid that is generated by a combined heat
and power system that is in compliance with Section 2843. The
commission may establish a maximum kilowatthours limitation on the
amount of excess electricity that an electrical corporation is
required to purchase if the commission finds that the anticipated
excess electricity generated has an adverse effect on long-term
resource planning or reliable operation of the grid. The commission
shall establish, in consultation with the Independent System
Operator, tariff provisions that facilitate both the provisions of
this chapter and the reliable operation of the grid.
(b) (1) Every electrical corporation shall file with the
commission a standard tariff for the purchase of excess electricity
from an eligible customer-generator.
(2) The tariff shall provide for payment for every kilowatthour
delivered to the electrical grid by the combined heat and power
system at a price determined by the commission.
(3) The tariff shall include flexible rates with options for
different durations, not to exceed 10 years, and fixed or variable
rates relative to the cost of natural gas.
(4) The commission shall ensure that ratepayers not utilizing
combined heat and power systems are held indifferent to the existence
of this tariff.
(c) The commission, in reviewing the tariff filed by an electrical
corporation, shall establish time-of-delivery rates that encourage
demand management and net generation of electricity during periods of
peak system demand.
(d) Every electrical corporation shall make the tariff available
to eligible customer-generators that own, or lease, and operate a
combined heat and power system within the service territory of the
electrical corporation, upon request. An electrical corporation may
make the terms of the tariff available to an eligible customer in the
form of a standard contract.
(e) The costs and benefits associated with any tariff or contract
entered into by an electrical corporation pursuant to this section
shall be allocated to all benefiting customers. For purposes of this
section "benefiting customers" may, as determined by the commission,
include bundled service customers of the electrical corporation,
customers of the electrical corporation that receive their electric
service through a direct transaction, as defined in subdivision (c)
of Section 331, and customers of an electrical corporation that
receive their electric service from a community choice aggregator, as
defined in Section 331.1.
(f) The physical generating capacity of the combined heat and
power system shall count toward the resource adequacy requirements of
load-serving entities for purposes of Section 380.
(g) The commission shall adopt or maintain standby rates or
charges for combined heat and power systems that are based only upon
assumptions that are supported by factual data, and shall exclude any
assumptions that forced outages or other reductions in electricity
generation by combined heat and power systems will occur
simultaneously on multiple systems, or during periods of peak
electrical system demand, or both.
(h) The commission may modify or adjust the requirements of this
article for any electrical corporation with less than 100,000 service
connections, as individual circumstances merit.
2841.5. A local publicly owned electric utility serving retail
end-use customers shall establish a program that does both of the
following:
(a) Allows retail end-use customers to utilize combined heat and
power systems that reduce emissions of greenhouse gases by achieving
improved efficiencies utilizing heat that would otherwise be wasted
in separate energy applications.
(b) Provides a market for the purchase of excess electricity
generated by a combined heat and power system, at a just and
reasonable rate, to be determined by the governing body of the
utility.
2842. The commission, in approving a procurement plan for an
electrical corporation pursuant to Section 454.5, shall require that
the electrical corporation's procurement plan incorporate combined
heat and power solutions to the extent that it is cost effective
compared to other competing forms of wholesale generation,
technologically feasible, and environmentally beneficial,
particularly as it pertains to reducing emissions of carbon dioxide
and other greenhouse gases.
2842.2. The commission shall ensure that an electrical
corporation utilizes long-term planning and a reliability assessment
for upgrades to its transmission and distribution systems and that
any upgrades are not inconsistent with promoting combined heat and
power systems that are cost effective, technologically feasible, and
environmentally beneficial, particularly as those combined heat and
power systems reduce emissions of greenhouse gases.
2842.4. (a) The commission shall, for each electrical
corporation, establish a pay-as-you-save pilot program for eligible
customers.
(b) For the purposes of this section, an "eligible customer" means
a customer of an electrical corporation that meets the following
criteria:
(1) The customer uses a combined heat and power system with a
generating capacity of not more than 20 megawatts that is in
compliance with Section 2843.
(2) The customer is a nonprofit organization described in Section
501(c) (3) of the Internal Revenue Code (26 U.S.C. Sec. 501(c) (3)),
that is exempt from taxation under Section 501(a) of that code (26
U.S.C. Sec. 501(a)).
(c) The pilot program shall enable an eligible customer to finance
all of the upfront costs for the purchase and installation of a
combined heat and power system by repaying those costs over time
through on-bill financing at the difference between what an eligible
customer would have paid for electricity and the actual savings
derived for a period of up to 10 years.
(d) The commission shall ensure that the reasonable costs of the
electrical corporation associated with the pilot program are
recovered.
(e) All costs of the pay-as-you-save program or financing
mechanisms shall be borne solely by the combined heat and power
generators that use the program or financing mechanisms, and the
commission shall ensure that the costs of the program are not shifted
to the other customers or classes of customers of the electrical
corporation.
(f) Each electric corporation shall make on-bill financing
available to eligible customers until the statewide cumulative rated
generating capacity from pilot program combined heat and power
systems in the service territories of the three largest electrical
corporations in the state reaches 100 megawatts. An electrical
corporation shall only be required to participate in the pilot
program until it meets its proportionate share of the 100-megawatt
limitation, based on the percentage of its peak demand to the total
statewide peak demand within the service territories of all
electrical corporations.
2843. (a) The Energy Commission shall, by January 1, 2010, adopt
guidelines that combined heat and power systems subject to this
chapter shall meet, and shall accomplish all of the following:
(1) Reduce waste energy.
(2) Be sized to meet the eligible customer-generator's thermal
load.
(3) Operate continuously in a manner that meets the expected
thermal load and optimizes the efficient use of waste heat.
(4) Are cost effective, technologically feasible, and
environmentally beneficial.
(b) It is the intent of the Legislature that the guidelines do not
permit customers to operate as de facto wholesale generators with
guaranteed purchasers for their electricity.
(c) Notwithstanding any other provisions of law, the guidelines
required by this section shall be exempt from the requirements of
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code. The guidelines shall be adopted at
a publicly noticed meeting offering all interested parties an
opportunity to comment. At least 30 days' public notice shall be
given of the meeting required by this section, before the Energy
Commission initially adopts guidelines. Substantive changes to the
guidelines shall not be adopted without at least 10 days' written
notice to the public.
(d) Prior to January 1, 2010, the Energy Commission may adopt
temporary guidelines for combined heat and power systems that comply
with the parameters set forth in subdivision (a).
(e) (1) An eligible customer-generator's combined heat and power
system shall meet an oxides of nitrogen (NOx) emissions rate standard
of 0.07 pounds per megawatthour and a minimum efficiency of 60
percent. A minimum efficiency of 60 percent shall be measured as
useful energy output divided by fuel input. The efficiency
determination shall be based on 100-percent load.
(2) An eligible customer-generator's combined heat and power
system that meets the 60-percent efficiency standard may take a
credit to meet the applicable NOx emissions standard of 0.07 pounds
per megawatthour. Credit shall be at the rate of one megawatthour for
each 3.4 million British thermal units of heat recovered.
(f) An eligible customer-generator's combined heat and power
system shall comply with the greenhouse gases emission performance
standard established by the commission pursuant to Section 8341.
(g) An eligible customer-generator shall adequately maintain and
service the combined heat and power system so that during operation,
the system continues to meet or exceed the efficiency and emissions
standards established pursuant to subdivisions (a), (d), and (f).
2845. The State Air Resources Board shall report to the Governor
and the Legislature by December 31, 2011, on the reduction in
emissions of greenhouse gases resulting from the increase of new
electrical generation that utilizes excess waste heat through
combined heat and power systems and recommend policies that further
the goals of this article.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
certain costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
With respect to certain other expenses, no reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because a local agency or school district has
the authority to levy service charges, fees, or assessments
sufficient to pay for the program or level of service mandated by
this act, within the meaning of Section 17556 of the Government Code.