BILL ANALYSIS Ó
AB 1900
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1900 (Gatto) - As Amended: May 2, 2012
Policy Committee:
UtilitiesVote:11-1
Natural Resources 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Public Utilities Commission (PUC) to take
several actions regarding the use of landfill gas within
California for electricity generation. Specifically, this bill:
1) Requires the PUC to:
a) Identify all constituents-not just vinyl chloride-that
may be found in landfill gas to be injected into a common
carrier pipeline and that could adversely impact public
health and safety, and requires the PUC to specify the
maximum allowable amount of these constituents for gas that
is to be injected into a common carrier pipeline.
b) Develop testing protocols for gas collected from a solid
waste landfill that is to be injected into a common carrier
pipeline.
c) By January 1, 2014, consider adopting pilot projects to
demonstrate the accuracy of its testing protocols and the
consistency and quality of gas injected into the pipeline
system.
d) Adopt policies and programs to promote in-state
production and distribution of biomethane to address the
state's energy and transportation needs.
e) Specify minimum electricity targets for electrical
corporations, in their annual procurement plans, to procure
electricity from landfill gas.
AB 1900
Page 2
f) Adopt pipeline access rules for each gas corporation
substantially equivalent to an existing commission rule
applying to San Diego Gas and Electric Company.
2)Makes all of the above operative only upon enactment of AB
2196 (Chesbro), which clarifies eligibility under the RPS for
pipeline biomethane and applies eligibility and verification
conditions comparable to those for other renewable energy
sources. AB 2196 is pending in the Assembly.
FISCAL EFFECT
The PUC will incur ongoing costs of around $250,000 for a
regulatory analyst and an administrative law judge to oversee
implementation of all requirements, as outlined above and
one-time cost in the range of $250,000 for consultants to
develop gas testing protocols. ÝPublic Utilities Reimbursement
Account]
COMMENTS
1)Background . The anaerobic digestion of biodegradable organic
matter produces biogas, which consists of methane, carbon
dioxide, and other trace amounts of gases. Depending on where
it is produced, biogas can be categorized as landfill gas or
digester gas. Landfill gas is produced by decomposition of
organic waste in a municipal solid waste landfill. Digester
gas is typically produced from livestock manure, sewage
treatment, or food waste.
The 2011 legislation (SBX1 2) which codified the state's
Renewable Portfolio Standard (RPS)-33% by 2020-also
established product content categories (or "buckets"), which
place the highest value (Bucket 1) on renewable energy that is
directly delivered into California because it has the greatest
economic, environmental and reliability benefits. Under the
RPS statutes, the eligibility of "pipeline biomethane," where
landfill gas or digester gas from a distant source is claimed
as the fuel source for a natural gas power plant, but is not
physically delivered to and used by the power plant to
generate electricity and renewable energy credits, is unclear.
Recently, several publicly-owned utilities entered large
AB 1900
Page 3
contracts for biomethane sourced from landfills in Texas and
points east to obtain RPS credit for their existing natural
gas power plants. Citing a variety of concerns regarding
consistency with the RPS, the California Energy Commission
(CEC) suspended eligibility for pipeline biomethane on March
28, 2012.
2)Purpose . The author intends AB 1900 to help advance the use of
in-state generated biomethane in order meet the state's
renewable energy needs.
According to the author, "Several forms of biomethane have
been treated to date as renewable fuels under the RPS, and
power plants which burn this biomethane to produce electricity
are thus eligible for RPS credit. However, there has been
debate about what truly constitutes "use" of biomethane under
RPS. As biomethane is generally transported through natural
gas pipelines, utilities currently contract for the biomethane
at its point of entry into the pipeline system, wherever that
may be, and claim credit for burning the gas at their
facility. This process displaces fossil fuel natural gas in
the pipeline system, but critics have raised concerns that the
biomethane may not be physically burned at the RPS-eligible
facility.
"Despite the growing market for biomethane as a reliable
source of cleaner energy, which can help stabilize variable
energy sources such as wind and solar, barriers to entry
within the state have resulted in a shifting of the market to
almost completely out of state."
3)Opposition . Southern California Edison opposes the provisions
requiring the PUC to specify minimum electricity targets for
landfill gas, arguing that such "Ýt]echnology specific
carve-outs prevent fair competition in the market and can have
a negative impact on customer rates by requiring utilities to
sign contracts with more expensive and less efficient
technologies."
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081