BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 1900 (Gatto) - Renewable energy resources: biomethane. Amended: August 6, 2012 Policy Vote: E,U&C 11-0 EQ 7-0 Urgency: No Mandate: Yes Hearing Date: August 6, 2012 Consultant: Bob Franzoia This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1900 would require the Office of Health Hazard Assessment (OEHHA), the California Energy Commission (CEC) and the Public Utilities Commission (PUC) to take actions related to the delivery of biomethane gas within the state for the purposes of electricity generation. Fiscal Impact: $139,000 in 2012-13 and 2013-14 from the Public Utilities Reimbursement Account to OEHHA for a health and safety study of landfill gas. $100,000 in 2012-13 and 2013-14 from the Energy Resources Programs Account (General Fund) to the CEC for hearings to identify impediments to interconnections and to develop solutions. $150,000 in 2012-13 and 2013-14 from the Public Utilities Reimbursement Account to the PUC to set standards for landfill gas, adopt testing protocols and policies that promote in-state production and distribution of biomethane, $120,000 annually thereafter to monitor standards, protocols and, as necessary, pilot projects. Background: As noted in the policy committee analysis, biomethane is a renewable fuel that is produced at several types of facilities, including dairy farms and landfills. The gas can be collected and then transported to a generation facility where it can be used to make electricity. Transportation of biofuels via truck or rail is not economically feasible with pipelines being the preferred method of transportation. This energy release allows biogas to be used as a fuel. The methane can also be used onsite, such as at dairies, in anaerobic digesters where it is typically used in a combustion engine to convert the energy in the gas into electricity and heat. AB 1900 (Gatto) Page 1 As a result of state law, California's major gas corporations, Sempra Utilities and Pacific Gas and Electric, operate common carrier pipelines but will not allow biomethane from landfills to be injected into the pipelines they operate. Landfill gas may have constituents present that could adversely impact human health. Some constituents, for example, lead, arsenic and cadmium could cause cancer or birth defects. Since the delivery of the gas to a household appliance could inadvertently provide close exposure to these constituents, gas corporations do not allow landfill or dairy gas into their pipelines. Gas corporations are also concerned about potential damage to the pipelines themselves, depending upon what is in the gas, moisture, for example, could cause corrosion. Related Legislation: AB 2196 (Chesbro) would clarify the definition of an eligible renewable electrical generation facility to include a facility that generates electricity utilizing biomethane delivered through a common carrier pipeline if the source and delivery of the fuel can be verified by the CEC. AB 2196, which contains contingent enactment language with AB 1900, is on today's agenda. Staff Comments: SB 1018 (Budget Committee) Chapter 39/2012 appropriated $139,000 from the Public Utilities Reimbursement Account to OEHHA for additional staffing to identify constituents of biomethane injected into a common carrier pipeline that are reasonably anticipated to be hazardous to human health and to determine inhalation standards for those identified constituents.