BILL ANALYSIS Ó
AB 2196
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 2196 (Chesbro and Gatto)
As Amended August 22, 2012
Majority vote
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|ASSEMBLY: |66-1 |(May 25, 2012) |SENATE: |35-2 |(August 31, |
| | | | | |2012) |
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Original Committee Reference: U. & C.
SUMMARY : Clarifies 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 State Energy Resources Conservation and
Development Commission (CEC). This bill counts in full, as
eligible generation for purpose of complying with the Renewable
Portfolio Standard (RPS), electric generation that relies on
procurement of biomethane from a contract executed, by a retail
seller or local publicly owned utility and reported to the
Public Utilities Commission (PUC) or the Energy Commission,
prior to March 29, 2012.
The Senate amendments clarify that electric generation that
relies on procurement of biomethane from a contract executed, by
a retail seller or local publicly owned utility and reported to
the PUC or the Energy Commission, prior to March 29, 2012,
counts in full, as eligible generation for purpose of complying
with the RPS.
FISCAL EFFECT : According to the Senate Appropriations
Committee, $75,000 from the Public Utilities Reimbursement
Account in 2012-12 and 2013-14 for the partial cost of a
proceeding to modify existing PUC rules related to RPS
eligibility and up to $75,000 from the Energy Resources Programs
Account (General Fund) annually to verify source and delivery of
biomethane.
AS PASSED BY THE ASSEMBLY , this bill clarified the definition of
an eligible renewable electrical generation facility to include
a facility that generates electricity utilizing biomethane
AB 2196
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delivered through a common carrier pipeline if the source and
delivery of the fuel can be verified by the CEC.
COMMENTS :
Rationale . The author intends to ensure that electricity
utilities and certain electricity providers meet their renewable
energy procurement obligations by using fuel sources that comply
with statutory requirement. These requirements, the author
notes, place the highest value on renewable energy delivered
directly into California because, the author contends, such
energy provides the greatest economic, environmental and energy
reliability benefits.
Background . Current statute requires the state's electricity
utilities and certain electricity providers to procure at least
33% of each of their electricity from renewable energy resources
by 2020 and establishes obligatory renewable energy procurement
milestones prior to this date. This requirement is known as
RPS.
Statute defines, for RPS purposes, eligible renewable energy
sources to include, among other sources, biogas, landfill gas
and digester gas, often collectively referred to as biomethane,
which are methane and other gases produced by the breakdown of
organic substances. Statute also establishes a "balanced
portfolio" requirement, classifying renewable energy products
based upon their location and other characteristics, eventually
requiring that 75% of renewable energy products be directly
connected or scheduled into the California electricity grid.
RPS statute tasks the California Energy Commission (CEC) with
certifying renewable energy resources as eligible for RPS
credit. In the past, CEC has certified as RPS eligible
renewable energy contracts between out-of-state facilities that
produce biomethane and California-based electricity generating
facilities that receive the biomethane via pipeline and burn it,
along with natural gas, to produce electricity.
Several major electric utilities, including the Los Angeles
Department of Water and Power and the Sacramento Municipal
Utilities District, among others, have signed contracts with
pipeline biomethane suppliers.
There has been growing concern with RPS eligibility of some
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pipeline biomethane contracts. This is because, in many
instances, the pipeline biomethane for which an electricity
generating facility receives RPS credit never physically
receives the biomethane. Rather, the facility receives gas from
a pipeline interconnected to the biomethane facility. But the
pipeline interconnection may be very indirect, cover a distance
of thousands of miles, and carry gas that flows away from
California, west to east. CEC has assumed the biomethane
displaces an equivalent amount of natural gas in the pipeline so
that gas removed by the electricity facility from the other end
of the pipeline, regardless of it physical composition or
source, may be considered biomethane for RPS compliance
purposes.
Earlier this year, in response to these concerns, CEC suspended
its RPS certification of pipeline biomethane contracts to allow
time to consider the appropriateness of pipeline biomethane's
RPS eligibility. CEC, however, granted RPS eligibility to
previously certified biomethane pipeline contracts.
Some electric utilities and other interested parties express
concern over CEC's action and the effect disqualification of
pipeline biomethane from RPS eligibility will have on electric
utilities' ability to meet RPS obligations and the cost to
Californians of doing so.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN:
0005808