BILL ANALYSIS Ó
AB 796
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 796 (Muratsuchi)
As Amended August 26, 2013
2/3 vote. Urgency
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|ASSEMBLY: | |(May 23, 2013) |SENATE: |38-0 |(September 6, 2013) |
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(vote not relevant)
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|COMMITTEE VOTE: |14-0 |(September 11, |RECOMMENDATION: |concur |
|(U. & C.) | |2013) | | |
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Original Committee Reference: U. & C.
SUMMARY : Requires the California Energy Commission (CEC) to
consider the effects of sea level rise on the proposed site and
related facility during the certification process.
The Senate amendments delete the Assembly version of this bill, and
instead extend eligibility for cogeneration natural gas rates to
fuel cells that become operational before January 1, 2016.
EXISTING LAW extends eligibility for a specified natural gas rate
to qualified fuel cells generation facilities that become
operational before January 1, 2014. (Public Utilities Code Section
379.8)
FISCAL EFFECT : Unknown
COMMENTS :
1)Background . Current law requires that gas corporations provide a
rate for natural gas purchases for customers who operate a fuel
cell for on-site electricity generation if that fuel cell meets
certain criteria related to greenhouse gas and pollution
emissions. The rate is the same rate that merchant natural gas
generation facilities and cogeneration facilities receive.
2)Should fuel cells receive this rate ? The Legislature mandated
(AB 1110 ( Fuentes), Chapter 508, Statutes of 2009) that certain
fuel cell models be eligible for natural gas at rates available
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to cogeneration and electrical generation facilities. The
original argument to allow fuel cells to qualify for this gas
rate was based on the reasoning that fuel cells are an efficient
method of electrical production, but certain models do not
qualify as cogeneration technologies, also known as
combined-heat-and-power (CHP). The original intent for the
statute was to balance the market for all models and
manufacturers of fuel cells by granting them all the same rates
for natural gas.
Specifically, utility customers that purchase CHP fuel cell
models receive the benefit of this gas rate, but these same rates
were not offered to customers with non-CHP fuel cells. By
qualifying the non-CHP fuel cells for the same rate, the playing
field was leveled.
3)Fuel cell emissions . This bill primarily impacts stationary fuel
cell technologies that generate power for large institutions or
facilities and use natural gas for fuel. In comparison to
natural gas plants, fuel cells generate lower amounts of criteria
pollutants including nitrogen oxides (NOx), sulfur oxides (SOx),
and particulate matter. However, all fuel cells that run on
natural gas continue to produce carbon dioxide (CO2) emissions at
levels similar to a natural gas plant. The benefits from an
emissions standpoint of non-CHP fuel cells are the de minimis
NOx, SOx, and particulate matter emissions, not the CO2
emissions.
Fuel cells customers are eligible for a ratepayer funded
incentive called the Self Generation Incentive Program (SGIP).
The incentive is a maximum of $2.25 per watt of capacity. One
fuel cell manufacturer has benefitted from approximately $250
million in incentives through this program since 2009.
Fuel cell technologies that use natural gas generate CO2
emissions. Depending on the efficiency of the fuel cell
technology, there can be emission reductions due to direct
displacement of grid based electricity, displacement of natural
gas burned in boilers, or by using recovered waste heat to run
chillers for cooling (thereby reducing electricity that would
otherwise have been provided from the electricity grid). Some
fuel cells are electric only and do not capture waste heat for
other uses.
The California Public Utilities Commission (PUC) published an
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analysis of SGIP and found that electric-only fuel cells were the
only non-renewable technology that had a net-reducing effect on
GHG emissions for the SGIP in 2011, shown by a negative value in
the chart below (excerpted from the PUC's analysis). Note that
this analysis is based on the SGIP program before it was amended
to focus on GHG reduction characteristics (SB 412 (Kehoe),
Chapter 182, Statutes of 2009).
-------------------------------------------------------------
| Type | SGIP | Baseline Emissions (Metric Tons | GHG |
| |Emission| of CO2 per Year) |Emissio|
| | s | | ns |
| |(Metric | |Impact |
| |Tons of | |(Metric|
| |CO2 per | | Tons |
| | Year) | |of CO2 |
| | A | | per |
| | | | Year) |
| | | | F=A-E |
| | | | |
-------------------------------------------------------------
|----------+--------+--------+-------+-------+--------+-------|
| | |Electric|Heating|Cooling| Total | |
| | | Power | | |Baseline| |
| | | Plant |Service|Service| | |
| | | B | s | s |E=B+C+D | |
| | | | C | D | | |
|----------+--------+--------+-------+-------+--------+-------|
|FC - CHP | 23,522 | 20,126 | 2,487 | 32 | 22,645 | 877 |
|----------+--------+--------+-------+-------+--------+-------|
|FC - | 7,561 | 7,811 | 0 | 0 | 7,811 | -250 |
|Elec. | | | | | | |
|----------+--------+--------+-------+-------+--------+-------|
|FC - PEM | 656 | 529 | 67 | 0 | 596 | 61 |
|----------+--------+--------+-------+-------+--------+-------|
|GT |111,071 | 78,780 |12,218 | 2,002 | 93,000 |18,071 |
|----------+--------+--------+-------+-------+--------+-------|
|ICE |157,237 |109,878 |33,038 | 2,861 |145,778 |11,459 |
|----------+--------+--------+-------+-------+--------+-------|
|MT | 58,447 | 29,949 | 9,430 | 529 | 39,908 |18,539 |
|----------+--------+--------+-------+-------+--------+-------|
|Total |358,495 |247,073 |57,240 | 5,425 |309,738 |48,756 |
| | | | | | | |
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The current SGIP program requires that a product or a technology
must produce fewer GHG emissions than it avoids from the grid.
As California's electricity resource mix adds more renewable
generation it is likely that the baseline emissions shown above
will be lower, which may make it more difficult for fuel cell
technologies to achieve net GHG reductions.
4)Is there a cost-shift ? PG&E estimates that approximately $4
million per year is shifted to other ratepayers as a result of
providing this rate to fuel cell facilities.
In addition to this discount on natural gas purchases, fuel cell
facilities are eligible for net metering credits as a result of
their electricity generation. A report on the costs and benefits
of net energy metering is due by October 1, 2013, from the Public
Utilities Commission.
5)Additional support for fuel cells . In addition to the natural
gas rate and the net metering credits, fuel cells customers are
also exempted from responsibility to contribute to "nonbypassable
charges." Nonbypassable charges include contributions to support
discounts for low income customers and incentives for customers
who make certain energy efficiency expenditures or acquire fuel
cells or renewable energy facilities.
6)Future extension of this statute should review total incentives
for this technology . If this statute is later proposed to be
extended, the Legislature should review the total incentives made
available and whether the statute has achieved its desired
results with respect to cost reductions and competitiveness in
the market for this technology.
Analysis Prepared by : Susan Kateley / U. & C. / (916) 319-2083
FN: 0002835