Amended in Assembly April 6, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 577


Introduced by Assembly Member Bonilla

February 24, 2015


begin deleteAn act to amend Section 399.20 of the Public Utilities Code, relating to public utilities. end deletebegin insertAn act to add Section 39718.5 to the Health and Safety Code, and to add Chapter 7.8 (commencing with Section 25680) to Division 15 of the Public Resources Code, relating to biomethane.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 577, as amended, Bonilla. begin deletePublic utilities: biogas. end deletebegin insertBiomethane: grant program.end insert

begin insert

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation.

end insert
begin insert

This bill would, upon appropriation, require the State Air Resources Board to allocate an unspecified percentage of the moneys in the fund to the State Energy Resources Conservation and Development Commission for the implementation of a biomethane collection and purification grant program. The bill would require the commission to develop and implement the grant program to award moneys for projects that build or develop collection and purification technology, infrastructure, and projects that upgrade existing biomethane facilities to meet certain requirements.

end insert
begin delete

Under the Public Utiliites Act, electrical corporations are required to file with the Public Utilities Commission a standard tariff for electricity purchased from certain electric generation facilities. The act requires the commission to direct the electrical corporations to collectively purchase 250 megawatts of cumulative rated generating capacity from developers of bioenergy projects. The act requires the commission to encourage electrical and gas corporations to develop and offer programs and services to facilitate development of in-state biogas for a broad range of purposes.

end delete
begin delete

This bill would limit that range of purposes to 3 specified purposes.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertThe Legislature finds and declares all of the
2following:end insert

begin insert

3(a) California imports 91 percent of its natural gas, which is
4responsible for 25 percent of all greenhouse gas (GHG) emissions.
5This costs California billions of dollars in lost revenues and jobs.

end insert
begin insert

6(b) California made a commitment to address climate change
7with the California Global Warming Solutions Act of 2006
8(Division 25.5 (commencing with Section 38500) of the Health
9and Safety Code). For California to meet its GHG reductions
10goals, the GHG emissions from the natural gas sector must be
11reduced.

end insert
begin insert

12(c) Biomethane is gas generated from organic waste through
13anaerobic digestion, gasification, pyrolysis, or other conversion
14technology that converts organic matter to gas. Biomethane may
15be produced from sources such as agricultural waste, forest waste,
16landfill gas, wastewater treatment byproducts, and diverted organic
17waste.

end insert
begin insert

18(d) Biomethane provides a more sustainable and cleaner
19 alternative to natural gas. If 10 percent of California’s natural
20gas use were to be replaced with biomethane, GHG emissions
P3    1would be reduced by tens of millions of metric tons of carbon
2dioxide equivalent every year.

end insert
begin insert

3(e) Almost 300 billion cubic feet of biomethane could be
4produced in California each year. This biomethane could power
52 to 3 million homes or generate 2.4 billion gallons of clean,
6ultralow carbon transportation fuels.

end insert
begin insert

7(f) Investing in biomethane would create cobenefits, such as
8renewable power available 24 hours a day, seven days a week,
9reduction of fossil fuel use, reduction of air and water pollution,
10and new jobs.

end insert
begin insert

11(g) Biomethane could be used for things such as transportation
12fuel or injected into the natural gas pipeline for other uses. The
13most appropriate use of biomethane varies depending on the
14source, proximity to existing natural gas pipeline injection points
15or large vehicle fleets, and the circumstances of existing facilities.

end insert
begin insert

16(h) The biomethane market has been slow to develop in
17California because the collection and purification of biomethane
18can be costly. Investing in biomethane purification equipment and
19infrastructure is necessary for companies to meet existing
20biomethane safety and purity standards. Alternative funding for
21compliance with standards established pursuant to Section 25421
22of the Health and Safety Code must be found so that biomethane
23can be transmitted via California’s vast natural gas pipeline
24infrastructure.

end insert
begin insert

25(i) Biomethane is poised to play a key role in future natural gas
26and hydrogen fuel markets as a blendstock that can significantly
27reduce the carbon footprint of these two fossil-based alternative
28fuels.

end insert
29begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 39718.5 is added to the end insertbegin insertHealth and Safety
30Code
end insert
begin insert, to read:end insert

begin insert
31

begin insert39718.5.end insert  

Upon appropriation by the Legislature, the state
32board shall allocate ____ percent of the moneys from the fund to
33the State Energy Resources Conservation and Development
34Commission for the purposes of Chapter 7.8 (commencing with
35Section 25680) of Division 15 of the Public Resources Code.

end insert
36begin insert

begin insertSEC. 3.end insert  

end insert

begin insertChapter 7.8 (commencing with Section 25680) is added
37to Division 15 of the end insert
begin insertPublic Resources Codeend insertbegin insert, to read:end insert

begin insert

P4    1 

2Chapter  begin insert7.8.end insert Biomethane Collection and Purification
3Grant Program
4

 

5

begin insert25680.end insert  

(a) The commission shall develop and implement a
6grant program to award moneys appropriated pursuant to Section
739718.5 of the Health and Safety Code for projects that build or
8develop collection and purification technology, infrastructure, and
9projects that upgrade existing biomethane facilities to meet the
10requirements established pursuant to Section 25421 of the Health
11and Safety Code.

12(b) In granting an award, the commission shall consider both
13of the following:

14(1) Opportunities to colocate biomethane producers with vehicle
15fleets to generate biomethane and convert it to transportation fuel
16in the same location.

17(2) Location of biomethane sources and their proximity to
18natural gas pipeline injection sites.

19(c) In prioritizing projects eligible for grants pursuant to this
20section, the commission shall maximize the reduction of greenhouse
21gas emissions achieved by a project for each dollar awarded.

end insert
begin delete
22

SECTION 1.  

Section 399.20 of the Public Utilities Code is
23amended to read:

24

399.20.  

(a) It is the policy of this state and the intent of the
25Legislature to encourage electrical generation from eligible
26renewable energy resources.

27(b) As used in this section, “electric generation facility” means
28an electric generation facility located within the service territory
29of, and developed to sell electricity to, an electrical corporation
30that meets all of the following criteria:

31(1) Has an effective capacity of not more than three megawatts.

32(2) Is interconnected and operates in parallel with the electrical
33transmission and distribution grid.

34(3) Is strategically located and interconnected to the electrical
35transmission and distribution grid in a manner that optimizes the
36deliverability of electricity generated at the facility to load centers.

37(4) Is an eligible renewable energy resource.

38(c) Every electrical corporation shall file with the commission
39a standard tariff for electricity purchased from an electric
40generation facility. The commission may modify or adjust the
P5    1requirements of this section for any electrical corporation with less
2than 100,000 service connections, as individual circumstances
3merit.

4(d) (1) The tariff shall provide for payment for every
5kilowatthour of electricity purchased from an electric generation
6facility for a period of 10, 15, or 20 years, as authorized by the
7commission. The payment shall be the market price determined
8by the commission pursuant to paragraph (2) and shall include all
9current and anticipated environmental compliance costs, including,
10but not limited to, mitigation of emissions of greenhouse gases
11and air pollution offsets associated with the operation of new
12generating facilities in the local air pollution control or air quality
13management district where the electric generation facility is
14located.

15(2) The commission shall establish a methodology to determine
16the market price of electricity for terms corresponding to the length
17of contracts with an electric generation facility, in consideration
18of the following:

19(A) The long-term market price of electricity for fixed price
20contracts, determined pursuant to an electrical corporation’s general
21procurement activities as authorized by the commission.

22(B) The long-term ownership, operating, and fixed-price fuel
23costs associated with fixed-price electricity from new generating
24facilities.

25(C) The value of different electricity products including
26baseload, peaking, and as-available electricity.

27(3) The commission may adjust the payment rate to reflect the
28value of every kilowatthour of electricity generated on a
29time-of-delivery basis.

30(4) The commission shall ensure, with respect to rates and
31charges, that ratepayers that do not receive service pursuant to the
32tariff are indifferent to whether a ratepayer with an electric
33generation facility receives service pursuant to the tariff.

34(e) An electrical corporation shall provide expedited
35interconnection procedures to an electric generation facility located
36on a distribution circuit that generates electricity at a time and in
37a manner so as to offset the peak demand on the distribution circuit,
38if the electrical corporation determines that the electric generation
39facility will not adversely affect the distribution grid. The
40commission shall consider and may establish a value for an electric
P6    1generation facility located on a distribution circuit that generates
2electricity at a time and in a manner so as to offset the peak demand
3on the distribution circuit.

4(f) (1) An electrical corporation shall make the tariff available
5to the owner or operator of an electric generation facility within
6the service territory of the electrical corporation, upon request, on
7a first-come-first-served basis, until the electrical corporation meets
8its proportionate share of a statewide cap of 750 megawatts
9cumulative rated generation capacity served under this section and
10Section 399.32. The proportionate share shall be calculated based
11on the ratio of the electrical corporation’s peak demand compared
12to the total statewide peak demand.

13(2) By June 1, 2013, the commission shall, in addition to the
14750 megawatts identified in paragraph (1), direct the electrical
15corporations to collectively procure at least 250 megawatts of
16cumulative rated generating capacity from developers of bioenergy
17projects that commence operation on or after June 1, 2013. The
18commission shall, for each electrical corporation, allocate shares
19of the additional 250 megawatts based on the ratio of each electrical
20corporation’s peak demand compared to the total statewide peak
21demand. In implementing this paragraph, the commission shall do
22all of the following:

23(A) Allocate the 250 megawatts identified in this paragraph
24among the electrical corporations based on the following
25categories:

26(i) For biogas from wastewater treatment, municipal organic
27waste diversion, food processing, and codigestion, 110 megawatts.

28(ii) For dairy and other agricultural bioenergy, 90 megawatts.

29(iii) For bioenergy using byproducts of sustainable forest
30management, 50 megawatts. Allocations under this category shall
31be determined based on the proportion of bioenergy that sustainable
32forest management providers derive from sustainable forest
33management in fire threat treatment areas, as designated by the
34Department of Forestry and Fire Protection.

35(B) Direct the electrical corporations to develop standard
36contract terms and conditions that reflect the operational
37characteristics of the projects, and to provide a streamlined
38contracting process.

39(C) Coordinate, to the maximum extent feasible, any incentive
40or subsidy programs for bioenergy with the agencies listed in
P7    1subparagraph (A) of paragraph (3) in order to provide maximum
2benefits to ratepayers and to ensure that incentives are used to
3reduce contract prices.

4(D) The commission shall encourage gas and electrical
5corporations to develop and offer programs and services to facilitate
6development of in-state biogas for purposes of encouraging the
7diversion of landfill waste, the development of ultralow carbon
8transportation fuel, and the generation of electricity through
9bioenergy resources.

10(3) (A) The commission, in consultation with the State Energy
11Resources Conservation and Development Commission, the State
12Air Resources Board, the Department of Forestry and Fire
13Protection, the Department of Food and Agriculture, and the
14Department of Resources Recycling and Recovery, may review
15the allocations of the 250 additional megawatts identified in
16paragraph (2) to determine if those allocations are appropriate.

17(B) If the commission finds that the allocations of the 250
18additional megawatts identified in paragraph (2) are not
19appropriate, the commission may reallocate the 250 megawatts
20among the categories established in subparagraph (A) of paragraph
21(2).

22(4) For the purposes of this subdivision, “bioenergy” means
23biogas and biomass.

24(g) The electrical corporation may make the terms of the tariff
25available to owners and operators of an electric generation facility
26in the form of a standard contract subject to commission approval.

27(h) Every kilowatthour of electricity purchased from an electric
28generation facility shall count toward meeting the electrical
29corporation’s renewables portfolio standard annual procurement
30targets for purposes of paragraph (1) of subdivision (b) of Section
31399.15.

32(i) The physical generating capacity of an electric generation
33facility shall count toward the electrical corporation’s resource
34adequacy requirement for purposes of Section 380.

35(j) (1) The commission shall establish performance standards
36for any electric generation facility that has a capacity greater than
37one megawatt to ensure that those facilities are constructed,
38operated, and maintained to generate the expected annual net
39production of electricity and do not impact system reliability.

P8    1(2) The commission may reduce the three megawatt capacity
2limitation of paragraph (1) of subdivision (b) if the commission
3finds that a reduced capacity limitation is necessary to maintain
4system reliability within that electrical corporation’s service
5territory.

6(k) (1) Any owner or operator of an electric generation facility
7that received ratepayer-funded incentives in accordance with
8Section 379.6 of this code, or with Section 25782 of the Public
9Resources Code, and participated in a net metering program
10pursuant to Sections 2827 and 2827.10 of this code prior to January
111, 2010, shall be eligible for a tariff or standard contract filed by
12an electrical corporation pursuant to this section.

13(2) In establishing the tariffs or standard contracts pursuant to
14this section, the commission shall consider ratepayer-funded
15incentive payments previously received by the generation facility
16pursuant to Section 379.6 of this code or Section 25782 of the
17Public Resources Code. The commission shall require
18reimbursement of any funds received from these incentive
19programs to an electric generation facility, in order for that facility
20to be eligible for a tariff or standard contract filed by an electrical
21corporation pursuant to this section, unless the commission
22determines ratepayers have received sufficient value from the
23incentives provided to the facility based on how long the project
24has been in operation and the amount of renewable electricity
25previously generated by the facility.

26(3) A customer that receives service under a tariff or contract
27approved by the commission pursuant to this section is not eligible
28to participate in any net metering program.

29(l) An owner or operator of an electric generation facility
30electing to receive service under a tariff or contract approved by
31the commission shall continue to receive service under the tariff
32or contract until either of the following occurs:

33(1) The owner or operator of an electric generation facility no
34longer meets the eligibility requirements for receiving service
35pursuant to the tariff or contract.

36(2) The period of service established by the commission pursuant
37to subdivision (d) is completed.

38(m) Within 10 days of receipt of a request for a tariff pursuant
39to this section from an owner or operator of an electric generation
40facility, the electrical corporation that receives the request shall
P9    1post a copy of the request on its Internet Web site. The information
2posted on the Internet Web site shall include the name of the city
3in which the facility is located, but information that is proprietary
4and confidential, including, but not limited to, address information
5beyond the name of the city in which the facility is located, shall
6be redacted.

7(n) An electrical corporation may deny a tariff request pursuant
8to this section if the electrical corporation makes any of the
9following findings:

10(1) The electric generation facility does not meet the
11requirements of this section.

12(2) The transmission or distribution grid that would serve as the
13point of interconnection is inadequate.

14(3) The electric generation facility does not meet all applicable
15state and local laws and building standards and utility
16interconnection requirements.

17(4) The aggregate of all electric generating facilities on a
18distribution circuit would adversely impact utility operation and
19load restoration efforts of the distribution system.

20(o) Upon receiving a notice of denial from an electrical
21corporation, the owner or operator of the electric generation facility
22denied a tariff pursuant to this section shall have the right to appeal
23that decision to the commission.

24(p) In order to ensure the safety and reliability of electric
25generation facilities, the owner of an electric generation facility
26receiving a tariff pursuant to this section shall provide an inspection
27and maintenance report to the electrical corporation at least once
28every other year. The inspection and maintenance report shall be
29prepared at the owner’s or operator’s expense by a
30California-licensed contractor who is not the owner or operator of
31the electric generation facility. A California-licensed electrician
32shall perform the inspection of the electrical portion of the
33generation facility.

34(q) The contract between the electric generation facility
35receiving the tariff and the electrical corporation shall contain
36provisions that ensure that construction of the electric generating
37facility complies with all applicable state and local laws and
38building standards, and utility interconnection requirements.

39(r) (1) All construction and installation of facilities of the
40electrical corporation, including at the point of the output meter
P10   1or at the transmission or distribution grid, shall be performed only
2by that electrical corporation.

3(2) All interconnection facilities installed on the electrical
4corporation’s side of the transfer point for electricity between the
5electrical corporation and the electrical conductors of the electric
6generation facility shall be owned, operated, and maintained only
7by the electrical corporation. The ownership, installation, operation,
8reading, and testing of revenue metering equipment for electric
9generating facilities shall only be performed by the electrical
10corporation.

end delete


O

    98