BILL ANALYSIS Ó SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS Senator Ben Hueso, Chair 2015 - 2016 Regular Bill No: AB 1110 Hearing Date: 7/13/2015 ----------------------------------------------------------------- |Author: |Ting | |-----------+-----------------------------------------------------| |Version: |6/19/2015 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Jay Dickenson | | | | ----------------------------------------------------------------- SUBJECT: Emissions of greenhouse gases reporting: retail electricity suppliers DIGEST: This bill requires every retail supplier of electricity in California annually to report to its customers the emissions of greenhouse gases associated with the supplier's electricity sources. ANALYSIS: Existing law: 1)Requires every retail supplier of electricity to disclose the sources of the supplier's electricity for the previous calendar year. Each supplier is to make the disclosure annually and in all product-specific written promotional material. Statute directs the California Energy Commission (CEC) to specify guidelines for the annual disclosure. The disclosure is to be reliable, accurate, timely and simple to understand. (Public Utilities Code §§398.1-398.5) 2)Requires retail sellers of electricity - investor-owned utilities (IOU), community choice aggregators (CCAs), and energy service providers (ESPs) - and publicly-owned utilities (POUs) to increase purchases of renewable energy such that at least 33 percent of retail sales are procured from renewable energy resources by December 31, 2020. This is known as the Renewable Portfolio Standard (RPS). (Public Utilities Code §399.11 et seq.) 3)Requires all renewable electricity products to meet the AB 1110 (Ting) PageB of? requirements of a "loading order" that mandates minimum and maximum quantities of three product categories (or "buckets"), which includes (a) renewable resources directly connected to a California balancing authority or provided in real time without substitution from another energy source, (b) energy not connected or delivered in real time yet still delivering electricity, and (c) unbundled renewable energy credits (RECs). (Public Utilities Code §399.16.) 4)Requires the reduction of statewide emissions of greenhouse gases (GHGs) to 1990 levels by 2020. This is known as the Global Warming Solutions Act of 2006. (Health and Safety Code §38500 et seq.) This bill: 1)Defines a retail supplier as an electrical corporation, local publicly owned electric utility, ESP, and CCA. 2)Requires a retail supplier to disclose RPS-eligible energy resources according to the three product content categories defined in the RPS statute, commonly known as bucket one, bucket two, and bucket three. 3)Adds to the disclosure requirement the emission of GHGs associated with the electricity sources, calculated as the sum of all annual emissions of GHGs divided by annual retail electric sales, and consistent with the California Air Resources Board's (ARB) GHG emissions reporting requirements. 4)Disallows adjustment to GHG emissions reporting resulting from: (1) RECs, (2) offset credits, or (3) other attributes acquired from any facility not providing the actual delivered electricity used to serve a retail customer. Background Suppliers of electricity must disclose power sources. Existing statute requires retail suppliers - IOUs, POUs, CCAs, and ESPs - to disclose fuel source information to potential end-use customers in a way that is accurate, reliable, and simple to understand. The disclosure is governed by the CEC's Power Source Disclosure Program, by which the CEC specifies a standard format the retail suppliers are to use. That format is known as AB 1110 (Ting) PageC of? the Power Content Label. The Power Content Label presents retail supplier fuel source information in two broad categories: (1) specific purchases and (2) unspecified sources of power. The label breaks out the first category - specific purchases - into several subcategories: eligible renewables (meaning eligible for RPS credit), coal, large hydroelectric, natural gas, nuclear, and other. The label provides no additional detail to the second category - unspecified sources of power - because such electricity, by definition, is not traceable to a specific generation source. In addition, the label presents comparison data on the power mix for all retail electricity deliveries in California. See PG&E's current Power Content Label below, as an illustration of the Power Content Label: ------------------------------------------------- | Pacific Gas and Electric Company | | POWER CONTENT LABEL | ------------------------------------------------- |-----------------------+-----------+-------------| | | 2013 | 2013 CA | |-----------------------+-----------+-------------| | ENERGY | POWER MIX | POWER MIX** | |-----------------------+-----------+-------------| | RESOURCES | (Actual) | | |-----------------------+-----------+-------------| | Eligible Renewable | 22% | 19% | |-----------------------+-----------+-------------| | -- Biomass & | 4%| 3%| |waste | | | |-----------------------+-----------+-------------| | -- Geothermal | 5%| 4%| ------------------------------------------------- ------------------------------------------------- | -- Small | | 2%| 1%| |hydroelectric | | | | ------------------------------------------------- ------------------------------------------------- | -- Solar | 5%| 2%| ------------------------------------------------- | -- Wind | 6%| 9%| ------------------------------------------------- | Coal | 0% | 8% | AB 1110 (Ting) PageD of? ------------------------------------------------- | Large | 10% | 8% | |Hydroelectric | | | ------------------------------------------------- | Natural Gas | 28% | 44% | ------------------------------------------------- | Nuclear | 22% | 9% | ------------------------------------------------- | Other | 0% | 0% | |-----------------------+-----------+-------------| |Unspecified sources of | 18% | 12% | |power* | | | ------------------------------------------------- ------------------------------------------------- | TOTAL | | 100% | 100% | | | | | | |---------------------+-+-----------+-------------| | | | | | | | | | | ------------------------------------------------- ------------------------------------------------- |* "Unspecified sources of power" means | |electricity from transactions that are not | |traceable to specific generation sources. | ------------------------------------------------- | | ------------------------------------------------- |** Percentages are estimated annually by the | |California Energy Commission based on the | |electricity sold to California consumers during | |the previous year. | ------------------------------------------------- | | ------------------------------------------------- |For specific information about this electricity | |product, contact Pacific Gas and Electric | |Company. For general information about the | |Power Content Label, contact the California | |Energy Commission at 1-800-555-7794 or | |www.energy.ca.gov/consumer. | ------------------------------------------------- | | ------------------------------------------------- | | |-------------------------------------------------| AB 1110 (Ting) PageE of? | | | | ------------------------------------------------- It is important to note that the Power Content Label is not meant to show a retail supplier's progress on meeting the requirements of the RPS, which entails multi-year compliance periods. Rather, the label shows a retail supplier's electricity sources for the previous calendar year. In this way, the label provides customers a snapshot of how "green" a retail supplier's power was for a given period. The Power Content Label is not without controversy. Some parties contend the bill potentially confuses customers, despite the statutory direction that the label be accurate, reliable, and simple to understand. For example, some parties have complained that the reporting periods and reporting specifications required of retail suppliers of electricity differ from the reporting periods and reporting specifications of other state programs. Others contend the label misleads customers on the supplier's progress in meeting the RPS. Still others contend that the Power Content Label, first created nearly two decades ago, needs updating to reflect the state's current environmental policies and priorities. Specifically, bill proponents argue the current Power Content Label should be modified to include a single number - a GHG emissions factor - that allows customers to easily and reliably understand the effect of their energy use on the environment. Further, this bill's proponents argue that the prescriptions that apply to calculation of a GHG emissions factor to be included on the Power Content Label should govern all such disclosures made by a retail seller, including printed and electronic promotional material. This bill would achieve these ends, by adding a GHG emissions factor to the statute requiring power source disclosure. It's not easy being green. As described above, this bill adds to the each retail supplier's Power Content Label a standard GHG emissions factor. The bill also requires the retail supplier to include the GHG emissions factor in all product-specific written promotional materials. Some retail suppliers already include information on GHG emissions in disclosures made to customers and in promotional materials. AB 1110 (Ting) PageF of? Consider, for example, Marin Clean Energy (MCE), a CCA operating within PG&E's service territory. MCE describes itself as "committed to assembling a power supply portfolio that not only exceeds the renewable energy content offered by the incumbent utility (PG&E) but also provides customers with a "cleaner" energy alternative, as measured by a comparison of the attributed portfolio GHG emission rate offers several energy products." To realize this commitment, MCE offers several energy products, including a "Light Green" product and a "Deep Green" product. According to MCE's 2013 Power Content Label (see figure below), 51 percent of the electricity supplied by the Light Green product came from RPS-eligible renewable energy resources, while 100 percent of the electricity supplied under the Deep Green product came from such energy resources.<1> --------------------------- <1> http://www.mcecleanenergy.org/wp-content/uploads/2013-Power-Conte nt-Label-Final.pdf AB 1110 (Ting) PageG of? --------------------------------------------------------------- | POWER CONTENT LABEL | --------------------------------------------------------------- |-----------------------+-------------+------------+------------| |ENERGY RESOURCES | MCE 2013 | MCE 2013 | 2013 CA | | | LIGHT GREEN | DEEP GREEN |POWER MIX** | | | POWER MIX | POWER MIX | (for | | | | |comparison) | |-----------------------+-------------+------------+------------| |Eligible Renewable: | 51% | 100% | 19% | |-----------------------+-------------+------------+------------| | -Biomass & waste | 6% | 0% | 3% | |-----------------------+-------------+------------+------------| | -Geothermal | 0% | 0% | 4% | |-----------------------+-------------+------------+------------| | -Eligible | 12% | 0% | 1% | | hydroelectric | | | | |-----------------------+-------------+------------+------------| | -Solar | <1% | 0% | 2% | |-----------------------+-------------+------------+------------| | -Wind | 33% | 100% | 9% | |-----------------------+-------------+------------+------------| |Coal | 0% | 0% | 8% | |-----------------------+-------------+------------+------------| |Large Hydroelectric | 10% | 0% | 8% | |-----------------------+-------------+------------+------------| |Natural Gas | 0% | 0% | 44% | |-----------------------+-------------+------------+------------| |Nuclear | 0% | 0% | 9% | |-----------------------+-------------+------------+------------| |Other | 0% | 0% | 0% | |-----------------------+-------------+------------+------------| |Unspecified sources of | 39% | 0% | 12% | |power* | | | | |-----------------------+-------------+------------+------------| |TOTAL | 100% | 100% | 100% | --------------------------------------------------------------- --------------------------------------------------------------- | * "Unspecified sources of power" means electricity from | | transactions that are not traceable to specific generation | | sources at the time of purchase. | --------------------------------------------------------------- | | AB 1110 (Ting) PageH of? | ** Percentages are estimated annually by the California | | Energy Commission based on the electricity sold to | | California consumers during the previous year. | | | |---------------------------------------------------------------| | For specific information about these electricity products, | | contact MCE at 1 (888) 632-3674 or info@mceCleanEnergy.org. | | For general information about the Power Content Label, | | contact the California Energy Commission at 1 (800) 555-7794 | |or www.energy.ca.gov/consumer. | --------------------------------------------------------------- Relatedly, as shown below, MCE reports on its website<2> and elsewhere that its Light Green energy product emits 380 pounds of carbon dioxide per megawatt hour, while its Deep Green energy product emits zero GHG emissions. MCE disclosure does not qualify the proportion of electricity that came from RPS-eligible energy resources. Nor does it qualify its depiction of the GHG emissions, other than to note that the depiction considers renewable energy, hydroelectric and nuclear resources as GHG free. Oftentimes, the energy resources described by a retail supplier as "eligible renewables" represent two-part transactions by which the supplier (1) procures electricity generated by conventional energy resources, such as natural gas and coal, and (2) buys unbundled RECs<3> in an amount equivalent to the electricity produced, thereby allowing the supplier to characterize the electricity as renewable and GHG emissions free (or nearly free), its underlying generation source notwithstanding. Bill proponents contend it is appropriate to report electricity sources based on the source of that electricity, not based upon a subsequent contractual transaction that, consistent with existing law, allows the retail supplier to count the electricity towards its RPS procurement obligation. Proponents say such disclosure, in a standard format, allows --------------------------- <2> http://www.mcecleanenergy.org/power-sources/ <3> A REC is a market instrument that represents the renewable and environmental attributes of a unit of energy production. An unbundled REC is one for which the underlying energy has been separated from the renewable and environmental attributes of a unit of energy production. AB 1110 (Ting) PageI of? consumers to easily and reliably understand the environmental effect of their energy consumption. Unbundled RECs are RPS eligible. As mentioned, existing statute authorizes a retail seller of electricity to use unbundled RECs to comply with the RPS procurement requirements. Generally speaking, unbundled RECs are RPS-eligible renewable energy products, though there are statutory restrictions on the amount of such energy products a retail seller may use in any compliance period. The proponents of this bill describe their intent as requiring a common methodology for the disclosure of GHG emissions to empower the customer. It is unclear what relation statutory renewable energy product content categories have to that intent. Therefore, the author and committee may wish to consider striking the language that modifies disclosure requirements relevant to eligible renewable energy resources, as follows: (5) Eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), identified by the corresponding categories described in subdivision (b) of Section 399.16,including any of the following: (A) Biomass and biowaste. (B) Geothermal. (C) Eligible hydroelectric. (D) Solar. (E) Wind. Compared to what? The Power Content Label, according to statute, is to be accurate, reliable, and simple to understand. Basing the reporting of GHG emissions on ARB's reporting requirements, which do not adjust GHG emissions based on offsets projects or RECs, should help ensure the GHG emissions disclosed by retail suppliers is accurate and reliable. However, this bill complicates the Power Content Label by adding an additional data point: GHG emissions divided by retail sales. The resulting figure - the GHG emissions intensity of retail supplier power mix - may be simple, yet not simple to understand, at least from the customer's perspective. This is because the customer has no immediately available point of reference against which to gauge the GHG emissions factor. To give context and meaning to the GHG emissions intensity AB 1110 (Ting) PageJ of? disclosure, the author and committee may wish to amend the bill to require the disclosure of each retail supplier of electricity to include the emissions of GHGs associated with the state's overall annual retail electricity sales divided by the state's overall annual retail electricity sales, as determined by CEC in consultation with ARB. In addition, this bill calls for disclosure of each retail supplier's emissions of GHGs. However, the calculation required by this bill yields not GHG emissions, but GHG emissions intensity (the sum of all annual emissions of GHGs divided by annual retail sales). The author and committee may wish to amend the bill to replace reference to "emissions of greenhouse gases" with reference to "greenhouse gas emissions intensity." Prior/Related Legislation SB 1305 (Sher, Chapter 796, Statutes of 1997) first required retail suppliers to disclose their power sources. AB 162 (Ruskin, Chapter 313, Statutes of 2009) modified and streamlined power source disclosure reporting requirements for POUs and other electricity providers. SB 456 (Padilla, 2014) would have added two categories of fuel source information to the Power Content Label: energy storage and out-of-state generation. The bill passed the Senate on a vote of 35-0 but was never heard in the Assembly. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT: The Utility Reform Network (source) California Clean Power California State Association of Electrical Workers California State Pipe Trades Council Coalition of California Utility Employees Sierra Club California Vote Solar AB 1110 (Ting) PageK of? Western States Council of Sheet Metal Workers OPPOSITION: California Municipal Utilities Association Marin Clean Energy, unless amended Northern California Power Agency Sonoma Clean Power, unless amended ARGUMENTS IN SUPPORT: The author contends the disclosure of GHG emissions associated with end-use electricity consumption is entirely unregulated. Currently, a provider of electricity to end users can make any GHG emissions claim using any calculation methodology. Consumers are subjected to either no GHG emission information or potentially unsubstantiated or conflicting GHG emission information. California's electricity consumers need easy-to-understand and reliable GHG emissions disclosures so they can make informed decisions about their electricity usage in order to reduce their carbon footprint. ARGUMENTS IN OPPOSITION: Opponents argue the requirements of this bill conflict with reporting requirements established by the RPS program and AB 32 and, therefore, undermine both those programs, as well as certain suppliers' to provide a cleaner energy mix. Opponents further contend the bill cuts short related regulatory efforts at the CEC and CPUC. -- END --