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 --