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
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|Author: |Ting |
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|Version: |6/19/2015 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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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:
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| 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 | | | |
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| -- Solar | 5%| 2%|
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| -- Wind | 6%| 9%|
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| Coal | 0% | 8% |
AB 1110 (Ting) PageD of?
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| Large | 10% | 8% |
|Hydroelectric | | |
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| Natural Gas | 28% | 44% |
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| Nuclear | 22% | 9% |
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| Other | 0% | 0% |
|-----------------------+-----------+-------------|
|Unspecified sources of | 18% | 12% |
|power* | | |
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| TOTAL | | 100% | 100% |
| | | | |
|---------------------+-+-----------+-------------|
| | | | |
| | | | |
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|* "Unspecified sources of power" means |
|electricity from transactions that are not |
|traceable to specific generation sources. |
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| |
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|** Percentages are estimated annually by the |
|California Energy Commission based on the |
|electricity sold to California consumers during |
|the previous year. |
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| |
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|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. |
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| |
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| |
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| |
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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
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| 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% |
---------------------------------------------------------------
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| * "Unspecified sources of power" means electricity from |
| transactions that are not traceable to specific generation |
| sources at the time of purchase. |
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| |
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| ** 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. |
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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
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<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
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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.
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