BILL ANALYSIS Ó
AB 1144
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ASSEMBLY THIRD READING
AB
1144 (Rendon)
As Amended April 14, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+-----------------------+------------------|
|Utilities |12-0 |Rendon, Achadjian, | |
| | |Bonilla, Burke, Dahle, | |
| | |Eggman, | |
| | | | |
| | | | |
| | |Cristina Garcia, | |
| | |Jones, Quirk, | |
| | |Santiago, Ting, | |
| | |Williams | |
| | | | |
|----------------+------+-----------------------+------------------|
|Natural |9-0 |Williams, Dahle, | |
|Resources | |Cristina Garcia, | |
| | |Hadley, Harper, | |
| | |McCarty, Rendon, Mark | |
| | |Stone, Wood | |
| | | | |
|----------------+------+-----------------------+------------------|
|Appropriations |17-0 |Gomez, Bigelow, Bloom, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
AB 1144
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| | |Gallagher, Eduardo | |
| | |Garcia, Holden, Jones, | |
| | |Quirk, Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: This bill provides that unbundled renewable energy
credits produced by newly established wastewater treatment
facilities may be used to meet the first category of the Renewable
Portfolio Standard (RPS) content requirements. Specifically, this
bill:
1)Permits public agencies that operate wastewater treatment
facilities to sell their Renewable Energy Credits (RECs)
produced by methane from wastewater treatment process in
Category 1 under the Renewable Portfolio Standards.
2)Clarifies that wastewater treatment facilities put into service
on or after January 2016 are the only facilities that are
eligible for this qualification.
FISCAL EFFECT: According to the Appropriations Committee, the
fiscal effects are minor and absorbable state costs.
COMMENTS:
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Author's Statement: "AB 1144 can help provide financing for
wastewater energy infrastructure that will reduce methane air
pollution by placing public wastewater agency Renewable Energy
Credits in Category 1 of the Renewable Portfolio Standard system.
Sales of the more valuable Category 1 credits can support critical
private financing to build the infrastructure to capture and use
the methane to generate renewable electricity. Public agencies
suffer limits on their ability to finance infrastructure, as shown
during 2014 discussion of the water bond.
"Financing use of wastewater methane helps improve air quality,
especially in the South Coast Bain. The alternative to
capture-and-use is flaring the methane, which reduces but does not
eliminate the air quality impacts. AB 1144 will help public
agencies use their methane, with the latest technology to minimize
any potential impacts from generating electricity. "
1)What is biogas? Processes used by many agencies to treat
wastewater produce useful byproducts such as biosolids, biogas,
and methane that are and can increasingly be used as a steady
and reliable source of fuel for renewable energy production.
Wastewater agencies across the state are in the process of
developing and implementing renewable energy projects,
attempting to account for biogas in their planning process.
Still, significant potential exists for the expansion of
renewable generation at wastewater treatment plants across
California. A recent report from the California Energy
Commission estimated that there are about 90 megawatts of
potential renewable generation that is currently being flared,
or coming from smaller wastewater treatment plants that do not
have the technology in place to produce and capture biogas.
2)Ambiguity of Categories and Definition: SB 2 X1 (Simitian),
Chapter 1, Statutes of 2011-12 First Extraordinary Session, set
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up three different categories of renewable energy. Category 1,
the largest category with the most demand and highest prices,
includes renewable electricity produced in California. In
contrast, Category 3, with the smallest demand and lowest prices
"unbundles renewable energy credits" from the electricity and
allows the REC to be sold separately from the electricity. When
the entity that creates the renewable electricity uses its own
electricity and wishes to sell the REC, they are selling an
"unbundled REC."
During a recent California Public Utilities Commission (CPUC)
rulemaking process, parties to the proceeding made comments
suggesting that unbundled RECs from generators that meet the
Category 1 criteria should qualify for Category 1. The CPUC
ruled in December 2011 that all unbundled RECs belong in
Category 3.
3)Air Quality and Methane Capture: Treating wastewater and
organic material from sewers creates biogas, including methane,
as a byproduct. The Air Resources Board and state law treat
methane as a short-lived air and climate pollutant. Methane is
known to be 25 times more potent than carbon dioxide (CO2) in
trapping heat on Earth. According to the Global Methane
Initiative, capturing methane will reduce GHG pollution and
provides a source of energy that is produced and used locally.
Air quality regulators require wastewater agencies to minimize
methane emissions from their plants. Some agencies "flare"
their methane to reduce its harmful effects. Other wastewater
agencies capture methane for use as fuel to create electricity,
if they can afford the costs to build the infrastructure to
create that energy. These agencies typically use the energy
they create to operate their treatment facility. This bill
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attempts to create a financing mechanism for future smaller
facilities to capture and use the methane they naturally
produce.
4)Part of a larger dialogue: Water-Energy Nexus: The State of
California has shown increasing interest in what is referred to
as the Water-Energy Nexus, the infrastructural, financial, and
environmental connection between water and energy.
Transportation and treatment of water, treatment and disposal of
wastewater, and the energy used to heat and consume water
account for nearly 20% of the total electricity and 30% of
non-power plant related natural gas consumed in California.
A recent rulemaking at the CPUC pushed for partnership between
energy utilities and agencies and the water sector to co-fund
programs that reduce energy consumption by the water sector
( R.13-12-011 ). Wastewater treatment plants that convert a waste
product into an energy and revenue source are a cost-effective
example of that type of partnership. Treating wastewater
naturally produces methane, and by capturing and processing
methane, the plant is able to produce power to treat more water.
Additionally, on-site production offsets purchased electricity,
which contributes to the closed-loop cycle that this bill
attempts to support.
This bill attempts to develop a more robust market that
incentivizes biogas power. Given Governor Brown's new energy
goals, this bill would allow California wastewater treatment
plants to tap into this unmet potential, expand biogas-powered
generation capacity, and potentially help California meet its
RPS goals, as well as its goal of 50% diversion of organic waste
from landfills by 2020.
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5)Concerns and Opposition: In their opposition letter, the
Utility Reform Network raised the concern that this bill will
create an exception to the bundled product definition for
electricity that is used at a facility owned by a public entity
and will potentially result in "double counting" of generation,
which will erode the overall RPS standard and statewide benefits
of the program.
In addition, the California Municipal Utilities Association and
the Northern California Power Agency both raised concerns that
this bill sets a precedent that legislative action is required
to make other unbundled RECs eligible for Bucket 1.
Analysis Prepared by:
Allegra Roth / U. & C. / (916) 319-2083 FN: 0000418