BILL ANALYSIS Ó
AB 2206
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2206
(Williams) - As Introduced February 18, 2016
SUBJECT: Biomethane: interconnection and injection into common
carrier pipelines: research
SUMMARY: Requests a study on technical aspects of biomethane
related to its delivery in common carrier pipelines and impacts
on end uses of biomethane. Specifically, this bill:
1)Requests the California Council on Science and Technology
(CCST) to undertake and complete a study analyzing issues
relating to minimum heating value and maximum siloxane
specifications adopted by the California Public Utilities
Commission (CPUC) for biomethane before it can be injected
into common carrier gas pipelines.
2)Requires each gas corporation operating common carrier
pipelines in California to proportionately contribute to the
expenses to undertake the study with the cost recoverable in
rates if CCST agrees to undertake and complete the study.
3)Authorizes the CPUC to modify certain available monetary
incentives to allocate some of these incentive moneys to pay
for the costs of the study.
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4)Requires, if CCST agrees to undertake and complete the study,
the CPUC, within 6 months of its completion, to reevaluate
requirements and standards adopted for injection of biomethane
into common carrier pipelines and, if appropriate, change
those requirements and standards or adopt new requirements and
standards, giving due deference to the conclusions and
recommendations made in the study.
5)Requires CCST to:
a) Consider and evaluate other states' standards, the
source of biomethane, the dilution of biomethane after it
is injected into the pipeline, the equipment and technology
upgrades required to meet the minimum heating value
specifications, including the impacts of those
specifications on the cost, volume of biomethane sold,
equipment operation, and safety.
b) Consider whether different sources of biogas should have
different standards or if all sources should adhere to one
standard for the minimum heating value and maximum
permissible level of siloxanes. The study shall develop the
best science reasonably available and not merely be a
literature review.
c) Complete the study within nine months from entering into
a contract to complete the study.
6)Requires the CPUC to reevaluate its requirements and standards
for biomethane injection in common carrier pipelines and, if
appropriate, change those requirements and standards or adopt
new requirements and standards, giving due deference to the
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conclusions and recommendations made in the study by CCST.
EXISTING LAW:
1)Requires the CPUC to adopt pipeline access rules to ensure gas
corporations provide nondiscriminatory open access to the
pipeline system for biomethane, regardless of the type or
source of the biogas. (Public Utilities Code Section 784)
2)Requires the California Energy Commission (CEC) to identify
impediments that limit procurement of biomethane in
California, including, but not limited to, impediments to
interconnection and offer solutions to those impediments.
(Public Resources Code Section 25326)
3)Directed the Office of Environmental Health Hazard Assessment
(OEHHA) and the California Air Resources Board (CARB), in
consultation with other state agencies, to perform certain
tasks related to the human health effects of biogas and
biomethane. (Health and Safety Code Section 25421)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's statement: "California is a leader in the fight
against climate change. The state has adopted dozens of
policies to increase low carbon fuels, renewable energy,
energy efficiency, recycling, carbon sequestration and more.
But, California must reduce emissions from the gas sector and
encourage in-state refining of biofuel to meet long term
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climate goals. Natural gas use has been increasing in recent
years and will likely to continue to do so given the rapid
increase in gas fired power plants and the historically low
price in natural gas. Alternatively, biomethane, which can be
produced from biological material, can provide immediate and
significant greenhouse gas reductions and other benefits.
However, the cost to comply with pipeline regulatory
requirements make pipeline biomethane cost-prohibitive.
"The California Public Utilities Commission recently adopted
the regulatory requirements for biomethane injected into the
natural gas pipeline. These include both chemical contaminant
and thermal heating value requirements. However, the standards
apply to biomethane even when dilution in the pipeline means
the biomethane will only be 1% or even 10% of the total gas
that reaches the first end user. As such, the contaminant and
thermal values could be very different than if the biomethane
is 100%. AB 2206 directs the CPUC to contract with the
California Council on Science and Technology to analyze the
contaminant and thermal requirements including standards in
other states as well as the different sources of biomethane
and the impacts on cost and safety."
2)Background: In implementing the requirement to adopt pipeline
access rules for biomethane (pursuant to AB 1900 (Gatto),
Chapter 602, Statutes of 2012) the CPUC opened a rulemaking
proceeding in February 2013. In January 2014, the CPUC issued
Decision (D) 14-01-034 adopting concentration standards for 17
Constituents of Concern (these include ammonia, biologicals,
hydrogen, mercury, and siloxanes), and the monitoring,
testing, reporting, and recordkeeping protocols for biomethane
to be injected into the gas utilities' pipelines.
On April 9, 2014, the second phase of the same proceeding was
opened to consider who should bear the costs of meeting the
standards and requirements that the CPUC adopted in
D.14-01-034.
In June 2015, the CPUC adopted D.15-06-029 and concluded that
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the costs of complying with the standards and protocols
adopted by D.14-01-034 should be borne by the biomethane
producers. However, consistent with AB 1900 and to provide
initial support to the developing biomethane market, the
CPUC's decision adopts a policy and program of a five-year
monetary incentive program to encourage biomethane producers
to design, construct, and to successfully operate biomethane
projects that interconnect with the gas utilities' pipeline
systems so as to inject biomethane that can be safely used at
an end user's home or business. As described in this decision,
each biomethane project that is built over the next five
years, or sooner if the program funds are exhausted before
that period, can receive 50% of the project's interconnection
costs, up to $1.5 million, to help offset these costs upon the
successful interconnection and operation of the facility.
According to the author, since the new standards were adopted,
not one new pipeline biogas project has been built and the
only one currently in operation - the Point Loma Wastewater
Treatment facility in San Diego County - has said that it
could not meet the new standards.
The Point Loma facility is specifically mentioned in the CEC
report<1> on natural gas:
Because the heating value of biomethane is
generally lower than fossil natural gas, blending
with propane may be required to achieve heating
values of greater than 990 British thermal unit
(Btu) per standard cubic foot. Natural gas prices
have been much lower than the production cost of
---------------------
<1>
http://docketpublic.energy.ca.gov/PublicDocuments/15-IEPR-04/TN20
6126_20150916T124857_AB_1257_Natural_Gas_Act_Report_Strategies_to
_Maximize_the_Benef.pdf
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biomethane. For example, the Point Loma Wastewater
Plant produces biomethane at roughly $8.50 per
MMBtu compared to an average cost of $4.00 per
MMBtu for natural gas. As a result, biomethane
production is more expensive than natural gas
extraction.
3)Issues with heat rate and siloxanes. The issues raised by
this bill relate to the heat content of the biogas, which
is typically lower than natural gas.
It is unclear if the lower heat content of biogas will
adversely impact end use equipment (such as gas turbines,
water heaters, cook stoves, furnaces, etc.) which were not
designed to be used with lower heat gas. Current utility
heating values are 990 British thermal units per standard
cubic feet (btu/scf). Biomethane proponents prefer a heat rate
of 950 to 970 btu/scf. In an earlier decision the CPUC relied
on to reach its decision on heating value in this proceeding,
the CPUC found that heating value could have an effect on
auto-ignition, flashback, and combustion dynamics.
(D.06-09-039). The CPUC also relied on a National Gas Council
(NGC) paper done in conjunction with representatives of LNG
suppliers, natural gas pipelines, utilities, power generators,
industrial process gas users, appliance manufacturers, and
natural gas processors. This paper found that understanding
the historical composition of gas in a region is essential to
establishing acceptable interchangeability standards, and that
for home appliances, that the "Appliance performance degrades
when the appliance is operated with gas that is not
interchangeable with the gas used to tune the appliance when
it was first installed."
The CPUC went on to state:
The proponents of biomethane have not introduced any
scientific evidence in this proceeding to
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demonstrate that lowering the heating value to 950
or 970 btu/scf will not cause end use equipment
problems. Instead, the biomethane proponents rely on
the argument that since other states allow
biomethane to have a minimum heating value of 950
btu/scf, or close to that number, that California
should likewise lower its minimum heating value.
That argument is insufficient justification to lower
the heating value when such a change could affect
the integrity and safety of end use equipment. As
the 2009 GTI [Gas Technology Institute] Report
notes, 'Low BTU gas may have detrimental effects on
end use equipment and may not be compatible with
many systems.'
Siloxane, which is found in gas produced at wastewater
facilities and is a wasteproduct of detergents and cosmetics.
During combustion of biogas containing siloxanes, silicon is
released and can combine with free oxygen or various other
elements in the combustion gas. Deposits are formed containing
mostly silica or silicates but can also contain calcium,
sulphur, zinc and phosphorous. These deposits can accumulate
and must be removed by chemical or mechanical means.
According to the CPUC decision setting standards for pipeline
biomethane:
"The biomethane proponents have not provided any evidence to
substantiate its argument that these 17 constituents of concern
will not harm human health, or affect the integrity and safety
of the pipeline and pipeline facilities."
To the extent that CCST is able to "develop the best science
reasonably available and not merely be a literature review" as
specified in the bill, then this study may aid in settling
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these issues.
4)Support: Supporters state that the CPUC did not retain
independent experts to recommend standards to protect end use
equipment and that requiring CST to consider those standards
will help achieve the goals of AB 1900 and promote pipeline
biogas.
REGISTERED SUPPORT / OPPOSITION:
Support
BioEnergy Association of California
Clean Energy
Refuel
TSS Consultants
West Biofuels
Opposition
None on file
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Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083