BILL ANALYSIS Ó
AB 2773
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2773
(Quirk) - As Introduced March 28, 2016
SUBJECT: Biomethane
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to modify the minimum heating value, the siloxane
trigger, and lower action levels of biomethane. Specifically,
this bill:
1)Requires the CPUC to modify the minimum heating value
requirement of biomethane to allow for the injection of
biomethane without first being blended upstream with other
fuel to account for the downstream blending occurring
naturally in the pipeline.
2)Requires the CPUC to consider modifying the minimum heating
value for biomethane from 990 British thermal units per
standard cubic foot (Btu/scf) to 970 Btu/scf.
3)Requires the CPUC modify the siloxane trigger level and lower
action level to reflect a standard that can be met by siloxane
processing equipment manufacturers and suppliers and for which
those manufacturers and suppliers are willing to provide
performance guarantees.
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4)Requires the CPUC to consider modifying the siloxane trigger
level to 1.0 milligram of silicon per square meter (mg Si/m3)
and the lower action level to 2.5 mg Si/m3.
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: "The standards developed for biomethane
injection into distribution pipelines have been so stringent
that no pipeline biomethane projects have been developed since
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the implementation of the standards in 2014. AB 2773 directs
the [CPUC] to expedite the review and modification of siloxane
standard and minimum heating value requirement by taking into
account recent experiences and challenges in meeting the
current standards and consideration of practicable approaches
to delivering the same reliability of natural gas delivered to
consumers while encouraging in-state biomethane production."
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
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
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costs, up to $1.5 million, to help offset these costs upon the
successful interconnection and operation of the facility.
Since s single biogas project is in operation - the Point Loma
Wastewater Treatment facility in San Diego County.
The Point Loma facility is specifically mentioned in a 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
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
--------------------------
<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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cubic feet (btu/scf). Biomethane proponents prefer a heat rate
of 950 to 970 btu/scf.
In an earlier decision, (D.06-09-039), 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
paper done in conjunction with representatives of liquefied
natural gas 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
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
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many systems.'
Siloxane 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.
4)AB 2206 (Williams) 2016: A substantially similar bill, AB 2206
(Williams), passed unanimously out of the Assembly Utilities
and Commerce Committee on April 6, 2016. AB 2206 requests a
study on technical aspects of biomethane related to its
delivery in common carrier pipelines and impacts on end uses
of biomethane. Specifically, AB 2206:
a) Requests the 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.
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b) 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.
c) Authorizes the CPUC to modify certain available monetary
incentives to allocate some of these incentive moneys to
pay for the costs of the study.
d) 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)Arguments in Support: According to the Coalition for Renewable
Natural Gas, the sponsor of this bill, "Renewable natural gas
[RNG] is an alternative, clean and domestic energy resource
used to generate renewable electric power, renewable heat, and
the lowest carbon-intensity transportation fuel available. RNG
utilization, particularly as transportation fuel is an
important component in a truly diversified energy portfolio
necessary to achieve the State's greenhouse gas emissions
reduction and related climate change objectives. Our members
produce 90% of the RNG in North America for more than 55
projects operating successfully (in some cases for more than
30 years) in 17 different states. Unfortunately, none of these
RNG projects have been developed or RNG volumes have been
produced in California. Instead, they have been and are
continuing to be developed and produced in states whose
natural gas pipeline companies have a minimum heating value
requirement no greater than 970 btu/scf, and who do not impose
any standard for maximum siloxane concentration."
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6)Arguments in Opposition: Proponents of biomethane have
not introduced scientific evidence to demonstrate that
lowering the heating value to 950 or 970 btu/scf will not
cause end use equipment problems. 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.
Further, proponents have not provided evidence to
substantiate the argument that the 17 constituents of
concern, including siloxane, will not harm human health,
or affect the integrity and safety of the pipeline and
pipeline facilities.
7)Related Legislation:
AB 2206 (Williams) 2016: Requires the CPUC to contract with
the CCST to conduct a study evaluating siloxane and minimum
heating value requirements. Pending in the Assembly Natural
Resources Committee.
8)Prior Legislation:
AB 1900 (Gatto), Chapter 602, Statutes of 2012: Requires
OEHHA, in consultation with CARB, the Department of Toxic
Substances Control, the Department of Resources Recycling and
Recovery, and the California Environmental Protection Agency,
to compile a list of constituents of concern that could pose
risks to human health and that are found in biogas. Requires
OEHHA to determine the health protective levels for that list
and requires CARB to identify realistic exposure scenarios and
the health risks associated with those scenarios. Requires
CARB to determine the appropriate concentrations of those
constituents. Requires the CPUC to adopt standards for
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biomethane that specify the concentrations of constituents of
concern that are reasonably necessary to protect public health
and ensure pipeline integrity and safety, and adopt
requirements for monitoring, testing, reporting, and
recordkeeping, as specified.
REGISTERED SUPPORT / OPPOSITION:
Support
Coalition for Renewable Natural Gas (Sponsor)
Opposition
None on file.
Analysis Prepared by:Darion Johnston / U. & C. / (916) 319-2083
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