BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2773


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          Date of Hearing:  April 27, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2773 (Quirk) - As Amended March 28, 2016


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          |Policy       |Rules                          |Vote:|10 - 0       |
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          |             |Utilities and Commerce         |     |14 - 0       |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the California Public Utilities Commission  
          (PUC) to modify the minimum heating value, the siloxane trigger,  
          and lower action levels of biomethane.  Specifically, this bill:  
           


          1)Requires the PUC to modify the minimum heating value  
            requirement of biomethane to allow for the injection of  








                                                                    AB 2773


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            biomethane without first being blended upstream with other  
            fuel to account for the downstream blending occurring  
            naturally in the pipeline. 


          2)Requires the PUC 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 PUC to 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. 





          4)Requires the PUC 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.
          FISCAL EFFECT:


          1)Increased one-time costs of $118,480 (PUC Utilities  
            Reimbursement Fund) to re-open an existing proceeding or open  
            a new proceeding on methane to consider the blending of gas  
            downstream, lowering the minimum heating value and modifying  
            siloxane levels.  This includes an Administrative Law Judge  
            and Analyst.


          2)Ongoing annual costs of $263,305 (PUC Utilities Reimbursement  
            Fund) to devote a full time engineer to the proceeding and  
            provide ongoing training and enforcement expertise.










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          This bill will require PUC to either reopen R.13-02-008, or   
          open a new proceeding, to consider these issues.  Since these  
          issues involve impacts on the safety and reliability of the gas  
          pipeline system and on gas appliances, evidentiary hearings on  
          the impact of such changes are likely.


          COMMENTS:


          1)Purpose.  According to the author, the standards developed for  
            biomethane injection into distribution pipelines have been so  
            stringent that no pipeline biomethane projects have been  
            developed since the implementation of the standards in 2014.   
            AB 2773 directs the PUC to expedite the review and  
            modification of standards  taking into account recent  
            experiences and challenges in meeting the current standards .   
            The author further states that this bill will require the PUC  
            to consider practicable approaches to delivering the same  
            reliability of natural gas delivered while encouraging  
            in-state biomethane production. 





          2)Background. The PUC opened a rulemaking proceeding in February  
            2013. In January 2014, the PUC issued Decision (D) 14-01-034  
            adopting concentration standards for 17 Constituents of  
            Concern (these include ammonia, biologicals, hydrogen,  
            mercury, and siloxanes), as well as 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 PUC adopted in  








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            D.14-01-034.  In June 2015, the PUC 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.  





          3)Related Legislation.  AB 2206 (Williams) requires the PUC to  
            contract with the California Council on Science and Technology  
            to conduct a study evaluating siloxane and minimum heating  
            value requirements.  This bill is pending in this Committee.



          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081