BILL ANALYSIS Ó AB 2773 Page 1 Date of Hearing: April 27, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2773 (Quirk) - As Amended March 28, 2016 ----------------------------------------------------------------- |Policy |Rules |Vote:|10 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Utilities and Commerce | |14 - 0 | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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. AB 2773 Page 3 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 AB 2773 Page 4 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