BILL ANALYSIS �
AB 2196
Page 1
Date of Hearing: April 16, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2196 (Chesbro) - As Introduced: February 23, 2012
SUBJECT : Renewable energy resources
SUMMARY : Clarifies eligibility under the Renewables Portfolio
Standard (RPS) for "pipeline biomethane" and applies eligibility
and verification conditions comparable to conditions applied to
other eligible renewable energy sources such as solar, wind and
geothermal.
EXISTING LAW :
1)The RPS requires investor-owned utilities (IOUs),
publicly-owned utilities (POUs) and certain other retail
sellers of electricity to achieve the following renewable
energy portfolio targets:
a) 20 percent on average from January 1, 2011 to December
31, 2013.
b) 25 percent by December 31, 2016.
c) 33 percent by December 31, 2020 and each year
thereafter.
2)Provides that eligible renewable generation facilities must
"use" biomass, solar thermal, photovoltaic, wind, geothermal,
renewable fuel cells, small hydroelectric, digester gas,
limited non-combustion municipal solid waste conversion,
landfill gas, ocean wave, ocean thermal, and tidal current.
3)Establishes "balanced portfolio" requirements for procurement
based on the following three categories of renewable energy
products:
a) Renewable energy interconnected to the grid within,
scheduled for direct delivery into, or dynamically
transferred to, a California balancing authority (i.e.,
real renewable energy supplied to the California grid,
located within or directly proximate to the state). Of the
total renewable energy contracts executed after June 1,
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2010, the following percentages must fall into this
category:
i) At least 50 percent for the 2011-2013 compliance
period.
ii) At least 65 percent for the 2014-2016 compliance
period.
iii) At least 75 percent thereafter.
b) Renewable energy where substitute non-renewable energy
is used to provide a reliable delivery schedule into a
California balancing authority (i.e., firmed and shaped
energy where substitute energy is used to compensate for
delivery problems due to intermittent generation or
inadequate transmission capacity from a remote renewable
resource).
c) Renewable energy products not meeting either condition
above, including unbundled renewable energy credits (RECs)
(i.e., the original source of renewable energy must be
located within the western grid, but otherwise need not
have a physical connection to California). Of the total
renewable energy contracts executed after June 1, 2010, the
following percentages may fall into this category:
i) Not more than 25 percent for the 2011-2013
compliance period.
ii) Not more than 15 percent for the 2014-2016
compliance period.
iii) Not more than 10 percent thereafter.
4)Requires the California Energy Commission (CEC) to:
a) Certify eligible renewable energy resources according to
the criteria in the statute.
b) Design and implement an accounting system to verify
compliance, to ensure that electricity generated by an
eligible renewable energy resource is counted only once for
the purpose of meeting the renewables portfolio standard of
this state or any other state, to certify renewable energy
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credits produced by eligible renewable energy resources,
and to verify retail product claims in this state or any
other state.
c) Establish a system for tracking and verifying RECs that,
through the use of independently audited data, verifies the
generation of electricity associated with each REC and
protects against multiple counting of the same REC.
5)Requires the CEC, in consultation with the Air Resources Board
(ARB), to adopt regulations for enforcement of the RPS on
POUs, including providing for the imposition of penalties by
ARB pursuant to AB 32, upon referral by the CEC, for failure
to comply with the RPS. Requires penalties imposed on POUs to
be comparable to penalties imposed by the Public Utilities
Commission (PUC) on IOUs and other retail sellers.
6)Requires the PUC to establish a cost limit for each IOU
according to specified criteria, requires the PUC to report to
the Legislature by 2016 regarding whether IOUs can achieve 33
percent within the adopted cost limit, authorizes the PUC to
revise the cost limit once after 2016 if necessary, and
authorizes IOUs to stop procuring renewable energy beyond the
cost limit, unless additional renewable energy can be procured
without exceeding a de minimis increase in rates.
THIS BILL requires for pipeline biomethane (where electricity
generated by a natural gas power plant is considered RPS
eligible on the basis that the plant is generating electricity
using landfill or digester gas delivered from a remote source
via a common carrier pipeline) that the source of the fuel and
the delivery method:
1)Meets the balanced portfolio requirements outlined above.
2)Is verified pursuant to the required accounting system
(Western Renewable Energy Generation Information System or
WREGIS) or a comparable system, as determined by the CEC.
FISCAL EFFECT : Unknown
COMMENTS :
The RPS is the centerpiece of the California's effort to develop
a clean energy system and reduce pollution and greenhouse gas
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emissions associated with electricity consumption. Over the
past 10 years, the RPS statutes have evolved to include very
specific eligibility conditions and limits for various renewable
electricity technologies and products. Under the RPS, renewable
fuels must be "used" to generate electricity to be eligible for
the RPS.
The 2011 legislation which codified the current 33 percent by
2020 RPS goal (SBX1 2) also established product content
categories (or "buckets"), which place the highest value on
renewable energy that is directly delivered into California
because it has the greatest economic, environmental and
reliability benefits.
The anaerobic digestion of biodegradable organic matter produces
biogas, which consists of methane, carbon dioxide, and other
trace amounts of gases. Depending on where it is produced,
biogas can be categorized as landfill gas or digester gas.
Landfill gas is produced by decomposition of organic waste in a
municipal solid waste landfill. Digester gas is typically
produced from livestock manure, sewage treatment, or food waste.
Under the RPS statutes, the eligibility of "pipeline
biomethane," where landfill gas or digester gas from a distant
source is claimed as the fuel source for a natural gas power
plant, but is not physically delivered to and used by the power
plant to generate electricity and renewable energy credits, is
unclear.
Under a suspension order adopted by the CEC on March 28, 2012,
no new certifications, fuel sources, or contracts for pipeline
biomethane will be permitted. All existing certified
facilities/contracts are "grandfathered" under the existing
rules. The CEC deferred action on a handful of pending
certifications, indicating they want to collect data and
reconsider at a future meeting.
This bill would override the CEC suspension and reinstate RPS
eligibility for pipeline biomethane going forward, under
conditions comparable to other renewable energy sources. In
particular, the biomethane fuel source and pipeline delivery
method would be (1) considered in determining the appropriate
product content category or "bucket" and (2) subject to
verification by an independent tracking system.
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REGISTERED SUPPORT / OPPOSITION :
Support
California State Association of Electrical Workers
California State Pipe Trades Council
California Wind Energy Association
Clean Power Campaign
Coalition of California Utility Employees
Large-scale Solar Association
The Utility Reform Network (TURN)
Union of Concerned Scientists
Western States Council of Sheet Metal Workers
Opposition
None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092