BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2196 (Chesbro) - Renewable energy resources.
Amended: August 6, 2012 Policy Vote: E,U&C 11-1 EQ 6-1
Urgency: No Mandate: No
Hearing Date: August 16, 2012 Consultant:
Bob Franzoia
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 2196 would clarify the definition of an
eligible renewable electrical generation facility to include a
facility that generates electricity utilizing biomethane
delivered through a common carrier pipeline if the source and
delivery of the fuel can be verified by the California Energy
Commission (CEC). This bill counts in full, as eligible
generation for purpose of complying with the Renewable Portfolio
Standard (RPS), electric generation that relies on procurement
of biomethane from a contract executed prior to January 1, 2012.
Fiscal Impact: $75,000 from the Public Utilities Reimbursement
Account in 2012-12 and 2013-14 for the partial cost of a
proceeding to modify existing Public Utilities Commission rules
related to RPS eligibility.
Up to $75,000 from the Energy Resources Programs Account
(General Fund) annually to verify source and delivery of
biomethane.
Background: As noted in the policy committee analysis, 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 fuel source and delivery method would be (1) considered in
determining the appropriate product content category under the
RPS and (2) subject to verification by the Western Renewable
Energy Generation Information System or a comparable independent
tracking system.
This bill aligns the RPS program statutory structure which
relies on and assumes that fuel supplies and the generation
facilities are coincidental, with the growth potential and
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delivery characteristics of the development of pipeline
biomethane where the fuel source and generation facility are
disconnected. This bill would override the CEC suspension and
reinstate RPS eligibility for pipeline biomethane for contracts
entered into after January 1, 2012, 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.
This bill will override the suspension of pipeline biomethane
and the associated generation facilities as eligible renewable
resources by the CEC and count as eligible under the RPS program
any procurement of pipeline biomethane under a contract executed
prior to January 1, 2012. It is important to distinguish this
bill from the CEC's suspension because the CEC determined
eligibility based on the certification status of a facility and
not on contracts for the fuel supply. Consequently, this bill
will grandfather an unknown number of contracts that never filed
for a certification or pre-certification of the facility with
the CEC.
Regardless of the grandfather date for the contracts, the
remaining issue for those contracts is product content
eligibility or what bucket into which the generation would
count. Because the product categories took effect in the spring
of 2011, the CEC has yet to consider into which bucket this
generation would count for POUs. The bill currently provides
that those contracts will "count in full" for purposes of the
RPS but does not specify a product content category or bucket.
The Western Renewable Energy Generation Information System is a
renewable energy registry and tracking system for the Western
Interconnection and is housed at the Western Electricity
Coordinating Council in Salt Lake City, UT. This entity
processes applications for account holder registration. Account
holders include load serving entities, balancing authorities,
generators, marketers, regulators and others.
This bill provides that any procurement of biomethane delivered
through a common carrier pipeline shall be subject to various
conditions and all sellers and purchasers of biomethane shall
comply with a system of tracking and verifying the use of
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biomethane. This system shall be established by the CEC in a
manner equivalent to the tracking system required by Public
Utilities Code 399.25 for the certification of renewal energy
resources. The CEC will likely employ a self-reporting system
coupled with random audits to comply with this requirement.
Preliminary information indicates the CEC will not require an
appreciable increase in staff workload to analyze the
self-reports and audit results.
Related Legislation: AB 1900 (Gatto) would require the Office of
Health Hazard Assessment, the California Energy Commission and
the Public Utilities Commission to take actions related to the
delivery of biomethane gas within the state for the purposes of
electricity generation. AB 1900, which contains contingent
enactment language with AB 2196, is on the Suspense File.
Proposed amendments related to grandfathered contracts are
intended to address policy issues.