BILL ANALYSIS �
AB 2390
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Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2390 (Chesbro) - As Amended: March 29, 2012
SUBJECT : Electricity: biomass: incentive programs
SUMMARY : Requires the California Energy Commission (CEC) to
provide incentives to producers and collectors of biomass
material associated with forest fuel reduction and fire
prevention activities. Specifically, this bill :
1)Defines "community scale biomass facilities" as a biomass
electric generation facility under three megawatts located in,
and that uses as a fuel source only forest biomass materials
from, an area identified as high or medium-priority landscapes
at risk of wildfire.
2)Defines "eligible biomass facility" as a biomass electric
generation facility that uses forest biomass materials as a
fuel source from an area identified as high or medium-priority
landscapes at risk of wildfire.
3)Requires the CEC, in consultation with CalFire (the California
Department of Forestry and Fire Prevention), to establish an
incentive program to compensate producers and collectors of
biomass material delivered to eligible biomass facilities for
use as a fuel source when those materials are associated with
forest fuel reduction and fire prevention activities.
4)Requires the CEC to encourage the maximum amount of hazardous
forest fuels removal.
EXISTING LAW
1)Requires investor owned utilities (IOUs), publicly owned
utilities (POUs), and retail sellers to meet the California
renewables portfolio standard (RPS).
2)Requires all RPS-eligible facilities must be within the
Western Electricity Coordinating Council (WECC), Categories 1,
2 or 3.
3)Establishes procurement category requirements for eligible
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generation and deadlines for reaching targets:
Category 1 : Directly connected or scheduled to a California
Balancing Authority, at least:
50% by 12/2013
65% by 12/2016
75% by 12/2020 and thereafter
Category 2 : Must be located within the WECC transmission grid
and the electricity must be firmed and shaped with substitute
electricity to provide incremental electricity that is
scheduled into a California Balancing Authority, no minimum or
maximum.
Category 3 : Unbundled renewable energy certificates, no more
than:
25% by 12/2013
15% by 12/2016
10% by 12/2020 and thereafter
4)Requires that facility counted toward RPS to have a first
point of interconnection to the transmission network outside
the state, within the WECC service area.
FISCAL EFFECT : Unknown
COMMENTS :
1)This bill directs the CEC to establish an incentive program to
compensate producers and collectors of biomass material
related to forest fuel reduction and fire prevention
activities delivered to eligible biomass facilities.
Combined fire suppression and restoration costs (CALFIRE,
United State Forest Service and the Bureau of Land Management)
have averaged (over 5 years) $1.2 Billion a year. Downed power
lines comprise one significant ignition source of these fires
causing ratepayer/utility exposure to litigation costs,
utility equipment replacement costs and increased insurance
premiums. Vegetation management in High and Medium Priority
Landscapes can reduce fire occurrence and impacts, as well as
ratepayer exposure to these costs.
2)Biomass generation can use this waste material in
RPS-certified facilities. However, the costs of handling
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biomass fuels can be substantial. According to CALFIRE, "One
of the greatest challenges to developing bioenergy from woody
biomass is that current market-based pricing mechanisms for
electricity, transportation, and waste management do not fully
cover the cost to collect and transport biomass feedstock to
the site of utilization. Pricing mechanisms have not
adequately monetized the nonmarket benefits to local
communities and the state described above." Adding an economic
value to removing this removing this waste can reduce the
costs of vegetation management, provide renewable energy fuel
and provide local economic development in rural areas.
In April 2012 the Imperial Irrigation District signed a
contract with a facility to provide 45 Megawatts (MW) of
generation from a local biomass generation facility.
PG&E currently has 34 contracts with biomass facilities for
624 MW of power. The majority of these facilities are
currently online. About 90 MW of these facilities are under
construction or are offline for other reasons (such as
feedstock issues).
3)Prior to 2011, biomass generation facilities received funds
via a ratepayer charge known as the Public Goods Charge (PGC).
The PGC funded Research, Development and Demonstration
programs; energy efficiency programs, and renewable energy
programs. The biomass generation facilities received funds
form the renewable energy program component of the PGC. In
August 2011 the Public Goods Charge (PGC) expired because the
Legislature had not yet passed a bill to reauthorize it. With
the expiration of the funding for the biomass contracts, PGC
funding will no longer be available.
At the end of 2011 the PUC adopted a decision establishing an
Electric Program Investment Charge (EPIC). This decision was
followed by a staff report to make recommendations on
continued funding for renewables and Research, Development,
Demonstration and Deployment (RDD&D), including potential
modifications to existing programs that were previously funded
by the PGC and recommendations for any additional programmatic
activities that might be supported by EPIC funds.
The PUC staff report recommended the following distribution of
EPIC funds:
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Applied research and development. Funding at the level
of $50 million per year.
Technology demonstration. Funding at the level of $35
million per year, with at least 20%, specifically set aside
to support commercialization of bioenergy technologies.
Market support . No funding recommended at this time
because renewable developers can seek market support
through incentives available from other programs, such as
the Self Generation Incentive Program (SGIP).
Market facilitation . Funding in this area is recommended
at $15 million per year, to cover the areas of program
tracking and market research, regulatory assistance and
streamlining, and workforce development.
Note that within the allocation of funds, the PUC staff report
recommends allocating 20% of the Technology Demonstration
funds to bioenergy demonstration projects based on input from
CalFire, California Department of Food and Agriculture,
CalRecylce and the CEC.
1)Assessment of Biomass Nationally . According to the Western
Governor's Association Task Force, "The Biomass Task Force has
done extensive analysis of supply at the production cost of 8
cents / kWh. Our analysis, using the methodology put forward
by the WGA Quantitative work group is that 10,000 MW of
produced electricity would be available by 2015 at that
price."
The report also recommended that, "The Governors should work
with the state utility commissions to ensure that utility
renewable purchase programs (RPS or otherwise) recognize the
firming capacity of biomass by establishing the appropriate
price structure. The ability of biomass to provide constant
power is both a benefit in and of itself and it can also be
used to address the intermittent nature of other resources."
2)Assessment of Biomass in California. According to the CEC's
report on Increased Woody Biomass Use for California, "The
assessment of forest lands suggests that an increase in woody
biomass harvests will come 1) as a complement to the existing
flow of lumber used in California that is currently sourced in
roughly equal proportions from California itself, Oregon and
other western states, and western Canada, or 2) as a byproduct
from fuels reduction projects in accessible fire prone areas
in California. Forestland cover and forest inventory data
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suggest that forest fires are significantly reducing the
carbon content of Californias 3)forests. Although there is
increasing evidence that well designed and implemented fuels
reduction projects can reduce future fire risk and that the
sale of the harvested products can reduce project costs, there
are also numerous cases in which thinning projects that
produced biomass were not that effective in reducing the fire,
insect, or disease risks. In addition, the goals and
constraints of forestland owners or managers may limit the
potential areas in which projects could be implemented. In
particular, many family forest landowners implement few land
management measures of any kind, and investor or corporate
ownerships often avoid projects that do not have a short term
positive cash flow. The limited number of energy plants that
use woody biomass are located more than 30 miles from many
forest parcels, a distance for which transportation costs
alone can be greater than the market price for delivered
biomass. An expansion in the number and distribution of energy
plants would be needed to increase biomass energy generation
significantly."
The author may wish to consider an amendment to require that
biomass facilities receiving incentives must meet best
management standards to ensure that biomass fuel use does not
adversely impact to water quality, soil productivity,
biodiversity and wildlife.
Pending Legislation: AB 723 (Bradford) reauthorizes the Public
Goods Charge.
REGISTERED SUPPORT / OPPOSITION :
Support
California Biomass Energy Alliance (CBEA)
Covanta Energy
Independent Energy Producers (IEP) (sponsor)
Trinity Public Utilities District (TPUD)
Opposition
None on file.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
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319-2083