BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 682 - Calderon Hearing Date:
April 28, 2011 S
As Introduced: February 18, 2011 FISCAL B
6
8
2
DESCRIPTION
Current law directs the CPUC to adopt tariffs and standard
contracts (aka feed-in-tariff or FIT) for the purchase of
eligible renewable generation for projects sized to 3 MW from
customers and generators located in the territories of the
state's electrical corporations (IOUs) and local publicly owned
utilities (POUs).
Current law directs the CPUC to establish a FIT for the purchase
of excess electricity generated from combined heat and power
units with a generating capacity of not more than 20 megawatts
and that meet specified emissions and efficiency standards.
This bill directs the CPUC to establish a FIT for the purchase
of electricity generated by fuel cells or microturbines that use
waste or stranded gas associated with oil and gas extraction or
a microturbine that runs off of any fuel source.
Current law requires the Air Resources Board (ARB) to issue
guidance to local air districts on the permitting or
certification of electrical generation technologies that address
best available control technology determinations.
This bill requires microturbines to meet the standards in that
guidance determination.
BACKGROUND
Feed-In-Tariffs - These contracts present a simple mechanism for
customers and generators who generate eligible renewable
resources to sell power to a utility at predefined terms and
conditions, without contract negotiations. The FIT operates as a
"must take" contract in a utility's renewable portfolio. That
is, if the power is generated the utility must take it at
predefined terms and prices. The CPUC has implemented FITs for
renewable generation facilities sized up to 1.5 MW and is in the
process of implementing SB 32 (Negrete-McLeod, 2009) which
expanded the eligible system size up to 3 MW for 10, 15, or 20
year contract periods. The program is a subset of the RPS
program.
FITs were also mandated by the Legislature in 2007 for combined
heat and power (CHP) that is sometimes referred to as
cogeneration. Those tariffs are also pending implementation by
the CPUC. Normally natural gas is used as the fuel source for
CHP.
Combined heat and power technologies produce both electricity
and steam from a single fuel at a facility located near the
consumer. These efficient systems recover heat that normally
would be wasted in an electricity generator, and save the fuel
that would otherwise be used to produce heat or steam in a
separate unit. CHP not only avoids electricity produced at
remote power plants, it displaces electricity or gas used for
onsite heating or cooling. The combined thermal efficiency
benefits of CHP at the point of use can be significant. The
state's current standard is that gas-fired CHP plants must have
a combined thermal efficiency of 60%.
COMMENTS
1. Author's Purpose . In many cases throughout California,
large amounts of waste gas are produced that, when run
through a turbine or fuel cell, could provide more
electricity than is needed for a particular facility.
However, because the excess electricity generated can only
be sold to the utilities, which have not been willing to
purchase the power or charge price-deterring
interconnection fees, the gas is flared. The result of
these conditions renders any capital investment in cleaner,
more efficient uses of waste gas uneconomical. Current PUC
rules allow for net metering, but any electricity generated
above that required by the operator requires offloading the
electricity. In these cases, the producer pays the utility
instead of the utility paying the producer.
2. Utility Electricity Purchases . Existing FITs have been
approved and designed to help the state achieve its
ambitious climate mitigation and renewable energy goals.
There is no evidence that the FIT proposed by this bill
will assist in that effort. The utilities have little need
for mandated generation purchases that actually increase
the GHG emissions of their electric generation portfolios.
In this instance, although the mandated purchase may
advance the goals of the seller or host of the generation
facility, data is lacking to determine whether buying that
generation will advance the state's goals or the GHG
reduction mandates currently pending on the IOUs.
3. Emissions Impact Unclear . The author reports that the
ARB has done some emissions analysis on the waste gas
emitted during oil and gas extraction so that those
emissions can be compared with those that would result from
generating electricity from that same waste gas using
microturbines or fuel cells and flaring it. That data is
not yet available. The author and committee may wish to
consider striking the content of this bill and instead
mandating that the ARB study the emissions issues and
report back to the Legislature in an effort to secure the
data and value the mandated electricity purchase under the
provisions of this bill.
4. Feed-in-Tariff Limits . Should the committee choose to
move the FIT proposed by this bill without studying its
necessity and impact, the author and committee should
consider limiting the total megawatt procurement required,
such as 50 MW under the FIT to a statewide cap proportioned
among the state's IOUs; whether the must-take obligation
should also apply to publicly owned utilities; whether the
must-take should apply to the state's smaller IOU; and
whether the tariff price should be capped at a specified
price such as the market price referent.
5. Prior Legislation. SB 1465 (Lowenthal, 2010)
established a FIT for generation that uses a microturbine
with a generating capacity of not more than one megawatt
that runs off of waste or standard gas associated with the
extraction of oil or gas. Dropped by author.
POSITIONS
Sponsor:
California Independent Petroleum Association
Support:
Capstone Turbine Corporation
Oppose:
California Public Utilities Commission (unless amended)
PacifiCorp (unless amended)
Southern California Edison
Kellie Smith
SB 682 Analysis
Hearing Date: April 28, 2011