California\u2019s power industry can expect eased carbon cap-and-trade system requirements under changes the California Air Resources Board proposed July 18. \tThe amendments would provide free emissions allowances for generators operating under so-called legacy power sales contracts between generators and utilities before the state enacted its climate protection law, AB 32. Further, the revisions would clarify the definition of resource shuffling\u2014i.e., substituting low carbon power for electricity from a high carbon plant to reduce its compliance obligation. It also would end a requirement that companies sign sworn attestations they have not engaged in the forbidden practice of resource shuffling. The concern is related to power imported into California. \tThe amendments additionally would give free emissions rights to natural gas providers to cover at least a portion of their obligation under the cap-and-trade program. \tThe Air Board\u2019s move on legacy contracts came after California Public Utilities Commission president Mike Peevey wrote to the board last month urging it to resolve the dispute between many generators and utilities that buy their power. \tGenerators with legacy contracts, Peevey noted in his June 5 letter, are unable to recover the cost they now must bear to purchase emissions rights under the cap-and-trade system. The contracts don\u2019t allow the cost of the emissions rights to be passed on to utilities and ultimately to ratepayers. \tBoth the CPUC and Air Board\u2014with limited success\u2014have encouraged legacy contract holders and utilities to renegotiate their agreements to allow the pass-through of the cost of buying emissions rights, according to Peevey. The Air Board has focused on combined heat and power facilities that sell power to the grid. The CPUC has focused on contracts between generators and investor-owned utilities. Peevey urged the Air Board to treat both types of legacy contract holders equally in its amendments to solve the problem. \tUnder the amendments, combined heat and power facilities would be exempted for their emissions related to their thermal power for the first compliance period (2013-2014) under the program. This, according to the Air Board, would make their remaining total emissions exempt from cap-and-trade altogether. \tMeanwhile, generators holding legacy power sales contracts with utilities would get free emissions rights from the Air Board for 2013 and 2014 based on their emissions in 2012. \tOn imported power, the amendments would: \u2022\tRemove a requirement to submit an annual attestation stating a company has not engaged in resource shuffling; and \u2022\tClarify what is considered to be resource shuffling by defining it as any attempt to substitute clean energy for dirty energy to reduce the need for a source of dirty energy to comply with the cap-and-trade requirements. Substitutes would be okay under 13 specific conditions, including, for instance, those required to maintain reliability during transmission outages, deliveries needed due to expiration of a contract, and substitutions for power from facilities that are retired. \tThe amendments would make a number of other changes to clarify requirements and streamline paperwork required under the cap-and-trade program. \tIn addition, they would establish new methods for generating offsets that can be used in lieu of actual emission reductions at a facility to meet its declining emissions cap. Offsets would become available for methane emissions reduction projects at mines and projects to reduce greenhouse gas emissions associated with rice farming. \tThe Air Board is expected to adopt the amendments Oct. 24, said Steve Cliff, agency climate change program evaluation branch chief.