CPUC and CEC Pitch CO2 Regs

The California Public Utilities Commission proposed carbon emissions restrictions on investor-owned utilities' in-state and imported power supplies pursuant to new state law SB 1368 December 13. A few days earlier, the California Energy Commission faced considerable opposition from municipal utilities for its proposed parameters under the same law. The statute requires that all power supplies' CO2 emissions be no more than those from combined-cycle natural gas-fired plants. Both agencies' rules cover new and renewed power contracts for five years or longer for baseload supplies. The law is aimed at reducing imported electricity from coal-fired power plants that spew out high levels of greenhouse gases and other pollutants. The CPUC's regulations, which go into effect by February, aim to ensure that the state meets its greenhouse gas reduction goals and to protect ratepayers from higher rates from a tax or toll on global warming gases. The standards also apply to direct-access providers and community-choice aggregators. The minimum emissions performance rules proposed by regulators are based on a power plant's carbon dioxide releases, not just the amount of electricity under contract. "We will look at the underlying resource, the power plant, and its underlying characteristics, regardless of the contract," said Julie Fitch, CPUC director of strategic planning. The proposed regs also tackle another contentious issue: how to determine emissions levels of megawatts from unidentified resources. There will be no guesstimate or proxy applied to the underlying mix of supplies. Instead, the rules require that the source of the electrons be specified. "It is highly unlikely that the load serving entities will need to enter into new or renewable power purchase agreements for five years or greater that are unspecified during the transition to a statewide greenhouse gas emissions limit," states the draft proposal by administrative law judge Meg Gottstein. Her proposal allows up-front emissions performance review of presumably complying renewables deals - in particular solar, wind, geothermal, and biomass contracts. Together with the grid operator, the CPUC will consider exemptions for reliability or high-cost claims on a case-by-case basis. There is no blanket exemption for small power projects. New and renewed qualifying-facility contracts are subject to the law. On December 8, the Energy Commission was rebuked by municipal utility representatives who insist that compliance with SB 1368 be left in their hands. The Energy Commission is charged with developing rules for the munis, which are not subject to CPUC jurisdiction. The two energy agencies interpret the law's mandate as requiring that all power supplies' emissions not exceed 1,000 lb. of CO2 per megawatt-hour. Munis continually object to having governmental agencies step on their local turf. SB 1368 requires that rules for munis be in place by next June. To meet that deadline, the CEC said, it must submit final regulations by February to the Office of Administrative Law for review. In contrast, the CPUC rules are not subject to the OAL. "The schedule is unworkable," said Bruce McLaughlin, representing the California Municipal Utilities Association. He explained that within the CMUA there are 40 munis, with diverse boards and power portfolios. He said the agency's proposed implementation will cause rules to be launched before the statutory deadline. Commission staff did not disagree. They'd "love to have more time," said Lisa DeCarlo, CEC staff attorney. Commissioner John Geesman suggested that self-compliance would be a viable option if the certification rules are as stringent as compliance provisions included in bond and other financing contracts that public power agencies routinely sign. He rejected the Natural Resources Defense Council's call to have his agency be the cop on the beat, noting that enforcement is not the Energy Commission's forte. "You're assuming a certain infallibility of an up-front review process," he noted. - Elizabeth McCarthy

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CPUC and CEC Pitch CO2 Regs

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