Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board (state board), to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers, and requires the Energy Commission to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2019, the state board, in consultation with California balancing authorities, as defined, to update its inputs or methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose. The bill would require the inputs or methodology to distinguish between those emissions associated with electricity from unspecified sources that is purchased within California balancing authority areas, as defined, and those emissions associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council. The bill would require the state board to regularly update the inputs to its methodology and authorize the state board to incorporate additional measures and forms of differentiation that are designed to improve the accuracy of the calculations and that support the states initiatives for reducing emissions of greenhouse gases. The bill would authorize the state board to not update its inputs or methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources if it determines that updating the inputs or methodology is infeasible or is not appropriate because the administrative burden is excessive and differentiating is unlikely to materially improve the accuracy of the calculations needed for the state programs designed to regulate emissions of greenhouse gases. The bill would require the state board, in consultation with the Independent System Operator and California balancing authorities, to report to the Legislature by January 1, 2019, on any barriers to developing an enhanced methodology, based on recorded generation operations data, for the calculation of hourly greenhouse gas emissions associated with electricity from unspecified sources, as specified. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), Commission) to, in consultation with the State Air Resources Board (state board), to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers customers, and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2019, the state board, in consultation with the Independent System Operator (ISO), California balancing authorities, as defined, to update its inputs or methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose. The bill would require the inputs or methodology to distinguish between those emissions associated with electricity from unspecified sources that is purchased within California balancing authority areas, as defined, and those emissions associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council. The bill would require the state board to regularly update the inputs to its methodology and authorize the state board to incorporate additional measures and forms of differentiation that are designed to improve the accuracy of the calculations and that support the states initiatives for reducing emissions of greenhouse gases. The bill would authorize the state board to not update its inputs or methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources if it determines that updating the inputs or methodology is infeasible or is not appropriate because the administrative burden is excessive and differentiating is unlikely to materially improve the accuracy of the calculations needed for the state programs designed to regulate emissions of greenhouse gases. The bill would require the state board, in consultation with the ISO Independent System Operator and California balancing authorities, to report to the Legislature by January 1, 2019, on any barriers to developing an enhanced methodology, based on recorded generation operations data, for the calculation of hourly greenhouse gas emissions associated with electricity from unspecified sources, as specified. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board (state board), to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2019, the state board, in consultation with the Independent System Operator (ISO), to update its methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose. The bill would require the methodology to distinguish between those emissions associated with electricity from unspecified sources that is purchased within California balancing authority areas, as defined, and those emissions associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council. The bill would require the state board to regularly update its methodology and authorize the state board to incorporate additional measures and forms of differentiation that are designed to improve the accuracy of the calculations, including seasonal and time-based differentiation. calculations and that support the states initiatives for reducing emissions of greenhouse gases. The bill would authorize the state board to not update its methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources if it determines that updating the methodology is infeasible or is not appropriate because the administrative burden is excessive and differentiating is unlikely to materially improve the accuracy of the calculations needed for the state programs designed to regulate emissions of greenhouse gases. The bill would require the state board, in consultation with the ISO and California balancing authorities, to report to the Legislature by January 1, 2019, on any barriers to developing an enhanced methodology, based on recorded generation operations data, for the calculation of hourly greenhouse gas emissions associated with electricity from unspecified sources, as specified. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board, Board (state board), to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2019, the State Air Resources Board (state board), state board, in consultation with the Independent System Operator (ISO), to update its methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose, purpose. The bill would require the methodology to distinguish between those emissions associated with electricity from unspecified sources that is purchased within California balancing authority areas, as defined, and, distinctly, and those emissions associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council. The bill would require the state board to regularly update its methodology and authorize the state board to incorporate additional measures designed to improve the accuracy of the calculations, including seasonal and time-based differentiation. The bill would require the state board, in consultation with the ISO and California balancing authorities, to report to the Legislature by January 1, 2019, on any barriers to developing an enhanced methodology, based on recorded generation operations data, for the calculation of hourly greenhouse gas emissions associated with electricity from unspecified sources, as specified. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board, to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2020, 2019, the State Air Resources Board, Board (state board), in consultation with the Independent System Operator, to adopt a Operator (ISO), to update its methodology for the calculation of hourly emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose, purchased within California balancing authority areas, as defined, and, distinctly, associated with electricity from unspecified sources imported into California from other different subregions of the Western Electricity Coordinating Council. The bill would require California balancing authorities to assist the State Air Resources Board by providing all relevant data needed for purposes of developing the methodology and calculating the hourly emissions of greenhouse gases. The bill would require the state board to regularly update its methodology and authorize the state board to incorporate additional measures designed to improve the accuracy of the calculations, including seasonal and time-based differentiation. The bill would require the state board, in consultation with the ISO and California balancing authorities, to report to the Legislature by January 1, 2019, on any barriers to developing an enhanced methodology, based on recorded generation operations data, for the calculation of hourly greenhouse gas emissions associated with electricity from unspecified sources, as specified. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board, to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2020, the State Air Resources Board, in consultation with the Independent System Operator, to adopt a methodology for the calculation of hourly emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose, purchased within California balancing authority areas, as defined, and associated with electricity from unspecified sources imported into California from other subregions of the Western Electricity Coordinating Council. The bill would require California balancing authorities to assist the State Air Resources Board by providing all relevant data needed for purposes of developing the methodology and calculating the hourly emissions of greenhouse gases. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

Existing law requires every retail supplier that makes an offer to sell electricity that is consumed in the state to disclose its electricity sources and the associated greenhouse gas emissions intensity for the previous calendar year. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission), in consultation with the State Air Resources Board, to adopt a methodology for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers and to calculate greenhouse gas emissions intensity associated with statewide retail electricity sales based on greenhouse gas emissions for total California system electricity.

This bill would require, by January 1, 2020, the State Air Resources Board, in consultation with the Independent System Operator, to adopt a methodology for the calculation of hourly emissions of greenhouse gases associated with electricity from unspecified sources, a term defined in existing law but revised for this purpose, purchased within California balancing authority areas, as defined, and for associated with electricity from unspecified sources imported into California from other subregions of the Western Electricity Coordinating Council. The bill would require California balancing authorities to assist the State Air Resources Board by providing all relevant data needed for purposes of developing the methodology and calculating the hourly emissions of greenhouse gases. The bill would require the Public Utilities Commission and the Energy Commission to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by entities under the respective jurisdiction of each. Because a local publicly owned electric utility would be required to incorporate the methodology into programs addressing the disclosure of the emissions of greenhouse gases and the procurement of electricity by the utility, this bill would impose a state-mandated local program.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill are within the act and require action by the commission to implement its their requirements, a violation of which would be a crime, this bill would impose a state-mandated local program by creating a new crime.

The Warren-Alquist State Energy Resources Conservation and Development Act establishes the State Energy Resources Conservation and Development Commission (Energy Commission), and requires it to certify sufficient sites and related facilities that are required to provide a supply of electricity sufficient to accommodate projected demand for power statewide.

This bill would require the Energy Commission to ensure that by January 1, 2019, no more than 6%, and by January 1, 2024, no more than 3%, of the electricity consumed in the state is generated from coal-fired generation resources, and to ensure that by January 1, 2026, no electricity consumed in the state is generated from a coal-fired generation resource.

Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing boards. The Public Utilities Act requires the PUC to review and approve, modify, or reject a procurement plan for each electrical corporation in accordance with specified elements, incentive mechanisms, and objectives. Existing law prohibits any load-serving entity and any local publicly owned electric utility from entering into a long-term financial commitment for baseload generation, unless that baseload generation complies with a greenhouse gases emission performance standard.

This bill would additionally prohibit any load-serving entity and any local publicly owned electric utility from entering into a financial commitment to procure electricity generated on and after January 1, 2026, from coal-fired generation resources.

GOVERNOR'S VETO

GV Bill Id:AB 79

Author:(Levine)

As Enrolled Ver:September 15, 2017

2/3 vote

Original Committee Reference: U. & E.

SUMMARY: Requires the Air Resources Board (ARB) to establish a methodology for calculating greenhouse (GHG) emissions associated with electricity from unspecified sources of power. Specifically, this bill:

1. Requires the ARB to update in consultation with California balancing authorities, by January 1, 2019, its inputs or methodology for determining the emissions associated with unspecified sources of power and distinguish between sources imported into California, and sources originating within California.
2. Requires the updated inputs or methodology to be applied to purchases of electricity from unspecified sources occurring after January 1, 2021.
3. Requires the California Public Utilities Commission and the California Energy Commission (CEC) to incorporate the inputs or methodology into programs addressing the disclosure of GHG emissions.
4. Authorizes the ARB to choose not to update its inputs or methodology if it determines doing so is infeasible or not appropriate because the administrative burden is excessive and differentiating unspecified sources of power is unlikely to materially improve the accuracy of the calculations needed for state programs to regulate emissions of GHGs.
5. Requires the ARB to report to the Legislature, by January 1, 2019, on any barriers to developing an enhanced methodology for the calculation of hourly GHG emissions data from unspecified sources of power.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill will result in increased annual costs up to $670,000 for the ARB to update their GHG emissions calculations.

COMMENTS:

1. Purpose. The author argues that this bill will result in better protocols for carbon accounting which accurately reflect real-world GHG emissions associated with the purchase of electricity and ensure that state policies achieve intended results.
2. Unspecified Sources of Electricity. The bulk of power procured by the state's retail suppliers of electricity is secured from long-term power purchase agreements. These stationary sources of power are easily identified and the GHG emissions are easily quantified and tracked by the ARB.

However, according to the CEC, 13.5% of California electrical load was served by unspecified sources of power in calendar year 2015 and the stationary sources, and related emissions data from which that power is derived, are not readily available. Electric utilities and the Independent System Operator utilize unspecified sources of power to fill gaps in procurement, peak load, and other short-term needs. Community choice aggregators and energy service providers heavily rely on this power – what is commonly referred to as "system power" or power from the "spot market" – to serve customer load.

The exact source of this power, which might be casually referred to as the left-overs or excess generation on the grid, technically remains a mystery as does the exact GHG content of that power. The power comes from myriad generation facilities inside and outside of California and the generation mix of the power can vary significantly in different Western sub-regions that supply California. Some opine that system power masks resources from coal-fired facilities; at the other extreme, others opine the mix has no coal and is primarily from gas and hydro-electric facilities.

1. GHG Tracking for Unspecified Resources. The ARB is required to track the GHG emissions of all electricity consumed in the state. For unspecified sources, the agency has long applied a static assumption for GHG emissions associated with the system power as 0.428 MT of CO2e/MWh. This rate applies for power imported from both the Southwest (which has more coal) and the Northwest (which is dominated by hydro and gas). The number does not vary by location, season, or time which the author opines does not "reflect these real-world differences in order to enable accurate compliance with comprehensive regulatory requirements."
2. Why Does it Matter? Accuracy in the calculation of GHG emissions is the foundation of many programs in the state starting with the Cap & Trade program. Specific to the electricity sector, the emissions calculations developed under this bill would be used by the CEC and California Public Utilities Commission as part of any relevant programs governing disclosure of GHG emissions or electricity procurement. Starting this year, the state's retail sellers will be required to base procurement planning not only on reliability and cost, but also for GHG emissions (Integrated Resource Planning). The availability of accurate data will allow retail sellers to effectively promote load-shifting and load reduction measures that yield maximum GHG emissions reductions. These same entities are also required to disclose the GHG emissions intensity of any electricity portfolio offered to retail customers (Power Content Label).

GOVERNOR'S VETO MESSAGE:

This bill would require the State Air Resources Board to update the inputs or methodology for calculating greenhouse gas emissions of unspecified energy sources.

This bill is unnecessary and interferes with the implementation of existing law passed just last year that requires the California Energy Commission, in consultation with the State Air Resources Board, to adopt a methodology for the calculation of greenhouse gas emissions intensity for all electricity purchases.

Analysis Prepared by: Kellie Smith / U. & E. / (916) 319-2083 FN: 0002434

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 79

Author:(Levine)

As Amended Ver:September 1, 2017

Majority vote

Original Committee Reference: U. & E.

SUMMARY: Requires the Air Resources Board (ARB) to establish a methodology for calculating greenhouse (GHG) emissions associated with electricity from unspecified sources of power. Specifically, this bill:

1. Requires the ARB to update in consultation with California balancing authorities, by January 1, 2019, its inputs or methodology for determining the emissions associated with unspecified sources of power and distinguish between sources imported into California, and sources originating within California.
2. Requires the updated inputs or methodology to be applied to purchases of electricity from unspecified sources occurring after January 1, 2021.
3. Requires the California Public Utilities Commission and the California Energy Commission (CEC) to incorporate the inputs or methodology into programs addressing the disclosure of GHG emissions.
4. Authorizes the ARB to choose not to update its inputs or methodology if it determines doing so is infeasible or not appropriate because the administrative burden is excessive and differentiating unspecified sources of power is unlikely to materially improve the accuracy of the calculations needed for state programs to regulate emissions of GHGs.
5. Requires the ARB to report to the Legislature, by January 1, 2019, on any barriers to developing an enhanced methodology for the calculation of hourly GHG emissions data from unspecified sources of power.

The Senate amendments require ARB to update it inputs for determining GHG emissions from unspecified sources, and authorizes the ARB to choose not to update either its inputs or methodology if it determines doing so is infeasible or inappropriate.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill will result in increased annual costs up to $670,000 for the ARB to update their GHG emissions calculations.

COMMENTS:

1. Purpose. The author argues that this bill will result in better protocols for carbon accounting which accurately reflect real-world GHG emissions associated with the purchase of electricity and ensure that state policies achieve intended results.
2. Unspecified Sources of Electricity. The bulk of power procured by the state's retail suppliers of electricity is secured from long-term power purchase agreements. These stationary sources of power are easily identified and the GHG emissions are easily quantified and tracked by the ARB.

However, according to the CEC, 13.5% of California electrical load was served by unspecified sources of power in calendar year 2015 and the stationary sources, and related emissions data from which that power is derived, are not readily available. Electric utilities and the Independent System Operator utilize unspecified sources of power to fill gaps in procurement, peak load, and other short-term needs. Community choice aggregators and energy service providers heavily rely on this power – what is commonly referred to as "system power" or power from the "spot market" – to serve customer load.

The exact source of this power, which might be casually referred to as the left-overs or excess generation on the grid, technically remains a mystery as does the exact GHG content of that power. The power comes from myriad generation facilities inside and outside of California and the generation mix of the power can vary significantly in different Western sub-regions that supply California. Some opine that system power masks resources from coal-fired facilities; at the other extreme, others opine the mix has no coal and is primarily from gas and hydro-electric facilities.

1. GHG Tracking for Unspecified Resources. The ARB is required to track the GHG emissions of all electricity consumed in the state. For unspecified sources, the agency has long applied a static assumption for GHG emissions associated with the system power as 0.428 MT of CO2e/MWh. This rate applies for power imported from both the Southwest (which has more coal) and the Northwest (which is dominated by hydro and gas). The number does not vary by location, season, or time which the author opines does not "reflect these real-world differences in order to enable accurate compliance with comprehensive regulatory requirements."
2. Why Does it Matter? Accuracy in the calculation of GHG emissions is the foundation of many programs in the state starting with the Cap & Trade program. Specific to the electricity sector, the emissions calculations developed under this bill would be used by the CEC and California Public Utilities Commission as part of any relevant programs governing disclosure of GHG emissions or electricity procurement. Starting this year, the state's retail sellers will be required to base procurement planning not only on reliability and cost, but also for GHG emissions (Integrated Resource Planning). The availability of accurate data will allow retail sellers to effectively promote load-shifting and load reduction measures that yield maximum GHG emissions reductions. These same entities are also required to disclose the GHG emissions intensity of any electricity portfolio offered to retail customers (Power Content Label).

Analysis Prepared by: Laura McWilliams / U. & E. / (916) 319-2083 FN: 0002001

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 79 (Levine) - Electrical generation: hourly greenhouse gas emissions: electricity from unspecified sources

Bill Summary:

AB 79 requires the Air Resources Board (ARB), on or before January 1, 2019, and in consultation with the California Independent System Operator (CAISO), to update the methodology for its greenhouse gas emissions (GHG) calculation associated with electricity from unspecified sources that retail suppliers purchase on behalf of California end-use customers.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on September 1, 2017

Fiscal Impact:

• Annual staff costs between $525,000 (years 1 and 2) and $670,000 (ongoing) (Cost of Implementation Fund) to the ARB to develop, coordinate the evaluation of, and update the methodology, as required.
• Minor costs to the California Energy Commission (CEC) and the California Public Utilities Commission to incorporate the revised methodology into their program.

Author Amendments:

• Adds “inputs” to the items that should be included in the methodology.
• Makes technical changes.

-- END --

 THIRD READING  

Bill No: AB 79

Author:

Amended: 9/1/17 in Senate

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 9-1, 6/20/17

AYES: Hueso, Bradford, Cannella, Hill, McGuire, Skinner, Stern, Vidak, Wiener

NOES: Morrell

NO VOTE RECORDED: Hertzberg

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 7/5/17

AYES: Wieckowski, Hill, Lara, Skinner, Stern

NOES: Stone, Gaines

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 56-19, 5/31/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires the California Air Resources Board (ARB) to modify its inputs or methodology for calculating emission of greenhouse gases (GHG) associated with electricity from unspecified sources of electricity generation.

ANALYSIS:

Existing law:

1. Requires the ARB to ensure that statewide GHG emissions are reduced to at least 40 percent below the 1990 level by 2030. (Health and Safety Code §38566)
2. Requires ARB to account for GHG from all electricity consumed in the state and purchased by all retail sellers of electricity, including load-serving entities and local publicly owned electric utilities. (Health and Safety Code §38530)
3. Establishes a formula for calculating GHG emissions from unspecified sources of power delivered to California. (17 CFR §95111)
4. Requires every retail supplier of electricity to disclose the sources of the supplier’s electricity for the previous calendar year. Statute directs the California Energy Commission (CEC) to specify guidelines for the annual disclosure. (Public Utilities Code §§398.1-398.5)

This bill:

1. Requires ARB, by January 1, 2019, and in consultation with California balancing authorities, to update its inputs or methodology for the calculation of GHGs associated with electricity from unspecified sources of power so that the methodology distinguishes between electricity from unspecified sources within a California balancing authority area and electricity from unspecified sources imported into California.
2. Requires the updated inputs or methodology to be applied to purchases of electricity from unspecified sources occurring after January 1, 2021.
3. Requires the California Public Utilities Commission and the CEC to incorporate the inputs or methodology into programs addressing the disclosure of GHG emissions.
4. Provides that the ARB may choose not to update its inputs or methodology if it determines doing so is infeasible or not appropriate because the administrative burden is excessive and differentiating unspecified sources of power is unlikely to materially improve the accuracy of the calculations needed for state programs to regulate emissions of GHGs.
5. Directs ARB to report to the Legislature, on or before January 1, 2019, on barriers to developing an enhanced methodology for reporting hourly GHG emissions associated with purchases of unspecified power.

Background

Statute tasks ARB with ensuring that statewide emission of GHGs reduced to at least 40 percent below the 1990 level by 2030. In support of that task, statute directs ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity.

Most electricity consumed in California is purchased by retail sellers through long-term contracts for electricity to be produced by fixed sources of generation. Because the sources of electricity procured through long-term contracts is known, it is relatively simple for ARB to determine the characteristics of the sources of electricity consumed in California and assign reasonably accurate GHG emissions to each.

However, retail sellers of electricity are not always able to meet all of their customer demand for electricity with energy procured through long-term contracts. In those instances, the retail sellers or, in some cases a balancing authority, such as California Independent System Operator, purchase electricity from the grid for instant delivery. That electricity comes from a source or sources unknown to the retail seller or the balancing authority. For this reason, such power is said to come from “unspecified sources of power,” which CEC describes as “electricity that is not traceable to a specific generating facility” and “typically a mix of resource types, and may include renewables. The associated electricity is known as “unspecified energy.”

Unspecified energy represents a varying but consistently significant portion of California’s energy resource mix. In recent years, the percentage of unspecified energy as a portion of total power has averaged 14.2 percent and ranged from as low as 12 percent and as high as 16.4 percent, as shown below:

As indicated in the preceding table, the resource portfolios of each of the state’s major electric utilities include unspecified energy, in some cases substantial amounts. Though not shown, the resource portfolios of other types of retail sellers—community choice aggregators and electric service providers also include substantial proportions of unspecified energy.

As noted above, statute requires ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity. Such electricity includes unspecified energy. To complete such an accounting, ARB makes several assumptions about the sources that might generate unspecified energy. Notably, ARB assumes unspecified energy to be generated by a marginal natural gas powerplant with a GHG emissions profile of 0.428 metric tons of carbon-dioxide equivalent per megawatt hour (0.428 MT CO2e/MWh). As ARB acknowledges, this assumption likely misrepresents reality in that unspecified energy likely includes sources of energy other than natural gas powerplants.

The author of this bill and its supporters express concern that the uniform GHG emissions factor ARB attributes to unspecified sources of energy is inaccurate and outdated. This inaccuracy, they continue, undercuts the effectiveness of California’s programs to account for and reduce California’s emissions of GHGs. The state’s GHG emissions reduction efforts may benefit from a better accounting of the GHG emissions associated with the state’s energy consumption, such as that proposed by this bill.

Related/Prior Legislation

AB 1110 (Ting, Chapter 656, Statutes of 2016) required every retail supplier of electricity in California annually to report to its customers the GHG emissions intensity of the supplier’s electricity sources.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Annual staff costs between $525,000 (years 1 and 2) and $670,000 (ongoing) (Cost of Implementation Fund) to the ARB to develop, coordinate the evaluation of, and update the methodology, as required.
• Minor costs to CEC and PUC to incorporate the revised methodology into their program.

SUPPORT: (Verified 9/1/17)

California State Association of Electrical Workers

California State Pipe Trades Council

California Wind Energy Association

Clean Power Campaign

Coalition of California Utility Employees

Environmental Defense Fund

Sierra Club California

The Utility Reform Network

Vote Solar

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 9/1/17)

California Municipal Utilities Association

ARGUMENTS IN SUPPORT: According to the author:

The State of California has committed to significant reductions in GHG emissions, and achieving these reductions requires accurate accounting of GHG emissions. Any attribution of GHG emissions should reflect real-world differences in order to enable accurate compliance with regulatory requirements. The availability of more accurate data will allow retail suppliers of electricity to effectively promote load-shifting and load-reduction measures that yield maximum GHG emissions reductions.

ARGUMENTS IN OPPOSITION: California Municipal Utilities Association believes that this bill should be clear and simple, and crafted in a way that recognizes the real world conditions for purchasing unspecified energy resources.  Definitions need not be cumbersome, and any language regarding accounting for GHG emissions from unspecified energy resources must acknowledge that any resources generated in California, are considered “covered entities” whose emissions are regulated today.  Reporting requirements for ARB to examine hourly GHG emissions calculations should be left up to ARB to examine the best way to achieve and such an outcome and not include it be done on “an ex post basis” when an it is unknown yet, if this or perhaps an ex ante basis are the best methods to actually use.

ASSEMBLY FLOOR: 56-19, 5/31/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chávez, Cunningham, Dahle, Flora, Fong, Gallagher, Harper, Kiley, Lackey, Mathis, Obernolte, Patterson, Voepel, Waldron

NO VOTE RECORDED: Chen, Choi, Eggman, Mayes, Melendez

Prepared by:

9/5/17 9:41:20

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 79 (Levine) - Electrical generation: hourly greenhouse gas emissions: electricity from unspecified sources

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 79 requires the Air Resources Board (ARB), on or before January 1, 2019, and in consultation with the California Independent System Operator (CAISO), to update the methodology for its greenhouse gas emissions (GHG) calculation associated with electricity from unspecified sources that retail suppliers purchase on behalf of California end-use customers.

Fiscal Impact:

• Annual staff costs between $525,000 (years 1 and 2) and $670,000 (ongoing) (Cost of Implementation Fund) to the ARB to develop, coordinate the evaluation of, and update the methodology, as required.
• Minor costs to the California Energy Commission (CEC) and the California Public Utilities Commission to incorporate the revised methodology into their program.

Background:

The California Global Warming Solutions Act of 2006 (also known as AB 32) requires the ARB to determine the 1990 statewide GHG emissions level and approve a statewide GHG emissions limit that is equivalent to that level to be achieved by 2020. The Act was later amended to require statewide GHG emissions reductions of at least 40% below the 1990 level by December 31, 2030.

ARB accounts for GHGs from all electricity consumed in the state and purchased by all retail sellers of electricity, including load-serving entities and local publicly owned electric utilities. Every retail supplier of electricity is required to disclose the sources of the supplier’s electricity pursuant to CEC’s guidelines. Regulations establish a formula for calculating GHG emissions from unspecified sources of power delivered to California.

Proposed Law:

1. This bill:
2. Requires ARB, on or before January 1, 2019, and in consultation with the ISO, to update its methodology for the calculation of GHG emissions associated with electricity from unspecified sources purchased by retail suppliers on behalf of California end-use customers.
3. Requires that the methodology distinguish between emissions associated with electricity from unspecified sources purchased within California balancing authority areas and associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council.
4. Requires the updated methodology to go into effect by January 1, 2021.
5. Requires ARB to regularly update the methodology to improve its accuracy, as specified.
6. Requires ARB to submit a report to the Legislature, as specified, on any barriers to updating the methodology.
7. Allows ARB to determine that updating its methodology is not appropriate if doing so is infeasible or if the administrative burden is excessive and the update is unlikely to materially improve the accuracy of state programs designed to regulate GHG emissions.
   

Related Legislation: AB 1110 (Ting, Chapter 656, Statutes of 2016) required every retail supplier of electricity in California to annually report to its customers the GHG emissions intensity of the supplier’s electricity sources.

Staff Comments:

Purpose of bill. According to the author, “California has long been a leader in greenhouse gas emissions standards. Recent landmark legislation (SB 350 and SB 32) reinforce California’s role as a national leader in clean energy standards and climate policy. To ensure that state policies achieve their intended results, we must develop better protocols for carbon accounting that accurately reflects real-world GHG emissions associated with the purchase of electricity. California has an opportunity to continue its world leadership through the evolution of comprehensive methodologies that track GHG emissions and allow this information to be used effectively in regulatory programs to promote the achievement of significant reductions of emissions that are driving global climate change.”

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 79

SUBJECT: Electrical generation: hourly greenhouse gas emissions: electricity from unspecified sources.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level to be achieved by 2020. (Health and Safety Code (HSC) §38500 et seq.)
   
2. Requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030. (HSC §38566)
   
3. Requires ARB to account for GHG from all electricity consumed in the state and purchased by all retail sellers of electricity, including load-serving entities and local publicly owned electric utilities. (HSC §38530)
   
   1. Establishes a formula for calculating GHG emissions from unspecified sources of power delivered to California. (Section 95111 of Title 17 of the California Code of Regulations)
      
4. Requires every retail supplier of electricity to disclose the sources of the supplier’s electricity for the previous calendar year pursuant to guidelines provided by the California Energy Commission. (Public Utilities Code §398.1 et seq.)
   

This bill:

1. Defines, for the purposes of this bill:
   1. “Balancing authority” means the responsible entity that integrates resource plans ahead of time, maintains load-interchange generation balance within a balancing authority area, and supports interconnection frequency in real time.
      
   2. “Balancing authority area” means the collection of generation, transmission, and loads within the metered boundaries of the area within which the balancing authority maintains the electrical load-resource balance.
      
   3. “California balancing authority” means a balancing authority with control over a balancing authority area primarily located in this state and operating for retail suppliers, including, but not limited to, the Independent System Operator (ISO) or a local publicly owned electric utility (POU) operating a transmission grid that is not under the operational control of the ISO. A California balancing authority is responsible for the operation of the transmission grid within its metered boundaries, not limited by the political boundaries of the State of California.
      
   4. “Electricity from specified sources” means electricity transactions that are traceable to specific generation sources.
      
   5. “Electricity from unspecified sources” means electricity generated within or outside the state and purchased under commercial agreements that do not identify specific generation sources, including electricity procured from a wholesale market exchange operated by a California balancing authority.
      
   6. “Retail supplier” has the same meaning as defined in PUC §398.2.
      
2. Requires ARB, on or before January 1, 2019 and in consultation with the ISO, to update its methodology for the calculation of GHG emissions associated with electricity from unspecified sources purchased by retail suppliers on behalf of California end-use customers.
   
3. Requires the methodology to distinguish between emissions associated with electricity from unspecified sources purchased within California balancing authority areas and associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council.
   
4. Requires the updated methodology to go into effect by January 1, 2021.
   
5. Requires ARB to regularly update the methodology to improve its accuracy, as specified.
   
6. Requires ARB to submit a report to the Legislature, as specified, on any barriers to updating the methodology.
   
7. Allows ARB to determine that updating its methodology is not appropriate if doing so is infeasible or if the administrative burden is excessive and the update is unlikely to materially improve the accuracy of state programs designed to regulate GHG emissions.
   

Background

1. Specified vs. unspecified energy. Statute tasks ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity.
   
   Most electricity consumed in California is purchased by retail sellers through long-term contracts for electricity to be produced by fixed sources of generation. Because the sources of electricity procured through long-term contracts is known, it is relatively simple for ARB to determine the characteristics of the sources of electricity consumed in California and assign reasonably accurate GHG emissions to each.
   
   However, retail sellers of electricity are not always able to meet all of their customer demand for electricity with energy procured through long-term contracts. In those instances, the retail sellers or, in some cases the California Independent System Operator (CAISO), purchase electricity from the grid for instant delivery. That electricity comes from a source or sources unknown to the retail seller or CAISO. For this reason, such power is said to come from “unspecified sources of power,” which California Energy Commission (CEC) describes as “electricity that is not traceable to a specific generating facility.”
   
   Unspecified energy represents a varying but consistently significant portion of California’s energy resource mix. According to CEC, unspecified energy made up about 14% of California’s “total system electric generation” in 2015. In recent years, the percentage of unspecified energy as a portion of total power has averaged 14.2% and ranged from as low as 12% and as high as 16.4 %.
   
   As noted above, statute requires ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity. Such electricity includes unspecified energy. To complete such an accounting, ARB makes several assumptions about the sources that might generate unspecified energy.
   
   According to ARB, it assumes that unspecified energy to be generated by a marginal natural gas powerplant with a GHG emissions profile of 0.428 metric tons of carbon-dioxide equivalent per megawatt hour (0.428 MT CO2e/MWh). As ARB acknowledges, this assumption likely misrepresents reality in that unspecified energy likely includes sources of energy other than natural gas powerplants. However, ARB reasons that the misrepresentation cuts both ways because although unspecified energy may include a relatively small amount of electrons flowing from coal-fired powerplants it is likely to include a similarly small amount of electrons flowing from renewable facilities.
   
   In ARB’s reasoning, the renewables net out the coal, making natural gas an accurate representation of the source of unspecified energy. Key to this reasoning is the fact that coal powerplants provide baseload power (meaning they cannot readily increase or decrease energy production in response to demand) and are therefore, unavailable to respond to sudden demands for power by California retail sellers or CAISO.

Comments

1. Purpose of bill. According to the author, “California has long been a leader in greenhouse gas emissions standards. Recent landmark legislation (SB 350 and SB 32) reinforce California’s role as a national leader in clean energy standards and climate policy. To ensure that state policies achieve their intended results, we must develop better protocols for carbon accounting that accurately reflects real-world GHG emissions associated with the purchase of electricity. California has an opportunity to continue its world leadership through the evolution of comprehensive methodologies that track GHG emissions and allow this information to be used effectively in regulatory programs to promote the achievement of significant reductions of emissions that are driving global climate change.”
   
2. Unspecified really means unknown. The definition of electricity from unspecified sources in this bill, which comports with general understanding of the phrase, is that electricity from unspecified sources means electricity generated within or outside the state and purchased under commercial agreements that do not identify specific generation sources.
   
   By definition, we cannot conclusively know the GHG emissions associated with electricity from unspecified sources because we do not know the generation sources of that electricity.
   
   As such, assumptions must be made in accounting for those GHG emissions. Given that most electricity from unspecified sources is utilized during peak demand, ARB argues it is reasonable to assume that the emissions associated with a natural gas powerplant are an appropriate number to use since those powerplants are most likely to respond to peak demand.
   
   It is possible to task ARB with the costly and of questionable benefit goal of attempting to differentiate the GHG emissions associated with different regions. According to the CEC, “much of the Pacific Northwest spot market purchases are served by surplus hydro and newer gas-fired power plants. The Southwest spot market purchases would be comprised of new combined cycle power and some coal.”
   
   If all of the assumptions made thus far are correct, this means that electricity from unspecified sources in southern California is likely more GHG intensive than electricity from unspecified sources in northern California. Assuming that the differences don’t balance each other out, it may be possible ARB could achieve minimally better GHG emissions accounting, but it would come at significant cost.
   
   Amendments in the Senate Energy, Utilities and Communications Committee allow ARB to determine that updating its methodology is infeasible, or that the administrative burden would be excessive and that the update is unlikely to materially improve the accuracy of state programs designed to regulate GHG emissions. Upon doing so, ARB may choose not to update its methodology, improving the cost-effectiveness of AB 79.

Related/Prior Legislation

AB 1110 (Ting, Chapter 656, Statutes of 2016) required every retail supplier of electricity in California annually to report to its customers the GHG emissions intensity of the supplier’s electricity sources.

DOUBLE REFERRAL:

This measure was heard in Senate Energy, Utilities and Communications Committee on June 20, 2017, and passed out of committee with a vote of 9-1.

SOURCE:

Author

SUPPORT:

California State Association of Electrical Workers

California State Pipe Trades Council

California Wind Energy Association

Coalition of California Utility Employees

Environmental Defense Fund

Sierra Club California

The Utility Reform Network (TURN)

Vote Solar

Western States Council of Sheet Metal Workers

OPPOSITION:

California Municipal Utilities Association

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/20/2017

SUBJECT:

DIGEST: This bill requires the California Air Resources Board (ARB) to modify its methodology for calculating emission of greenhouse gases (GHG) associated with electricity from unspecified sources of electricity generation.

ANALYSIS:

Existing law:

1. Requires the ARB to ensure that statewide GHG emissions are reduced to at least 40 percent below the 1990 level by 2030. (Health and Safety Code §38566)
2. Requires ARB to account for GHG from all electricity consumed in the state and purchased by all retail sellers of electricity, including load-serving entities and local publicly owned electric utilities. (Health and Safety Code §38530)
3. Establishes a formula for calculating GHG emissions from unspecified sources of power delivered to California. (17 CFR §95111)
4. Requires every retail supplier of electricity to disclose the sources of the supplier’s electricity for the previous calendar year. Statute directs the CEC to specify guidelines for the annual disclosure. (Public Utilities Code §§398.1-398.5)

This bill:

1. Requires ARB, by January 1, 2019 and in consultation with California Independent System Operator (CAISO), to update its methodology for the calculation of GHGs associated with electricity from unspecified sources of power so that the methodology distinguishes between electricity from unspecified sources within a California balancing authority area and electricity from unspecified sources imported into California.
2. Authorizes ARB’s methodology to differentiate emissions by season and time of day, unless ARB determines doing so is excessively burdensome or is unlikely to improve the accuracy of state programs to regulate emissions of GHGs.
3. Requires (a) the updated methodology to be applied to purchases of electricity from unspecified sources occurring after January 1, 2021, (b) ARB to regularly update the methodology, and (c) the CPUC and the CEC to incorporate the methodology into programs addressing the disclosure of GHG emissions.
4. Directs ARB to report to the Legislature, on or before January 1, 2019, on barriers to developing an enhanced methodology for reporting hourly GHG emissions associated with purchases of unspecified power.

Background

Statute tasks ARB with ensuring that statewide emission of GHGs reduced to at least 40 percent below the 1990 level by 2030. In support of that task, statute directs ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity.

Most electricity consumed in California is purchased by retail sellers through long-term contracts for electricity to be produced by fixed sources of generation. Because the sources of electricity procured through long-term contracts is known, it is relatively simple for ARB to determine the characteristics of the sources of electricity consumed in California and assign reasonably accurate GHG emissions to each. However, retail sellers of electricity are not always able to meet all of their customer demand for electricity with energy procured through long-term contracts. In those instances, the retail sellers or, in some cases CAISO, purchase electricity from the grid for instant delivery. That electricity comes from a source or sources unknown to the retail seller or CAISO. For this reason, such power is said to come from “unspecified sources of power,” which California Energy Commission (CEC) describes as “electricity that is not traceable to a specific generating facility” and “typically a mix of resource types, and may include renewables.”^[1] The associated electricity is known as “unspecified energy.”

Unspecified energy represents a varying but consistently significant portion of California’s energy resource mix. According to CEC, unspecified energy made up about 14 percent of California’s “total system electric generation” in 2015.^[2] In recent years, the percentage of unspecified energy as a portion of total power has averaged 14.2 percent and ranged from as low as 12 percent and as high as 16.4 percent, as shown below:

As indicated in the preceding table, the resource portfolios of each of the state’s major electric utilities include unspecified energy, in some cases substantial amounts. Though not shown, the resource portfolios of other types of retail sellers—community choice aggregators and electric service providers also include substantial proportions of unspecified energy.

As noted above, statute requires ARB to account for the GHG emissions associated with all electricity consumed in the state and purchased by all retail sellers of electricity. Such electricity includes unspecified energy. To complete such an accounting, ARB makes several assumptions about the sources that might generate unspecified energy.

According to ARB, it assumes that unspecified energy to be generated by a marginal natural gas powerplant with a GHG emissions profile of 0.428 metric tons of carbon-dioxide equivalent per megawatt hour (0.428 MT CO2e/MWh). As ARB acknowledges, this assumption likely misrepresents reality in that unspecified energy likely includes sources of energy other than natural gas powerplants. However, ARB reasons that the misrepresentation cuts both ways: unspecified energy may include a relatively small amount of electrons flowing from a coal-fired powerplants, but it likely includes a similarly small amount of electrons flowing from renewable facilities. In ARB’s reasoning, the renewables net out the coal, making natural gas an accurate representation of the source of unspecified energy. Key to this reasoning is the assumption that coal powerplants provide baseload power and are therefore unavailable to respond to sudden demands for power by California retail sellers or CAISO.

The author of this bill and its supporters express concern that the uniform GHG emissions factor ARB attributes to unspecified sources of energy is inaccurate and outdated. This inaccuracy, they continue, undercuts the effectiveness of California’s programs to account for and reduce California’s emissions of GHGs. They note that ARB developed its emissions factor in 2008 and does not reflect current grid conditions. They also note that the uniform emissions factor fails to account for the different energy portfolios of the two regions from which California receives unspecified energy—the Pacific Northwest and the Southwest. According the CEC:^[3]

Much of the Pacific Northwest spot market purchases are served by surplus hydro and newer gas-fired power plants. The Southwest spot market purchases would be comprised of new combined cycle power and some coal.

It is true that ARB’s GHG uniform GHG emissions factor likely misrepresents the emissions associated with some of the energy sources that generate unspecified energy consumed in California. As ARB acknowledges, unspecified sources of energy likely include some coal and some renewables. And as CEC describes, the mix of energy resources in the Pacific Northwest and Southwest differ. And unspecified power consistently is a substantial portion of California’s energy portfolio. The state’s GHG emissions reduction efforts may benefit from a better accounting of the GHG emissions associated with the state’s energy consumption. But benefit how much?

It might be the case, as ARB contends, that nearly all unspecified energy is from natural gas powerplants with an emissions profile close to 0.428 MT CO2e/MWh and that, to the extent unspecified energy include coal it is offset by renewable resources. If this is true, there is little real-world consequence to ARB’s uniform GHG accounting of unspecified energy. It might also be the case that ARB needs to expend considerable resources to more accurately account for the GHG emissions associated with unspecified energy, regardless of the value of that more-accurate accounting.

More worrisome still is that it is infeasible that ARB better account for the GHG emissions of unspecified energy. Indeed, this is the position of ARB: neither it nor CAISO has the authority to compel a power generator located outside the state and that do not directly import power into the state to provide power source data.

It is possible, however, that ARB could fulfill the requirements of the bill even in the absence of source-specific data. That is, ARB could update its GHG accounting methodology for unspecified sources in a way that distinguishes between emissions associated with electricity from unspecified sources purchased within California balancing authority areas and associated with imports of unspecified power, and do so in a way that accounts for the GHG profile of California’s energy mix and that of other regions. Similarly, ARB could distinguish the GHG emissions profile of the Pacific Northwest and the Southwest in a way that acknowledges the differing energy resource mixes of the two regions noted by CEC. The results might be a more accurate accounting of the GHG emissions associated with unspecified energy.

This bill also authorizes ARB to differentiate such emissions by season and time of day. This makes sense: the mix of resources generating electricity varies by season and time of day; so might ARB’s GHG emissions accounting. Wisely, the bill conditions the obligation on ARB to make such a differentiation upon the administrative burden of doing so and the likelihood of it will materially improve the accuracy of the state’s GHG emissions regulation. The obligation of ARB to update its methodology should be similarly conditioned. Therefore, the committee should consider amending this bill as follows:

38532 (b) (1) On or before January 1, 2019, the state board, in consultation with the ISO, shall update its methodology for the calculation of emissions of greenhouse gases associated with electricity from unspecified sources purchased by retail suppliers on behalf of California end-use customers.

(2) The methodology shall distinguish between emissions associated with electricity from unspecified sources purchased within California balancing authority areas and associated with electricity from unspecified sources imported into California from different subregions of the Western Electricity Coordinating Council.

(3) The updated methodology may differentiate emissions by season and time of day. The state board may determine that this differentiation is not appropriate if the administrative burden is excessive and differentiation is unlikely to materially improve the accuracy of state programs designed to regulate emissions of greenhouse gases.

(4) The updated emissions methodology shall be applied to purchases of electricity from unspecified sources occurring after January 1, 2020.

(5) The state board shall regularly update its methodology and may incorporate additional measures designed to improve the accuracy of the calculations, including seasonal and time-based differentiation.

(c) The requirements of paragraph (b) notwithstanding, the state board may determine that updating its methodology as described in paragraph (b) is not appropriate if doing so is infeasible or if the administrative burden is excessive and the update is unlikely to materially improve the accuracy of state programs designed to regulate emissions of greenhouse gases.

Double Referral. Should this bill be approved by this committee, it will be re-referred to the Senate Committee on Environmental Quality for its consideration.

Prior/Related Legislation

AB 1110 (Ting, Chapter 656, Statutes of 2016) required every retail supplier of electricity in California annually to report to its customers the GHG emissions intensity of the supplier’s electricity sources.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

California State Association of Electrical Workers

California State Pipe Trades Council

California Wind Energy Association

Coalition of California Utility Employees

Environmental Defense Fund

Sierra Club California

The Utility Reform Network

Vote Solar

Western States Council of Sheet Metal Workers

OPPOSITION:

California Municipal Utilities Association

ARGUMENTS IN SUPPORT: According to the author:

The State of California has committed to significant reductions in GHG emissions, and achieving these reductions requires accurate accounting of GHG emissions. Any attribution of GHG emissions should reflect real-world differences in order to enable accurate compliance with regulatory requirements. The availability of more accurate data will allow retail suppliers of electricity to effectively promote load-shifting and load-reduction measures that yield maximum GHG emissions reductions.

ARGUMENTS IN OPPOSITION: California Municipal Utilities Association believes that this bill should be clear and simple, and crafted in a way that recognizes the real world conditions for purchasing unspecified energy resources.  Definitions need not be cumbersome, and any language regarding accounting for GHG emissions from unspecified energy resources must acknowledge that any resources generated in California, are considered “covered entities” whose emissions are regulated today.  Reporting requirements for ARB to examine hourly GHG emissions calculations should be left up to ARB to examine the best way to achieve and such an outcome and not include it be done on “an ex post basis” when an it is unknown yet, if this or perhaps an ex ante basis are the best methods to actually use.

-- END --

1. See http://www.energy.ca.gov/sb1305/power_content_label.html. ↑

2. CEC defines “total system electric generation” as “the annual total energy requirement for all load serving entities with end-use loads in California, including self-generation supply for cogeneration, and other non-utility served loads from power plants that are one megawatt and larger in nameplate capacity.” ↑

3. See, again, http://www.energy.ca.gov/almanac/electricity_data/total_system_power.html. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 79

Author:(Levine)

As Amended Ver:April 24, 2017

Majority vote

SUMMARY: Requires the Air Resources Board (ARB) to establish a methodology for calculating greenhouse (GHG) emissions associated with electricity from unspecified sources of power. Specifically, this bill:

1. Requires the ARB to update, by January 1, 2019, its methodology for determining the emissions associated with unspecified sources of power and distinguish between sources imported into California, and sources originating within California.
2. Requires that the updated emissions methodology be applied to all purchases of electricity and incorporated into all agency programs addressing the disclosure of GHG emissions by January 1, 2020.
3. Requires the ARB to report to the Legislature, by January 1, 2019, on any barriers to developing an enhanced methodology for the calculation of hourly GHG emissions data.
4. Requires the ARB to consult with the Independent System Operator (ISO) and other balancing authorities.

FISCAL EFFECT: According to the Assembly Appropriations Committee, initial ARB costs of approximately $525,000 per year for two years to develop the methodology and report to the Legislature. Ongoing costs of approximately $690,000 for the continuation of the same duties and for legal coordination with the Western Climate Initiative and regulation updates.

COMMENTS:

Unspecified Sources of Electricity – Left Overs? The bulk of power procured by the state's retail suppliers of electricity is secured from long-term power purchase agreements. These stationary sources of power are easily identified and the GHG emissions are easily quantified and tracked by the ARB.

However, according to the California Energy Commission (CEC), 13.5% of California electrical load was served by unspecified sources of power in calendar year 2015 and the stationary sources, and related emissions data, from which that power is derived are not readily available. Electric utilities and the ISO utilize unspecified sources of power to fill gaps in procurement, peak load, and other short-term needs. Community choice aggregators and energy service providers heavily rely on what is commonly referred to as "system power" or power from the "spot market" to serve customer load.

The exact source of this power, which might be casually referred to as the left-overs or excess generation on the grid, technically remains a mystery as does the exact GHG content of that power. The power comes from myriad generation facilities inside and outside of California and the generation mix of the power can vary significantly in different Western sub-regions that supply California. Some opine that system power masks resources from coal-fired facilities; at the other extreme, others opine the mix has no coal and is primarily from gas and hydro-electric facilities.

GHG Tracking for Unspecified Resources. The ARB is required to track the GHG emissions of all electricity consumed in the state. For unspecified sources, the agency has long applied a static assumption for GHG emissions associated with the system power as 0.428 MT of CO2e/MWh. This rate applies for power imported from both the Southwest (which has more coal) and the Northwest (which is dominated by hydro and gas). The number does not vary by location, season, or time which the author opines does not "reflect these real-world differences in order to enable accurate compliance with comprehensive regulatory requirements."

Why Does it Matter? Accuracy in the calculation of GHG emissions is the foundation of many programs in the state starting with the Cap & Trade program. Specific to the electricity sector, the emissions calculations developed under this bill would be used by the CEC and California Public Utilities Commission as part of any relevant programs governing disclosure of GHG emissions or electricity procurement. Starting this year, the state's retail sellers will be required to base procurement planning not only on reliability and cost, but also for GHG emissions (Integrated Resource Planning). The availability of accurate data will allow retail sellers to effectively promote load-shifting and load reduction measures that yield maximum GHG emissions reductions. These same entities are also required to disclose the GHG emissions intensity of any electricity portfolio offered to retail customers (Power Content Label).

Arguments in support. The author argues that this bill will result in better protocols for carbon accounting which accurately reflect real-world GHG emissions associated with the purchase of electricity and ensure that state policies achieve intended results.

Analysis Prepared by: Kellie Smith / U. & E. / (916) 319-2083 FN: 0000758

Date of Hearing: May 10, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 79

Author:(Levine) – As Amended Ver:April 24, 2017

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires the Air Resources Board (ARB) to adopt a methodology to calculate greenhouse gas (GHG) emissions from unspecified sources of electricity. This bill requires the California Public Utilities Commission (PUC) and California Energy Commission (CEC) to incorporate the methodology into programs addressing disclosure of GHG emissions and procurement of electricity. Specifically, this bill:

1. Requires ARB, in consultation with the Independent System Operator (ISO), on or before January 1, 2019, to adopt a methodology to calculate GHG emissions associated with electricity from "unspecified sources" (electricity that is not traceable to specific generation sources) purchased from retail suppliers on behalf of California end-users.
2. Requires the methodology to rely on recorded generation operations data provided by the California balancing authorities and other balancing authorities serving California end-use customers.
3. Requires the ISO and other California balancing authorities to assist ARB by providing relevant data.
4. Requires the PUC and CEC to incorporate the methodology into programs addressing the disclosure of GHG emissions or the procurement of electricity by entities subject to the respective jurisdiction of each.

FISCAL EFFECT:

1. Initial ARB costs of approximately $525,000 per year for two years to develop the methodology and report to the Legislature. Ongoing costs of approximately $690,000 for the continuation of the same duties and for legal coordination with the Western Climate Initiative and regulation updates.
2. Absorbable ISO and CEC costs.

COMMENTS:

1. Purpose. According to the author, to ensure state policies achieve their intended results, we must develop better protocols for carbon accounting which accurately reflect real-world GHG emissions associated with the purchase of electricity.
2. Background. The bulk of power procured by the state’s investor-owned utilities (IOUs), community choice aggregators (CCAs), and electrical service providers (ESPs) and publicly owned utilities (POUs) is secured from long-term power purchase agreements. These stationary sources of power are easily identified and the GHG emissions are easily quantified and tracked by CARB. Conversely, according to the CEC, 13.5% of California electrical load was served by unspecified sources of power in 2015, and the stationary sources from which that power is derived are not readily available. The utilities and the ISO utilize unspecified sources of power to fill gaps in procurement, peak load, and other short-term needs. CCAs and ESPs heavily rely on what is commonly referred to as “system power” or power from the “spot market” to serve customer load. The exact source of this power technically remains a mystery as does the exact GHG content of that power.

ARB is required to track the GHG emissions of all electricity consumed in the state. For unspecified sources, the agency has long applied a static assumption for GHG emissions associated with the system power as 0.428 MT of CO2e/MWh (metric tons of carbon dioxide equivalents divided by megawatt hours).

The static calculation ARB uses seems to come at the expense of accuracy. The emission factor does not recognize well-established facts about electricity imports, including that actual generation sources vary by season and location, from hydro to coal, with very different emissions, and that electricity imports are not necessarily procured on the margin by electricity suppliers. I

Additionally, ARB's data and assumptions regarding marginal natural gas-fired generation in the western grid may be outdated. Among other things, the default factor can lead to inaccurate GHG emissions reporting for retail electricity suppliers, particularly those that rely on significant amounts of "system power" purchased from unspecified sources in spot markets.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 3, 2017

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Cristina Garcia, Chair

ABPCA Bill Id:AB 79 (

Author:Levine) – As Amended Ver:March 21, 2017

SUBJECT: Electrical generation: hourly greenhouse gas emissions: electricity from unspecified sources

SUMMARY: Requires the Air Resources Board (ARB) to adopt a methodology to calculate hourly greenhouse gas (GHG) emissions from unspecified sources of electricity. Requires the Public Utilities Commission (PUC) and California Energy Commission (CEC) to incorporate the methodology into programs addressing disclosure of GHG emissions and procurement of electricity.

EXISTING LAW:

1. Requires ARB, pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
2. Authorizes ARB to permit the use of market-based compliance mechanisms, applicable from January 1, 2012 to December 31, 2020, to comply with GHG reduction regulations, once specified conditions are met. Pursuant to this authority, ARB has adopted a cap-and-trade regulation which applies to large industrial facilities and electricity generators emitting more than 25,000 metric tons of carbon dioxide (CO₂) equivalent per year, as well as distributors of fuels, including gasoline, diesel and natural gas.
3. Requires ARB to adopt regulations to require the reporting and verification of statewide GHG emissions, including monitoring and annual reporting of GHG emissions sources, beginning with the sources that contribute most to statewide emissions. ARB has adopted a Mandatory Reporting Regulation (MRR) for operators of certain facilities that directly emit GHGs, suppliers of certain fuels and carbon dioxide, electric power entities, verifiers of GHG emissions data reports and offset project data reports submitted pursuant to the cap-and-trade regulation, and verification bodies.
4. Requires the CEC, in consultation with ARB, to adopt a methodology for the calculation of GHG emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers, and requires each retail supplier, including an electrical corporation, local publicly-owned electric utility, electric service provider, and community choice aggregator, to disclose both the GHG emissions intensity of any electricity portfolio offered to its retail customers and the CEC's calculation of the GHG emissions intensity associated with all statewide retail electricity sales.

THIS BILL:

1. Requires ARB, in consultation with the Independent System Operator (ISO), on or before January 1, 2020, to adopt a methodology to calculate hourly GHG emissions associated with electricity from "unspecified sources" (electricity that is not traceable to specific generation sources).
2. Requires the methodology to be capable of calculating, on an ex-post basis, recorded hourly emissions associated with electricity from unspecified sources purchased within California balancing authority areas and associated with electricity from unspecified sources imported into California from other sub-regions of the Western Electricity Coordinating Council.
3. Requires the methodology to rely on recorded generation operations data provided by the California balancing authorities and other balancing authorities serving California end-use customers.
4. Requires the ISO and other California balancing authorities to assist ARB by providing relevant data.
5. Requires the PUC and CEC to incorporate the methodology into programs addressing the disclosure of GHG emissions or the procurement of electricity by entities subject to the respective jurisdiction of each.
6. Establishes related definitions.

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. The MRR supports ARB's GHG emissions inventory and AB 32 regulatory programs. For unspecified sources of electricity delivered to California, the MRR includes a default formula for estimating GHG emissions. If imported electricity is not directly delivered to California and/or cannot be tied via ownership or contract rights to a specified source, the importer must use ARB’s unspecified electricity emission factor to estimate GHG emissions. The default emission factor was developed by PUC and ARB prior to adoption of the first MRR in 2010 and has not been updated since.  According to ARB, it is based on marginal generation likely to be dispatched in the Western Electricity Coordinating Council (WECC; also known as the western grid) for 2006, 2007 and 2008.  Marginal generation is from those facilities that are dispatched or ramped up to provide the last incremental MWh of electricity needed to serve demand, which is usually natural gas-fired generation and is reflected in the current 0.428 MTCO₂e/MWh figure.  ARB staff is planning to pursue the update to the emission factor through a review and update of the current fleet mix for the western grid and using the existing methodology.

Unfortunately, the static calculation ARB uses seems to come at the expense of accuracy. The emission factor itself and ARB's reasoning ignore well-established facts about electricity imports, including that actual generation sources vary by season and location, from hydro to coal, with very different emissions, and that electricity imports are not necessarily procured on the margin by electricity suppliers. In addition, ARB's data and assumptions regarding marginal natural gas-fired generation in the western grid may be outdated. Among other things, the default factor can lead to very inaccurate GHG emissions reporting for retail electricity suppliers, particularly those that rely on significant amounts of "system power" purchased from unspecified sources in spot markets.

1. Author's statement:

California lacks an adequate approach for calculating the greenhouse gas emissions associated with purchases of electricity from “unspecified” sources. Although ARB does apply a single generic GHG emissions factor for imports of unspecified power from other western states under the Cap-and-Trade program, this factor (0.428 MTCO2e/MWh) was calculated in 2010 using data from 2008 for the entire western region. ARB has not updated this default factor since that time and does not apply different factors to imports from different regions (or within California) despite the fact that the generation mix supplying “unspecified” power can vary significantly in different Western sub-regions that supply California. Moreover, the default GHG factor does not account for any variation by season or hour despite the fact that the mix of generating resources supplying “unspecified” electricity changes significantly based on timing.

The state has recently launched a number of initiatives that require load-serving entities to report GHG emissions associated with their purchase of electricity. Pursuant to AB 1110 (Ting), the CEC is updating the Power Content Label to include the disclosure of GHG emissions intensity associated with each retail supplier’s electricity portfolio. Pursuant to SB 350 (De León), both the PUC and CEC are developing Integrated Resources Planning targets that may include specific GHG emissions limits for the electric supply portfolios of all retail suppliers in the state. Since practically all retail suppliers procure some electricity from unspecified sources, the development of a robust and accurate methodology for calculating GHG emissions for these purchases will prove essential to the successful implementation of these programs.

ARB is currently working with the California Independent System Operator to develop a comprehensive approach to measuring GHG emissions attributable to dispatch in the Energy Imbalance Market (EIM) that serves California. This approach is intended to permit real-time calculations of GHG emissions from all resources participating in the EIM and offers hope that California can move away from a system that relies on default GHG emissions factors and towards more real-time and real-world calculations.

1. Opposition. The California Municipal Utilities Association (CMUA), which represents both retail suppliers and balancing authorities, opposes this bill, saying the ex-post calculation of GHG emissions adds uncertainty. Further, CMUA is concerned that the purpose of the new methodology includes procurement of electricity, not just disclosure of emissions. CMUA suggests the bill instead give general direction to ARB to update its GHG emissions calculation, consulting with relevant entities.
2. Technical amendments. This bill should be amended to define and reconcile the use of the terms "retail seller," "local publicly owned electric utility" and "retail supplier."
3. Double referral. This bill was heard and approved by the Utilities and Energy Committee by a vote of 10-5 on March 15, 2017.

REGISTERED SUPPORT / OPPOSITION:

Support

California State Association of Electrical Workers

California State Pipe Trades Council

California Wind Energy Association

Coalition of California Utility Employees

The Utility Reform Network (TURN)

Vote Solar

Western States council of Sheet Metal Workers

Opposition

California Municipal Utilities Association

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /

Date of Hearing: March 15, 2017

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Chris Holden, Chair

ABPCA Bill Id:AB 79 (

Author:Levine) – As Amended Ver:March 6, 2017

SUBJECT: Electrical generation: hourly greenhouse gas emissions: electricity from unspecified sources.

SUMMARY: Requires the California Air Resources Board (CARB) to establish a methodology for calculating greenhouse (GHG) emissions associated with electricity from unspecified sources of power. Specifically, this bill:

1. Requires CARB to develop a methodology to calculate the hourly GHG emissions of unspecified sources of electricity after it is purchased by retail suppliers for delivery to California customers. The methodology is to be developed no later than January 1, 2020 and in consultation with the Independent System Operator (ISO).
   
2. Requires any balancing authority serving California customers to provide relevant data to CARB to facilitate the development of the methodology.
   
3. Requires the California Public Utilities Commission (CPUC), and the California Energy Commission (CEC), to use the methodology in any programs for which GHG calculations are included.
   
4. Defines “balancing authority,” “balancing authority area,” “California balancing authority,” “electricity from specified sources,” and “electricity from unspecified sources.

EXISTING LAW:

1. Requires CARB to account for GHG from all electricity consumed in the state including transmission and distribution line losses from electricity generated within the state or imported from outside the state and purchased by all retail sellers of electricity, including load-serving entities (LSEs) and local publicly owned electric utilities (POU). (H&S §38530)
2. Establishes a formula for calculating GHG emissions from unspecified sources of power delivered to California. (17 CFR §95111)
3. Defines, for purposes of the Power Content Label, “purchases of electricity from specified sources” and “purchases from specified sources” as electricity transactions that are traceable to specific generation sources by any auditable contract trail or equivalent, such as a tradable commodity system, that provides commercial verification that the electricity source claimed has been sold once and only once to a retail consumer. Retail suppliers may rely on annual data to determine whether a transaction meets this definition, rather than hour-by-hour matching of loads and resources. (PUC §398.2 [d])
4. Defines, for purposes of the Power Content Label, “electricity from unspecified sources” as electricity that is not traceable to specific generation sources by any auditable contract trail or equivalent, including a tradable commodity system, which provides commercial verification that the electricity source claimed has been sold once, and only once, to a retail consumer. (PUC §398.2 [e])
5. Defines an LSE as an electrical corporation, electric service provider, or community choice aggregator. (PUC §380 [k])
6. Defines a POU as a municipality or municipal corporation operating as a “public utility” furnishing electric service, as specified; an irrigation district furnishing electric services, as specified, or a joint powers authority that includes one or more of these agencies and that owns generation or transmission facilities, or furnishes electric services over its own or its member’s electric distribution system. (PUC §224.3)
7. Requires LSEs and POUs to file Integrated Resource Plans (IRPs) that meet GHG reduction targets for the electric sector established by CARB. (PUC §§454.52, 9621)
8. Requires LSEs and POUs to disclose sources of energy, and related GHG emissions, used to deliver electric service to customers in an accurate, reliable, and simple to understand format, commonly referred to as the “Power Content Label.” (PUC §398.1 et seq.)

FISCAL EFFECT: This bill is keyed fiscal and will be referred to the Appropriations Committee for its review of the fiscal effect of this bill.

COMMENTS:

1. Author’s Statement. California has long been a leader in GHG emissions standards. Recent landmark legislation (SB 350 and SB 32) reinforce California’s role as a national leader in clean energy standards and climate policy. To ensure that state policies achieve their intended results, we must develop better protocols for carbon accounting which accurately reflect real-world GHG emissions associated with the purchase of electricity. California has an opportunity to continue its world leadership through the evolution of comprehensive methodologies that track GHG emissions and allow this information to be used to effectively in regulatory programs to promote the achievement of significant reductions of emissions that are driving global climate change.
2. Unspecified Sources of Electricity – Left Overs? The bulk of power procured by the state’s LSEs (IOUs, CCAs, and ESPs) and POUs is secured from long-term power purchase agreements. These stationary sources of power are easily identified and the GHG emissions are easily quantified and tracked by CARB.

However, according to the CEC, 13.5% of California electrical load was served by unspecified sources of power in calendar year 2015^[1] and the stationary sources from which that power is derived are not readily available. The utilities and the ISO utilize unspecified sources of power to fill gaps in procurement, peak load, and other short-term needs. CCAs and ESPs heavily rely on what is commonly referred to as “system power” or power from the “spot market” to serve customer load.

The exact source of this power, which might be casually referred to as the left-overs or excess generation on the grid, technically remains a mystery as does the exact GHG content of that power. The power comes from myriad generation facilities inside and outside of California and the generation mix of the power can vary significantly in different Western sub-regions that supply California. Some opine that system power masks resources from coal-fired facilities; at the other extreme, others opine the mix has no coal and is primarily from gas and hydro-electric facilities.

1. GHG Tracking for Unspecified Resources. The CARB is required to track the GHG emissions of all electricity consumed in the state. For unspecified sources, the agency has long applied a static assumption for GHG emissions associated with the system power as 0.428 MT of CO2e/MWh. This rate applies for power imported from both the Southwest (which has more coal) and the Northwest (which is dominated by hydro and gas). The number does not vary by location, season, or time which the author opines does not “reflect these real-world differences in order to enable accurate compliance with comprehensive regulatory requirements.”
   
2. Why does it Matter? Accuracy in the calculation of GHG emissions is the foundation of many programs in the state starting with the Cap & Trade program. Specific to the electricity sector, the emissions calculations developed under this bill would be used by the CEC and CPUC as part of any relevant programs governing disclosure of GHG emissions or electricity procurement. Starting this year, the state’s LSEs and POUs will be required to base procurement planning not only on reliability and cost, but also for GHG emissions (Integrated Resource Planning). The availability of accurate hourly data will allow LSEs to effectively promote load-shifting and load reduction measures that yield maximum GHG emissions reductions. These same entities are also required to disclose the GHG emissions intensity of any electricity portfolio offered to retail customers (Power Content Label).
   
3. Feasibility & Purpose of Calculation. The bill requires that the CARB develop a methodology that is “capable of calculating, on an ex-post basis, recorded hourly emissions” of GHG. The California Municipal Utilities Association acknowledges the CARB use of a “default factor” for GHG emissions for unspecified power but opines that “the hourly calculation proposed in AB 79 erroneously assumes a more accurate reporting of GHG emissions than CARB’s current practice.” They further opine that use of the current “default factor” allows utilities and other LSEs to know in advance the compliance costs associated with system power. This however appears to treat the emissions as simply a “cost of doing business.” The purpose of programs that calculate and rely on GHG emissions data generally have an end goal of reducing those emissions. Logically, accurate GHG calculations would seem to be the foundation for those programs and are used to inform procurement decisions.
   
   TURN writes in support of the bill and represents that it is “an important step forward in refining the calculation of GHG emissions associated with unspecified power. The current approach relies on 2008 data and does not reflect the sub-region in which the power was generated, the time of day or season, or the extent to which resources considered “unspecified” are actually being purchased by a retail supplier as “specified sources.”
   
   The committee has yet to hear any questions about the feasibility of accomplishing this hourly calculation. With the extensive availability of data and improvements in the tracking of emissions, it is hard to imagine that the calculations required by this bill are not possible. CARB has not had the opportunity to comment but the author will need to work with CARB, should this bill move forward, on any adjustments necessary to the mandated calculation while still achieving the goal of a more accurate disclosure of GHG associated with unspecified power.
   
4. CARB Mandate. The bill places a technical mandate on a CARB GHG emissions program in the Public Utilities Code but CARB directives are in the Health and Safety Code. The committee may wish to consider amending this bill to appropriately place the CARB directives in the Health and Safety Code and include the appropriate mandates on the CPUC and CEC to use the new calculation when it is available in 2020.
   
5. Prior Legislation. In 2016 the Legislature revised disclosures required by LSEs and POUs to, for the first time, require those entities to annually disclose GHG emissions intensity associated with electricity delivery to customers. (AB 1110 [Ting], Chapter 656, statutes of 2016). The disclosure however is limited in its accuracy for GHG emissions associated with unspecified sources of electricity as a result of the static number in current use by CARB.

REGISTERED SUPPORT / OPPOSITION:

Support

California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
The Utility Reform Network
Western States Council of Sheet Metal Workers

Opposition

California Municipal Utilities Association

Analysis Prepared by: Kellie Smith / U. & E. /

1. http://www.energy.ca.gov/almanac/electricity_data/total_system_power.html ↑