BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 180 (Jackson) - Electricity: emissions of greenhouse gases ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 5, 2015 |Policy Vote: E., U., & C. 8 - | | | 3, E.Q. 5 - 2 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 180 would direct the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) to develop greenhouse gas (GHG) emission performance standards (EPS) for nonpeaking and peaking electricity generation for load-serving entities and local publicly-owned utilities (POUs), respectively. Fiscal Impact: Ongoing annual costs of $300,000 to $450,000 from the Energy Resources Program Account (General Fund) for additional responsibilities by the CEC in regards to EPSs for generation purchased by POUs Unknown ongoing costs, potentially in the mid-hundreds of thousands of dollars, from the Energy Resources Program Account (General Fund) to permit carbon capture and storage projects associated with a generation facility. SB 180 (Jackson) Page 1 of ? Ongoing annual costs of $280,000 to the Public Utilities Reimbursement Account (special) for the CPUC to calculate and enforce the new EPS for load-serving entities and the review of GHG emissions from biomass facilities. One-time costs of $250,000 from the Public Utilities Reimbursement Account (special) for the CPUC to contract out modeling of reliability impacts of EPS standards. Background: Existing law requires a load-serving entity- an investor-owned utility (IOU), electric service provider (ESP) and community choice aggregator (CCA) - or a local publicly-owned utility (POU) from entering into a long-term financial commitment for baseload electricity generation unless that generation complies with a GHG EPS. The CPUC and the CEC are required to establish the standards, in consultation with each other and the Air Resources Board (ARB), for the load-serving entities and POUs, respectively. The standard may be no higher than the rate of GHG emissions for combined-cycle natural gas baseload generation. The standards for load-serving entities and POUs shall be consistent. "Baseload generation" is electricity generation from a power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least 60 percent. The GHG EPS are to be reevaluated and modified by the CEC and the CPUC in consultation with the ARB. In calculating the GHG emissions for the purpose of EPS compliance, carbon dioxide that is injected into geological formations as to prevent releases into the atmosphere and in compliance with applicable laws and regulations may not be counted as emissions of the powerplant. Additionally, net emissions from the growing, processing, and generating electricity may be considered for facilities that generate electricity from biomass, biogas, or landfill gas energy. Proposed Law: This bill would create a new basis for determining the EPS and require a separate EPS be developed for peaking and nonpeaking facilities beginning on July 1, 2017. Specifically, this bill SB 180 (Jackson) Page 2 of ? would: Define "nonpeaking generation" and "peaking generation" Define "Greenhouse gases emission performance standard" Directs the CPUC and CEC, in consultation with each other and ARB, by June 30, 2017 to adopt a GHG EPS for nonpeaking and peaking generation for load-serving entities and POUs, respectively. The initial GHG performance standard for peaking and nonpeaking generation at the lowest level each agency determines to be technologically feasible without risking the reliability of the electrical grid and of electric service, or hampering further development of renewable generation resources or reductions of GHG emissions, and taking into consideration siting factors such as altitude, regional climate, and operating capacity. Require the CPUC and the CEC to update the EPS at least every five years based on new technology. Prohibits, as of July 1, 2017, a load-serving entity or a POU from entering into a new long-term financial commitment for peaking or nonpeaking generation unless the source of the generation complies with the applicable GHG EPS. Requires the CPUC to reconsider and modify its prior decisions on how to calculate GHG emissions by facilities generating electricity from biomass, biogas, or landfill gas energy. Declare that a carbon capture and storage project is a "related facility" for the purposes of obtaining certification from the CEC, thereby subjecting the project to CEC's CEQA equivalent permitting process. Related SB 180 (Jackson) Page 3 of ? Legislation: SB 1368 (Perata) Chapter 598, Statutes of 2006 established the EPS for baseload electricity generation. Staff Comments: This bill would create significant costs for both the CEC and the CPUC to develop EPSs for nonpeaking and peaking generation supplying POUs and load-serving entities, respectively. The CPUC estimates that it would need $230,000 annually for the development of the new EPSs for generation purchased by load-serving entities and compliance review. Staff notes that the CPUC would be reviewing a greater number of facilities with the inclusion of peaking generating facilities. The CPUC would also need $250,000 in contract costs for modeling of reliability impacts of the EPS standards. The CEC would also have additional workload for the development of the new EPSs for generation purchased by POUs and compliance review. The CEC estimates that it would need $150,000 to $300,000 annually for EPS establishment and updates and approximately $150,000 ongoing for additional compliance review, for a total cost of $300,000 to $450,000 annually. This bill, by allowing a carbon capture and storage project to be a related facility for the purposes of CEC permitting, brings carbon capture projects under the jurisdiction of the CEC when there is a generation facility involved. Currently the Division of Oil, Gas, and Geothermal Resources (DOGGR) within the Department of Conservation has the dedicated authority from the US EPA to permit carbon sequestration projects. To date, the only experience the CEC has had with carbon sequestration is limited involvement associated with the siting, not the actual carbon injection, of the proposed Hydrogen Energy California (HECA) project in Kern County. The CEC's costs associated with carbon sequestration permitting is uncertain and would depend on a number of factors including the amount of assistance the CEC receives from DOGGR and how many applications the CEC will have to review. As a preliminary estimate, the CEC estimates it SB 180 (Jackson) Page 4 of ? additional ongoing costs in the mid-hundreds of thousands of dollars. Based on the CEC's experience with HECA, the CEC will likely also have additional contract costs of at least $50,000 for each project. The ARB indicates that it will have minor and absorbable costs to consult with the CEC and CPUC in the establishing of GHG EPSs. Recommended Amendments: Staff notes that there is an error on page which inappropriately charges the CEC with adopting the GHG EPS for peaking generation of load-serving entities instead of a local publically owned electric utilities. On page 19, line 33, delete "load-serving entities" and insert "local publicly owned electric utilities" -- END --