BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 180 (Jackson) - Electricity:  emissions of greenhouse gases
          
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          |Version: May 5, 2015            |Policy Vote: E., U., & C. 8 -   |
          |                                |          3, E.Q. 5 - 2         |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 18, 2015      |Consultant: Marie Liu           |
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          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.







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           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  








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          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  








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          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  








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          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"







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