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Transcript of California Public Utilities Commission CPUC Climate Change Activities Paul Clanon Executive Director...
California Public Utilities Commission
CPUC Climate Change Activities
Paul ClanonExecutive Director
August 28, 2007
Presentation to the
Senate Energy, Utilities & Communications Committee
Subcommittee on Alternative Energy
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California Public Utilities Commission
California’s Greenhouse Gas Emissions
Industrial Facilities (Over 40% Petroleum Refineries), 23%
In-State Electricity
Generation, 10%
Out-of-State Generation, 10%
Other, 16%Transportation,
41%
Source: CA Energy Commission
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California Public Utilities Commission
Southern California Edison
31%
Pacific Gas and Electric
20%
Los Angeles Department of
Water and Power18%
San Diego Gas and Electric
6%
Sacramento Municipal Utility
District2%
California Department of
Water Resources3%
Other Publicly-Owned Utilities
20%
Electric Utility Emissions
2004 Total: 107 million metric tons
Source: CA Energy Commission Emissions Inventory
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California Public Utilities Commission
Regulatory and Market-Based Solutions
Regulatory• Renewables Portfolio
Standard• Energy Efficiency• Emissions Performance
Standard
Market-based• GHG emissions cap
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California Public Utilities Commission
Emissions Cap Policy Development
Development of policy being handled jointly by CPUC and CEC
Designed to dovetail with Air Resources Board implementation of AB 32
CPUC/CEC will develop guidelines for electricity sector (investor-owned and publicly-owned utilities) for ARB adoption; separate track will also address natural gas distribution utilities
Major outcome of proceeding: size of contribution to 2020 required reductions from electricity and natural gas sectors
CPUC adopted policy framework in February 2006 (prior to AB 32 consideration), based on workshops and rulemaking conducted in 2004-2005
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California Public Utilities Commission
Proceeding Organization
Work happening on six separate tracks: Reporting issues Baseline development Emission reduction measures and annual emissions caps Flexible compliance mechanisms Allowance Allocation Modeling to support evaluation of costs
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California Public Utilities Commission
Reporting and Tracking (electricity only)
Decision to be adopted by CPUC on September 6th and CEC on September 12th
Decision will be incorporated by CARB into package to be submitted to the Office of Administrative Law (OAL) at the end of September for ALL mandatory reporting to start 1/1/08 (as per AB 32)
CPUC reporting protocols are for electricity sector, and deal with the controversial topic of “contract shuffling” - this is where a utility might own a coal plant but sell its output rather than use it and then buy another existing resource (such that no reductions in GHG emissions occur, but they look on paper like they reduced their emissions)
CPUC proposal is designed to strictly guard against this possibility and start sending those signals to the market NOW, even though mandatory compliance doesn’t begin until 2012
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California Public Utilities Commission
Baseline Development
The 1990 baseline finalization for all sectors is occurring at CARB
CPUC is working on developing the individual baselines for regulated entities in the electricity and natural gas sectors
Can be difficult given differing conditions (low or high hydro conditions) to pinpoint – CPUC is likely to need multiple years on which to base current emissions levels
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California Public Utilities Commission
Emissions Reductions Measures Identification
This effort dovetails closely with the Modeling Track
Analysis will be conducted by the modeling consultants in collaboration with staff - will help determine the level of emissions reductions available in the electricity and natural gas sectors
CPUC staff is analyzing how a potential cap and trade market would intersect with Energy Efficiency (EE) and the Renewable Portfolio Standard (RPS) - initial assumption is that EE will remain a separate (but related) mandatory program
CPUC staff is identifying the current and projected levels of emission reductions attributable to EE and RPS – as well as their costs – to determine where the electricity sector will be WITHOUT any potential cap and trade program
Staff will then analyze how much further EE and RPS (and other) strategies will need to expand WITH a cap and trade program – as well as analyze the costs of various measures
Workshops on Sept 5-7 regarding Renewable Energy Credits (RECs) will discuss issue
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California Public Utilities Commission
Allowance Allocation
Currently evaluating policy issues surrounding allowance allocation – track addresses issues about how to set emissions caps for each entity in the electricity and natural gas sectors
CPUC held workshop on June 22 to discuss options with stakeholders.
CPUC staff preparing a set of questions and a straw proposal on which to take comments from parties in writing.
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California Public Utilities Commission
Flexible Compliance
Track encompasses such issues as trading, compliance periods, banking, borrowing, and offsets
CPUC staff held workshop in April
CPUC staff preparing a proposal to be issued in September for comment
Comments on this will help narrow what scenarios are being modeled
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California Public Utilities Commission
Modeling
Consultants were recently brought on and are working on base case – jointly managed with input from CEC, CARB and CalEPA
CARB has also co-funded contract to ensure that they can ask consultants to run additional scenarios, if necessary, later in the process
Basic output of this is effort is to show what is cost effective for the electricity and natural gas sectors to achieve as part of the 2020 goal
Results will be fed into CARB macroeconomic model of whole state economy, to compare costs of compliance with other sectors
Base case development should be complete by November 2007 - initial runs will be ready by April 2008
Consultants are also developing non-proprietary spreadsheet tool that stakeholders can use to run their own scenarios and test their own assumptions (to help in stakeholder process)
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California Public Utilities Commission
Summary
The CPUC and the CEC will jointly adopt a “framework” policy decision in the February/March 2008 timeframe to give some key initial policy recommendations to CARB before their multi-sector integration workshop in March or April 2008.
The CPUC and CEC will continue to refine analysis during 2008 and MAY issue a subsequent decision in September 2008 in time for CARB to incorporate into their final scoping plan.