California Public Utilities Commission Sets Fourth and Fifth Solicitations for the Renewable Auction Mechanism Program
On May 9, 2013, the California Public Utilities Commission adopted Resolution E-4582, scheduling the fourth Renewable Auction Mechanism (RAM) auction to close on June 28, 2013 and setting a fifth RAM auction for no later than June 27, 2014. The RAM program allows renewable energy developers to bid their 3 MW to 20 MW projects to California’s three largest utilities – PG&E, SCE, and SDG&E – for a standard contract. The final Resolution did not differ substantively from the Commission’s draft Resolution, issued in early April 2013 and detailed in a previous blog post. Advice letters filed today with the CPUC provide the utilities' procurement targets for the fourth RAM auction. SCE will solicit projects totaling 181 MW, PG&E is seeking a total of 82 MW, and SDG&E is looking to procure 47 MW in total. The advice letters also breakdown the utilities' total procurement goals into the capacity sought in each of the three RAM product categories - baseload, peaking as-available, and non-peaking as-available.
Various parties commented on draft Resolution E-4582, attempting to influence the Commission's direction with the RAM program. Commenting on the draft Resolution, the Division of Ratepayer Advocates requested that the fourth and fifth auctions be delayed so that RAM projects from these auctions would come online during the utilities’ third RPS compliance period (2017-2020). In their comments, Recurrent Energy, the Solar Energy Industries Association, and the Large Scale Solar Association proposed that the Commission hold the fifth RAM auction within six months of the fourth auction, rather than up to a year after the fourth auction, and hold three subsequent auctions on an annual basis thereafter. They did not propose an increase in the total capacity of the RAM program; the three additional auctions would solicit capacity to replace any previously executed contracts that fail or are terminated. The Commission did not amend the draft Resolution to incorporate these recommendations.
On April 19, 2013, the California Air Resources Board (CARB) voted to link the California cap and trade program to Québec’s cap and trade system. CARB approved changes to the California cap and trade regulation on Friday to allow for the linkage, which is effective January 1, 2014. In practical terms, the linkage opens a new market for greenhouse gas allowances and offsets for California’s regulated entities and offset generators. As Québec’s cap and trade participants enter the California market, regulated entities in California could face tighter competition in bidding for allowances at CARB’s quarterly auctions.
CARB is also planning for additional amendments to the California cap and trade regulation this year. Many of the potential changes were teed up for consideration in CARB Resolutions 12-33, 12-51, and 11-32. Topics up for potential amendment include:
- Refining the definition of resource shuffling and clarifying how CARB will deal with the problem. CARB will base proposed amendments to resource shuffling provisions on the recommended actions presented by staff in October 2012.
- Providing transition assistance to electrical generating facilities with legacy power purchase agreements that do not provide for recovery of the cost of compliance with the cap and trade program.
- Exemption for steam and waste heat emissions from combined heat and power.
- Exemption for emissions from waste-to-energy facilities during the first compliance period (2013-2014).
Draft California PUC Resolution Would Set Fourth RAM Auction for June 28, 2013, Authorize Fifth RAM Auction in 2014
The California Public Utilities Commission has issued a Draft Resolution to schedule the fourth Renewable Auction Mechanism (RAM) solicitation and authorize a fifth RAM auction to take place in 2014. Draft Resolution E-4582, issued April 9, 2013, would close bidding for the fourth RAM auction on June 28, 2013. The fifth RAM auction authorized by the Resolution would close no later than June 27, 2014. Under the Draft Resolution, Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) are directed to solicit two-thirds of their remaining RAM capacity allocation in the fourth auction. The remaining one-third of capacity, plus any unsubscribed capacity from previous auctions, would be solicited in the fifth auction. The Draft Resolution does not alter the total RAM procurement targets of the three utilities or other components of the program. However, the addition of the fifth auction provides RAM participants with an additional opportunity to bid their renewable energy projects to the utilities.
PG&E, SCE, and SDG&E are required under the current RAM Program to procure a combined 1,299 MW of renewable energy from 3 to 20 MW projects through four auctions taking place from 2011 to 2013. The third RAM solicitation closed December 21, 2012. The utilities will submit advice letters to the Commission in May 2013 with the results of the third auction. In previous submissions to the Commission, SCE stated that it sought to procure 186 MW in the fourth auction and SDG&E stated it planned to procure 44 MW in the fourth auction. Depending upon the success of its third auction, PG&E may have approximately 100 MW of remaining procurement capacity. Under the Draft Resolution, this remaining capacity will be solicited across the fourth and fifth auctions.
Comments on the Draft Resolution are due to the CPUC April 29, 2013. The Commission currently plans to vote on the Draft Resolution at its May 9, 2013 meeting.
On February 19, 2013, the California Air Resources Board held its second auction of greenhouse gas (GHG) emission allowances for its Cap and Trade Program. This was the first quarterly auction for 2013; the first auction was held November 14, 2012. All ‘covered entities’ – GHG emitters regulated under Cap and Trade – were eligible to participate in the auction. Voluntarily associated entities, i.e. groups who wish to retire allowances or sell allowances on the market, were also eligible to participate. Some key rules of the auction:
- Participants submit sealed bids, for multiples of 1,000 allowances.
- For 2013 auctions, the minimum bid is $10.71 per allowance.
- One allowance equals the right to emit one metric ton of CO2 (or other GHGs in CO2-equivalent terms).
- Allowances are awarded beginning with the highest bid and proceeding through successively lower bids until the total number of allowances available for sale have been awarded.
- The final price of allowances for all participants in the auction, the “settlement price,” is the lowest bid received at which the supply of available allowances for sale is exhausted.
In this auction, the settlement price for 2013 vintage allowances was $13.62. All of the approximately 13 million allowances offered for sale were sold. The auction also included the advance sale of 2016 vintage allowances. The settlement price for 2016 allowances was $10.71. 4,440,000 2016 vintage allowances were sold, approximately half the total number offered for sale. There were approximately 2.5 bids for every one allowance, compared with approximately one bid for each allowance during the November 2012 auction. Not surprisingly, auction participation is up, with covered entities facing compliance obligations this year.
The settlement prices for this auction were slightly higher than those of the first auction, held November 14, 2012. The settlement price for 2013 vintage allowances in November 2012 was $10.09. Advance sales of 2015 vintage allowances were settled at $10, the minimum price, in the November 2012 auction. The Air Resources Board will hold an allowance price containment reserve sale on March 8, 2013, offering allowances at a three tiers of fixed prices.
The California Public Utilities Commission has commenced a new rulemaking to implement Assembly Bill (AB) 1900, on the use of common carrier gas pipelines for biomethane. In the rulemaking, the CPUC will develop standards and requirements for biomethane injected into pipelines, as well as pipeline access rules to ensure non-discriminatory open access to the system. Under current tariffs, most gas utilities specifically decline to accept or transport gas from landfills. Under AB 1900, the CPUC is also directed to adopt policies and programs that promote the in-state production and distribution of biomethane. This aspect of AB 1900 is being handled in the CPUC’s existing proceeding on implementation of the state 33% RPS. The California Energy Commission is charged with implementing other provisions of AB 1900, including identifying impediments that limit procurement of biomethane in California and offering solutions to those impediments.
In January 2013, the CPUC updated the scope of its 33% RPS proceeding to also implement Senate Bill (SB) 1122, requiring investor-owned utilities to procure at least 250 MW of electrical generation from new bioenergy projects. A third bioenergy bill, AB 2196, allowing electrical generating facilities using landfill or digester gas to qualify for the California RPS, will largely be implemented by the Energy Commission. This suite of legislation from the 2011-2012 California Legislative Session offers new opportunities in California for the bioenergy and biogas industries, after the setback suffered in March 2012 when the Energy Commission suspended the RPS-eligibility of biogas.
The California Bioenergy Interagency Working Group has released its 2012 Bioenergy Action Plan, with the goal of facilitating the development of bioenergy in California on a variety of levels, including research and development support, streamlining and consolidating permitting, facilitating access to transmission, pipelines, and other distribution networks, and policies and laws to monetize the benefits of bioenergy. The Working Group is a broad coalition of state energy, environment, and resources agencies, including the California Public Utilities Commission, Energy Commission, Air Resources Board, Natural Resources Agency, Cal Fire, Cal Recycle, and the Department of Food and Agriculture, as well as the California Biomass Collaborative and the Central Valley Regional Water Quality Control Board. The 2012 Plan builds on the Working Group’s 2006 and 2011 Bioenergy Action Plans, providing a more detailed set of actions for the constituent agencies to undertake and incorporating more of Governor Brown’s policies for energy, waste reduction, and job creation. Bioenergy has met some obstacles in California in recent times, including challenges by major and local environmental groups to biomass-fueled electrical generation contesting claims of greenhouse gas neutrality and the Energy Commission’s suspension, in most cases, of pipeline biomethane as an eligible renewable fuel for gas-fired facilities to help meet the state’s 33% renewable portfolio standard. A concerted focus by the state agencies on specific Action Plan items will undoubtedly help move bioenergy forward in California. Bioenergy advocates should also keep an eye on several bioenergy and biomethane bills still active during this last week of the California 2011-2012 Legislative Session, including A.B. 1900, A.B. 2196, and S.B. 1122.
Yesterday, the D.C. Circuit Court of Appeals issued a decision in EME Homer City Generation, L.P. v. EPA that rejects the U.S. Environmental Protection Agency’s approach to regulating upwind pollution from coal- and natural gas-fired power plants, among other sources. The so-called Transport Rule, also known as the Cross-State Air Pollution Rule, had sought to define emissions reduction responsibilities for Texas and 27 eastern states based on those states’ contributions to downwind states’ air quality problems. The Rule would have imposed caps on sulfur dioxide and nitrogen oxide emissions.
In a 2-1 ruling, the D.C. Circuit found that the Transport Rule exceeds EPA’s statutory authority. The Court ordered EPA to continue to enforce a 2005 regulation know as the Clean Air Interstate Rule until it established a lawful replacement to the Transport Rule. That process is widely expected to take years to accomplish.
One of the immediate consequences of the ruling is likely a stay of execution for certain older coal-fired power plants. Under the Transport Rule, owners of such plants would either have had to close their facilities or install expensive pollution control equipment.
As my colleagues Kristen Castaños and Melissa Foster posted on the Stoel Rives California Environmental Law Blog, the U.S. Department of the Interior announced today that it will publish the Final Programmatic Environmental Impact Statement (“Solar PEIS”) for solar energy development in six southwestern states—Arizona, California, Colorado, Nevada, New Mexico, and Utah. The Solar PEIS is a major step forward in the permitting of utility-scale solar energy on public lands in the West.
The Solar PEIS will establish solar energy zones with access to existing or planned transmission and with the fewest resource conflicts and provide incentives for development within those zones. The roadmap set forth in the Solar PEIS will make for faster, more streamlined permitting of large-scale solar projects on these public lands. The focus of the Solar PEIS is on Bureau of Land Management (“BLM”) lands that are most suitable for solar energy development. It identifies 17 Solar Energy Zones (“SEZs”), totaling about 285,000 acres of public lands, as priority areas for utility-scale solar development. The Solar PEIS also notes the potential for additional zones through ongoing and future regional planning processes and allows for utility-scale solar development on approximately 19 million acres in variance areas lying outside of identified SEZs.Continue Reading...
The California Public Utilities Commission (CPUC) has adopted several changes to the state’s Renewable Auction Mechanism program (RAM), created in 2010. The RAM program operates as a reverse auction, offering a standard contract with the state’s three largest investor-owned utilities for energy from renewable distributed generation facilities of up to 20 megawatts (MW). The utilities will procure up to 1,000 MW of renewable energy under the program over two years. The first RAM auction took place in November 2011 and the second auction is schedule for next month. Resolution E-4489, adopted last Thursday, modifies the CPUC decision creating the RAM program, Decision 10-12-048, and Resolution E-4417, which served to implement details of the program. Resolution E-4489 approves changes to align the RAM with recent updates to Southern California Edison’s Solar Photovoltaic Program and incorporate a change requested by Pacific Gas & Electric Company.
On March 23, 2012, the U.S. Fish and Wildlife Service (USFWS) released its highly anticipated final Land-Based Wind Energy Guidelines. The Guidelines present a tiered approach for the consideration and analysis of potential impacts to wildlife and habitat from onshore wind energy development. The five-tier process and other guidance found in the Guidelines aim to efficiently avoid and minimize impacts to wildlife and habitat by guiding the decisions of developers from the initial stages of site selection through the development of project design and the ultimate construction and operation of a project.
While the Guidelines are voluntary, this new publication represents the informal rulebook by which the USFWS will judge the appropriateness of a site or project design and the adequacy of mitigation, including for purposes of enforcement. The new Guidelines replace the interim guidance published by the USFWS in 2003 and are effective immediately. The final version of the Guidelines does not significantly differ from the September 2011 draft version that was issued for public comment.