California Public Utilities Commission Opens New Rulemaking on Biomethane

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.

Update: California Energy Commission Postpones Action on Proposed Decision Allowing PV Projects to Opt-In to CEC Permitting Process

In a previous blog, we reported on a proposed decision pending consideration by the California Energy Commission (CEC), which would allow solar photovoltaic project developers to opt-in to the CEC's permitting process.  The CEC has announced that its decision on this matter has been postponed to an as-yet undetermined date.

California Energy Commission Issues 2011 Integrated Energy Policy Report

Yesterday, the California Energy Commission (CEC) issued a notice that, as part of the CEC’s February 8, 2012 Business Meeting, the Commission will consider adoption of the Lead Commissioner’s Final 2011 Integrated Energy Policy Report (IEPR). 

The CEC’s notice included the following information:

Background
Senate Bill 1389 requires the CEC to adopt an integrated energy policy report every two years. The objective of the IEPR is to evaluate market trends and develop energy policies that will "conserve resources, protect the environment, ensure energy reliability, enhance the state's economy, and protect public health and safety." The Final 2011 IEPR has been prepared in response to this direction and is available on the CEC’s website.

To prepare the report, the Energy Commission conducted 30 public workshops on a range of issues facing California's electricity, natural gas, and transportation fuel sectors. On December 5, 2011, the Energy Commission released the Draft 2011 IEPR to solicit public comments. The Final 2011 IEPR considers all written comments on the draft report.

Written Comments
The Energy Commission will accept comments on the Final 2011 IEPR and requests parties to submit comments in writing by February 1, 2012, so that comments can be considered before  the February 8, 2012, Business Meeting. Comments will also be accepted at the Business Meeting.   

 

California Energy Commission Releases Comprehensive Energy Storage Analysis

This week the California Energy Commission's PIER program released a comprehensive report titled "2020 Strategic Analysis of Energy Storage in California."  The report discusses the state of technology, policy, barriers to deployment and suggested reforms.  A staff workshop related to the report will be held on November 15, 2011 at 10 am at the CEC located at 1516 Ninth Street, Sacramento, California 95814 (webex also available).

CEC Moves Forward on Implementation of 33% RPS

On June 3, the California Energy Commission (“CEC”) issued a Notice of Intent to Implement 33 Percent Renewables Portfolio Standard (“RPS”). The new 33% RPS was signed into law by Governor Brown on April 12, 2011. The legislation for the first time expanded the RPS to publicly-owned utilities (“POU”), and tasked the CEC with, among other things, monitoring POU compliance with, and developing regulations to enforce, the new 33% RPS.

The Notice also encourages all regulated entities, including POUs, to participate in the California Public Utilities Commission (“CPUC”) proceeding addressing the new RPS, Rulemaking 11-05-005, “so that, where appropriate, the [CEC] and CPUC may coordinate program development.” 

The Notice states that the CEC will implement the new RPS through two processes: (1) amending the RPS Eligibility Guidebook through the existing amendment process so that it conforms with the new legislation, and (2) initiating a rulemaking proceeding to address POU compliance. Although the new RPS legislation set a target date of July 1, 2011 for the CEC to adopt regulations for POU compliance, pending legislation (Senate Bill 23) may extend that deadline to July 1, 2012. 

 

On June 6, the CEC also noticed a staff workshop for June 17, 2011 to introduce the scope and a tentative schedule for the rulemaking proceeding concerning POU compliance, and to solicit comments from interested stakeholders. Written comments may also be submitted to the CEC by July 1, 2011.

Governor Brown Signs Bill Increasing California's Renewable Portfolio Standard to 33%

A Legal News Alert from Seth Hilton and the Stoel Rives Renewable Energy Law Group:

California’s Governor Jerry Brown signed Senate Bill ("SB") X1-2 on Tuesday requiring California's electric utilities to procure 33% of their energy from renewable resources by 2020.  Upon signing the bill, Governor Brown stated the "bill will bring many important benefits to California, including stimulating investment in green technologies in the state, creating tens of thousands of new jobs, improving air quality, promoting energy independence and reducing greenhouse gas emissions."

Details concerning the implementation of the new legislation will have to be worked out at various California regulatory agencies, including the California Public Utilities Commission and the California Energy Commission. The legislation will likely spawn numerous regulatory proceedings as the various regulatory agencies struggle to come to grips with the new RPS mandate.

For more information about SBX1-2, please see our earlier blog post and detailed Renewable Energy Law Alert, dated March 29, 2011.

Upcoming Electric Energy Storage (EES) Workshops

California’s AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. By October 1, 2013, the CPUC must (1) determine whether a procurement target for energy storage is appropriate and, if so, (2) adopt a procurement target for each load-serving entity under its jurisdiction to be achieved by December 31, 2015 and a second target to be achieved by December 31, 2020. Municipal utilities have an additional year to meet these requirements.

In December of last year, the CPUC opened Rulemaking 10-12-007 both to implement AB 2514 and “on [the CPUC’s] own motion to initiate policy for California utilities to consider the procurement of viable and cost-effective energy storage systems.” Order Instituting Rulemaking (“OIR”) at 1, R.10-12-007. 

On March 9, 2011, a workshop was held to address the scope of the rulemaking proceeding. The workshop included discussions of current and emerging energy storage technologies, the goals and applications of energy storage, existing barriers to storage implementation, and whether a unified storage policy would work or whether the policy should be written to address specific barriers to entry. The workshop also considered how the CPUC could and should work with other agencies addressing energy storage or related issues, including the California Energy Commission, the California Independent System Operator, and the Federal Energy Regulatory Commission. You can find Seth Hilton’s report about the March 9 workshop here.

The CPUC has scheduled a pre-hearing conference in the rulemaking proceeding for April 21, 2011The conference will be held before ALJ Amy C. Yip-Kikugawa, beginning at 10 am, in the Commission Courtroom, State Office Building, 505 Van Ness Avenue, San Francisco, California. Stoel Rives partner Seth Hilton will attend the conference.

In addition, as part of its 2011 Integrated Energy Policy Report (IEPR) Schedule, the California Energy Commission has scheduled a committee workshop on energy storage for renewable integration, which will begin at 9:30 on April 28 in Hearing Room A, CALIFORNIA ENERGY COMMISSION, 1516 Ninth Street, First Floor, Sacramento, California. Stoel Rives attorneys are planning to attend the workshop.

Recommendations for Carbon Capture and Storage in California

The California Carbon Capture and Storage Review Panel released its final recommendations last week after nine months of fact-finding and deliberations. The Panel was sponsored by the California Energy Commission, the California Public Utilities Commission, and the California Air Resources Board (“CARB”), with participation from the California Department of Conservation and the California State Water Board. The Panel was formed to review the statutory and regulatory barriers to the use of carbon capture and storage (“CCS”) as a strategy to combat climate change. CCS is a technology with potential to reduce carbon dioxide emissions from power plants and industrial sources on a large scale by capturing the emissions and sequestering them in geologic formations underground.

The Panel’s recommendations focus on:

  • ensuring that CCS can play a role in meeting California’s greenhouse gas emission (“GHG”) reduction requirements (e.g., the Panel recommends that CARB consider and integrate CCS into its GHG rules);
  • addressing regulatory and permitting barriers for CCS projects (e.g., the Panel recommends establishing a coordinated permitting system with the California Energy Commission as the lead agency);
  • addressing key legal issues and uncertainties (e.g., the Panel recommends that the legislature declare surface owners to be the owners of subsurface pore space that could be used for carbon dioxide storage); and
  • ensuring the safe, equitable, and cost-effective use of CCS in California (e.g., the Panel recommends that the legislature establish that any cost allocation mechanisms for CCS projects be spread as broadly as possible across all Californians).

The Panel was comprised of experts from industry, trade groups, academia, and environmental organizations. Stoel Rives’ Jerry Fish served on the Panel’s Technical Advisory Committee along with representatives from the relevant state agencies and other expert consultants. With assistance from other members of Stoel’s CCS team, he contributed white papers on carbon dioxide pipelines, pore space rights, and enhanced oil recovery issues and advised on the Panel on a variety of property, liability, and regulatory issues for CCS. For more information on CCS or the Panel’s work, please contact:

Read the Panel’s key findings and recommendations after the jump or download the full background report and final recommendations report from the California Climate Change Portal.

Key Findings (see pages 3-4 of Findings and Recommendations by the California Carbon Capture and Storage Review Panel, December 2010):

1.     There is a public benefit from long-term geologic storage of CO2 as a strategy for reducing GHG emissions to the atmosphere as required by California laws and policies.

2.     Technology currently exists for the safe and effective capture, transport, and geological storage of CO2 from power plants and other large industrial facilities.

3.     High costs, inadequate economic drivers, remaining uncertainties in the regulatory and legal frameworks for CO2 storage, and uncertainties regarding public acceptance are barriers to the near-term deployment of commercial-scale CCS projects in California.

4.     There is a need for clear rules under AB 32 regarding the treatment of CO2 emission reductions from CCS projects involving capped and uncapped emission sources.

5.     Multiple state and federal agencies are currently responsible for permitting CCS projects in California.

6.     There is a need for clear, efficient, and consistent regulatory requirements and authority for permitting all phases of CCS projects in California, including CO2 capture, transport, and storage.

7.     Standards are needed to ensure the safe and effective operation of geologic storage projects.

8.     Consistent requirements are needed for monitoring, measuring, verifying, and reporting injected CO2, and releases, if any, and for GHG accounting protocols necessary to comply with federal and state laws and policies to reduce CO2 emissions.

9.     There is a need to establish clear financial responsibility for the stewardship of geologic storage sites during the (a) operating phase; (b) post-injection (pre-closure) monitoring phase; and (c) post-closure phase.

10. The right to use subsurface pore space for geologic storage needs to be clarified.

11. There is a need to address any potential environmental justice aspects of CCS projects.

12. There is a need for increased public understanding of CCS benefits and risks.

13. Absent new initiatives, economic barriers to early CCS deployment will delay the technological learning needed to drive down the costs of CCS. 

 Key Recommendations (see pages 4-5 of Findings and Recommendations by the California Carbon Capture and Storage Review Panel, December 2010):

To ensure that CCS can play a role in meeting California’s requirements for GHG emission reductions:

1.   The State should recognize appropriately regulated CCS as a measure that can safely and effectively reduce atmospheric emissions of CO2 from relevant stationary sources, including power plants and other industrial sources. To that end, and conditioned on compliance with all applicable federal and state requirements, ARB should: (a) for capped sources under AB 32, recognize CO2 sequestered by CCS projects as having not been emitted to the atmosphere (with the result that an allowance is not required to be held for each ton of CO2 that is captured and geologically stored) and define accounting protocols for sequestered CO2 and (b) for uncapped sources under AB 32, decide whether offset protocols for CCS projects within the State should be adopted.

To address regulatory and permitting issues related to CCS projects:

2.      The State should evaluate current EPA regulations and determine which, if any, State agency should seek “primacy” for permitting Class VI wells under the UIC program.

3.      The State should designate the California Energy Commission (Energy Commission) as the lead agency under the California Environmental Quality Act (“CEQA”) for preventing significant environmental impacts in CCS projects (both new and retrofit projects).

4.      The State should clarify that the State Fire Marshall is indeed the lead agency for regulating the safety and operation of intrastate CO2 pipelines.

5.      The Energy Commission should consult with the responsible permitting agencies in carrying out its responsibilities as the CEQA lead agency for CCS projects. Specifically, the Energy Commission should:

a.       Designate the Division of Oil, Gas and Geothermal Resources (DOGGR) to be the responsible agency for activities related to the subsurface.

b.      Coordinate the development of performance standards for CCS sites that would include design requirements and other operational measurements consistent with the goals of protecting the groundwater and preventing emissions of CO2 to the atmosphere.

c.       Designate the California Air Resources Board as the responsible agency for air-related aspects of CO2 monitoring, reporting, and verification (MRV) requirements.

d.      Designate the State Fire Marshall as the responsible agency for CO2 pipelines.

e.       Designate the State Water Board as the responsible agency for impacts to water quality.

f.       Designate other agencies as appropriate.

To address key legal issues and uncertainties related to CCS projects:

6.   The State should consider legislation establishing an industry-funded trust fund to manage and be responsible for geologic site operations in the post-closure stewardship phase. In addition, California should proactively participate in federal legislative efforts to enact similar post-closure stewardship programs under federal law.

7.   The State legislature should declare that the surface owner is the owner of the subsurface “pore space” needed to store CO2. The legislature should further establish procedures for aggregating and adjudicating the use of, and compensation for, pore space for CCS projects.

8.   The State should consider whether legislation is needed to extend to CO2 transportation infrastructure for CCS projects the current authority for acquiring the rights of way for the siting of transportation infrastructure for natural gas storage projects.

To ensure the safe, equitable, and cost-effective use of CCS in California:

9.   It should be State policy that the burdens and benefits of CCS be shared equally among all Californians. Toward this end, the permitting authority shall endeavor to reduce, as much as possible, any disparate impacts to residents of any particular geographic area or any particular socioeconomic class.

10.                       The Panel endorses the need for a well-thought-out and well-funded public outreach program to ensure that the risks and benefits of CCS technology are effectively communicated to the public.

11.                       The State legislature should establish that any cost allocation mechanisms for CCS projects should be spread as broadly as possible across all Californians.

12.                       The State should evaluate a variety of different types of incentives for early CCS projects in California and consider implementing those that are most cost-effective.

  

California Energy Commission Proposes Revisions to RPS Guidebooks

An alert written by Stoel Rives partners Seth Hilton and John McKinsey:

The California Energy Commission RPS staff has proposed some significant and potentially important revisions to the RPS Eligibility Guidebook and the Overall Program Guidebook.  Written comments on the proposed revisions are due September 10, 2010, by 5:00 p.m.  The CEC will consider approval of the revisions at the November 17, 2010 CEC Business Meeting.  The revisions would become effective immediately upon adoption. 

Some of the most significant changes proposed to the RPS Eligibility Guidebook include:

Biodiesel:

  • Facility operators and fuel suppliers would now be required to verify that fuel meets RPS eligibility requirements.

Biogas:

  • Biogas use would now be allowed to generate electricity at the fuel processing site.  If not, the biogas must be transported by one of three methods to the electric generating facility.
  • The eligibility of biogas would now be expanded to include electric generating facilities located outside of California (but within the WECC – must deliver to pipeline that is directly linked to California).

Biomass:

  • Biomass facilities could now use up to 5% nonrenewable fuel if the facility participates in the Existing Renewable Facilities Program and up to 2% if the facility participates only in the RPS program.
  • Facility operators would now be required to provide verifications that fuel meets RPS eligibility requirements.

Fuel Cells:

  • Fuel cells would now be allowed to use the following renewable fuels in electrochemical reaction to generate electricity:  landfill gas, digester gas, other RPS-eligible gases, and Hydrogent or hydrogen-RCI gases derived from a non-fossil fuel or feedstock through the use of power generated by an RPS-eligible resource.

Out-of-State Facilities:

  • The proposed changes would require submission of environmental documentation to support the analysis submitted on Laws, Ordinances, Regulations and Standards requirements.

Multiple Fuel Facilities – Measurement Methods:

  • The proposed changes would require all facilities using multiple energy inputs to select and submit an appropriate measurement method, or submit an alternative, that will be used to measure the contribution of each resource.  Such measurements would apply to three categories: combustion and fuel cell, non-combustion thermal, and non-thermal electric generating technologies (excluding fuel cells).

CEC staff also proposes changes to the Overall Program Guidebook, including changes to the definitions of biogas, biomass, central station and distributed generation, commercial operation and hydroelectric. 

 

Perhaps equally important, CEC staff will consider further changes immediately after the November 17 CEC Business Meeting, including for example, limitations on biogas delivery via injection into natural gas pipelines.  CEC staff has asked for stakeholder input on additional areas, which can be found at http://www.energy.ca.gov/portfolio/notices/2010-08-30_Staff_Workshop_Revised.pdf.

If these changes are important to you, comments will be accepted up to September 10 and again at the CEC Business Meeting on November 17.

If you have any questions about the issues of this update, please contact:

Seth Hilton at (916) 319-4749 or sdhilton@stoel.com
John McKinsey at (916) 319-4746 or jamckinsey@stoel.com