BILL NUMBER: AB 577 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 6, 2015
INTRODUCED BY Assembly Member Bonilla
FEBRUARY 24, 2015
An act to amend Section 399.20 of the Public Utilities
Code, relating to public utilities. An act to add
Section 39718.5 to the Health and Safety Code, and to add Chapter 7.8
(commencing with Section 25680) to Division 15 of the Public
Resources Code, relating to biomethane.
LEGISLATIVE COUNSEL'S DIGEST
AB 577, as amended, Bonilla. Public utilities: biogas.
Biomethane: grant program.
The California Global Warming Solutions Act of 2006 designates the
State Air Resources Board as the state agency charged with
monitoring and regulating sources of emissions of greenhouse gases.
The state board is required to adopt a statewide greenhouse gas
emissions limit equivalent to the statewide greenhouse gas emissions
level in 1990 to be achieved by 2020. The act authorizes the state
board to include the use of market-based compliance mechanisms.
Existing law requires all moneys, except for fines and penalties,
collected by the state board from the auction or sale of allowances
as part of a market-based compliance mechanism to be deposited in the
Greenhouse Gas Reduction Fund and to be available upon
appropriation.
This bill would, upon appropriation, require the State Air
Resources Board to allocate an unspecified percentage of the moneys
in the fund to the State Energy Resources Conservation and
Development Commission for the implementation of a biomethane
collection and purification grant program. The bill would require the
commission to develop and implement the grant program to award
moneys for projects that build or develop collection and purification
technology, infrastructure, and projects that upgrade existing
biomethane facilities to meet certain requirements.
Under the Public Utiliites Act, electrical corporations are
required to file with the Public Utilities Commission a standard
tariff for electricity purchased from certain electric generation
facilities. The act requires the commission to direct the electrical
corporations to collectively purchase 250 megawatts of cumulative
rated generating capacity from developers of bioenergy projects. The
act requires the commission to encourage electrical and gas
corporations to develop and offer programs and services to facilitate
development of in-state biogas for a broad range of purposes.
This bill would limit that range of purposes to 3 specified
purposes.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) California imports 91 percent of its natural gas, which is
responsible for 25 percent of all greenhouse gas (GHG) emissions.
This costs California billions of dollars in lost revenues and jobs.
(b) California made a commitment to address climate change with
the California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code). For
California to meet its GHG reductions goals, the GHG emissions from
the natural gas sector must be reduced.
(c) Biomethane is gas generated from organic waste through
anaerobic digestion, gasification, pyrolysis, or other conversion
technology that converts organic matter to gas. Biomethane may be
produced from sources such as agricultural waste, forest waste,
landfill gas, wastewater treatment byproducts, and diverted organic
waste.
(d) Biomethane provides a more sustainable and cleaner alternative
to natural gas. If 10 percent of California's natural gas use were
to be replaced with biomethane, GHG emissions would be reduced by
tens of millions of metric tons of carbon dioxide equivalent every
year.
(e) Almost 300 billion cubic feet of biomethane could be produced
in California each year. This biomethane could power 2 to 3 million
homes or generate 2.4 billion gallons of clean, ultralow carbon
transportation fuels.
(f) Investing in biomethane would create cobenefits, such as
renewable power available 24 hours a day, seven days a week,
reduction of fossil fuel use, reduction of air and water pollution,
and new jobs.
(g) Biomethane could be used for things such as transportation
fuel or injected into the natural gas pipeline for other uses. The
most appropriate use of biomethane varies depending on the source,
proximity to existing natural gas pipeline injection points or large
vehicle fleets, and the circumstances of existing facilities.
(h) The biomethane market has been slow to develop in California
because the collection and purification of biomethane can be costly.
Investing in biomethane purification equipment and infrastructure is
necessary for companies to meet existing biomethane safety and purity
standards. Alternative funding for compliance with standards
established pursuant to Section 25421 of the Health and Safety Code
must be found so that biomethane can be transmitted via California's
vast natural gas pipeline infrastructure.
(i) Biomethane is poised to play a key role in future natural gas
and hydrogen fuel markets as a blendstock that can significantly
reduce the carbon footprint of these two fossil-based alternative
fuels.
SEC. 2. Section 39718.5 is added to the
Health and Safety Code , to read:
39718.5. Upon appropriation by the Legislature, the state board
shall allocate ____ percent of the moneys from the fund to the State
Energy Resources Conservation and Development Commission for the
purposes of Chapter 7.8 (commencing with Section 25680) of Division
15 of the Public Resources Code.
SEC. 3. Chapter 7.8 (commencing with Section
25680) is added to Division 15 of the Public Resources
Code , to read:
CHAPTER 7.8. BIOMETHANE COLLECTION AND PURIFICATION GRANT
PROGRAM
25680. (a) The commission shall develop and implement a grant
program to award moneys appropriated pursuant to Section 39718.5 of
the Health and Safety Code for projects that build or develop
collection and purification technology, infrastructure, and projects
that upgrade existing biomethane facilities to meet the requirements
established pursuant to Section 25421 of the Health and Safety Code.
(b) In granting an award, the commission shall consider both of
the following:
(1) Opportunities to colocate biomethane producers with vehicle
fleets to generate biomethane and convert it to transportation fuel
in the same location.
(2) Location of biomethane sources and their proximity to natural
gas pipeline injection sites.
(c) In prioritizing projects eligible for grants pursuant to this
section, the commission shall maximize the reduction of greenhouse
gas emissions achieved by a project for each dollar awarded.
SECTION 1. Section 399.20 of the Public
Utilities Code is amended to read:
399.20. (a) It is the policy of this state and the intent of the
Legislature to encourage electrical generation from eligible
renewable energy resources.
(b) As used in this section, "electric generation facility" means
an electric generation facility located within the service territory
of, and developed to sell electricity to, an electrical corporation
that meets all of the following criteria:
(1) Has an effective capacity of not more than three megawatts.
(2) Is interconnected and operates in parallel with the electrical
transmission and distribution grid.
(3) Is strategically located and interconnected to the electrical
transmission and distribution grid in a manner that optimizes the
deliverability of electricity generated at the facility to load
centers.
(4) Is an eligible renewable energy resource.
(c) Every electrical corporation shall file with the commission a
standard tariff for electricity purchased from an electric generation
facility. The commission may modify or adjust the requirements of
this section for any electrical corporation with less than 100,000
service connections, as individual circumstances merit.
(d) (1) The tariff shall provide for payment for every
kilowatthour of electricity purchased from an electric generation
facility for a period of 10, 15, or 20 years, as authorized by the
commission. The payment shall be the market price determined by the
commission pursuant to paragraph (2) and shall include all current
and anticipated environmental compliance costs, including, but not
limited to, mitigation of emissions of greenhouse gases and air
pollution offsets associated with the operation of new generating
facilities in the local air pollution control or air quality
management district where the electric generation facility is
located.
(2) The commission shall establish a methodology to determine the
market price of electricity for terms corresponding to the length of
contracts with an electric generation facility, in consideration of
the following:
(A) The long-term market price of electricity for fixed price
contracts, determined pursuant to an electrical corporation's general
procurement activities as authorized by the commission.
(B) The long-term ownership, operating, and fixed-price fuel costs
associated with fixed-price electricity from new generating
facilities.
(C) The value of different electricity products including
baseload, peaking, and as-available electricity.
(3) The commission may adjust the payment rate to reflect the
value of every kilowatthour of electricity generated on a
time-of-delivery basis.
(4) The commission shall ensure, with respect to rates and
charges, that ratepayers that do not receive service pursuant to the
tariff are indifferent to whether a ratepayer with an electric
generation facility receives service pursuant to the tariff.
(e) An electrical corporation shall provide expedited
interconnection procedures to an electric generation facility located
on a distribution circuit that generates electricity at a time and
in a manner so as to offset the peak demand on the distribution
circuit, if the electrical corporation determines that the electric
generation facility will not adversely affect the distribution grid.
The commission shall consider and may establish a value for an
electric generation facility located on a distribution circuit that
generates electricity at a time and in a manner so as to offset the
peak demand on the distribution circuit.
(f) (1) An electrical corporation shall make the tariff available
to the owner or operator of an electric generation facility within
the service territory of the electrical corporation, upon request, on
a first-come-first-served basis, until the electrical corporation
meets its proportionate share of a statewide cap of 750 megawatts
cumulative rated generation capacity served under this section and
Section 399.32. The proportionate share shall be calculated based on
the ratio of the electrical corporation's peak demand compared to the
total statewide peak demand.
(2) By June 1, 2013, the commission shall, in addition to the 750
megawatts identified in paragraph (1), direct the electrical
corporations to collectively procure at least 250 megawatts of
cumulative rated generating capacity from developers of bioenergy
projects that commence operation on or after June 1, 2013. The
commission shall, for each electrical corporation, allocate shares of
the additional 250 megawatts based on the ratio of each electrical
corporation's peak demand compared to the total statewide peak
demand. In implementing this paragraph, the commission shall do all
of the following:
(A) Allocate the 250 megawatts identified in this paragraph among
the electrical corporations based on the following categories:
(i) For biogas from wastewater treatment, municipal organic waste
diversion, food processing, and codigestion, 110 megawatts.
(ii) For dairy and other agricultural bioenergy, 90 megawatts.
(iii) For bioenergy using byproducts of sustainable forest
management, 50 megawatts. Allocations under this category shall be
determined based on the proportion of bioenergy that sustainable
forest management providers derive from sustainable forest management
in fire threat treatment areas, as designated by the Department of
Forestry and Fire Protection.
(B) Direct the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process.
(C) Coordinate, to the maximum extent feasible, any incentive or
subsidy programs for bioenergy with the agencies listed in
subparagraph (A) of paragraph (3) in order to provide maximum
benefits to ratepayers and to ensure that incentives are used to
reduce contract prices.
(D) The commission shall encourage gas and electrical corporations
to develop and offer programs and services to facilitate development
of in-state biogas for purposes of encouraging the diversion of
landfill waste, the development of ultralow carbon transportation
fuel, and the generation of electricity through bioenergy resources.
(3) (A) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, the State Air
Resources Board, the Department of Forestry and Fire Protection, the
Department of Food and Agriculture, and the Department of Resources
Recycling and Recovery, may review the allocations of the 250
additional megawatts identified in paragraph (2) to determine if
those allocations are appropriate.
(B) If the commission finds that the allocations of the 250
additional megawatts identified in paragraph (2) are not appropriate,
the commission may reallocate the 250 megawatts among the categories
established in subparagraph (A) of paragraph (2).
(4) For the purposes of this subdivision, "bioenergy" means biogas
and biomass.
(g) The electrical corporation may make the terms of the tariff
available to owners and operators of an electric generation facility
in the form of a standard contract subject to commission approval.
(h) Every kilowatthour of electricity purchased from an electric
generation facility shall count toward meeting the electrical
corporation's renewables portfolio standard annual procurement
targets for purposes of paragraph (1) of subdivision (b) of Section
399.15.
(i) The physical generating capacity of an electric generation
facility shall count toward the electrical corporation's resource
adequacy requirement for purposes of Section 380.
(j) (1) The commission shall establish performance standards for
any electric generation facility that has a capacity greater than one
megawatt to ensure that those facilities are constructed, operated,
and maintained to generate the expected annual net production of
electricity and do not impact system reliability.
(2) The commission may reduce the three megawatt capacity
limitation of paragraph (1) of subdivision (b) if the commission
finds that a reduced capacity limitation is necessary to maintain
system reliability within that electrical corporation's service
territory.
(k) (1) Any owner or operator of an electric generation facility
that received ratepayer-funded incentives in accordance with Section
379.6 of this code, or with Section 25782 of the Public Resources
Code, and participated in a net metering program pursuant to Sections
2827 and 2827.10 of this code prior to January 1, 2010, shall be
eligible for a tariff or standard contract filed by an electrical
corporation pursuant to this section.
(2) In establishing the tariffs or standard contracts pursuant to
this section, the commission shall consider ratepayer-funded
incentive payments previously received by the generation facility
pursuant to Section 379.6 of this code or Section 25782 of the Public
Resources Code. The commission shall require reimbursement of any
funds received from these incentive programs to an electric
generation facility, in order for that facility to be eligible for a
tariff or standard contract filed by an electrical corporation
pursuant to this section, unless the commission determines ratepayers
have received sufficient value from the incentives provided to the
facility based on how long the project has been in operation and the
amount of renewable electricity previously generated by the facility.
(3) A customer that receives service under a tariff or contract
approved by the commission pursuant to this section is not eligible
to participate in any net metering program.
(l) An owner or operator of an electric generation facility
electing to receive service under a tariff or contract approved by
the commission shall continue to receive service under the tariff or
contract until either of the following occurs:
(1) The owner or operator of an electric generation facility no
longer meets the eligibility requirements for receiving service
pursuant to the tariff or contract.
(2) The period of service established by the commission pursuant
to subdivision (d) is completed.
(m) Within 10 days of receipt of a request for a tariff pursuant
to this section from an owner or operator of an electric generation
facility, the electrical corporation that receives the request shall
post a copy of the request on its Internet Web site. The information
posted on the Internet Web site shall include the name of the city in
which the facility is located, but information that is proprietary
and confidential, including, but not limited to, address information
beyond the name of the city in which the facility is located, shall
be redacted.
(n) An electrical corporation may deny a tariff request pursuant
to this section if the electrical corporation makes any of the
following findings:
(1) The electric generation facility does not meet the
requirements of this section.
(2) The transmission or distribution grid that would serve as the
point of interconnection is inadequate.
(3) The electric generation facility does not meet all applicable
state and local laws and building standards and utility
interconnection requirements.
(4) The aggregate of all electric generating facilities on a
distribution circuit would adversely impact utility operation and
load restoration efforts of the distribution system.
(o) Upon receiving a notice of denial from an electrical
corporation, the owner or operator of the electric generation
facility denied a tariff pursuant to this section shall have the
right to appeal that decision to the commission.
(p) In order to ensure the safety and reliability of electric
generation facilities, the owner of an electric generation facility
receiving a tariff pursuant to this section shall provide an
inspection and maintenance report to the electrical corporation at
least once every other year. The inspection and maintenance report
shall be prepared at the owner's or operator's expense by a
California-licensed contractor who is not the owner or operator of
the electric generation facility. A California-licensed electrician
shall perform the inspection of the electrical portion of the
generation facility.
(q) The contract between the electric generation facility
receiving the tariff and the electrical corporation shall contain
provisions that ensure that construction of the electric generating
facility complies with all applicable state and local laws and
building standards, and utility interconnection requirements.
(r) (1) All construction and installation of facilities of the
electrical corporation, including at the point of the output meter or
at the transmission or distribution grid, shall be performed only by
that electrical corporation.
(2) All interconnection facilities installed on the electrical
corporation's side of the transfer point for electricity between the
electrical corporation and the electrical conductors of the electric
generation facility shall be owned, operated, and maintained only by
the electrical corporation. The ownership, installation, operation,
reading, and testing of revenue metering equipment for electric
generating facilities shall only be performed by the electrical
corporation.