Bill Text: CA SB1440 | 2017-2018 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Energy: biomethane: biomethane procurement.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2018-09-23 - Chaptered by Secretary of State. Chapter 739, Statutes of 2018. [SB1440 Detail]
Download: California-2017-SB1440-Amended.html
gas corporations each gas corporation with over 100,000
customers, except local publicly owned gas utilities. to annually procure its proportionate share of a total of 32 billion cubic feet of biomethane statewide until January 1, 2030. The program shall be known and may be cited as the Biomethane Procurement Program. The Biomethane Procurement Program requirements shall be consistent with all of the following:
Bill Title: Energy: biomethane: biomethane procurement.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2018-09-23 - Chaptered by Secretary of State. Chapter 739, Statutes of 2018. [SB1440 Detail]
Download: California-2017-SB1440-Amended.html
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Amended
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Assembly
June 14, 2018 |
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Amended
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Senate
May 25, 2018 |
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Amended
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Senate
April 30, 2018 |
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Senate
April 09, 2018 |
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Amended
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March 22, 2018 |
CALIFORNIA LEGISLATURE—
2017–2018 REGULAR SESSION
| Senate Bill | No. 1440 |
| Introduced by Senator Hueso (Principal coauthor: Senator Lara) (Principal coauthor: Assembly Member Quirk) (Coauthor: Assembly Member Grayson) |
February 16, 2018 |
An act to amend Section 25420 of the Health and Safety Code, to amend Section 40106 of the Public Resources Code, and to add Section 2814 to, and to add Chapter 11 (commencing with Section 2898) to Part 2 of Division 1 of, the Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1440, as amended, Hueso.
Energy: biomethane: biomethane procurement program.
Existing law requires the Office of Environmental Health Hazard Assessment, in consultation with the State Air Resources Board (state board), the Department of Toxic Substances Control, the Department of Resources Recycling and Recovery, and the California Environmental Protection Agency, to compile a list of constituents of concern that could pose risks to human health and that are found in biogas, as defined, at concentrations that significantly exceed the concentrations of those constituents in natural gas. Existing law defines biomass conversion for the purposes of the California Integrated Waste Management Act of 1989, which requires each city, county, and regional agency, if any, to develop a source reduction and recycling element of an integrated waste management plan.
This bill would revise the definitions of biogas and biomass
conversion for these purposes.
Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law requires the commission to authorize the construction of an interconnection with existing transmission facilities for gas or electricity by a private energy producer upon application of the private energy producer if the commission makes specified findings. Existing law requires the private energy producer to provide and to pay the total cost of the interconnection as well as other specified costs.
This bill would require a gas corporation that offers electrical or natural gas service and accepts an interconnection application from a private energy producer to provide the private energy producer with a sourced line-item justification, as defined, for the overall estimated cost of the interconnection.
By placing additional requirements upon local publicly owned utilities, this bill would impose a state-mandated local program.
Existing law requires state agencies to consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas. Existing law requires the PUC, in consultation with the State Energy Resources Conservation and Development Commission and the state board, to consider additional policies to support the development and use in the state of renewable gas that reduce short-lived climate pollutants in the state.
This bill would require the state board, in consultation with the PUC, to establish a requirement that all gas corporations with over 100,000 customers, except publicly owned gas utilities, procure biomethane consistent with specified conservation requirements and policies in current law and other requirements. This bill would require
the state board, in consultation with the PUC, to update the biomethane procurement program’s requirements, and report to the Legislature on the progress toward meeting those requirements, every 5 years. This bill would require the commission to allow recovery in rates of the costs of investments for this program when specified conditions are met, subject to the commission’s authority to determine just and reasonable expenditures. the rate base of the just and reasonable investment required to interconnect biomethane production to the existing pipeline system, as specified.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making
that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 25420 of the Health and Safety Code is amended to read:25420.
For purposes of this chapter, the following definitions apply:(a) “Biogas” means gas that is produced from the anaerobic decomposition of organic material or the noncombustion thermal conversion of eligible biomass feedstock consistent with Section 40106 of the Public Resources Code.
(b) “Biomethane” means biogas that meets the standards adopted pursuant to subdivisions (c) and (d) of Section 25421 for injection into a common carrier pipeline.
(c) “Board” means the State Air Resources Board.
(d) “CalRecycle” means the
Department of Resources Recycling and Recovery.
(e) “Commission” means the Public Utilities Commission.
(f) “Common carrier pipeline” means a gas conveyance pipeline, located in California, that is owned or operated by a utility or gas corporation, excluding a dedicated pipeline.
(g) “Dedicated pipeline” means a conveyance of biogas or biomethane that is not part of a common carrier pipeline system, and which conveys biogas from a biogas producer to a conditioning facility or an electrical generation facility.
(h) “Department” means the Department of Toxic Substances Control.
(i) “Gas
corporation” has the same meaning as defined in Section 222 of the Public Utilities Code and is subject to rate regulation by the commission.
(j) “Hazardous waste landfill” means a landfill that is a hazardous waste facility, as defined in Section 25117.1.
(k) “Office” means the Office of Environmental Health Hazard Assessment.
(l) “Person” means an individual, trust, firm, joint stock company, partnership, association, business concern, limited liability company, or corporation. “Person” also includes any city, county, district, and the state or any department or agency thereof, or the federal government or any department or agency thereof to the extent permitted by law.
SEC. 2.
Section 40106 of the Public Resources Code is amended to read:40106.
(a) “Biomass conversion” means the production of heat, fuels, or electricity by the controlled combustion of, or the use of other noncombustion thermal conversion technologies on, the following materials, when separated from other solid waste:(1) Agricultural crop residues.
(2) Bark, lawn, yard, and garden clippings.
(3) Leaves, silvicultural residue, and tree and brush pruning.
(4) Wood, wood chips, and wood waste.
(5) Nonrecyclable pulp or
nonrecyclable paper materials.
(6) Livestock waste.
(7) Municipal sewage sludge or biosolids.
(8) Diverted organic waste.
(9) Organic industrial food processing residues.
(b) “Biomass conversion” does not include the controlled combustion of recyclable pulp or recyclable paper materials, or materials that contain industrial sludge, medical waste, hazardous waste, or either high-level or low-level radioactive waste.
(c) For purposes of this section,
“nonrecyclable pulp or nonrecyclable paper materials” means either of the following, as determined by the department:
(1) Paper products or fibrous materials that cannot be technically, feasibly, or legally recycled because of the manner in which the product or material has been manufactured, treated, coated, or constructed.
(2) Paper products or fibrous materials that have become soiled or contaminated and as a result cannot be technically, feasibly, or legally recycled.
SEC. 3.
Section 2814 is added to the Public Utilities Code, to read:2814.
(a) A gas corporation that offers natural gas service and accepts an interconnection application from a private energy producer shall provide the private energy producer with a sourced line-item justification for the overall estimated cost of the interconnection.(b) For the purposes of this section, “sourced line-item justification” means a document that, on separate lines, breaks down the estimated cost of the interconnection, including, but not limited to, the price of labor,
materials, and third-party charges.
SEC. 4.
Chapter 11 (commencing with Section 2898) is added to Part 2 of Division 1 of the Public Utilities Code, to read:CHAPTER 11. Biomethane Procurement Program
2898.
For the purposes of this chapter:(a) “Biogas” has the same definition as in Section 25420 of the Health and Safety Code.
(b) “Biomethane” means biogas that meets the standards adopted pursuant to subdivisions (c) and (d) of Section 25421 of the Health and Safety Code for injection into a common carrier pipeline.
(c) “Codigestion” means the anaerobic digestion of multiple biodegradable substrates or feedstocks.
2898.1.
(a) On or before January 1, 2020, the State Air Resources Board, in consultation with the commission, shall adopt a biomethane procurement requirement for(1) The organic waste diversion requirement of Section 39730.6 of the Health and Safety Code.
(2) The requirements of the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1).
(3) The requirements of Section 399.12.6.
(b) In adopting the biomethane procurement requirements, the State Air Resources Board and the commission shall ensure all of the following:
(1) Appropriate allocations by the organic waste sector to meet the requirements of Section 39730 of the Health and Safety Code and state policies to reduce greenhouse gases.
(2) Consistency with the recommendations of the California Council on Science and Technology pursuant to Section 784.1.
(3) A gas corporation shall meet the biomethane procurement
program’s requirements through contracts with terms of no fewer than 10 years, formed pursuant to a competitive solicitation process or a bilateral agreement.
(4) (A) Adoption of targets for specific sectors, including, but not limited to, landfill gas, livestock waste, diverted organic waste, and
wastewater treatment. treatment, and organic industrial food processing.
(5)
(B) In adopting the targets in paragraph (4), pursuant to this paragraph, the State Air Resources Board shall adopt
shall:
(i) Adopt a declining target for landfill gas in accordance with achieving the goals outlined in Section 39730.6 of the Health and Safety Code.
(ii) Prioritize feedstocks with the highest reductions in methane emissions, while ensuring a balanced and diverse overall portfolio of resources and an increase in the beneficial use of methane from organic sources.
(C) The State Air Resources Board shall allow the use of codigestion to meet the targets for specific sectors adopted pursuant to
this paragraph.
(6)
(5) Additions to the environmental benefits of existing state biogas or biomethane programs, rules, or regulations, including, but not limited to, furthering the purposes of methane reductions required in Section 39730.5 of the Health and Safety Code.
(7)
(6) That utilities do not unfairly compete with nonutility enterprises.
(c) (1) The overall procurement mandate for biomethane across all commercially available sectors shall be determined by the State Air Resources Board, in consultation with the commission, and initially be set to 32 billion cubic feet.
(2) The overall procurement mandate for biomethane generated using nascent technologies or
and other technologies not included in paragraph (1), including those using forest and agricultural biomass as a fuel source or others consistent with Section 40106 of the Public Resources Code, shall initially be set to up to two billion cubic feet. The State Air Resources Board and the commission shall limit the cost impacts of this paragraph to the maximum extent possible while also encouraging the development of new technologies to generate biomethane.
(d) The State Air Resources Board, in consultation with the commission, shall review and, if necessary, update the biomethane procurement program requirements, and report to the Legislature, pursuant to Section 9795 of the Government Code, on the progress toward meeting
the program requirements, at least once every five years, with the first review concluding before January 1, 2025.
(e)(1)The commission shall allow recovery in
rates of the costs of utility investments pursuant to this chapter for prudent and reasonable investments for infrastructure that provide direct benefits, such as safety, reliability, affordability, or greenhouse gas reduction, to all classes of ratepayers, and that are in the interests of all classes of ratepayers.
(2)The following investments shall be eligible for recovery:
(A)Fifty percent of the direct investment in infrastructure necessary to achieve interconnection from the natural gas transmission and distribution pipeline network up to and including the point of receipt. The point of receipt is limited to equipment that monitors gas quality, prevents noncompliant gas from entering the common carrier system, and meters and odorizes gas.
(B)Other investments the commission determines support the purposes of this chapter.
(3)Utility investment shall be limited to three million dollars ($3,000,000) per project.
(f)Any costs incurred by a gas corporation to comply with the biomethane procurement program’s requirements that are in excess of the resale value of the biomethane it procures shall be allocated as a fully nonbypassable charge to the gas corporation’s customers, including both core and noncore customers, subject to the commission’s authority to determine just and reasonable expenditures pursuant to Article 1 (commencing with Section 451) of the Public Utilities Code.
(g)The commission shall require 15 percent of revenues received annually by a gas corporation as a result of the direct allocation of greenhouse gas allowances to natural gas suppliers, pursuant to subdivision (f) of Section 95890 of Title 17 of the California Code of Regulations, to be used to offset the costs of procuring biomethane to meet the requirements of this chapter.
(h)Notwithstanding any other provision of this chapter, if the cost of the commodity purchased to comply with the biomethane procurement program exceeds an average cost of fifteen dollars ($15) per million British thermal units above the average National Gas Index price, a gas corporation shall no longer be required to procure gas above that cost to comply with this program.
(i)It is not the intent of the Legislature in
enacting this chapter to supplant any existing state biogas or biomethane programs, rules, or regulations.
2898.2.
(a) The commission shall approve, or modify and approve, a gas corporation’s application to recover in the rate base the just and reasonable investment required to interconnect biomethane production to the existing pipeline system, including the just and reasonable investment for the point of receipt and any downstream facilities required to facilitate the receipt of biomethane, with full cost recovery from the gas corporation’s customers, including both core and noncore customers.(b) Any costs incurred by a gas corporation to comply with the biomethane procurement program’s requirements that are in excess of the resale value of the biomethane it procured shall be allocated as a fully nonbypassable fixed charge or a nonbypassable demand
differentiated fixed charge to the gas corporation’s customers, including both core and noncore customers, subject to the commission’s authority to determine just and reasonable expenditures pursuant to Article 1 (commencing with Section 451) of the Public Utilities Code.
(c) Consistent with this section, the investments shall be recoverable in rates and considered a public good to all classes of ratepayers and in the interests of all classes of ratepayers.
(d) In order to prevent unfair competition by the utility against nonutility enterprises, the commission shall consider modifying and extending the monetary incentive program for biomethane projects adopted in Decision 15-06-029 (June 11, 2015), Decision Regarding the Costs of Compliance with Decision 14-01-034 and Adoption of Biomethane Promotion Policies and Program, to provide equal benefits to projects under that program
and this section.
(e) The commission shall require 15 percent of revenues received annually by a gas corporation as a result of the direct allocation of greenhouse gas allowances to natural gas suppliers, pursuant to subdivision (f) of Section 95890 of Title 17 of the California Code of Regulations, to be used to offset the costs of procuring biomethane to meet the requirements of this chapter.
(f) Notwithstanding any other provision of this chapter, both of the following shall apply:
(1) If, after taking into account the value received by a gas corporation upon any resale of biomethane, including any environmental credits associated with that biomethane, the cost to the gas corporation of the biomethane purchased to comply with the biomethane procurement program exceeds an average cost of fifteen dollars ($15) per
million British thermal units above the average National Gas Index price, then the gas corporation shall no longer be required to procure gas above that cost to comply with this program.
(2) If, after taking into account the value received by a gas corporation upon any resale of biomethane, including any environmental credits associated with that biomethane, the gas corporation’s total annual costs to comply with the biomethane program exceeds 5 percent of its revenue requirement for that year, then the gas corporation shall no longer be required to procure additional gas to comply with the program for that year.
