Paying for Carbon Performance

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Historically in California, programs to encourage energy-efficient or renewable energy technologies provide upfront financial incentives. While the dollar amounts of these incentives are typically developed in part based on the lifecycle costs and performance of the technology in question, very few have provided incentives based on the ongoing performance of the project. And none of them have based payments on the amount of carbon dioxide equivalent reduced – carbon performance. This post describes recent developments in pay-for-performance programs and a program recently approved by the California Public Utilities Commission (CPUC) that pays for carbon performance.

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Water and energy, rain and drought….

At this time (2018-2019), the region has experienced extremely high rainfall, with reservoirs filled to the brim. But just last year, we were concerned about the lack of rain, how much water we can save, and in that context, how much energy and greenhouse gases are produced when moving water to us here in the San Diego region.

The water-energy relationship first appeared in a 2005 California Energy Commission (CEC) study which stated that the “water-related energy consumption is large — 19 percent (%) of all electricity used in California” (Table 1-1 p.8, CEC 2005). A more recent study (Spang, 2018, UC Davis) found that electricity savings from mandated statewide water conservation measures from July — September 2015 were almost identical to the first-year electricity savings in the period July 2015–June 2016 from energy efficiency investments by all of the state’s Investor-owned Utilities (IOUs) — a dramatic savings. Though this effect was unintended because the purpose of the mandate was to conserve water, it demonstrated the important role that water conservation can play in energy conservation in California.

However, the story about how much energy is used for water may be quite different at the city level compared with the state-level, not least because definitions of water-energy components vary from state to water district to city-level depending on whether it is about water planning or about climate action planning.  Previously we showed some general relationships on water-energy especially in the City of San Diego. This post continues and delves deeper into the relationships between water use and energy use at the state level contrasted with that at the city level (San Diego region), the “city” being a common unit used for climate action planning.

Energy Embedded in Water at the State versus City Level
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2019 Introduced Bill Update

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With the deadline for the Legislature to introduce bills passing last Friday, we are currently tracking approximately 210 energy, climate, and other related bills for this session.  This session marks a higher volume of introduced bills than previous sessions with a major emphasis on wildfire issues faced by the state as well as proposed changes to electricity procurement and climate actions.  The following includes bills that represent the range of issues addressed this session.  A complete list can be found on our website.

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CPUC Unanimously Approves Peterman’s Revised PCIA Alternative Decision

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Today, the California Public Utilities Commission (CPUC) unanimously approved Commissioner Peterman’s revised Alternative Proposed Decision (APD) to conclude the cost allocation methodology portion of the Power Charge Indifference Adjustment Methodology (PCIA) proceeding. Phase II of the proceeding will address many important issues that still need resolution.

The PCIA determines the cost indifference calculation for how much community choice aggregator (CCA) customers, bundled investor owned utility (IOU) customers, and direct access (DA) customers will pay for generation resources previously procured on their behalf.  These costs are allocated to customers who departed or may depart IOU service territories to take service from a CCA or direct access provider (electric service providers (ESPs)).

Per the CPUC’s 10/11/18 press release: “Bill impacts will vary depending on customer class, service provider, energy usage, the energy markets, and a utility’s resources.  Evaluating CCA residential customers departing in 2018, there is an estimated 1.68 percent increase in bills of residential CCA customers over 2018 bills as a result of today’s decision in PG&E’s territory; in Edison’s territory, that figure is 2.50 percent; and in SDG&E’s territory, that number is 5.24 percent.  Any rate increases for one group of customers will be offset by rate decreases for other sets of customers.”

This post updates a previous post that explained the original proposed alternative decision.  This post focuses on explaining the differences between the original PD, APD, and the revised APD adopted today.

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2018 Chaptered Bill Update

On September 30th, Governor Brown signed or vetoed all enrolled bills passed by the legislature.  This completed the 2018 legislative session fulfilling one of Governor Brown’s last major duties before leaving office.  The 2017-2018 two year legislative session saw the introduction of approximately 482 energy, natural resource, land use, and climate related bills with the 2018 legislative session resulting in approximately 94 of these bills becoming law.  The following is a brief list of important bills that were chaptered or vetoed during the 2018 session. A full list of chaptered and vetoed bills can be found here.

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Governor Brown Signs SB 100 Making Carbon Free Energy Mandatory by 2045

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At a press conference that included speeches from State Assemblywomen Lorena Gonzalez and author State Senator Kevin De León, Governor Brown signed SB 100 into law today.  SB 100 amends the Renewable Portfolio Standard Program (RPS) targets for 2030 and makes the policy of California that electric utilities supply 100% of retail sales from renewable energy resources and zero-carbon resources by 2045.

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Enrolled Bill Update September 2018

The deadline for the Legislature to pass pending legislation and send it to the Governor’s desk was August 31st. The Governor sign, veto, or allow enrolled bills to become law by September 30, 2018. The Legislature passed many bills that address California’s short, medium, and long term climate, energy, transportation, and wildfire priorities.  Below is a short highlight of enrolled bills: Continue reading

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