Loading...
HomeMy WebLinkAboutAgenda Report - April 29, 2020 B-01 SM 1 Exhibit A LODI ELECTRIC UTILITY GREENHOUSE GAS FREE ALLOWANCE PROCEEDS SPENDING PLAN April 2020 BACKGROUND The Global Warming Solutions Act of 2006 (AB 32) requires California to return to 1990 levels of greenhouse gas emissions by 2020. SB 32 (Statutes of 2016) requires further reductions in greenhouse gas emissions to 40 percent below 1990 levels by 2030. All programs developed in response to the original AB 32 directives, and periodically refined though the California Air Resources Board’s (CARB) Scoping Plan process, contribute to the reductions needed to achieve this goal. The Cap and Trade Program is a key element in California’s climate plan and is designed to provide covered entities the flexibility to seek out and implement the lowest-cost options to reduce emissions. The City of Lodi Electric Utility (LEU), as an electrical distribution utility, receives an annual direct allocation of California Greenhouse Gas (GHG) allowances, or “free allowances.” These free allowances are currently scheduled for receipt by the LEU through 2030 per AB 398 and are consigned at auction. The City receives the proceeds which are currently deposited in its Environmental Compliance Fund. PURPOSE The purpose of the Greenhouse Gas Free Allowance Proceeds Spending Plan is to identify activities and programs the LEU will pursue to spend the proceeds received at auction in accordance with regulations set forth by the California Air Resources Board. In summary, auction proceeds must be used for the primary benefit of retail ratepayers, consistent with the goals of AB 32. PLAN The LEU Greenhouse Gas Free Allowance Proceeds Spending Plan includes the following options and will be reviewed each year as part of the annual budget process as to which specific programs and activities will be implemented: 1. Investments in renewable energy resources including, but not limited to, generation projects, energy storage projects and/or the purchase of generation from eligible renewable energy resources. 2. Investments in energy efficiency programs. 3. Projects or programs that address the potential for impacts of the Cap and Trade regulations including, but not limited to, efforts to mitigate impacts on low-income customers. 2 4. Fuel switching including, but not limited to, electric vehicle (EV) rebates and/or incentives, EV fueling supply equipment rebates, and/or infrastructure investment for transportation electrification. 5. Projects or activities that reduce emissions of sulfur hexafluoride or hydrofluorocarbons associated with electrical distribution system equipment. 6. Wildfire risk reduction activities.1 7. Non-volumetric return of proceeds to electric retail ratepayers. 8. Administrative, outreach and education program expenses as permitted. Specific projects will be identified and funding for those projects will be approved in accordance with existing City policies and procedures. The LEU will report to the CARB by June 30 of each year, how it has spent, or plans to spend, the proceeds received through auction of its GHG free allowances and will seek approval from its Risk Oversight Committee prior to submitting said report. 1 Allowable only after CARB adopts a standardized system for quantifying GHG emissions reductions and provided the risk reduction is in conformance with applicable Public Utilities Code. 1 Exhibit A LODI ELECTRIC UTILITY GREENHOUSE GAS FREE ALLOWANCE PROCEEDS SPENDING PLAN April 2020 BACKGROUND The Global Warming Solutions Act of 2006 (AB 32) requires California to return to 1990 levels of greenhouse gas emissions by 2020. SB 32 (Statutes of 2016) requires further reductions in greenhouse gas emissions to 40 percent below 1990 levels by 2030. All programs developed in response to the original AB 32 directives, and periodically refined though the California Air Resources Board’s (CARB) Scoping Plan process, contribute to the reductions needed to achieve this goal. The Cap and Trade Program is a key element in California’s climate plan and is designed to provide covered entities the flexibility to seek out and implement the lowest-cost options to reduce emissions. The City of Lodi Electric Utility (LEU), as an electrical distribution utility, receives an annual direct allocation of California Greenhouse Gas (GHG) allowances, or “free allowances.” These free allowances are currently scheduled for receipt by the LEU through 2030 per AB 398 and are consigned at auction. The City receives the proceeds which are currently deposited in its Environmental Compliance Fund. PURPOSE The purpose of the Greenhouse Gas Free Allowance Proceeds Spending Plan is to identify activities and programs the LEU will pursue to spend the proceeds received at auction in accordance with regulations set forth by the California Air Resources Board. In summary, auction proceeds must be used for the primary benefit of retail ratepayers, consistent with the goals of AB 32. PLAN The LEU Greenhouse Gas Free Allowance Proceeds Spending Plan includes the following options and will be reviewed each year as part of the annual budget process as to which specific programs and activities will be implemented: 1. Investments in renewable energy resources including, but not limited to, generation projects, energy storage projects and/or the purchase of generation from eligible renewable energy resources. 2. Investments in energy efficiency programs. 3. Projects or programs that address the potential for impacts of the Cap and Trade regulations including, but not limited to, efforts to mitigate impacts on low-income customers. 2 4. Fuel switching including, but not limited to, electric vehicle (EV) rebates and/or incentives, EV fueling supply equipment rebates, and/or infrastructure investment for transportation electrification. 5. Projects or activities that reduce emissions of sulfur hexafluoride or hydrofluorocarbons associated with electrical distribution system equipment. 6. Wildfire risk reduction activities.1 7. Non-volumetric return of proceeds to electric retail ratepayers. 8. Administrative, outreach and education program expenses as permitted. Specific projects will be identified and funding for those projects will be approved in accordance with existing City policies and procedures. The LEU will report to the CARB by June 30 of each year, how it has spent, or plans to spend, the proceeds received through auction of its GHG free allowances and will seek approval from its Risk Oversight Committee prior to submitting said report. 1 Allowable only after CARB adopts a standardized system for quantifying GHG emissions reductions and provided the risk reduction is in conformance with applicable Public Utilities Code.