04-18-2014 BPU RPT 11 - Laserfiche WebLink

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The item for Board of Public Utilities consideration is approval of the Policy on the Permissible Use of Greenhouse Gas (GHG) Aflowance Value and Proceeds. RECOMMENDATIONS: That the Board of Public Utilities approve and recommend that the City Council: Approve Riverside's Policy on the Permitted Use of Greenhouse Gas Allowance Value and Proceeds-, 2. Authorize the City Manager, or his designee, to make changes to the Policy in accordance with the goals of Assembly Bill 32 and herein for the benefit of Riverside's retail electric ratepayers; and I Is necessary to meet the applicable regulatory 13 Approve the preparation and filing of the report requirements of Assembly Bill 32. BACKGROUND: Assembly Bill (AB) 32, enacted in 2006, mandated that the California Air Resources Board (CAR B) develop a framework and the associated regulations to limit the GHG emissions in California to 1990 levels by the year 2020. In December 2011, CARB developed its framework, the associated regulations and the market mechanisms as required by AB 32 to implement its mandates. The mandates became effective an January 1, 2011 Central to the CARB's GHG regulations is the establishment of a Cap-and-T rade Program for GFIG allowances, which requires that electric utilities, such as Riverside Public Utilities (RPU), have sufficient "rights" on an annual basis to offset GHG emissions associated with generating electricity; these"rights" are also called GHG Allowances. One GHG allowance permits the holder of the allowance to emit one metric ton equivalent of GHG. Through the cap-and-trade quarterly GHG allowance auctions. CARB would sell the GHG allowances to entities that have GHG compliance obligations and derive proceeds which would be used for GHG reduction purposes. To ease the transition to the Cap-and-Trade Program and m itigate the rate impacts to retail electric customers, electrical distribution utilities such as RPU are allocated certain amounts of GHG allowances at no cost 'through calendar year (CY) 2020. Such allocated GHG aillowances can be used to directly offset a Publicly Owned Utilities` GHG compliance, obligation,