06-19-2015 BPU RPT 06 - Laserfiche WebLink

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'eV A I= IL h V L I L Y I. l F F lag PUBLIC UTILITIES BOARD OF PUBLIC UTILITIES RIVERSIDE PUBLIC UTILITIES Board Memorandum DATE: JUNE 19, 2015 ITEM NO: 6 SUBJECT: ANNUAL ELECTRICAL DISTRIBUTION UTILITY USE OF ALLOWANCE VALUE REPORT TO THE CALIFORNIA AIR RESOURCES BOARD, AND ATTESTATION ISSUE: The issue for Board of Public Utilities (Board) consideration is approval of, and attestation as to the accuracy of, the City's 2014 use of allowance value associated with its allocation of Greenhouse Gas Allowances (GHG) from the California Air Resources Board (CARB). RECOMMENDATIONS: That the Board of Public Utilities: 1. Approve the Electrical Distribution Utility (EDU) Use of Allowance Form; 2. Attest as to the accuracy of the EDU Use of Allowance Form; and 3. Authorize the City Manager or his designee to execute and submit the attestation. BACKGROUND: Enacted in 2006, Assembly Bill (AB) 32 mandated CARB to develop regulations to limit California's GHG emissions to 1990 levels by the year 2020. In December 2011 CARB developed its framework, associated regulations and market mechanisms to implement AB 32, to become effective on January 1, 2012. The cornerstone of CARB's GHG regulations is its Cap and Trade (C &T) Program for GHG allowances. EDUs that emit GHGs (such as fossil fuels associated with generating electricity) have an annual compliance obligation, and must possess sufficient "permits" (e.g., GHG allowances) to offset such GHG emissions. To mitigate an EDU's retail electric rate impacts from the mandatory C &T Program, the implementing regulations provided EDUs with a "free" allocation of GHG allowances through calendar year (CY) 2020. Such "freely" allocated GHG allowances can be used to directly offset a Publicly Owned Utilities' GHG compliance obligation. The C &T regulations contain strict limitations governing the use of the value and the proceeds derived from the sale of such directly (e.g., "freely ") allocated allowances, including limitations imposed by the Utilities' governing body. Such limitations are found in Section 95892(d)(1), (3) and (5) of the regulations as follow: "Proceeds obtained from the monetization of allowances directly allocated to a publicly owned electric utility shall be subject to any limitations imposed by the governing body of the utility and to the additional requirements set forth." "Auction proceeds and allowance value obtained by an electrical distribution utility shall be used exclusively for the benefit of retail ratepayers of each electrical distribution utility, consistent with the goals of AB 32, and may not be used for the benefit of entities or persons other than such ratepayers."