06-10-2019 BPU RPT 17 - Laserfiche WebLink

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W A F E R E N E R G Y L I f h ► RIVERSIDE PUBLIC UTILITIES Board Memorandum P B L I C u I i 1'rI FS BOARD OF PUBLIC UTILITIES DATE: JUNE 10, 2019 ITEM NO: 17 SUBJECT: ANNUAL REPORT ON CITY OF RIVERSIDE'S USE OF ALLOWANCE VALUE AND PROCEEDS OF GREENHOUSE GAS ALLOWANCES ISSUE: Receive and file update on the City of Riverside's use of allowance value and proceeds of Greenhouse Gas Allowances. RECOMMENDATION: That the Board of Public Utilities receive and file an update on the City of Riverside's use of allowance value and proceeds of Greenhouse Gas Allowances. LEGISLATIVE HISTORY: Assembly Bill (AB) 32, enacted in 2006, mandates the California Air Resources Board (CARB) to develop regulations to limit California's greenhouse gas (GHG) emissions to 1990 levels by 2020. In December 2011, CARB developed its framework, associated regulations and market mechanisms to implement AB 32, effective January 1, 2012. Two (2) subsequent bills, Senate Bill (SB) 32 in 2016 and AB 398 in 2017, established new GHG emissions reduction targets and extended the State's authorization to use market mechanisms to meet these targets. Specifically, SB 32 expands the limit on GHG emissions to 40% below 1990 levels by 2030, and AB 398 permits the continued use of the Cap and Trade Program through 2030. BACKGROUND: The cornerstone of CARB's GHG regulations is its Cap and Trade Program for GHG allowances. Electric distribution utilities that emit GHGs (such as fossil fuels associated with generating electricity) have an annual compliance obligation and must possess sufficient GHG allowances to offset such GHG emissions. To mitigate rate impacts, the Cap and Trade Program provides utilities with "free" allocations of GHG allowances through 2030. Publicly owned utilities such as Riverside Public Utilities (RPU) can use these GHG allowances to offset their GHG compliance obligations. The Cap and Trade Program regulations contain strict limitations governing the use of the value and the proceeds derived from the sale of the allocated allowances, as follows: "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 in sections 95892 (d) (3)-(5) and 95892 (e)."