06-12-2017 BPU RPT 06 - Laserfiche WebLink

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W A I R h N h B L Y I. l F F RIVERSIDE PUBLIC UTILITIES Law&, PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: JUNE 12, 2017 ITEM NO: 6 SUBJECT: ANNUAL REPORT ON THE CITY OF RIVERSIDE'S USE OF ALLOWANCE VALUE AND PROCEEDS OF GREENHOUSE GAS (GHG) ALLOWANCES ISSUE: Receive, review and file this 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, review and file this update on the City of Riverside's use of allowance value and proceeds of Greenhouse Gas (GHG) Allowances. BACKGROUND: Assembly Bill (AB) 32, was enacted in 2006 and mandated California Air Resources Board (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, effective January 1, 2012. The cornerstone of CARBs GHG regulations is its Cap and Trade Program for GHG allowances. Electrical Distribution Utility's 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 an Electrical Distribution Utility's retail electric rate impacts from the mandatory Cap and Trade Program, the implementing regulations provided Electrical Distribution Utility's with a "free" allocation of GHG allowances through calendar year 2020. These GHG allowances can be used to directly offset a Publicly Owned Utilities' GHG compliance obligation. The Cap and Trade regulations contain strict limitations governing the use of the value and the proceeds derived from the sale of the allocated allowances, including limitations imposed by the Utilities' governing body. The limitations are found in the Cap -and -Trade Regulation Section 95892(d)(1), (3) and (5) of The California Code of 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. "