Common use of Compliance With Interim Emissions Performance Standard Clause in Contracts

Compliance With Interim Emissions Performance Standard. A greenhouse gas Emissions Performance Standard (“EPS”) was established by Senate Bill 1368 (“SB 1368”), which requires that the Commission consider emissions costs associated with new long-term contracts for baseload generation procured on behalf of California ratepayers. The EPS was intended to reduce California’s financial risk exposure to potential future compliance costs associated with future GHG emissions restrictions.26 Essentially the legislature and the Commission were concerned that California ratepayers not be exposed to the high cost of retrofits or potential supply disruptions if the generator must satisfy future emission control regulations. 25 D.▇▇-▇▇-▇▇▇ at 61-62 26 Id. at 3. As a result, in D.▇▇-▇▇-▇▇▇, the Commission adopted an EPS that applies to contracts to procure baseload generation for a term of five or more years.27 Baseload generation to which EPS applies is “electricity generation from a power plant” with an annualized plant capacity factor of at least 60 percent.28 In other words, the statute and D.▇▇-▇▇-▇▇▇ appear to apply only to contracts for procurement of energy, not REC-only transactions. Though D. ▇▇-▇▇-▇▇▇ does not explicitly address the interaction between EPS compliance and REC-only transactions, the Commission distinguished the transfer of RECs from the GHG emissions rate associated with the renewable facility and found that “RECs would not have any value for EPS compliance under our rules.”29 Therefore, the PSA is not a covered procurement subject to the EPS because it does not involve procurement of electric energy. Even if the Commission were to apply the EPS requirements to REC-only transactions, the PSA would satisfy the EPS. The PSA procures RECs associated with electric energy generated at TransAlta’s wind facility that is not baseload and is for a term less than 5 years.

Compliance With Interim Emissions Performance Standard. A greenhouse gas Emissions Performance Standard (“EPS”) was established by Senate Bill 1368 (“SB 1368”), which requires that the Commission consider emissions costs associated with new long-term contracts for baseload generation procured on behalf of California ratepayers. The EPS was intended to reduce California’s financial risk exposure to potential future compliance costs associated with future GHG emissions restrictions.26 restrictions.23 Essentially the legislature and the Commission were concerned that California ratepayers not be exposed to the high cost of retrofits or potential supply disruptions if the generator must satisfy future emission control regulations. 25 D.▇▇-▇▇-▇▇▇ at 61-62 26 Id. at 3. As a result, in D.▇▇-▇▇-▇▇▇, the Commission adopted an EPS that applies to contracts to procure baseload generation for a term of five or more years.27 years.24 Baseload generation to which EPS applies is “electricity generation from a power plant” with an annualized plant capacity factor of at least 60 percent.28 percent.25 In other words, the statute and D.▇▇-▇▇-▇▇▇ appear to apply only to contracts for procurement of energy, not REC-only transactions. Though D. ▇▇-▇▇-▇▇▇ does not explicitly address the interaction between EPS compliance and REC-only transactions, the Commission distinguished the transfer of RECs from the GHG emissions rate associated with the renewable facility and found that “RECs would not have any value for EPS compliance under our rules.”29 ”26 22 D.▇▇-▇▇-▇▇▇ at 61-62 23 Id. at 3. 24 Id. at Finding of Fact 12. 25 D.▇▇-▇▇-▇▇▇ at 4. 26 Id. at 124, see id. at 121-127. Therefore, the PSA is not a covered procurement subject to the EPS because it does not involve procurement of electric energy. Even if the Commission were to apply the EPS requirements to REC-only transactions, the PSA would satisfy the EPS. The PSA procures RECs associated with electric energy generated at TransAltaSPI’s wind facility biomass facilities, which use the wood waste biomass that is not baseload and is for a term less than 5 years.would otherwise be disposed of utilizing open burning, forest accumulation, landfill (uncontrolled, gas collection with flare, gas collection with engine), spreading or composting.27