- What changes did the Assembly Bill (AB) 1110 (Ting, Chapter 656, Statutes of 2016) rulemaking make to the Power Source Disclosure (PSD) program?
AB 1110, authored by Assembly member Phil Ting, was signed into law in September 2016. The bill directed the Energy Commission to create a method to calculate the greenhouse gas (GHG) emissions intensities associated with retail electricity portfolios reported under the PSD program. The changes to the program regulations took effect on May 4, 2020. In addition to adding GHG emissions disclosure requirements, this rulemaking overhauled major elements of the program, including:
- Treatment of unbundled renewable energy credits (RECs)
- Method for determining annual unspecified power procurements
- Requirement for all marketing claims regarding a retail supplier’s GHG emissions intensity to be consistent with the Energy Commission’s adopted methodology.
- Treatment of firmed-and-shaped imports
- Adjustment mechanism to account for procurement exceeding retail sales
- Extension of the ability for public agency retail suppliers to have one portfolio submitted via attestation in lieu of meeting the auditing requirements, to all portfolios
These regulatory updates are substantial and represent a significantly modified methodology. Consequently, program data for years prior to 2019 may not be comparable to data under the updated program. For a detailed explanation, see the Initial Statement of Reasons and the Final Statement of Reasons.
- What is an eligible renewable resource?
An eligible renewable resource means a generator that is certified pursuant to the California Renewables Portfolio Standard (RPS) Program. Eligible renewables include biomass and biowaste, geothermal, eligible hydroelectric, solar, wind, and other resources that the RPS Program may recognize in the future. For a detailed explanation, see Chapter 2 of the RPS Eligibility Guidebook, Ninth Edition. Some electricity resources do not produce annual GHG emissions, such as nuclear and large hydroelectric facilities, but are not recognized as eligible renewables under California’s RPS Program.
- What is a GHG emissions intensity?
It is a pollution rate. It measures the mass of GHGs that are emitted into the atmosphere to generate one megawatt hour (MWh) of electricity from a particular generation resource or portfolio of resources.
- What are RECs?
RECs are certificates of proof associated with the generation of electricity from an eligible renewable energy resource. Electricity retail suppliers buy and sell RECs for compliance with California’s RPS program, as well as for voluntary purposes. Under the PSD program, a specified procurement claim from an eligible renewable facility must include the associated RECs.
- What are unbundled RECs and how does the PSD Program recognize them?
These are simply RECs without any power; these standalone RECs have become “unbundled” from their associated electricity. Unbundled RECs may be used to meet certain RPS requirements as well as for voluntary purposes.
Since unbundled RECs are not associated with electricity procurement, they may not be used to calculate or adjust the fuel mix or GHG emissions intensity of an electricity portfolio. Instead, unbundled RECs are disclosed separately on the Power Content Label as a percentage of retail sales.
- What is unspecified power and how does the PSD Program treat it?
Unspecified power refers to electricity that is not traceable to specific generation sources by any auditable contract trail or equivalent. Unspecified power includes energy that was originally procured as a bundled eligible renewable product, but the associated RECs were subsequently resold separately as unbundled RECs from the underlying energy. This electricity is sometimes referred to as “null energy” or “null power”. Unspecified power also includes electricity purchased through open market transactions, even if the energy can be traced back to specific resources. Without a purchase agreement in place prior to the generation, open market transactions are considered to be unspecified because there was no upfront contractual intention to procure electricity from a specified resource.
The PSD program adopted the GHG emissions intensity of unspecified power as assigned by the CARB under Section 95111(b)(1) of the Mandatory Greenhouse Gas Reporting Regulation (MRR). The default GHG emissions intensity for unspecified power is 943.577 lbs. CO2e/MWh, which is similar in profile to a natural gas generator. The PSD Annual Report template automatically calculates retail suppliers’ purchases of unspecified power as the difference between retail sales and net specified purchases. Retail suppliers do not manually report their unspecified power purchases.
- What is an Asset-Controlling Supplier (ACS)?
ACSs are entities that own or operate generating facilities or serve as exclusive marketers for the facilities if they do not own the resources. ACSs sell a specified mixture of resources at wholesale to retail suppliers.
CARB assigns annual GHG emissions intensities to each participating ACS based on the ACS’ system mix of resources.
Under the PSD Program, retail suppliers can claim the system resource mix and GHG emissions intensity associated with purchases of ACS power. This means that ACS power is reflected on the Power Content Label according to its actual fuel sources rather than being characterized as unspecified power.
- What are firmed-and-shaped products? Why are they assigned the GHG emissions intensity of a substitute energy source?
Firmed-and-shaped products are a special class of electricity products used primarily for RPS compliance. These products match RECs with imported substitute electricity (meaning the electricity did not come from the renewable facility that generated the electricity originally associated with the RECs).
On the Power Content Label, firmed-and-shaped products are counted as eligible renewables and classified according to the fuel type of the RECs, while the GHG emissions are counted according to the source of the imported substitute electricity. This split accounting methodology on the Power Content Label reflects historical differences in fuel type and GHG emissions accounting practices established by other State programs such as the RPS and CARB’s MRR.
- Why are the GHG emissions of certain firmed-and-shaped products excluded from the emissions intensity of an electricity portfolio?
Retail suppliers can exclude GHG emissions associated with eligible firmed-and-shaped products from the Power Content Label if they were procured under a purchase agreement executed prior to January 1, 2019. This provision provides good faith relief to retail suppliers that entered into firmed-and-shaped contracts prior to the development of retail GHG emissions accounting rules.
- How are biogenic carbon dioxide emissions accounted for?
This refers to carbon dioxide emissions associated with electricity production using biogenic fuels, meaning biomass, biowaste, or biomethane from an eligible renewable generator. National and international GHG accounting practices typically attribute these GHG emissions to an agriculture or land use sector, rather than to the electricity sector. In alignment with the best practices of GHG inventories, this program similarly does not attribute biogenic carbon dioxide to the electricity sector.
- Why does the PSD Annual Report template adjust certain net specified procurements?
Retail electricity suppliers typically buy more power than they need to meet their retail demand (also called retail sales). They need to, among other things, cover for their own electricity consumption as well as transmission and distribution losses. The Power Content Label is required by statute to only reflect electricity serving retail sales, which means some power may be left off the label. For consumer transparency, these adjustments to net specified procurements are shown on schedule 1 on a PSD Annual Report to indicate that a retail supplier has additional power sources that are not represented on its Power Content Label.
The AB 1110 rulemaking updated the rules for this adjustment. Under the new rules, retail suppliers apply their low-GHG resources (eligible renewables, large hydro, and nuclear power) to retail sales first. If the retail supplier procured more electricity than it needs to serve retail sales, then its fossil fuel resources are reduced to account for the difference between net specified procurements and retail sales of an electricity portfolio. All natural gas resources are proportionally reduced first, then coal and other fossil fuels as needed (if total adjusted procurements still exceed retail sales, then all remaining fuel types are proportionally reduced).
- Why do Power Content Label fuel mix calculations differ from RPS percentages?
The PSD Program serves a different purpose than the RPS Program. While some components align, PSD fuel mix calculations do not reflect RPS compliance. As an example of one important distinction, the PSD Program does not allow unbundled RECs to contribute to the fuel mix, even though those may be eligible products for use in RPS compliance.
- How is the 2020 CA Power Mix calculated for the Power Content Label?
The 2020 CA Power Mix refers to California’s Total System Electric Generation, which represents a full inventory of all in-state generation plus electricity imports. The Power Content Label, however, only reflects electricity serving retail sales, which covers most but not all electricity consumption. (Onsite consumption and transmission losses are examples of electricity uses that are not included on the Power Content Label). Consequently, although California’s Total System Electric Generation appears on the Power Content Label as a reference point, it is not an exact apples-to-apples comparison with a retail supplier’s fuel mix.
- How is the 2020 CA Utility Average Emissions Intensity calculated for the Power Content Label?
The 2020 CA Utility Average Emissions Intensity represents the average GHG emissions intensity for all retail electricity portfolios offered in California in 2020. This average GHG emissions intensity appears on the Power Content Label as a reference point for direct comparison with an electricity portfolio’s emissions intensity.
