5. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner. On September 21, 2009, this proceeding was reassigned to ALJ Jean Vieth.

Findings of Fact

1. Ongoing monitoring, reporting and enforcement are critically important aspects of D.07-01-039's specification that an LSE develop a "reasonable and economically and technically feasible plan that will result in the permanent sequestration of CO₂ once the injection project is operational."

2. While the Commission's jurisdictional charge does not include the development of regulations governing ongoing monitoring, reporting and enforcement of CCS, in undertaking its responsibilities for LSE compliance with the EPS, the Commission must ensure the integrity of the EPS.

3. It is reasonable to modify D.07-01-039 to clarify our expectation of the contents of any LSE plan. The language in Ordering Paragraph 2 addresses
two matters relevant to the Commission's responsibilities for LSE compliance with the EPS that party proposals inadequately address. One, the LSE plan must comply with federal and/or state monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ (that is, prevent CO₂ releases into the atmosphere). Two, the absence of such state and/or federal monitoring, verification and reporting requirements, or the fact that they have yet to be finalized, should not prevent an LSE from filing an application for a Commission finding of EPS compliance for a CCS project.

4. D.07-01-039 already specifies that a plan must be technically feasible, reasonable and economically feasible.

Conclusions of Law

1. The petition for modification should be granted in part but the language in Ordering Paragraph 2 should be added to D.07-01-039 in lieu of the language proposed by NRDC et al.; in all other respects the petition for modification should be denied.

2. NRDC et al. have met the requirements of Rule 16.4(d), regarding the timeframe for filing a petition for modification; the petition is properly filed.

ORDER

IT IS ORDERED that:

1. Decision 07-01-039 is modified as follows (additions to existing text are underlined and deletions appear with overstrikes).

(a) Decision text at 93-94:

Because of the unique nature of such CO₂ sequestration projects, we will require LSEs to file an application requesting a Commission finding of EPS compliance for any covered procurement that employs a geological formation injection. As part of this filing, the LSE shall provide documentation demonstrating that the CO2 capture, transportation and geological formation injection project has a reasonable and economically and technically feasible plan that will result in a permanent sequestration of CO2 once the injection project is operational. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information. This may mean that the sequestration project might become operational after the powerplant comes on line or the LSE enters into the contract. In implementing §§ 8341(d)(2) and (5), we clarify today that we will determine EPS compliance for such powerplants based on reasonably projected net emission over the life of the plant.

(b) Decision text at 175:

We also require LSEs to file an application requesting a Commission finding of EPS compliance for any covered procurement that employs geological formation injection for CO₂ sequestration. As part of this filing, the LSE shall provide documentation demonstrating that the geological formation injection project has a reasonable and technically feasible plan that will result in a permanent sequestration of CO2 once the project is operational. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information.

(c) Conclusion of Law 47:

Because of the unique nature of CO₂ geological injection sequestration projects, an LSE entering into an EPS covered procurement utilizing such projects should request Commission
pre-approval by application. In order to ensure that the purposes of SB 1368 are served, the LSE should be required to: (1) provide documentation that the project has a reasonable and economically and technically feasible plan that will result in the permanent sequestration of CO2 once the injection project is operational. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information; (2) present projections of net emissions over the life of the powerplant,; and (3) provide documentation that the CO2 injection project complies with applicable laws and regulations.

(d) Ordering Paragraph 3(c) ii:

As part of this filing, PG&E, SCE and SDG&E shall provide documentation demonstrating that the CO2 capture, transportation and geological formation injection project has a reasonable and economically and technically feasible plan that will result in the permanent sequestration of CO2 once the project is operational, and that the CO2 injection project complies with applicable laws and regulations. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information. This showing shall include any emissions-related provisions that may be required through contract and/or permit conditions.

(e) Ordering Paragraph 6:

For covered procurements that employ geological formation injection for CO2 sequestration, LSEs other than PG&E, SCE and SDG&E shall request Commission pre-approval by filing a separate application with service on the service list in this proceeding, or its successor proceeding. As part of this filing, the LSE shall provide documentation demonstrating that the CO2 capture, transportation and geological formation injection project has a reasonable and economically and technically feasible plan that will result in the permanent sequestration of CO2 once the project is operational, and that the CO2 injection project complies with applicable laws and regulations. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information. The LSE shall also make a showing of EPS compliance by presenting projections, and documentation of those projections, of net emissions over the life of the life of the powerplant. This showing shall include any emissions-related provisions that may be required through contract and/or permit conditions.

(f) Attachment 7 (Adopted Interim EPS Rules), Rule 6.B(2):

The CO₂ capture, transportation and geological formation injection project has a reasonable and economically and technically feasible plan that will result in a permanent sequestration of CO₂ once the injection project is operational. The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information.

2. The petition to modify Decision 07-01-039 filed by Natural Resources Defense Council, the Environmental Defense Fund, Green Power Institute, Union of Concern Scientists, and The Utility Reform Network on November 30, 2009 is granted to the extent consistent with Ordering Paragraph 1 and is otherwise denied.

3. Rulemaking 06-04-009 remains open.

This order is effective today.

Dated July 29, 2010, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

TIMOTHY ALAN SIMON

NANCY E. RYAN

Commissioners