Greenhouse Gas Emissions Performance Standards

The California Legislature passed Senate Bill (SB) 1368 on August 31, 2006 and Governor Schwarzenegger signed the bill into law on September 29, 2006. Section 2 of the bill adds Public Utilities Code Section 8341(a), which provides that "No load-serving entity or local publicly owned electric utility may enter into a long-term financial commitment unless any baseload generation supplied under the long-term financial commitment complies with the greenhouse gas emission performance standard established by the commission, pursuant to subdivision (d)."

The Commission opened R.06-04-009 to implement the provisions of SB 1368. The proceeding resulted in the establishment of a GHG emissions performance standard (EPS), for carbon dioxide (CO2). D.07-01-039 noted that "SB 1368 establishes a minimum performance requirement for any long-term financial commitment for baseload generation that will be supplying power to California ratepayers. The new law established that the GHG emissions rates for these facilities must be no higher than the GHG emissions rate of a combined-cycle gas turbine (CCGT) powerplant."

The CCGT-equivalent emissions limit adopted by the Commission is 1,100 pounds of CO2/MWh.

The Decision further explains:

SB 1368 describes what types of generation and financial commitments will be subject to the EPS ("covered procurements"). Under SB 1368, the EPS applies to "baseload generation," but the requirement to comply with it is triggered only if there is a "long-term financial commitment" by an LSE. The statute defines baseload generation as "electricity generation from a powerplant that is designed and intended to provide electricity at an annualized plant capacity factor of at least 60%. ... For baseload generation procured under contract, there is a long-term commitment when the LSE enters into "a new or renewed contract with a term of five or more years."

SB 1368 provides that CCGT baseload powerplants currently in operation, or that have a CEC final permit decision to operate as of June 30, 2007, shall be "deemed to be in compliance" with the EPS.

The "Adopted Interim Rules for Greenhouse Gas Emissions Performance Standard" are attached to D.07-01-039 as Attachment 7.

CPV, Walnut Creek and Wellhead will be operating as peaking resources with expected capacity factors that exempt them from the proposed GHG emissions performance standards for facilities with a baseload capacity factor of 60%. While El Segundo is capable of operating as a baseload facility, the current limits by the air pollution control district limits the operation of the units to approximately 5,456 hours per year, or a 57.5% maximum capacity factor. In addition, SCE's projections for the facility have it operating well below the 60% baseload capacity factor, above which the GHG emission performance rules would apply. If El Segundo does operate at above the 60% base load capacity factor, the facility must meet the EPS requirement. In summary, SCE claims that the four new contracts are more efficient and cleaner resources than the facilities they are replacing and SCE expects to have them running even fewer hours when it has its expected increase in renewable resources also on-line. With the renewables and these new resources working together, SCE expects that the system level of GHG emissions will be reduced.