Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Allocation to
Individual Natural Gas Suppliers. For each budget year, each natural gas
supplier's allocation will be calculated as follows. Any allowances allocated
to natural gas suppliers must be used exclusively for the benefit of retail
ratepayers of each such natural gas supplier, consistent with the goals of AB
32, and may not be used for the benefit of entities or persons other than such
ratepayers.
As,t =
E2011 *
ct
Where:
"As,t" is the amount of
California GHG allowances directly allocated to the natural gas supplier "S"
from budget year "t";
"E2011" is the emissions for
natural gas supplier "S" for data year 2011, as calculated using the compliance
obligation calculation methods under section
95852(c);
and
"ct" is the adjustment factor
for natural gas suppliers for budget year "t" to account for cap decline as
specified in Table 9-2.
(b)
Transfer to Natural Gas Supplier Accounts.
(1)
When a natural gas supplier as defined in section
95811(c) is
eligible for a direct allocation, it shall inform the Executive Officer by
September 1 of the amount of allowances to be placed into its compliance
account and limited use holding account with the following constraints. If an
entity fails to submit its distribution preference by this deadline, ARB will
automatically place all directly allocated allowances for the following budget
year in the entity's limited use holding account:
(A) The quantity of allowances placed into
the limited use holding account will equal at least the amount of allowances
provided in section
95893(a)
multiplied by the applicable percentage in Table 9-5 or Table 9-6, rounded down
to the nearest whole allowance.
(B)
The remaining allowances from the total allowances allocated in section
95893(a) which
are not placed into the limited use holding account will be placed into the
entity's annual allocation holding account to be transferred by the Executive
Officer into the entity's compliance account pursuant to section
95831(a)(6).
(c) Monetization Requirement. Within each
calendar year beginning in 2015 and after, a natural gas supplier must offer
for sale at auction all allowances in its limited use holding account that were
issued from budget years that correspond to the current calendar year and from
budget years prior to the current calendar year.
(d) Limitations on the Use of Auction
Proceeds and Allowance Value.
(1) Proceeds
obtained from the monetization of allowances directly allocated to a publicly
owned natural gas utility shall be subject to any limitations imposed by the
governing body of the utility and to the additional requirements set forth in
sections 95893(d)(3)
through 95893(d)(8) and
95893(e).
(2) Proceeds obtained from the monetization
of allowances directly allocated to public utility gas corporations shall be
subject to any limitations imposed by the California Public Utilities
Commission and to the additional requirements set forth in sections
95893(d)(3)
through 95893(d)(8) and
95893(e).
(3) Allowance value, including any allocated
allowance auction proceeds, obtained by a natural gas supplier must be used for
the primary benefit of retail natural gas ratepayers of each natural gas
supplier, consistent with the goals of AB 32, and may not be used for the
benefit of entities or persons other than such ratepayers. Allocated allowance
auction proceeds must be used to reduce greenhouse gas emissions or returned to
ratepayers using one or more of the approaches described in sections
95893(d)(3)(A)-(C)
and may also be used to pay for administrative and outreach costs and
educational programs described in section
95893(d)(4).
(A) Energy Efficiency. Funding programs or
activities designed to reduce greenhouse gas emissions through reductions in
energy use in the following categories:
1.
Energy efficient equipment rebates;
2. Energy-efficient building
retrofits;
3. Other projects that
reduce energy demand;
(B)
Other GHG Emission Reduction Activities. Funding programs or activities other
than energy efficiency, for which the natural gas supplier can demonstrate GHG
emission reductions per section
95893(d)(5). This
includes funding projects or activities that reduce emissions of uncombusted
natural gas and that are not mandated by any federal, state, or local health
and safety requirements, Senate Bill 1371 (Morrell, 2014), or the Greenhouse
Gas Emission Standards for Crude Oil and Natural Gas Facilities (California
Code of Regulations, sections
95665-95677).
(C) Non-Volumetric Return to Ratepayers.
Distribution of allocated allowance auction proceeds to some or all ratepayers
in a non-volumetric manner, either on- or off-bill.
(4) Administrative and Outreach Costs and
Educational Programs. Allocated allowance auction proceeds may be used for
administrative costs only in so far as those costs are solely limited to
necessary costs to administer the projects and activities funded pursuant to
sections 95893(d)(3)(A)-(C).
Allocated allowance auction proceeds may be used for outreach that supports the
implementation of the projects and activities funded pursuant to sections
95893(d)(3)(A)-(C).
Up to $100,000 or one percent of the total allocated allowance auction proceeds
expended by the supplier in a data year, whichever is larger, may be used in
that data year for educational programs that have the primary purpose of
reducing the GHG emissions of the natural gas supplier's ratepayers, but for
which expected GHG emissions, pursuant to sections
95893(d)(5) and
95893(e)(4)(B),
cannot be demonstrated.
(5) Natural
gas suppliers must demonstrate the expected GHG emissions reductions, pursuant
to section
95893(e)(4)(B),
for each use of allocated allowance auction proceeds described in sections
95893(d)(3)(A)-(B)
that is undertaken.
(6) Public
utility gas corporations shall ensure equal treatment of their procurement and
delivery customers and delivery-only customers.
(7) Prohibited Use of Allocated Allowance
Value. Use of the value of any allowance allocated to a natural gas supplier
other than for the primary benefit of retail natural gas ratepayers consistent
with the goals of AB 32 is prohibited. Prohibited uses include:
(A) Use of allocated allowance auction
proceeds to pay for the costs of complying with MRR, the AB 32 Cost of
Implementation Fee Regulation (California Code of Regulations, sections
95200-95207), or the Cap-and-Trade
Regulation, including the purchase of allowances, except for the costs
allowable pursuant to sections
95893(d)(3)-(4);
(B) Use of allocated allowance auction
proceeds to pay for lobbying costs, employee bonuses, shareholder dividends, or
costs, penalties, or activities mandated by any legal settlement,
administrative enforcement action, or court order; and
(C) Returning allocated allowance auction
proceeds to ratepayers in a volumetric manner.
(8) Deadline for Use of Allocated Allowance
Value. For allocated allowances received on or after October 1, 2017, the
proceeds received from the sale of allowances allocated to a natural gas
supplier must be spent by December 31 of the year ten years after the vintage
year of the allowances, and the value of allocated allowances received prior to
Octo ber 1, 2017 must be spent by December 31, 2027. To be spent, the proceeds
must not remain in any account owned or controlled by the natural gas supplier
or its corporate associates. If the proceeds have not been spent within ten
years, they must be returned to ratepayers in a non-volumetric manner by
December 31 of the year eleven years after the vintage year of the
allowances.
(e) Reporting
on the Use of Auction Proceeds. No later than June 30, 2016, and June 30 of
each calendar year thereafter, each natural gas supplier shall submit a report
to the Executive Officer describing the disposition of all allocated allowance
auction proceeds during the previous calendar year. This report shall include:
(1) The monetary value of any unspent
allocated allowance auction proceeds remaining from prior years at the start of
the previous calendar year.
(2) The
monetary value of auction proceeds received by the natural gas supplier from
the sale of allowances during the previous calendar year;
(3) The monetary value of all auction
proceeds spent during the previous calendar year and the monetary value of all
auction proceeds remaining unspent at the end of the previous calendar
year;
(4) How each use of allocated
allowance auction proceeds which were spent during the previous calendar year
complies with the requirements of this section and the requirements of
California Health and Safety Code sections
38500
et seq. This includes:
(A) Describing the
nature and purpose of each use of allocated allowance auction proceeds,
including how it benefits ratepayers, and specifying the amount of allocated
allowance auction proceeds spent on that use. This includes describing the GHG
reduction purpose of any educational programs;
(B) Estimating the GHG emission reductions
from each use of allocated allowance auction proceeds allowed pursuant to
sections 95893(d)(3)(A)-(B).
The portion of total GHG emission reductions attributable to the use of the
proceeds shall be based on the percentage of total project costs covered by the
use of the proceeds. The total GHG emission reductions shall be based on
comparing the expected GHG emissions with and without the use of the proceeds.
The calculation shall use the following, as applicable:
1. Use-specific information on equipment
efficiency, MMBtu of fuel saved, and vehicle miles travelled, as
applicable.
2. GHG emissions
factors applicable to the fuel used or saved, vehicle miles travelled or
electricity saved, calculated as follows:
a.
GHG Emission Factor for Natural Gas Saved. The GHG emission factor for natural
gas shall be calculated using the emission factor and annual average high
heating value used in the natural gas supplier's MRR reporting for the same
reporting year.
b. GHG Emission
Factors for Non-Transportation Fuels. The GHG emission factor for each fuel
used or saved, other than natural gas, shall be as listed in Table C-1 of
Subpart C of 40 CFR Part 98 (December 2010), which is hereby incorporated by
reference, or calculated by means that can be demonstrated to the Executive
Officer to be comparably accurate.
c. GHG Emission Factors for Vehicle Miles
Travelled. If the use of allocated allowance auction proceeds reduces
transportation-related GHG emissions, the GHG emission factor for the vehicles
used with and without the use of proceeds shall be calculated using the methods
in ARB's California Climate Investments Quantification Methodology
Emission Factor Database Documentation (August 2018), which is hereby
incorporated by reference, or by comparable means that can be demonstrated to
the Executive Officer to be consistent with these methods. Active
transportation may be assumed to have zero GHG emissions.
3. The expected time frame over which the
emissions reductions will occur.
4.
The percentage of total project costs covered by the use of allocated allowance
auction proceeds.
(C)
Itemizing any use of allocated allowance auction proceeds on administrative and
outreach costs and educational programs described in section
95893(d)(4).
Table 9-5: Minimum Annual Percentage
Consignment Requirements for Natural Gas Utilities for
2015-2020
| Year | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Minimum Percentage
Consigned | 25% | 30% | 35% | 40% | 45% | 50% |
Table 9-6: Minimum Annual Percentage
Consignment Requirements for Natural Gas Utilities for 2021 and Subsequent
Years
| Year | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030
and beyond |
| Minimum Percentage
Consigned | 55% | 60% | 65% | 70% | 75% | 80% | 85% | 90% | 95% | 100% |
1. New
section filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section
11343.4(b)(3)
(Register 2014, No. 26). For prior history, see Register 2012, No.
7.
2. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to
Government Code section
11343.4(b)(3)
(Register 2017, No. 38).
3. Amendment filed 3-29-2019; operative
3-29-2019 pursuant to Government Code section
11343.4(b)(3)
(Register 2019, No. 13).
Note: Authority cited: Sections
38510,
38560,
38562,
38570,
38571,
38580,
39600
and
39601,
Health and Safety Code. Reference: Sections
38530,
38560.5,
38564,
38565,
38570
and
39600,
Health and Safety Code.
