HomeMy WebLinkAboutF-1 GHG Emissions Information Item
PresentedF 1
LIs :
INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES
DATE: MAY 27,2014
SUBJECT: TREATMENT OF PROCEEDS FROM SALES OF GREENHOUSE GAS
ALLOWANCES
BACKGROUND
Assembly Bill (AB) 32, "The Global Warming Solutions Act", was passed by the California
Legislature in 2006. The statute requires that California's greenhouse gas (GHG) emissions in
2020 be at or below the same levels as that of year 1990. The California Air Resources Board
(CARB) was charged with development of regulations to reach this goal, and the cap-and-trade
program is one of several tools designed by CARB to achieve the desired GHG reduction goal.
CARB issued the final regulation for its cap-and-trade program in December 2011.
The cap-and-trade program technically went into effect in January 2012 but its practical
implementation and enforcement began on January 1,2013. Under the terms of the cap-and-trade
regulations, entities doing business within the "covered"industry sectors in California, such as
Azusa Light & Water, will be allocated specific amounts of GHG Allowances to help them
absorb the impact of the regulation. GHG Allowance is an authorization to emit an amount of
greenhouse gas equivalent to one metric ton of carbon-dioxide(CO2e).
CARB regulations require that AL&W utilize the value of these allocated GHG allowances,
including proceeds from the sale of the allowances in the auctions conducted by CARB, for the
benefit of its retail electric ratepayers and consistent with the State's GHG reduction goals. In
particular, regulation for the use of the proceeds from sale(s) of allowances stipulates the
following:
"Auction proceeds and allowance value obtained by an electrical distribution utility
shall be used exclusively for the benefit of retail ratepayers of each electrical
distribution utility, consistent with the goals of AB 32, and may not be used for the
benefit of entities or persons other than such ratepayers."
On November 25, 2013, consistent with the above regulation, the Utility Board adopted the
"Azusa GHG Allowance Use and Proceeds Policy" establishing formal rules on use and
utilization of proceeds from sales of the CARB allocated GHG Allowances.
UB-60
Proceeds from Sales of GHG Allowances
May 27,2014
Page 2
Staff would like to report that, consistent with the Board's policy, all proceeds from the
June 2013 auction - S322,644.00 - are being credited to Azusa Light & Water ratepayers
via the Power Cost Adjustment mechanism.
Prepared by:Yarek Lehr, Assistant Director of Resource Management
UB-61