E ne rg y I mb alanc e Marke t (E I M) Oc to b e r 21, 2016 1 - PowerPoint PPT Presentation

Ma nda to ry GHG Re po rting a nd Ca p-a nd-T ra de Pro g ra m Wo rksho p E ne rg y I mb alanc e Marke t (E I M) Oc to b e r 21, 2016 1 Ca lifo rnia Air Re so urc e s Bo a rd

Ac c o unting fo r E le c tric ity E missio ns Unde r AB 32  AB 32: “Sta te wide GHG e missio ns” inc lude s a ll GHG e missio ns fro m the g e ne ra tio n o f e le c tric ity de live re d to a nd c o nsume d in Ca lifo rnia , a c c o unting fo r tra nsmissio n a nd distrib utio n line s lo sse s, whe the r tha t e le c tric ity is g e ne ra te d in sta te o r impo rte d  Ca lifo rnia po we r pla nts must re po rt fa c ility le ve l e missio ns unde r MRR  E le c tric ity impo rte rs must re po rt impo rts b a se d o n physic a l de live ry o f e le c tric ity b y so urc e  I mpo rte d e le c tric ity re po rte d a s e ithe r spe c ifie d o r unspe c ifie d 2 Ca lifo rnia Air Re so urc e s Bo a rd

Spe c ifie d vs. Unspe c ifie d I mpo rts  Spe c ifie d So urc e I mpo rts  I mpo rte r must o wn, o pe ra te , o r c o ntra c t fo r the po we r  Must b e dire c tly de live re d to Ca lifo rnia fro m the so urc e  Po we r must b e spe c ifie d whe n pa rtie s a g re e to de a l  Unspe c ifie d po we r c a nno t b e re so ld a s spe c ifie d po we r  Re po rt the le sse r o f po we r g e ne ra te d o r sc he dule d (with c e rta in e xc e ptio ns)  Unspe c ifie d I mpo rts  Ge ne ra tio n so urc e no t spe c ifie d whe n pa rtie s a g re e to de a l  Po we r tha t do e s no t me e t spe c ifie d so urc e re q uire me nts  Unspe c ifie d e missio n fa c to r c a pture s e missio ns impa c t fro m “ma rg ina l” so urc e in we ste rn po we r ma rke ts  E I M impo rts c urre ntly b e ing re po rte d a s spe c ifie d po we r fro m pa rtic ipa ting re so urc e s ide ntifie d b y CAI SO’ s mo de l 3 Ca lifo rnia Air Re so urc e s Bo a rd

Ca lifo rnia Clima te Po lic ie s (1 o f 2)  E nsure a c c ura te a c c o unting o f full GHG b urde n o n the a tmo sphe re a s a c o nse q ue nc e o f e le c tric ity g e ne ra te d a nd c o nsume d in Ca lifo rnia  Ne e de d to tra c k pro g re ss to wa rds the AB 32 g o a ls, inc luding 2020 ta rg e t, a nd a sse ss c o mplia nc e o b lig a tio ns in the Ca p- a nd-T ra de Pro g ra m  E nsure imple me nta tio n a nd de sig n o f po lic ie s suppo rting Ca lifo rnia GHG g o a ls 4 Ca lifo rnia Air Re so urc e s Bo a rd

Ca lifo rnia Clima te Po lic ie s (2 o f 2)  E I M o ptimiza tio n le a ds to ina c c ura te GHG a c c o unting fo r e le c tric ity c o nsume d in CA in so me c a se s  CAI SO ha s disc usse d this issue in te rms o f e missio ns a sso c ia te d with a “prima ry” a nd “se c o nda ry” dispa tc h  Prima ry dispa tc h is re fe rre d to in MRR a s e le c tric ity de sig na te d b y CAI SO’ s E I M o ptimiza tio n mo de l a s e le c tric ity impo rte d to se rve Ca lifo rnia lo a d (se e “impo rte d e le c tric ity” de finitio n)  Se c o nda ry dispa tc h illustra te s the po te ntia l b a c kfill e ffe c t o f hig he r e mitting re so urc e s to se rve E I M lo a d whe n the o ptimiza tio n a ttrib ute s lo we r e mitting re so urc e s to se rve Ca lifo rnia lo a d  Se c o nda ry dispa tc h no t de fine d in E I M ta riff, se c o nda ry dispa tc h no t o b se rva b le b y ma rke t pa rtic ipa nts (CAI SO Ma rke t Re sults I nte rfa c e ) 5 Ca lifo rnia Air Re so urc e s Bo a rd

ARB Optio ns Unde r Co nside ra tio n fo r Addre ssing E I M Ac c o unting  I nc re me nta l a b o ve -e c o no mic -b a se de e ming 1  Mo difie d o ptimiza tio n with dyna mic hurdle ra te a nd re ne wa b le c o ntra c ts fo r e xte rna l re so urc e s 2  Othe r o ptio ns, o r va ria tio ns o f o ptio ns, disc usse d b y CAI SO a t the ir Oc to b e r 13, 2016 wo rksho p (e xc luding c re diting o f e xpo rte d e le c tric ity)  Ope n to sta ke ho lde r pro po sa ls 1 Optio n 2 pre se nte d a t CAI SO’ s Oc to b e r 13, 2016 wo rksho p 2 Mo dific a tio n to Optio n 3 pre se nte d a t CAI SO’ s Oc to b e r 13, 2016 wo rksho p 6 Ca lifo rnia Air Re so urc e s Bo a rd

I nc re me nta l De e ming Optio n  CAI SO o ptimize s e ne rg y b ids in the a b se nc e o f Ca lifo rnia lo a d a nd g e ne ra tio n the n o ptimize s E I M fo r a c tua l dispa tc h instruc tio ns  De e me d g e ne ra tio n to se rve Ca lifo rnia lo a d wo uld c o me fro m the inc re me nta l diffe re nc e b e twe e n the se two sc he dule s  Ne e ds to e nsure o ptio n a ddre sse s e missio ns a c c o unting c o nc e rns  CAI SO indic a te s full o ptimiza tio n no t c o mputa tio na lly po ssib le a t this time 7 Ca lifo rnia Air Re so urc e s Bo a rd

Dyna mic Hurdle Ra te Optio n (1 o f 2)  Optimiza tio n a ssig ns impo rts a s de e me d de live re d to Ca lifo rnia a t the 5-minute a ve ra g e e missio ns ra te o f the e xte rna l g rid  Co st o f c o mplia nc e wo uld b e inc lude d in the o ptimiza tio n  E I M impo rts no t a ssig ne d to spe c ific re so urc e s  Se e king sta ke ho lde r input o n a lte rna tive c a lc ula tio ns o f hurdle ra te  Re ne wa b le c o ntra c ts e nte re d into b y Ca lifo rnia lo a d se rving e ntitie s (L SE ) wo uld b e a ssig ne d a ze ro c o mplia nc e o b lig a tio n  E I M impo rts with c o mplia nc e o b lig a tio n:  E I M I mpo rts = CA L o a d – CA Supply – CA L SE re ne wa b le c o ntra c ts  Que stio n: Who wo uld b e a ssig ne d the c o mplia nc e o b lig a tio n? 8 Ca lifo rnia Air Re so urc e s Bo a rd

Dyna mic Hurdle Ra te Optio n (2 o f 2)  E missio ns a c c o unting o f e ne rg y impo rts a t a ve ra g e syste m ra te  Ma inta ins re c o g nitio n fo r re ne wa b le c o ntra c ts b y a pplying ze ro e missio n fa c to r  Se c o nda ry dispa tc h no t re le va nt: e ne rg y impo rts a ssig ne d unifo rm inte rva l-spe c ific e missio ns ra te  Co uld e xte nd to re g io na l ma rke t a nd multiple c a rb o n pric ing re g ime s 1  CAI SO va ria tio n o f this o ptio n re ta ins re so urc e spe c ific a ttrib utio n thro ug h de e ming g e ne ra tio n a nd a pplying a hurdle ra te fo r re ma ining e missio ns 1 Multiple c a rb o n ma rke ts ma y re q uire future mo dific a tio n 9 Ca lifo rnia Air Re so urc e s Bo a rd

Ne xt Ste ps  Sta ff will c o ntinue to wo rk with sta ke ho lde rs a nd CAI SO to ide ntify o ptio ns a nd disc uss imple me nta tio n de ta ils  Ple a se pro vide fe e db a c k a fte r wo rksho p o n the se o ptio ns o r a dditio na l o ptio ns no t pre se nte d to da y (thro ug h 5pm o n No ve mb e r 5, 2016)  Sta ff will pro po se a so lutio n a s pa rt o f the 15-da y re g ula to ry a me ndme nts fo r b o th MRR a nd Ca p-a nd- T ra de 10 Ca lifo rnia Air Re so urc e s Bo a rd

Additio na l I nfo rma tio n  Ma nda to ry Gre e nho use Ga s Re po rting Pro g ra m: http:/ / www.a rb .c a .g o v/ c c / re po rting / g hg -re p/ g hg -re p.htm  Ca p-a nd-T ra de Pro g ra m: http:/ / www.a rb .c a .g o v/ c c / c a pa ndtra de / c a pa nd tra d e .htm  E ma il q ue stio ns a nd c o mme nts to : b yro nshe r@ c a le pa .c a .g o v 11 Ca lifo rnia Air Re so urc e s Bo a rd

AB 197 & Po st-2020 Ca p-a nd- T ra de Pro g ra m De sig n Oc to b e r 21, 2016 12 Ca lifo rnia Air Re so urc e s Bo a rd

Re vie w o f Pro g ra m De sig n  AB 197  Prio ritize me a sure s re sulting in dire c t re duc tio ns while c o nside ring the so c ia l c o sts o f c a rb o n a nd fo llo wing AB 32 re q uire me nts suc h a s c o nside ring c o st-e ffe c tive ne ss a nd minimizing le a ka g e  Do e s no t pro hib it a c a p-a nd-tra de pro g ra m  Se pte mb e r 2016 Bo a rd He a ring  E q uity a nd Ca p-a nd-T ra de Pa pe r  Bo a rd me mb e r q ue stio ns re g a rding po te ntia l a dve rse impa c ts to lo c a l a ir q ua lity  Que stio ns re g a rding pro g ra m e ffe c tive ne ss fo r dire c t re duc tio ns  E JAC re c o mme nda tio ns  Pre sc riptive re g ula tio ns in lie u o f po st-2020 Ca p-a nd-T ra de Pro g ra m 13 Ca lifo rnia Air Re so urc e s Bo a rd

Po te ntia l De sig n Cha ng e s  Co nside r whic h Pro g ra m fe a ture s c o uld b e re fine d to suppo rt g re a te r e missio ns re duc tio ns a t c o ve re d e ntitie s  Po te ntia l c ha ng e s must b e c o o rdina te d with o ur linke d pa rtne rs  Po te ntia l c ha ng e s will b e e va lua te d fo r impa c t to c o mplia nc e c o st fo r c o ve re d e ntitie s 14 Ca lifo rnia Air Re so urc e s Bo a rd

Ro le o f Offse t Cre dits  An o ffse t c re dit re pre se nts a re a l, q ua ntifia b le , e nfo rc e a b le , ve rifia b le , a dditio na l, a nd pe rma ne nt GHG re duc tio n  Offse t c re dits pro vide re duc tio ns o utside o f c o ve re d se c to rs  Offse t c re dits a re a c o mplia nc e c o st ma na g e me nt fe a ture  Curre nt o ffse t c re dit usa g e limit is 8%  Sta ff c o nside ring lo we ring the o ffse t usa g e limit po st-2020  T his c ha ng e wo uld b e sub je c t to c o st- c o nta inme nt/ e c o no mic a na lysis 15 Ca lifo rnia Air Re so urc e s Bo a rd