What’s Happening In California
[Feb. 2006]

On February 16, 2006, the California Public Utilities Commission (“Commission”) adopted D. 06-02-032 (“Decision”) in Rulemaking 04-04-003, stating its intent to set a “cap” on greenhouse gas (“GHG”) emissions for investor-owned utilities (“IOUs”) and non-utility companies that produce power for electric consumers within the service territories of the Commission-regulated IOUs. The Decision represents the first step by the Commission in mandating a load-based cap for purposes of monitoring the GHG emissions produced in the course of generating electricity that is used to serve California electric customers.

The Decision represents that the Commission intends to develop a system that will be “compatible” with any other GHG cap-and-trade regime that may be developed in California or elsewhere. It explains that implementation details and a timeline for including each of the six major GHG emissions (i.e., carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) under the GHG cap will be addressed during a later phase of the proceeding.

The Decision advises that during the implementation phase, the Commission expects to set a deadline for all California IOUs who execute a power purchase agreement to include a provision requiring the generation supplier to register with the California Climate Action Registry (“CCAR”). The CCAR is a non-profit public/private partnership that serves as a voluntary GHG registry. According to the Decision, participating power generators and electric utilities account for and report GHG emission inventories according to the CCAR’s reporting protocols. Over 40 major companies, cities, government entities, and non-governmental organizations measure their GHG emissions and publicly report these emissions to the CCAR.

Accordingly, during the implementation stage, the Commission will establish a date by which all generation resources serving California load will be required to register with the CCAR and to report their emissions using CCAR’s reporting protocols. These protocols include:

• Signing a statement of intent;
• Identifying sources of GHG emissions for all facilities/sites, including direct emissions from vehicles, onsite combustions, fugitive and process emissions and indirect emissions from electricity, steam, and co-generation;
• Collecting background information from utility bills and fuel purchase receipts;
• Calculating emissions using the protocol and the CCAR’s web-based reporting tool called “CARROT” by August 31 of each year;
• Hiring a CCAR-approved third-party contractor to certify emissions data; and
• Posting certified, entity-wide emissions data on the CCAR website by December 31 of each year.

The CCAR’s website, www.climateregistry.org, provides further information regarding registering and reporting requirements, including the reportable sources of GHG emissions.

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