As mandated by the state's 2006 law, the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) Feb. 8 released their joint recommendation for greenhouse gas (GHG) emission limits in the electricity and natural gas sectors, proposing a mix of mandatory regulatory requirements and a cap-and-trade system. Ultimately the California Air Resources Board (CARB) will establish the standards.

California's Global Warming Solutions Act (AB 32) requires that CARB adopt the GHG emissions cap on all major sources to reduce statewide GHG to 1990 levels by 2020, and it specified that the CPUC and CEC be consulted on the energy industry rules. Stakeholder comments will be accepted through March 9. The CEC and CPUC are expected to consider adoption March 12 and 13 respectively and send the results on to CARB.

As part of the draft recommendations, the CPUC and CEC call for regular monitoring and enforcement with "built-in monitoring, rapid identification of problems, and tools to react to, correct or penalize noncompliance." They also commit to working collaboratively with other states and provinces in the Western Climate Initiative to design a western cap-and-trade system.

For both electricity and natural gas retail providers, the recommendation calls for requiring minimum levels of energy efficiency, and power providers are also supposed to step up the use of renewable (nonGHG-emitting) sources of power. The gas efficiency programs apply to transportation, distribution and/or retail sales of natural gas. Among the highlights of the two energy agency recommendations are provisions that call for all retail electricity providers to provide cost-effective energy efficiency and renewables beyond the 20% level of their retail sales.

Also specified is a "multi-sector cap-and-trade program that includes the electricity sector (the natural gas sector should not be included in a cap-and-trade system at this time but should be considered for inclusion in the future)."

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