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Confusion Reigns in Implementation of CA Global Warming Laws

It will take at least two more months, and maybe through the first half of next year, for California's state agencies to sort out their respective responsibilities for implementing the state's new global warming laws (AB 32 and SB 1368), according to a joint report by the California Public Utilities Commission (CPUC) and California Energy Commission (CEC) on Monday.

And as part of the bureaucratic stew, the CEC will attempt to set a greenhouse gas emissions standard for the state's 30 public-sector utilities, which include the Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Utility District (SMUD). The CEC will do its work after the CPUC sets a similar standard for private-sector utilities by February, so it is assumed similar guidance will be adopted for the munis. By law, the standards are supposed to be "consistent" for all utilities, but there may still be some differences.

Since it lacks the state constitutional independence of the CPUC, the energy commission's process will be more complex in setting the standard so it has already begun to draft regulations for review and comment and will hold two workshops in January to further hammer them out. The CEC's proposed standards will have to be reviewed by California's Office of Administrative Law (OAL).

"It makes it very interesting and challenging for us to meet our June 30 deadline for setting the standard," Kennedy said. "We have to submit various documentation to OAL by late February to allow time for possible changes and revisions by mid-April. The commission itself will hold a hearing to adopt proposed regulations in early May and then the rulemaking package has to go back to OAL for final review.

"There are a number of issues, and to a large extent the CPUC has been ahead of us in grappling with these things," said Kennedy, listing such issues as the level of the standards, how combined heat-power can be counted, and how do to deal with "blended resources," or unspecified power.

The CEC will have to grapple with the stark differences in the munis. Kennedy said they are "in many ways different -- many are much smaller and potentially have fewer options available to them to deal with this new standard, and there are very obvious differences in the governing structure and regulatory authority over them; the munis are more used to being self-governing."

How the state will deal with compliance of the munis is another area open to debate since the public-sector utilities are not used to having anyone from the state looking over their shoulders regarding contracts. Whether the CEC will review contracts in advance or after-the-fact is still up for discussion, Kennedy said.

The state agencies also appear to be understaffed to meet these added challenges and may have to hire outside expertise. CPUC President Michael Peevey also suggested that the state's three major private-sector utilities might be tapped to provide staff and computer modeling support.

Another wild card is how to handle rules for natural gas utility operations. "We're thinking that natural gas is sufficiently different from electricity that it needs to be put on a separate track," said Julie Fitch, CPUC's staff manager for the greenhouse gas (GHG) emissions law implementation. "I'm among the people who haven't thought a lot about how natural gas GHG emissions capping would work. I have thought a lot about it in the context of the electricity sector, but natural gas is quite different."

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