HomeMy WebLinkAbout15 AB32 Cap and Trade and Adoption of a Resolution to Participate in the Cap and Trade Auction Program Agenda
Item
15
TRUCKEE DONNER
Public Utl � lty District
A TION
To: Board of Directors
From: Stephen Hollabaugh
Date: September 05, 2012
Subject: Discussion Regarding AB32, Cap & Trade and Adoption of a
Resolution for the District to Participate in the Cap & Trade Auction
Program
1. WHY THIS MATTER IS BEFORE THE BOARD
This item involves adopting a resolution to adopt a program for implementation of the
California Cap-and-Trade Program. Only the Board can approve a resolution.
2. HISTORY
The State of California adopted into law the California Global Warming Solution Act of
2006, AB32. Under this law, the State of California has adopted a goal to reduce
state-wide emissions of greenhouse gases ("GHG") to estimated levels of the year
1990 by the year 2020. The California Air Resources Board ("CARB") has adopted
three regulations whose purpose is to achieve the state's GHG reduction goals,
including a market-based compliance mechanism commonly referred to as the
California Cap-and-Trade Program.
The Cap-and-Trade Program covers major sources of GHG emissions in the State
such as refineries, power plants, industrial facilities, and transportation fuels. The
regulation includes an enforceable GHG cap that will decline over time. CARB will
distribute allowances, which are tradable permits, equal to the emission allowed under
the cap. The website provides information on implementing California's Cap-and-
Trade program.
Free distribution of allowances to industrial and utility sectors are intended to mitigate
the burden on the consumer without impacting a carbon price signal. These tradable
allowances authorize the holder to emit up to one metric ton of carbon dioxide
equivalent.
There are four major entities included in the Cap-and-Trade program:
• Facility Operators: Cement/Glass Production, Iron/Steel Production, Petroleum
Refining, Pulp & Paper Manufacturing and self generation
• 1st Deliverers of Electricity: Operators of generation facilities in California,
Importers of electricity into California. (TDPUD falls into this categor
y)
• Suppliers of Natural Gas: Gas Utility of Interstate Pipeline delivering gas
directly to end users
• Other Suppliers: Distillate Fuels, Liquefied Petroleum Gas
Also voluntary associated entities can be part of Cap-and-Trade. These are
organizations with no compliance obligation that are primarily interested in purchasing
and retiring allowances. Entities like these include, Sierra Club, NRDC (National
Resources Defense Council) and EDF (Environmental Defense Fund).
3. NEW INFORMATION
The District has been tracking and reporting the carbon from our electric resources
since 2009. The District is now required to approve a resolution adopting a program
for the California Cap-and-Trade Program (Attachment 1).
The District will register with CARB under the appropriate registered function and will
identify District personnel, as appropriate, such that it will fulfill the first pre-requisite to
receive its direct allocation of allowances. The District will identify personnel as
required including one Primary Account Representative (Stephen Hollabaugh), at least
one Alternate Account Representative (Joe Horvath and Kathy Neus) and up to five
Account Viewing Agents (Robert Mescher). Through the Cap-and-Trade regulations,
the CARB will host auctions to sell allowances which are effectively permits to emit
GHGs. The first auction is scheduled for November 14, 2012.
The District electric utility is identified as an "Electric Distribution Utility" under the Cap-
and-Trade regulations and is therefore eligible to receive a direct allocation of
allowances at no cost from the CARB. The table below lists the free allowances the
District will receive:
Utility Annual Allocation to Electrical Distribution Utilities(Allowances
Type
W14 Name (1) 203 1 20`14 2015 206 2017 12018 2019 1 202u
Truckee-
Donner Public
Utili District POU I 115,865 1116,807 1 11,52 118090 1:19452 119,049 119,295 119,775
No later than September 14, 2012, the District will receive its direct allocation of
allowances for 2013. The District's Primary Account Representative (Stephen
Hollabaugh) will instruct CARB to deposit some of the District's direct allocation of
allowances into the District's Compliance Account and the remainder into the District's
Limited Use Holding Account. The Limited Use Holding Account will eventually all be
sent to auction.
The District will consign one-third (1/3) of the allowances held in the Districts Limited
Use Account to CARB for the purpose of selling the consigned allowances in the
CARB-Sponsored Auction as required by regulation. CARB will hold quarterly
auctions on the 12th business day of the second month of each calendar quarter.
The District's cap-and-trade program in no way authorizes District personnel to
procure compliance instruments, including allowances from the CARB-sponsored
auctions.
The auction proceeds and allowance value obtained by the electric distribution utility
shall be used exclusively for the benefit of the retail ratepayers of each electric
distribution utility, consistent with the goals of AB32, and may not be used for the
benefit of entities or persons other than ratepayers.
It is the District's intent to replace or amend this program within twelve (12) calendar
months of the adoption of this program to allow time to explore acceptable uses of
market proceeds associated with the sale of allowances received through a direct
allocation from CARB.
4. FISCAL IMPACT
The fiscal impact to the District is unknown due to the fact this is a new auction and
the value of the direct allocation of allowances will only be known once some of the
auctions take place. It is expected that the District will be a net seller of allowances.
5. RECOMMENDATION
Approve Resolution 2012-XX initiating a program for the District participation in the
California Cap-and-Trade Program.
Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager
Attachment 1
iUCKEE i
XX
Resolution No. 2012 -
A RESOLUTION OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
ADOPTING A PROGRAM FOR THE CALIFORNIA CAP AND TRADE PROGRAM
WHEREAS, in 2006, the State of California adopted into law the California Global
Warming Solutions Act of 2006; and
WHEREAS, under this law, the State of Califon, -ryas adopted a goal to reduce
state-wide emissions of greenhouse gases ("GHG") to 'Ioift
a Wted levels of the year 1990 by
the year 2020■ and
Y }
WHEREAS, the California Air Board .2 FRB }
" has adopted three
regulations whose purpose is to achieve trtate's GHG r tion goals, including a
market-based compliance mechanism co :x {nly referred to asf s California Cap-and-
Trade Program; andFill
.
WHEREAS, the District sha,f,,. ^ester with t under the appM riate registered
function and will identify District p � as apprte, such that it will fulfill the first
C - ��
:.w' ri h
pre-requisite to receive its direct allo ■�or�Y� � owance �$� d
Ri
WHEREAS, the �shall ide the ry h.:riate srict personnel, as required,
.af; o q
includingbut not limif;` r s , onesf P A&Q,
antke resentative, at least one
( } ryp
(1) and not more t "J`$ryr t four (4 Alternate"0nt Repeentative s , and u to five (5)( } p
Account Viewing Agent { .order ;perform 00,
us required tasks of the re ulations; and
9
;.
WHf � per ,
;see cce to the CARB electronic tracking system,
77
s ;fp g y '
currently red to Cc m��ance Ire �e t Tracking System Service" (or "CITSS"},
shall ful�re "Know Yo s# sto ':.;re uiremts of the regulations; and
#.. q g
WHEF , through t cap-af g
rade regulations, the CARB will host auctions to
sell "al Iowa nceich are effvely permits to emit GHGs; and
�.:....
r
WHEREAS, thd`G7RARB.. `host the first auction on November 14, 2012; and
fi
WHEREAS, begins"'2013, and each year thereafter, the CARB will host auctions
on the twelfth (12 th} business day of the second month of each calendar quarter; and
WHEREAS, the District, through its electric utility, participates in the activities that
subjects it to a number of new mandates created under this law and its related regulations,
including procuring allowances from the CARB auctions; and
WHEREAS, the District electric utility is identified as an "Electric Distribution Utility'
under the cap-and-trade regulations and is therefore eligible to receive a direct allocation of
allowances at no cost from the CARB; and
1 Resolution 2012 - XX
Attachment 1
WHEREAS, the allowances received from CARB under a direct allocation are
restricted in their use as are any associated values and market proceeds; and
WHEREAS, not later than September 4, 2012, the District's Primary Account
Representative, or any Alternate Account Representative whom has proper delegated
authority, shall instruct CARB to deposit some of the District's direct allocation of allowances
into the District's Compliance Account and the remainder into the District's Limited Use
Holding Account; and
WHEREAS, not later than September 14 2012 district shall receive it p :..n s d i rect
allocation of allowances; and
T.
WHEREAS, not later than November 4� 12, ;2t� District's Primary Account
k
Representative, or any Alternate Account f= sentative :rn has proper delegated
■ p p g
authority, shall (1/3d)
consi n one-thirdMM - jowances held 1 Use
y, g ofDistrict's Limited
i f
Holding Account to CARB for the ur osr f selling the con allowances i p p g w::.. n the
CARB-sponsored Auction; andMi
f r :n
Z
S .
WHEREAS, not less than �''.-MM t -five (751as_ - rior to a uarter` auction h
2013 or any year thereafter, the " hrequired`t onsign all allowances held in its
f
Limited Use Holding Account to the ,~ F {~ its desi� : for sale in quarterly auctions
with a calendar year correo�ponding to Vint : saidvances and an vintages of
0_111■ ? r y g
prior years; and
x `;
i
WHEREAS aHh,
auctions,thirtyFO} dar: o the 212 quarterly auc s, the
:a„ f y r t and q y tion
District's Primary Accoiepretative, or��p Alternate Account Representative y whom
has proper ft d autr OR , ~r .,. s:R::. . . ■
p p . � �? r_ . ter tcrtic� ate in the auction,
?_. #� p on, to the extent that
registratiQ:�� ~ ordf `consi" , se#161lowances
in the auction; and
$S
WHS-1
REAS, this ram '
r:.no way authorizes District personnel to procure
compliancer ".
uments, inng ar inces from the CARB-s-sponsored auctions;
p
W H E REAS`-`"
ro ra`. f
i p rn no way authorizes District personnel 'g fr Y p nel from expending any
market proceeds a 'ated w� ���he sale of allo
wances received through .a direct allocation
from CARB; and
WHEREAS, it is the'�`D i strict's intent to replace or am 'p end this program within twelve
(12) calendar months of the adoption of this program to allow time to acceptable
explore table
p p
uses of market proceeds associated with the sale of allowances received through a direct
allocation from CARB.
NOW, THEREFORE, BE IT RESOLVED that the Truckee Donner Public Utility
District does hereby adopt a program for implementation of the California Cap-and-Trade p de
Program as shown on Exhibit A attached, and this Resolution shall be effective up
on
adoption of this resolution and shall remain in effect until amended or superseded.
2 Resolution 2012 - XX
Attachment 1
PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility
District in a meeting duly called and held within said District on the fifth day of September,
2012
AYES:
NOES:
ABSTAIN:
ABSENT: =
TRUCKEE DONNER PUBLIC UTILITY DISTRICT h:_-fh=.::. -, ry
Tony Laliotis, President
Nfl-
ATTEST: s:
Mi
chael
ch ael D. Holley,
P.E. I C erk of they
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x
:=s2+ F.
3 Resolution 2012 - XX
Attachment 1
Exhibit A
Program for the Implementation of the California Cap-and-Trade Program
1. The District shall have a program for the implementation of the California Cap-and-
Trade Program, which shall include all of the provisions set forth herein and shall be
known as the "District's Cap-and-Trade Implementation Program";
2. The Cap-and-Trade Implementation Program shall be effective upon adoption by the
District Board and shall remain in effect until amende ,i6tible
or superseded;
'
3. The Electric Utility Manager ("EUM") shall be _p for the administration of
allowances received through a direct allocatiY%gym the California Air Resources
d ("CARB");Boar
as
4. The EUM is hereby authorized to sera District's Primary
2: _. ..}, mary Account
Representative ("PAR"), or similar role shall perf ..,all duties assigned to that
. . :, g
role that are prerequisite or relate_ coQ inthe act of fIf
allowances to the
Executive Officer of CARB, for theoses of selling said ,:wances in a CARB-
sponsored auction, that are received tlm h a dirg0 allocation;
6. The EUM is hereby authorized to consign?, Il0-44bes to the
utive Officer of
CARB, or its designee, fob j u oses ` } " said all '...$..,,purposes
owa n c i n th
; : ?. g e CARB
sponsored auctions, as requ =f1.,h,,e re ulatr ,,,,
6. The EUM shall instruct CARB`-_', Ok,,than •t Seber 1 of each year, or the first
business day thereafter, to ti` fer of ter` `district's direct allocation
• zf ;fi; of
allowances intoV . rict's Ctplianc unt }$ d the remainder into th
■ s aF sas e
District's Limit use g Acco � i
s s; fps f
:.:
# :r..
rd
7. The EUM shy I n i # November
s gn, `; later th 5 2012 one-third (1/3
} of the
allowances in ti £_ ,3mitedU-1.1i
e Holdi sccount rounded u
� :$ p to the nearest whole
intege h dock sib s i sfi regulations, to the Executive
:a. r $:� 2. $ nder g ecutive Officer of
igne r,� r . se f selling said allowances inauction
: ::. g the
so-h & d for���nber���� 2012; .-N
8. St ��g in 2013, jar thereafter the a EUM shall consign
h Ye gn allowances, not
less%On 75 days b each rterl auction to the '
a y e Executive Officer of CARB, or
its desie, for the $ oses ` selling said allowances g es in each of the quarterly
auctions, . a followin f- •
f_$ portions:
a For a the 41","1114 "thr
ee (3) uarterl •�:;ofy auctions of a calendar
• ;���: fi-"� q year, twenty-five
percent ;° founded to the nearest whole integer or block size r
.� .r:. A
g emitted
ti4 #kil
. p
under thens, of the balance of the Limited Use Holding Account a
,. g s of
January 1 of calendar year corresponding to the quarterly auction in• g q y which
the consigned allowances will be sold;
b. For the fourth (4th} quarterly auction, all remaining allowances in '. g the Limited
Use Holding Account with vintage years equal to or less than the current
calendar year;
9. The EUM shall identify at least one (1) and up to four (4) Alternate Accoun
t
Representative(s) ("AAR") and shall have the abilit to dele ate an rol. . . . Y 9 y es,
responsibilities, and powers established under this program to an of the AARs•
. Y ,
a. The AARs shall register with the CARB, as required byregulations;the
4 Resolution 2012 - XX
Attachment 1
1o.The EUM may identify up to five (5) natural persons to act as Account Viewing
Agents ("AVA");
a. Any AVAs shall register with the CARB, as required by the regulations;
11.The Cap-and-Trade Implementation Program does not authorize:
a. District personnel to directly procure GHG compliance instruments;
b. Any use or expenditure of any market proceeds associated with the
consignment or sale of allowances received through a direct allocation from
the CARB, without further policy direction from this Truckee Donner Public
Utility District.
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5 Resolution 2012 - XX