RPS and landfill gas bill being debated on Senate Floor

By CMTA Staff

Capitol Update, Aug. 23, 2012 Share this on FacebookTweet thisEmail this to a friend

CMTA opposes a bill still active on the Senate Floor that would illegally alter procurement contracts for renewable natural gas (biomethane) retroactively. AB 2196 (Wesley Chesbro, D-Eureka) violates a basic principle of fair dealing by changing the eligibility rules for certain energy procurement contracts – retroactively – putting millions of dollars of investments at risk.  The biomethane contracts in question were entered into between April 2011 and March 2012 to meet California’s renewable portfolio standard (RPS).  Investors, suppliers, and ratepayers will be affected by this legislation.

Current law prohibits in-state landfill gas injections into the pipeline system, yet the RPS law allows use of biogas for electric generation such as out-of-state biogas injected into the interstate system to offset fossil fuel use that would otherwise generate the electricity. This bill would determine how such use would qualify under the buckets of the current RPS law.

The language in AB 2196, which allows biomethane contracts only to ‘count in full’ toward RPS procurement requirements, consigns all biomethane contracts to an accounting system that predates the current RPS law and reduces the value of the gas significantly below its contracted value. Many current contracts require the biomethane to be recognized by the state as qualifying for ‘bucket one’ under the current RPS law. If AB 2196 is enacted in its current form, the biomethane under contract for delivery will not even receive the reduced ‘count in full’ value.”

Long-standing rules that both municipalities and industry suppliers rely upon should not be changed retroactively. Contracts signed pursuant to existing laws and regulatory guidelines should be grandfathered in.

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