← Back to Press Releases

 

FOR IMMEDIATE RELEASE

Market Advisory: California Energy Commission Power Source Disclosure

Released January 26, 2018

The California Energy Commission (CEC) released its second proposal for power source and emissions disclosure (PSD) on January 17, 2018. Similar to the initial proposal released in June of last year, it proposes that renewable energy certificates (RECs) cannot be used for electricity purchaser greenhouse gas (GHG) claims and reporting. This conflicts with internationally accepted guidance on Scope 2 reporting from the World Resources Institute and the World Business Council for Sustainable Development. The implications for voluntary purchasing of renewable energy in California are enormous, as is the potential for this regulation to affect broader regional and national markets for renewable energy. Center for Resource Solutions (CRS) strongly urges interested and impacted stakeholders to engage directly with the CEC during this process. There will be a workshop held at the CEC on February 1 to discuss the proposal, with remote attendance available, and written comments on the proposal may be submitted through February 23. More information is available at AB 1110 Implementation Rulemaking – Workshops, Notices, and Documents. Written comments can be submitted at the CEC’s Comments page.

Background Information

Under this proposal, the GHG emissions factor of every megawatt-hour (MWh) delivered to retail load in California will be disclosed to electricity customers based on allocation of the physical electricity under PSD. The RECs associated with those MWh will be claimed by the customers of load-serving retail suppliers reporting under PSD. Those RECs cannot be sold to other customers without double counting.

Implementation of this proposal would have a significant negative impact on voluntary and corporate renewable energy purchasing and investment in California. The right-hand column in following table summarizes the renewable energy purchasing options that would no longer meet Scope 2 and credible renewable energy usage claims criteria. Limiting voluntary and corporate purchasing options in this way makes renewable energy more expensive and difficult to purchase, reduces voluntary demand, and pushes private investment in renewable energy out of state.

Valid voluntary renewable energy purchasing options

Invalid voluntary renewable energy purchasing options
  • Contracts for renewable electricity (e.g. renewable energy power purchase agreements) from facilities that do not sell their power to a retail in California.
  • Retail supplier voluntary renewable electricity products (e.g. competitive electricity products, utility green pricing or community choice aggregation programs) that are supplied with renewable energy that is 100% “directly delivered,” where the REC and electricity are procured together by the supplier.
  • Self-generated renewable energy in California (e.g. onsite solar) where the power and REC are both consumed by the customer.
  • Contracts for bundled renewable electricity (e.g. renewable energy power purchase agreements) from California suppliers that report under PSD.
  • Virtual power purchase agreements with facilities in California or serving California load.
  • California retail supplier voluntary renewable energy products (e.g. competitive electricity products, utility green pricing or community choice aggregation programs) that are supplied with any renewable energy that are composed of unbundled RECs paired with local system power, or where the RECs and electricity were not procured together by the supplier.
  • Unbundled REC purchases from California.
  • Self-generated renewable energy (e.g. onsite solar) where the REC is retained by the customer, but the power is purchased or otherwise consumed by a California supplier.

 

Beyond the voluntary market, this proposal also fundamentally changes the impact of RECs and the Renewable Portfolio Standard (RPS). By denying that RECs substantiate delivery of the GHG emissions associated with renewable energy, this proposal diminishes the RPS as a tool to deliver GHG emissions reductions to the state and undermines how GHG benefits are being delivered by the RPS policy.

The proposal includes a number of contradictions and inconsistencies, and it conflates source-based and consumption-based accounting and claims, as well as avoided emissions and direct emissions. As a result, it also reflects a misunder­standing of the broadly accepted role of RECs in accounting for delivered and purchased electricity.

CRS will attend the workshop on February 1 and will submit both oral and detailed written comments on this proposal. CRS’s recommendations for power source and emissions disclosure are:

  1. Renewable energy and the emissions associated with renewable energy can only be reported as delivered to retail customers with REC retirement. RECs convey the GHG emissions profile of renewable generation for consumer claims.
  2. Null power and unspecified power should be assigned a residual mix emissions factor.
  3. All purchases by suppliers of RECs, bundled or unbundled, for retail sales should be reported in power source disclosure. Unbundled REC purchases should be included in reported renewable energy deliveries. Where required, disclosure about unbundled RECs purchases by suppliers should be provided as supplemental information.

If you are interested in learning more about our concerns and/or supporting our efforts, please contact Todd Jones at todd.jones@resource-solutions.org.