PUC Adopts Renewable Natural Gas Procurement Targets -- EnergyChoiceMatters.com

PUC Adopts Renewable Natural Gas Procurement Targets

Declines (For Now) Nonbypassable Charge For Competitive Supply Customers, But Says Cost Sharing Should Be Considered, Sets Future Proceeding

February 25, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The California PUC adopted a decision establishing biomethane (i.e., renewable natural gas and/or bio-synthetic natural gas) procurement targets for investor-owned utilities.

The decision implements Senate Bill 1440

In doing so, the PUC did not impose a renewable natural gas procurement obligation on Core Transport Agents (CTAs, retail suppliers) at this time, due to the PUC's lack of express statutory authority over CTA procurement

However, while not adopting an obligation for CTAs, the PUC did express its opinion that CTAs should be required to meet or exceed biomethane procurement levels of the joint utilities. "Ideally, legislation should be enacted requiring CTAs to procure biomethane at the same rate as the Joint Utilities, similar to legislation enacted in 2005 that requires Community Choice Aggregators to comply with the RPS compliance obligations established by the Commission. The Office of Governmental Affairs shall work with the Legislature and stakeholders to achieve this objective," the PUC said

The PUC also declined, in the current proceeding, to consider whether a nonbypassable charge for the joint utilities’ incremental biomethane procurement costs should be imposed on CTA customers as an interim measure.

"Instead, we intend to explore this issue in a new ratesetting proceeding that will explore the appropriateness of adopting a nonbypassable charge for noncore unbundled gas distribution system customers," the PUC said

"We agree with TURN and the Joint Utilities that the CPUC should consider distributing above-market biomethane procurement costs to noncore customers 'by either including the costs in the gas public purpose program or in a new nonbypassable charge that all noncore and CTA customers must pay' or by some other means. However, we find that it is more appropriate to address this issue in a separate ratesetting proceeding. A new ratesetting proceeding shall be opened to address the topic of noncore cost sharing of biomethane procurement costs," the PUC said

The PUC's decision establishes utility short-term and medium-term procurement goals, including:

• The short-term 2025 biomethane procurement target is 17.6 billion cubic feet of biomethane, which corresponds to 8 million tons of organic waste diverted annually from landfills. Each utility will be responsible for procuring a percentage of the total in accordance with its proportionate share of natural gas deliveries.
• The medium-term 2030 target for biomethane procurement is 72.8 billion cubic feet per year. "This higher amount will help the state achieve its goal to reduce methane emissions 40 percent by 2030. It reflects approximately 12 percent of current residential and small business (known as 'core gas customers') gas usage in 2020," the PUC said
• Because biomethane from dairies is currently incentivized in other state programs, under the decision it may be procured to satisfy only the medium-term target, after the utility has procured sufficient biomethane from organic waste diverted from landfills to divert its share of 8 million tons of organic waste. For the medium-term goal, there is a ceiling on dairy biomethane of 4 percent of total biomethane procurement. Measures are required to avoid adverse environmental impacts to air and water quality from any dairies that provide biomethane.

Rulemaking 13-02-008

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