Procurement Under GHG Regulation

Transcription

1 Procurement Under GHG Regulation Pedro J. Pizarro Senior Vice President, Power Procurement Southern California Edison IEP Annual Meeting September 25, 2007

2 Existing GHG-Related Procurement Rules Loading Order RPS Targets CPUC D (2004 LTPP) & D (Avoided Cost): GHG Adder Cost adder used in procurement valuation/selection process Started at $8/ton CO 2, escalated 5%/year SB 1368: Limits Power Resources No new ownership investment in high emitting resources (i.e. > 1,100 lbs of CO 2 /MW) No long-term contracts (i.e. >5 years) with high emitting resources No long-term contracts with unspecified resources Page 1

3 Other Large Hydroelectric Coal Renewables Nuclear Power Mix Comparison: SCE, California and U.S. 100% 100% 100% 1% 5% 6% 17% 17% <1% 4% 17% 7% 20% 11% 50% 14% 1% Natural Gas 55% 38% 20% 18% Low-GHG Resources Sources: * SCE s Power Content Label ** CEC s Net System Power: A Small Share of California s Power Mix in 2005 report, April 2006 *** Energy Information Administration s Electric Power Annual, November 2005 Table 1.1 SCE 2006* California 2005** U.S. 2005*** 39% 42% 28% Page 2

4 Change in SCE Emissions from 1990 to 2006 CO 2 Emissions SCE Bundled Customer Perspective (million metric tons) Direct Access (6.5) (1.8) (2.6) 25 (3.8) 8 Million Metric Tons 1990 Emissions Load Growth Through 2006 (Net of D.A.) Cum. EE Through 2006 More Renewables Mohave Shutdown (Net Change) Improved Generation Efficiency 2006 Emissions Note: Does not include sales to non-bundled service customers Page 3

5 CA Utility Carbon Intensity and Average Retail Cost (metric tons CO2 / MWH & cents / kwh) Conventional Coal CCGT Pasadena*** /kwh Anaheim*** Riverside*** LADWP** 9.31 /kwh IID*** SCE* /kwh SDG&E** /kwh PG&E** /kwh SMUD** /kwh * Reported to the California Climate Action Registry for SCE is in the final certification step of having its emissions and carbon intensity certification approved by CCAR. ** SMUD certified by the CCAR for 2005; PG&E, SDG&E and LADWP certified for *** Estimated carbon intensity based on the following assumptions: Coal used for electricity generation has a carbon intensity rate of mt/mwh Natural gas electrical generation assumed to be from conventional NG units with a carbon intensity rate of mt/mwh Note: Source for prices: CEC Utility-wide weighted avg. retail electricity prices for Other munis had avg. price of 9.51 /kwh Page 4

6 RPS Status for Major IOUs, Munis, and ESPs (2006) 16.9% 12.5% 12.0% 7.0% 6.0% 5.6% 5.0% 4.2% 2.0% 2.0% 1.0% SCE PG&E SMUD LADWP Sierra Pacific SDG&E Glendale Water & Power PacifiCorp Pasadena Water & Power All ESPs Burbank Water & Power Page 5

7 Solar Small Hydro SCE s 2006 Renewable Resources Wind 5% Purchases 348 GWh SCE-owned 598 GWh 7% 100% ~ 13 Billion kwh 2006 renewable procurement ~ 17% 20% Biomass 9% 59% Geothermal Transmission is critical for RPS energy delivery $1.8 B Tehachapi Renewable Transmission Project (TRTP) Pursuing other areas RECs may be future alternative CAISO evaluating intermittent renewable resource integration, reliability impact mitigation, and related costs Page 6

8 GHG Implementation Issues Ahead Development of comprehensive AB32 implementation framework Target setting across and within industry sectors Market-based vs. command and control Allowance allocation Use of offsets Load-based vs. source-based electric sector approach Compatibility with CAISO Market Redesign and Technology Upgrade (MRTU, scheduled to go live April 2008) Interaction with Federal legislation Unclear timing/structure for Federal action Compatibility of California solution with Federal Market structure vs. command and control Allowance allocation Use of offsets Interaction with other emissions regulations Los Angeles Basin emission offsets constrain new generation Page 7

9 SCE Leadership in Clean Energy Programs Energy efficiency Has saved more than 4 billion kwh over the past five years Reduced GHG emissions by >2 million tons over 5 years Will save another 9 billion kwh (4 million tons) beyond 2006 levels by 2016 Demand response Largest portfolio in CA: Nearly 1,300 MW Edison SmartConnect Award-winning smart meter program Electric car fleet and programs Traveled more than 14 million miles and reduced GHG by more than 7,600 tons New partnership with Ford on Plug-In Hybrid Vehicles Clean hydrogen power generation proposal Coal fuel with carbon capture and sequestration Page 8

10 Paying for Clean Energy Environmental goals create need for new resources with likely higher costs Environmental compliance costs must be borne fairly by all customers This is a challenge in competitive retail environments Legislation/regulation must ensure fair treatment for all customers and their load-serving entities Renewable portfolio standards must apply equally to munis and competitive retail providers, not just utilities GHG framework and allocations must cover all sectors and entities fairly PJM-style capacity market and backup procurement can support new generation for system reliability with fair cost allocation Page 9

11 Procurement Under GHG Regulation Pedro J. Pizarro Senior Vice President, Power Procurement Southern California Edison IEP Annual Meeting September 25, 2007