Comment Log Display

Comment Log Display

Below is the comment you selected to display.
Comment 13 for Cap & Trade Public Meeting (may-17-allocation-ws) - 1st Workshop.


First Name: JOHN
Last Name: BUSTERUD
Email Address: JWBB@PGE.COM
Affiliation: PACIFIC GAS AND ELECTRIC COMPANY

Subject: PG&E'S COMMENTS ON MAY 17, 2010 WORKSHOP
Comment:
June 7, 2010

E-Filing
ARB’s Cap-and-Trade Website

Kevin M. Kennedy, Ph.D.
Assistant Executive Officer – Climate Change
CALIFORNIA AIR RESOURCES BOARD
1001 “I” Street
Sacramento, CA  95814-2828

Re: 	Pacific Gas and Electric Company’s Comments on the Air
Resources Board’s May 17, 2010 Workshop on the Greenhouse Gas
Cap-and-Trade Regulation Status Update 

Dear Dr. Kennedy:

	Pacific Gas and Electric Company (“PG&E”) is pleased to submit
these comments on the Air Resources Board’s (“ARB”) May 17, 2010
Workshop on the Greenhouse Gas Cap-and-Trade Regulation Status
Update.

A.	Cap-and-Trade Regulation Status Update 

	PG&E appreciates ARB staff’s update on the cap-and-trade
regulation provided during the May 17th workshop.  We agree with
the program design principles outlined by staff and believe that AB
32 can be implemented in a manner that will achieve the goals of
taking us to a lower carbon future while minimizing the impact on
Californians and the California economy.  Additionally, we support
staff’s plan to gather further stakeholder feedback on key topics
and hold workshops on key issues such as cost containment
mechanisms, offset demand and supply, offset protocols, compliance
scenario studies, monitoring and enforcement and mandatory
reporting.

We believe that key issues to address in the cost containment
workshop include the extent to which the various alternatives being
considered maintain environmental integrity and provide allowance
price and quantity certainty to the marketplace to limit gaming or
market manipulation.  In the offset workshops, we believe it will
be important to assess the projected supply of offsets and how
various policies being considered may affect supply, especially in
the early years of the program.  PG&E also believes it is important
to discuss the lead time associated with offset protocol
development since timely approval of protocols and linking to
established programs such as the Climate Action Reserve are
critical to create a viable offset market in time for the start of
the cap and trade program.

B.	Allowance Allocation
 
PG&E agrees with the allowance allocation recommendations stated
in the Joint Utilities March 26, 2010 letter to ARB Chair Mary
Nichols.  The Joint Utilities noted that “some of the Scoping Plan
measures will be costly.”  In order “to contain this
disproportionate economic burden on electricity consumers and to
manage the transition to a low carbon economy, the Joint Utilities
recommend an administrative allocation of cap-and-trade allowances
to local distribution companies (“LDCs”) on behalf of their
customers.”

PG&E generally supports staff’s overarching allowance allocation
goals as expressed during the workshop, including their goal to
“strive for a gradual transition.”  We also support staff’s efforts
to look for ways to use allowances to further the goals of AB 32,
including use to mitigate the impact of the more costly AB 32
measures, such as above-market costs associated with renewable
energy.  We are concerned, however, that the allowances dedicated
to LDCs for the benefit of their customers are presented as a
subordinate use or in the 2nd tier of staff’s allowance value
diagrams.  We believe that the electricity sector will play a key
role in the State’s transition to a low carbon economy, and that a
sufficient quantity of allowances should be allocated to our sector
to help facilitate that transition and provide assistance to
California consumers and businesses.  We support the Joint
Utilities’ recommendation that the quantity of allowances
administratively allocated to the electricity sector be based on
the sector’s proportionate share of total capped sector emissions.

C.	Allowance Reserve for Price Mitigation

PG&E also supports staff’s goal of mitigating “unexpectedly high
or low allowance prices.”  We support a price collar that preserves
environmental integrity, with a price floor to encourage investment
in low-carbon technology, and a price ceiling to protect customers
from unexpectedly high prices for allowances.  We believe a price
collar should also include an allowance “window,” similar to the
Federal Reserve Bank’s discount window, from which any complying
entity, at any time, can purchase an allowance or offset at a
pre-announced price.  This “open-window” feature is important for
electricity markets.  If market trading of allowances ceases or
produces volatile prices, generators may be unable to submit
electricity bids that reflect allowance prices.  In such a
circumstance, these entities could submit electricity bids that
reflect the penalty payable for emitting CO2 without an allowance. 
Because the wholesale electricity market clears every ten minutes,
this behavior could rapidly lead to high prices in wholesale
electricity markets.  Therefore, PG&E encourages staff to implement
an allowance “window” that is always open.

Thank you for the opportunity to present these comments.  Please
do not hesitate to contact me at (415) 973-6617 if you have any
questions regarding these comments or if we may be of further
assistance.

Very truly yours

/S/

John W. Busterud

JWB:kp:bd

cc:	Mr. Steve Cliff, Manager – Program Development Section, Office
of Climate Change
	Ms. Lucille Van Ommering, Manager – Program Evaluation Branch,
Office of Climate Change
	Mr. Sam Wade, Air Pollution Engineer – Program Evaluation Branch,
Office of Climate Change

Attachment:

Original File Name:

Date and Time Comment Was Submitted: 2010-06-07 12:15:53



If you have any questions or comments please contact Office of the Ombudsman at (916) 327-1266.


Board Comments Home

preload