Washington Administrative Code › Title 173 - Ecology, Department of (See also Titles 197, 317, 372, and 508) › Chapter 173-446 - Climate Commitment Act program rule › ALLOWANCE BUDGETS AND DISTRIBUTION OF ALLOWANCES › Section 173-446-230 - Distribution of allowances to electric utilities

Current through Register Vol. 24-14, July 15, 2024
(1)
Total no cost
				allowances allocated to electric utilities.
Allowances will be allocated
				to qualifying electric utilities for the purposes of mitigating the cost burden
				of the program based on the cost burden effect of the program. Only electric
				utilities subject to chapter 19.405 RCW, the Washington Clean Energy
				Transformation Act, qualify for no cost allowances.
(2) The cost burden effect recognizes that
				compliance with the program requires the submission of compliance instruments
				and in the absence of possessing the required compliance instruments
				procurement of those instruments has an associated cost that would be
				translated into consumer electricity prices without the mitigation of that cost
				burden as provided by this program. Those potential costs, along with the
				administrative costs of the program, comprise the cost burden of the program.
				Provision of some or all of the allowances necessary to address this deficit,
				through the means established in this section, is the method by which this cost
				burden is mitigated. Under this framework, ecology will use the following
				methods to determine the cost burden effect and the allocation of allowances to
				each qualifying electric utility.
(a) Ecology
				will use utility-specific demand forecasts that provide estimates of retail
				electric load. Demand forecasts should represent the best estimate of the most
				likely electricity demand scenario during the compliance period.
(b) Ecology will use utility-specific
				resource supply forecasts to determine the resource fuel types that are
				forecasted to be used to provide the retail electric load predicted by the
				demand forecast for the utility. Resource supply forecasts should represent the
				best estimate of the most likely electricity resource mix scenario during the
				compliance period including, but not limited to, using an assumption of average
				hydroelectric conditions.
(c) These
				forecasts will be derived from the following sources, which will be relied upon
				in the rank order listed below as necessary to most accurately determine the
				supply and demand forecasts that best predict the manner in which each electric
				utility will comply with the Clean Energy Transformation Act, chapter 19.405
				RCW:
(i) A forecast of supply or a forecast of
				demand, along with any supporting information, which has been approved by the
				utilities and transportation commission in the case of an investor-owned
				utility or approved by the governing board of a consumer-owned utility in the
				case of a consumer-owned utility. Any such forecast must also be consistent
				with the clean energy implementation plan that is submitted pursuant to the
				Clean Energy Transformation Act, chapter 19.405 RCW.
(ii) The forecasts of supply and forecasts of
				demand that are part of the clean energy implementation plan, or supporting
				materials for that plan, for a utility that is submitted pursuant to chapter
				19.405 RCW, the Washington Clean Energy Transformation Act.
(iii) An integrated resource plan, or
				supporting materials for that plan, that complies with chapter 19.280 RCW and
				is consistent with or serves as the basis for the clean energy implementation
				plan submitted pursuant to chapter 19.405 RCW, the Washington Clean Energy
				Transformation Act.
(iv) Another
				source that provides a utility's supply or demand forecast that is, based on
				ecology's analysis, consistent with an existing forecast approved by the
				appropriate governing board or the utilities and transportation
				commission.
(v) For
				multijurisdictional electric companies, a multistate resource allocation
				methodology that has been approved by the utilities and transportation
				commission may be used in the relevant forecasts.
(d) Ecology will use the following emission
				factors to determine the emissions associated with the projected electricity
				resource supply mix. These factors are to be applied to the amount of
				electrical load in megawatt-hours (MWh) that comprises the proportion of the
				forecasted demand served by that resource type.
(i) For the proportion of load that is
				projected to be served by natural gas resources, the factor will be 0.4354 MT
				CO2e/MWh.
(ii) For the proportion of load that is
				projected to be served by coal resources, the factor will be 1.0614 MT
				CO2e/MWh, unless the source of the load is coal
				transition power, as defined in
				RCW
				   80.80.010, in which case the factor is
				zero.
(iii) For the proportion of
				load identified as being served by a nonemitting or a renewable resource in the
				clean energy implementation plan, use an emission factor of zero.
(iv) For any load from which the fuel or
				resource type serving that load is unknown or unknowable, and for unspecified
				market purchases, use the unspecified emission factor using the procedures
				identified in WAC
				173-444-040.
(v) For load from a source or supplying
				entity that has established an asset controlling supplier emission factor
				pursuant to chapter 173-441 WAC, use the most recent emission factor
				established by that procedure.
(e) The cost burden effect from the emissions
				for each utility is calculated according to Eq. 230-1. In cases where no retail
				electric load is attributable to the resource category for that term of the
				equation, the relevant term should be treated as zero. The resulting total of
				emissions represents the cost burden effect for the utility.
Cost Burden Effect = (LoadNG
											×
				  EFNG) + (LoadCoal
											×
				  EFCoal) + (LoadNE,RE
											× 0) +
				  (LoadRemaining
											×
				  EFUnspecified) + (LoadACS
											×
				  EFACS)
Eq. 230-1
Where:
Loadxxx
= Amount of retail electric load served by natural
							 gas (NG), coal, and nonemitting and renewable resources (NE, RE), sources which
							 has a designated asset controlling supplier (ACS) emission factor, and
							 remaining load for which generation source is unknown or
							 unspecified.
EF
= Emission factor for natural gas (NG), coal, asset
							 controlling suppliers (ACS), and unspecified electricity.
(f)
				One allowance will be initially allocated for each metric ton of emissions
				associated with the cost burden effect for each qualifying electric utility for
				each emissions year as projected through this process. The final total of
				allocated allowances will be subject to further adjustments as detailed in this
				subsection.
(g) The initial
				allocation of allowances will be adjusted as necessary to account for any
				differential between the applicable reported greenhouse gas emissions for the
				prior years for which reporting data are available and verified in accordance
				with chapter 173-441 WAC and the number of allowances that were allocated for
				the prior year through this process.
(h) An additional number of allowances will
				be allocated to account for the administrative costs of the program.
				Administrative costs of the program are limited solely to those costs
				associated with establishing and maintaining compliance accounts, tracking
				compliance, managing compliance instruments, and meeting the reporting and
				verification requirements of this chapter. Program costs, such as those related
				to energy efficiency or renewable energy programs, are not qualifying
				administrative costs, including any administrative requirements of those
				programs. The number of allowances allocated for this purpose will be
				determined by ecology based on documented and verified administrative costs
				derived from audited financial statements from utilities. The mean allowance
				auction price from the time period for which administrative costs are
				documented will be used to translate administrative costs into the appropriate
				number of allowances. To ensure consistency, ecology will consult with the
				utilities and transportation commission in its calculations for the
				administrative costs for investor-owned utilities.
(i) The number of allowances to be allocated
				to qualifying utilities will be published on the ecology website no later than
				October 1st in the calendar year prior to each compliance period. Public notice
				of the availability of this information will also be made available
				concurrently with publishing of this information on the website.
(j) The schedule of allowances will be
				updated by October 1st of each calendar year as necessary to accommodate the
				requirements of the adjustment processes described in this subsection. In
				addition, if a revised forecast of supply or demand is approved in a form and
				manner consistent with the requirements of this section by July 30th of the
				same calendar year, then ecology may adjust the schedule of allowances to
				reflect the revised information provided by an updated forecast.