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Home My WebLink AboutRESO 9487Resolution No. 9487 Resolution of the Council of the City of Palo Alto Amending the Cap- and-Trade Revenue Utilization Policy to Cover the Use of Freely Allocated Allowances for the Gas and Electric Utilities RECITALS A. The Global Warming Solutions Act, also known as Assembly Bill 32 (AB 32), requires that California's Greenhouse Gas {GHG) emissions by 2020 be at 1990 levels, and authorized the California Air Resources Board (CARB) to develop regulations to reach this goal. B. The GHG emission cap-and-trade program is one of several tools designed by CARB to achieve the state's GHG reduction goal, and has been in operation since November 2012. C. As of January 2015 and in accordance with CARB's cap-and-trade regulations, as a natural gas supplier, the City of Palo Alto will be GHG emission allowances (allowances) free of charge by CARB, to be utilized in a manner both consistent with the goals of AB 32 and exclusively for the benefit of retail gas ratepayers. D. Under the terms of CARB's cap-and-trade regulations, including Title 17 California Code of Regulations Section 95893 (d)(3), the City is required to sell a portion of these allocated allowances in the auctions conducted by CARB and utilize the auction sale proceeds "exclusively for the benefit of retail ratepayers of each natural gas supplier" and "consistent with the goals of AB 32". E. The Council of the City of Palo Alto supports the state's AB 32 goals, and intends to implement the City's Policy on the Use of Freely Allocated Allowances Under the State's Cap- and-Trade Program (formerly titled the Cap-and-Trade Revenue Utilization Policy) in furtherance ofthese goals. The Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. The City's Policy on the Use of Freely Allocated Allowances Under the State's Cap-and-Trade Program is amended as shown in Exhibit A. SECTION 2. The Council grants the City Manager or his designee the authority to implement the Policy on the Use of Freely Allocated Allowances Under the State's Cap-and- Trade Program and to use allowances and allocate auction revenues to projects or expenditures as defined in Exhibit A. SECTION 3. Should California's cap-and-trade program and/or the CARB regulations implementing that program be suspended, discontinued or materially altered such that the City 150105 mf 6053201 of Palo Alto Utilities no longer receives allocated allowances of significant monetary value, the Council reserves the right to terminate the Policy on the Use of Freely Allocated Allowances Under the State's Cap-and-Trade Program and discontinue any programs funded from the City's allocated allowance revenues. SECTION 4. The Council finds that the implementation of this Policy, including the use of revenue derived from it, and the expenditures of funds necessary to implement it, represent the City's cost of regulatory compliance with the state's cap-and-trade program and are consistent with the goals of AB 32. Such costs therefore represent the reasonable costs of providing service to CPAU's gas customers. SECTION 5. The Council finds that the amendment of this policy does not meet the definition of a "project" under the California Environmental Quality Act, as defined by California Public Resource Code Section 21065. INTRODUCED AND PASSED: January 26, 2015 AYES: BERMAN, BURT, DUBOIS, FILSETH, HOLMAN, KNISS, SCHARFF, SCHMID, WOLBACH NOES: ABSENT: ABSTENTIONS: ATTEST: ~ ~( ~1 City Clerk ~ APPROVED AS TO FORM: ~ctt~ Mayor APPROVED: r!Lti,L ~a ATTACHMENT A EXHIBIT A TO RESOLUTION NO •. __ ADOPTED BY COUNCIL ON: __ _ CITY OF PALO ALTO POLICY ON THE USE OF FREELY ALLOCATED ALLOWANCES UNDER THE STATE'S CAP-AND-TRADE PROGRAM This Polley applies to freely allocated greenhouse gas (GHG) emission allowances from the california Air Resources Board (CARB) to the City of Palo Alto's electric and natural gas distribution utilities ("Allocated Allowances"). The City Manager or his designee Is authorized to use Allocated Allowances and any resulting revenue in any lawful manner consistent with this policy. The City's Polley on the Use of Freely Allocated Allowances for the Electric Utility Is as follows: 1. The City shall abide by CARB's regulations by using the auction proceeds and allowance value obtained from the City's allocated allowances for the exclusive benefit of the City's electric retail ratepayers, consistent with the goals of the Global Warming Solutions Act, also known as Assembly Bill 32 (AB 32), and not for the benefit of entities or persons other than such ratepayers. 2. The following uses of the City's auction proceeds are permitted: a) Purchases or Investment in renewable resources (outside Palo Alto or locally) for the electric portfolio; b) Investment In energy efficiency programs for the electric portfolio and retail customers; c) Investment In other carbon reduction activities, Including those required to achieve a carbon-neutral electric portfolio; and d) Rebates to electric retail ratepayers. 3. Allocated allowances may also be used to meet the City's electric utility's compliance obligations for electricity scheduled into the California Independent System Operator Markets, should state law eventually permit this action. 4. Council will receive annual reports on the allowance revenues and expenditures associated with complying with CARB regulations and this policy. 5. Additional Council approval will be required for any rebates to electric ratepayers proposed under this Polley. The City's Polley on the Use of Freely Allocated Allowances for the Gas Utility Is as follows: 1. The City shall abide by CARB's regulations by using the auction proceeds for the exclusive benefit of the City's natural gas retail ratepayers, consistent with the goals of _J;JJillP'-1\~:tO;:gesOtUTiO'N NO~~-~, ......_..,.. 1\QQPTEQiiBV tOU.N¢l'L\(lN: ~- ~"'~-~·rt)~l w:wrmioB-~QJ\ltl9o~-~~~t;: ~~~~,~ngwi:t~~i~~~l)lv $Jll.·~aJA~.a~rJ~~nd nAlHhr ~he•be-nefttof:'i!~tltfes:-l!Jr,persons::othenftan'-suelttatep~y.ers-~- ·2· ~:f1~1.:1J~~-·.'.!_!f,~ <:~Hti~t~J!JK~IJ~}Strt~~~ ~~ft ~¢JI{!e~.-~t9';ffi~~lJtlj~·~IW:~~~natQfjfg@~ y~UJW~$· ~~o~n.,; g'·'",.; "' , . tto:n~; :and the :r:e:malnin~;Aifotate'd •P..J'It5wUnt::~~ will ber~~n~f~~-~~ J~ ~q~flon. s.. Theffbilowlhr;use§:\'ofthe dtts •auetiM -J)tocee.tis ftorn the:s~Oe:of-1\floeated Ailowan~es~ ~.;, P~.; .... ·· ···· w. :~lUr:fc3PTAter.il'l1l~.ttmt.gr,eenbtw~J~r.~$-rijwatf~n·m~~ur~f6e.~:p:t~r.m;uad<' ·~·-' -. ~l~Jff)I~~Jj . 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'inMr:c~mertt· fll:Ptb~r CilfPQil '(*!flucfrgn a~Mttes·fQf' tht! t~atur~l .gas.: utU(ty,, jn(it!.!dlntt :5Y!~~m~ro~loten~~n~~:~~t:rept~¢~fu~ttt:~() ,.,.~q~~ ms1~ve g~~:~ffil$iiM~: . .-__ .. dj -Riib~tes.to natural gas retail rate~ayer:s .. _ ae'bates/if pt()Vtded{tnusfo~:aUocat-ed''ott ~'non~v,Qlt~tr:titric::l:iasis :as.~Sjait!d tn''t1t'le :tz;¢C.tt~e~tlon~9$:lt9:3 (~}.!~;l' ;4, Gourtcfi\wrri''r4teiVe'annua1 rep:ortS'J:iitthE!:use:nt.Ailo:cated'Atiowarn:~t~ irtc1'udl'ngd:h~:~lsef cir'au¢tlonx'v~n~es•~nd~l!pendittJr~s asso:d~fed·vdth ~o.mJIYing,,wltK~;«~tl r~gy:l~bons• ~~g·~lfti$·~91JPY; .· . . . ·-.. ,s.. b..ddltlo.nal',t.ouneJi ~approval wiH be'·.te-q~tred fonmv reba'te$ tQ. natyraLgaSi~rat~pa.vers ~tP1i4'~fi~t~ftqj¥r<tJ11$f~b.Jl~yi . . '· -.. ·.-.