Cal. Code Regs. Tit. 17, § 95894 - Allocation to Legacy Contract Generators for Transition Assistance

(a) Demonstration of Eligibility. Opt-in covered entities are not eligible for transition assistance due to legacy contract emissions. To be eligible to receive a direct allocation of allowances under this section, the primary or alternate account representative of a legacy contract generator with an industrial counterparty or a legacy contract generator without an industrial counterparty shall submit the following in writing via certified mail to the Executive Officer by June 1 of each year as applicable:

(1) A letter to ARB stating covered entity's name and ARB ID, identity of legacy contract counterparty, and statement requesting transition assistance for the previous data year's legacy contract emissions.

(A) Previous data year's legacy contract emissions, pursuant to section 95894(c).

(B) 2012 data year's legacy contract emissions, pursuant to section 95894(d).

(2) Copy of the following portions from the legacy contract for which it is seeking an allocation;

(A) Dates of effective commencement and cessation of terms of contract.

(B) Terms governing price per unit of product.

(C) Signature page.

(3) An attestation under penalty of perjury under the laws of the State of California that:

(A) Each legacy contract does not allow the covered entity to recover the cost of legacy contract emissions from the legacy contract counterparty purchasing electricity and/or legacy contract qualified thermal output from the unit or facility;

(B) The legacy contract was originally executed prior to September 1, 2006, remains in effect, and has not been amended since that date to change the terms governing the price or amount of electricity or legacy contract qualified thermal output sold, the GHG costs, or the expiration date; and

(C) The operator of the legacy contract generator with an industrial counterparty or the legacy contract generator without an industrial counterparty made a good faith effort, but failed to renegotiate the legacy contract with the counterparty to address recovery of the costs of compliance with this Regulation. The renegotiation effort began at least 60 days, but no earlier than a year, before the date of this attestation.

(4) Data requested pursuant to Section 95894.

(5) If, subsequent to the submittal of the foregoing information and supporting documentation, there is any material change in the information and statements provided to the Executive Officer, the party who submitted such information and statements shall submit a supplemental attestation and supporting materials addressing any such material change to the Executive Officer within 30 days after the change occurs.

(b) Determination of Eligibility. Upon receipt of the information required by paragraph (a) of this section, the Executive Officer shall determine whether the party submitting such information has demonstrated that it is eligible to receive a direct allocation of allowances pursuant to this section and shall notify that party by October 10 each year if it is eligible to receive an allocation calculated pursuant to section 95894(c) or 95894(d) for the following compliance year.

(c) Allocation to Legacy Contract Generators with an Industrial Counterparty. If the counterparty (or entity in a direct corporate association with the counterparty) is a covered entity or opt-in covered entity that is in a sector listed in Table 8-1, the following formulae apply based on the type of generation facility:

(1) For stand-alone generation facilities that are legacy contract generators with an industrial counterparty, the following equations apply:

A_t = (EEm_lc,t-2 * c_a,t * AF_lcc,t) + TrueUp_t

Where:

"A_t" is the amount of California GHG allowances directly allocated to the legacy contract generator with an industrial counterparty for legacy contract emissions from budget year "t". This value shall only be calculated if the entity meets the eligibility requirements, pursuant to section 95894(a) and 95894(b), and is covered under the Cap-and-Trade Program during budget year "t";

"EEm_lc,t-2" is the emissions reported, in MTCO_2e, associated with electricity sold under the legacy contract in the data years two years before year "t";

"c_a,t" is the cap adjustment factor for the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for budget year "t" as specified in Table 9-2. The subscript "a" designates the activity conducted by the legacy contract counterparty or the entity in a direct corporate association with the legacy contract counterparty;

"AF_lcc,t" is the assistance factor associated with the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for budget year "t"; and

TrueUp_t = (EEm_lc,t-2 * c_a,t-2 * AF_lcc,t-2) - A_{t-2,no trueup}

Where:

"TrueUp_t" is the amount of true-up allowances allocated to account for the emissions reported for data year "t" and allowed to be used for compliance for the budget year two years prior to year "t" and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D);

"EEm_lc,t-2" is the emissions reported, in MTCO₂e, associated with electricity sold under the legacy contract in the data years two years before year "t";

"C_a,t-2" is the cap adjustment factor for the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for the year two years prior to year "t" as specified in Table 9-2. The subscript "a" designates the activity conducted by the legacy contract counterparty or the entity in a direct corporate association with the legacy contract counterparty;

"AF_lcc,t-2" is the assistance factor associated with the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for two years before budget year "t"; and

"A_{t-2,no trueup}" is the amount of California GHG allowances directly allocated to the legacy contract generator with an industrial counterparty for legacy contract emissions from the budget year two years prior to year "t," not including the true-up for that budget year.

(2) For legacy contract generators with an industrial counterparty subject to section 95894(c), but not covered by section 95894(c)(1), the following equations apply:

A_t = ((Q_lc,t-2 * B_s + E_lc,t-2 * B_e) * AF_lcc,t * c_a,t) + TrueUp_t

Where:

"A_t" is the amount of California GHG allowances directly allocated to the legacy contract generator with an industrial counterparty for legacy contract emissions from budget year "t". This value shall only be calculated if the entity meets the eligibility requirements, pursuant to section 94894(a), and 95894(b), and is covered under the Cap-and-Trade Program during budget year "t";

"Q_lc,t-2" is the legacy contract qualified thermal output, in MMBtu, sold under a legacy contract in the data year two years prior to year "t," as reported under MRR;

"E_lc,t-2" is the electricity, in MWh, sold under the legacy contract in the data year two years prior to year "t," as reported under MRR;

"B_e" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

"B_s" is the emissions efficiency benchmark per unit of legacy contract qualified thermal output, 0.06244 California GHG Allowances/MMBtu thermal;

"AF_lcc,t" is the assistance factor associated with the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for budget year "t";

"c_a,t" is the cap adjustment factor for the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty for budget year "t" as specified in Table 9-2. The subscript "a" designates the activity conducted by the legacy contract counterparty or the entity in a direct corporate association with the legacy contract counterparty; and

TrueUp_t = ((Q_lc,t-2 * B_s + E_lc,t-2 * B_e) * AF_lcc,t-2 * c_a,t-2) - A_{t-2,no trueup}

Where:

"TrueUp_t" is the amount of true-up allowances allocated to account for the emissions reported for data year "t" and allowed to be used for compliance for the budget year two years prior to year "t" and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D);

"Q_lc,t-2" is the legacy contract qualified thermal output, in MMBtu, sold under a legacy contract in the data year two years prior to year "t," as reported under MRR;

"B_s" is the emissions efficiency benchmark per unit of legacy contract qualified thermal output, 0.06244 California GHG Allowances/MMB tu;

"E_lc,t-2" is the electricity, in MWh, sold under the legacy contract in the data year two years prior to year "t," as reported under MRR;

"B_e" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

"AF_lcc,t-2" is the assistance factor associated with the legacy contract counterparty or entity in a direct corporate association with the legacy contract counterparty in the budget year two years prior to year "t";

"c_a,t-2" is the cap adjustment factor for the budget year two years prior to year "t" as specified in Table 9-2. The subscript "a" designates the activity conducted by the legacy contract counterparty or the entity in a direct corporate association with the legacy contract counterparty; and

"A_{t-2,no trueup}" is the amount of California GHG allowances directly allocated to the legacy contract generator with an industrial counterparty for legacy contract emissions from the budget year two years prior to year "t," not including the true-up for that budget year.

(d) Allocation to Legacy Contract Generators without an Industrial Counterparty. Legacy contract generators not covered by section 95894(c) may receive allowance allocation only for budget years 2020 through the life of the legacy contract.

(1) For stand-alone generation facilities that are legacy contract generators without an industrial counterparty, allowance allocation is calculated by the following equation:

A_t = (EEm_lc x c_t) + TrueUp_CP3

Where:

"A_t" is the amount of California GHG allowances directly allocated to the legacy contract generator without an industrial counterparty for legacy contract emissions from budget year "t." This value shall only be calculated if the entity meets the eligibility requirements, pursuant to sections 95894(a) and 95894(b), and is covered by the Cap-and-Trade Program during the compliance period containing year "t";

"EEm_lc" is the emissions reported, in MTCO_2e, associated with electricity sold under the legacy contract in 2012; and

"c_t" is the cap adjustment factor for budget year "t" to account for cap decline as specified in Table 9-2.

"TrueUp_cp3" is the amount of true-up allowances allocated from budget year 2020 to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year "t" shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). For budget years 2021 and beyond, "TrueUp_cp3" is equal to zero. For budget year 2020, this value is calculated by the following equation:

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(2) For legacy contract generators without an industrial counterparty not subject to either section 95894(c) or section 95894(d)(1), allowance allocation is calculated by the following equation:

A_t = (Q_lc x B_s + E_lc x B_e) x c_t + TrueUp_CP3

Where:

"A_t" is the amount of California GHG allowances directly allocated to the legacy contract generator without an industrial counterparty, for legacy contract emissions from budget year "t." This value shall only be calculated if the entity meets the eligibility requirements, pursuant to sections 95894(a) and 95894(b), and is covered by the Cap-and-Trade Program during the compliance period containing year "t";

"Q_lc" is the legacy contract qualified thermal output, in MMBtu, sold under a legacy contract in data year 2012, as reported pursuant to MRR;

"E_lc" is the electricity, in MWh, sold under the legacy contract in data year 2012;

"B_e" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

"B_s" is the emissions efficiency benchmark per unit of legacy contract qualified thermal output, 0.06244 California GHG Allowances/ MMBtu; and

"c_t" is the cap adjustment factor for budget year "t" to account for cap decline as specified in Table 9-2.

"TrueUp_cp3" is the amount of true-up allowances allocated from budget year 2020 to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year "t" shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). For budget years 2021 and beyond, "TrueUp_cp3" is equal to zero. For budget year 2020, this value is calculated by the following equation:

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(e) Data Sources. In determining the appropriate values for sections 95894(c)-(e), the Executive Officer may employ all available data reported to ARB under MRR and all other relevant data, including invoices, that demonstrate the amount of electricity and legacy contract qualified thermal output sold or provided for off-site use does not include a carbon cost in the budget year for which the legacy contract generator is seeking an allocation. If necessary, the Executive Officer will solicit additional data to establish a representative allocation. The operator of the legacy contract generator with an industrial counterparty or legacy contract generator without an industrial counterparty must provide the additional data upon request by the Executive Officer.

(f) Contract Expiration or Generator Closure. Once a legacy contract expires or the legacy contract generator with an industrial counterparty or legacy contract generator without an industrial counterparty closes operations, the generator will no longer be eligible for free allocation pursuant to 95890(e), and allocation will be prorated for the time in which the contract was eligible.

Notes

Cal. Code Regs. Tit. 17, § 95894

1. New section filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
2. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
3. Amendment filed 3-29-2019; operative 3-29-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).
4. Editorial correction of subsection (d) (Register 2019, No. 30).

Note: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, Health and Safety Code. Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

1. New section filed 6-26-2014; operative 7/1/2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
2. Amendment filed 9-18-2017; operative 10/1/2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
3. Amendment filed 3-29-2019; operative 3/29/2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).