Staff recommends that City Council adopt a resolution directing all 334,821 of the City’s 2023 directly allocated allowances under the state's Greenhouse Gas Cap-and-Trade Program to Roseville’s compliance account for its direct compliance obligation.

In 2006, the State of California passed Assembly Bill 32 (AB 32), the “Global Warming Solutions Act of 2006.” This law created the statewide Cap-and-Trade program designed to reduce greenhouse gas (GHG) emissions in California to 1990 levels by 2020. To address the City’s legal and fiscal responsibilities under the California Greenhouse Gas Cap-and-Trade Program, Roseville Electric developed a Greenhouse Gas Cap-and-Trade Program that was approved by City Council in August 2012, and was revised in February 2013. This program defines how Roseville Electric will use the emission allowances it receives from the State each year.

Prior to the first business day of September, the City must allocate the succeeding calendar year’s allowances between those used to meet its direct compliance obligation and those to be auctioned with Roseville receiving the proceeds. Roseville’s direct compliance obligation is accrued from Roseville Energy Park (REP) generation and out-of-state imports of electricity.

Roseville will receive 334,821 allowances of 2023 vintage. Roseville Electric will apply directly allocated allowances to the compliance obligations associated with REP generation as well as out-of-state imports of electricity. The combination of Roseville increasing its transmission capacity to the northwest in 2018, and the REP’s increased utilization following Roseville’s 2021 entry into the California Independent System Operator Energy Imbalance Market, has increased the amount of allocated allowances needed for Cap-and-Trade compliance.  Accordingly, staff recommends all vintage 2023 directly allocated allowances be directed to Roseville’s compliance account. Allowances can be banked and do not expire, so any unused allowances can be applied towards future compliance obligations. Under state law, the City is required to allocate its allowances annually.

There is no direct fiscal impact associated with the allowance allocation.  The value of the allowances is estimated at approximately $8 million and will be used to offset greenhouse gas compliance costs Roseville otherwise would have incurred.

The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment, or is otherwise not considered a project as defined by CEQA Statute §21065 and CEQA State Guidelines §15060(c)(3) and §15378.

The California Greenhouse Gas Cap-and-Trade Program – 2023 Directly Allocated Allowance Allocation meets the above criteria and is not subject to CEQA. No additional environmental review is required.

Goal A - Remain fiscally responsible in a changing world

_____________________________
Dominick Casey, City Manager