California Public Utilities Commission Adopts GHG Emissions Cap

On February 16, 2006, the California Public Utilities Commission (CPUC) unanimously decided to establish a cap on greenhouse gas emissions. The cap will initially cover electricity retailers, and will include natural gas utilities over the longer term. The CPUC’s decision follows Governor Schwarzenegger’s announcement of GHG reduction targets last June and is consistent with the recommendations included in the California Climate Action Team’s recent draft report. The CPUC plans to define the implementation phase through a public process, and preference will be given to flexible compliance options such as offsets, trading, banking, and borrowing. All power purchase agreements signed by the utilities will require the supplier to register its emissions with the California Climate Action Registry and sales of excess allowances outside the state will be allowed. Costs and benefits of the framework that emerges in the implementation phase will be evaluated by CPUC.

Press Release