74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 2008
 
                         House Bill 3545
 
Sponsored by Representatives BRUUN, CANNON; Representatives
  DINGFELDER, MACPHERSON
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Establishes annual statewide limits for emissions of carbon
dioxide by electricity providers. Assigns percentage of annual
statewide emissions limit to each electricity provider. Provides
that electricity provider may meet requirements of Act with
emission allowance certificates, greenhouse gas credits,
unbundled renewable energy certificates and alternative
compliance payments.
  Exempts certain electricity providers from limits.
  Establishes process for annual issuance of emission allowance
certificates. Provides that specified percentages of certificates
may be set aside for load changes, sold at auction and directly
distributed to electricity providers after payment of
administrative fee.
  Allows use of greenhouse gas credits approved by State
Department of Energy to meet electricity provider's emissions
limit. Establishes criteria for approval of greenhouse gas
credits.
  Directs State Department of Energy to establish system of
renewable energy certificates that can be used by electricity
provider to comply with provider's emissions limit. Provides that
only unbundled renewable energy certificates may be used to
comply with limit.
  Provides that electricity provider must make alternative
compliance payments if provider is unable to comply with
provider's emissions limit.
 
                        A BILL FOR AN ACT
Related to reduction of greenhouse gases.
Be It Enacted by the People of the State of Oregon:
 
                               { +
DEFINITIONS + }
 
  SECTION 1.  { + Definitions. As used in sections 1 to 21 of
this 2007 Act:
  (1) 'Capped provider' means an electricity provider that is
subject to section 2 of this 2007 Act.
  (2) 'Carbon dioxide emissions' means emissions of carbon
dioxide that result from the combustion of fossil fuels. 'Carbon
 
dioxide emissions' does not include emissions of carbon dioxide
that result from the combustion of nonfossil, biogenic fuels.
  (3) 'Consumer-owned utility' has the meaning given that term in
ORS 757.600.
  (4) 'Electric company' has the meaning given that term in ORS
757.600.
  (5) 'Electricity provider' means:
  (a) An electric company, an electricity service supplier or a
consumer-owned utility that sells electricity to retail
electricity consumers in this state; or
  (b) A self-generator that is located in this state.
  (6) 'Electricity service supplier' has the meaning given that
term in ORS 757.600.
  (7) 'Greenhouse gas' means any gas that contributes to global
warming, including but not limited to:
  (a) Carbon dioxide;
  (b) Methane;
  (c) Nitrous oxide;
  (d) Perfluorocarbons;
  (e) Sulfur hexafluoride; and
  (f) Hydrofluorocarbons.
  (8) 'Load' means the number of megawatt-hours of electricity
generated to serve the customers of an electricity provider or
for a self-generator's own use, including electricity losses from
transmission and distribution equipment.
  (9) 'Nominal electric generating capacity' has the meaning
given that term in ORS 469.300.
  (10) 'Self-generator' means an electricity user that generates
a portion or all of the user's own electricity for use at a site
in this state.
  (11) 'Site' has the meaning given that term in ORS 757.600.
  (12) 'Statewide emissions limit' means the allowable limit on
carbon dioxide emissions for a calendar year, as established
under section 3 of this 2007 Act.
  (13) 'Unbundled renewable energy certificate' means a renewable
energy certificate for electricity that is acquired by an
electricity provider by trade, purchase or other transfer without
acquiring the electricity for which the certificate was
issued. + }
 
                               { +
MANDATORY COMPLIANCE WITH + }
                               { +
CARBON DIOXIDE EMISSIONS LIMIT + }
 
  SECTION 2.  { + Required compliance with capped provider's
emissions limit. Except as provided in sections 1 to 21 of this
2007 Act, for each compliance period established under section 18
of this 2007 Act, an electricity provider must establish that the
provider has complied with the provider's carbon dioxide
emissions limit, or has otherwise met the requirements of
sections 1 to 21 of this 2007 Act, for each calendar year of the
period by providing to the State Department of Energy any
combination of the following:
  (1) Emission allowance certificates issued under section 7 of
this 2007 Act;
  (2) Greenhouse gas credits issued under section 14 of this 2007
Act;
  (3) Unbundled renewable energy certificates approved under
section 16 of this 2007 Act; and
  (4) Alternative compliance payments under section 19 of this
2007 Act. + }
 
                               { +
EMISSIONS LIMITS + }
 
  SECTION 3.  { + Statewide emissions limits. (1) On or before
December 31, 2008, the State Department of Energy shall calculate
the average annual carbon dioxide emissions, in metric tons of
carbon dioxide, for calendar years 2002 through 2006 by each
electricity provider that is a capped provider on January 1,
2008. The department shall use the methodology provided in
section 17 of this 2007 Act to calculate a three-year average for
the five-year period described, disregarding data for the
calendar year in which the provider's annual emissions were the
highest and the calendar year in which the provider's annual
emissions were the lowest. The sum of the average annual carbon
dioxide emissions of all capped providers calculated under this
subsection, expressed in metric tons of carbon dioxide, is the
statewide emissions baseline amount.
  (2) The statewide emissions limit for calendar years 2009, 2010
and 2011 is equal to the statewide emissions baseline amount
determined under subsection (1) of this section.
  (3) The department shall determine the total of statewide
carbon dioxide emissions by all electricity providers in calendar
year 1990. The statewide emissions limit in calendar year 2020 is
equal to 90 percent of the total of statewide carbon dioxide
emissions in calendar year 1990. The department shall establish
statewide emissions limits for calendar years 2012 through 2019
that decline linearly from the statewide emissions limit for
calendar year 2011 established under subsection (2) of this
section to the statewide emissions limit for calendar year 2020
established under this subsection.
  (4) The statewide emissions limit in calendar year 2050 is
equal to 25 percent of the total of statewide carbon dioxide
emissions in calendar year 1990 as determined under subsection
(3) of this section. The department shall establish statewide
emissions limits for calendar years 2021 through 2049 that
decline linearly from the statewide emissions limit for calendar
year 2020 established under subsection (3) of this section to the
statewide emissions limit for calendar year 2050 established
under this subsection.
  (5)(a) Upon completion of a normal compliance period
established under section 18 (1) or (3) of this 2007 Act, the
department shall determine whether capped providers made
alternative compliance payments for the compliance period under
section 19 of this 2007 Act for an amount of carbon dioxide that,
in the aggregate, exceeds 10 percent of the sum of:
  (A) The amount of carbon dioxide allowed for the compliance
period under the statewide emissions limits established for the
calendar years of the period; and
  (B) The amount of carbon dioxide represented by banked emission
allowance certificates held by capped providers at the beginning
of the compliance period.
  (b) If the department determines that capped providers made
alternative compliance payments in excess of the amount specified
in paragraph (a) of this subsection, the statewide emissions
limit for the first year of the normal compliance period
following the compliance period for which the determination was
made shall be the same as the limit for the last year of the
compliance period for which the determination was made. The
statewide emissions limits for subsequent years shall be as
provided in subsection (3) or (4) of this section. + }
  SECTION 3a.  { + Baseline date for electricity providers. All
electricity providers shall submit a report to the State
Department of Energy on or before July 1, 2008, that contains
information on the provider's carbon dioxide emissions in
calendar years 2002, 2003, 2004, 2005 and 2006 and any other
information required by the department. + }
  SECTION 4.  { + Capped provider's emissions limits. (1) The
State Department of Energy shall assign to each capped provider a
percentage of the statewide emissions baseline amount calculated
under section 3 (1) of this 2007 Act so that the entire baseline
amount is assigned. Except as provided in this section, a capped
provider's emissions limit for a calendar year is equal to the
percentage assigned to the provider under this subsection
multiplied by the statewide emissions limit for the calendar
year.
  (2) If a consumer-owned utility or self-generator that was
exempt under section 5 of this 2007 Act subsequently ceases to be
qualified for the exemption, the department shall assign to the
utility or self-generator a portion of the statewide emissions
limit beginning in the calendar year following the year in which
the utility or self-generator ceases to qualify for the
exemption. The department shall reduce the emissions limits of
all other capped providers proportionately.
  (3) In addition to adjustments required by subsection (2) of
this section, the department shall adjust the emissions limits of
all other capped providers if:
  (a) A new electricity provider commences to make sales of
electricity after January 1, 2008;
  (b) A self-generator or an electricity service supplier that is
a capped provider increases or decreases its load after January
1, 2008, in a manner that increases or decreases the load of
another capped provider; or
  (c) An electric company or consumer-owned utility that is a
capped provider acquires territory previously served by another
electric company or consumer-owned utility.
  (4) The department by rule may adjust the emissions limits of
capped providers based on any of the following:
  (a) Sales of electricity generating facilities by the provider;
  (b) Contracts for purchases of electricity by the provider; or
  (c) Changes in the sources of electricity used by the provider,
if those changes result in a reduction in the provider's annual
carbon dioxide emissions and the department determines that those
changes do not reduce total annual carbon dioxide emissions by
all capped providers. + }
 
                               { +
EXEMPT ELECTRICITY PROVIDERS + }
 
  SECTION 5.  { + Exemption for certain consumer-owned utilities
and self-generators. (1) Section 2 of this 2007 Act does not
apply to:
  (a) A consumer-owned utility with annual carbon dioxide
emissions of less than 15,000 metric tons of carbon dioxide;
  (b) A self-generator that has a nominal electric generating
capacity of less than five megawatts and combined annual carbon
dioxide emissions of less than 15,000 metric tons of carbon
dioxide at all sites; or
  (c) A self-generator that provides only emergency backup power
generation and has a combined nominal electric generating
capacity of less than 25 megawatts if:
  (A) No individual electricity generating facility having a
nominal electric generating capacity of one megawatt or more
exceeded 500 hours of operation in any calendar year after 2001;
and
  (B) The combined carbon dioxide emissions of all electricity
generating facilities operated by the self-generator do not
exceed 15,000 metric tons of carbon dioxide in any calendar year
after 2001.
  (2) For the purpose of maintaining an exemption under this
section, a consumer-owned utility or self-generator may purchase
and use emission allowance certificates, greenhouse gas credits
and unbundled renewable energy certificates for application
against annual carbon dioxide emissions by the utility or
self-generator that exceed 15,000 metric tons of carbon dioxide
in a calendar year. + }
  SECTION 6.  { + Reports by exempt electricity providers. (1) A
consumer-owned utility that is exempt under section 5 (1) of this
2007 Act, or a self-generator that is exempt under section 5
(1)(b) of this 2007 Act and that has a nominal electric
generating capacity of more than one megawatt, shall make an
annual report to the State Department of Energy that provides
information on:
  (a) The utility's or self-generator's carbon dioxide emissions
during the previous calendar year;
  (b) Emission allowance certificates, greenhouse gas credits and
unbundled renewable energy certificates used by the utility or
self-generator to maintain the exemption provided by section 5 of
this 2007 Act; and
  (c) Any other information required by the department.
  (2) The reporting requirements of this section do not apply to:
  (a) A self-generator that is exempt under section 5 (1)(b) of
this 2007 Act and that has a nominal electric generating capacity
of one megawatt or less; and
  (b) A self-generator that is exempt under section 5 (1)(c) of
this 2007 Act. + }
 
                               { +
EMISSION ALLOWANCE CERTIFICATES + }
 
  SECTION 7.  { + Emission allowance certificates. (1) For each
calendar year, the State Department of Energy shall issue
emission allowance certificates the total value of which equals
the allowed carbon dioxide emissions for that calendar year under
the statewide emissions limit. Each certificate permits the
holder to emit one metric ton of carbon dioxide. The department
shall identify each certificate with an identification number and
the year of issuance.
  (2) The department shall distribute emission allowance
certificates for a calendar year as follows:
  (a) For set-asides under section 8 of this 2007 Act;
  (b) By auction under section 9 of this 2007 Act; and
  (c) By direct distribution under section 10 of this 2007 Act.
  (3) The department shall collect a uniform administrative fee
for each emission allowance certificate that is directly
distributed to a capped provider under section 10 of this 2007
Act or set aside and distributed to a capped provider under
section 8 of this 2007 Act. The fee shall be in an amount
sufficient to pay all costs incurred by the department in
administering sections 1 to 21 of this 2007 Act, excluding the
cost of administering greenhouse gas credits under section 14 of
this 2007 Act. + }
  SECTION 8.  { + Set-asides of emission allowance certificates.
(1) For each calendar year, the State Department of Energy may
set aside up to three percent of the total number of emission
allowance certificates that are issued under section 7 of this
2007 Act. Certificates that are set aside may be distributed
during the calendar year to:
  (a) Electricity providers that come into existence during the
calendar year; and
  (b) Capped providers that have a significant increase in load
as described in subsection (2) of this section during the
calendar year.
  (2) The department may distribute emission allowance
certificates to a capped provider under subsection (1)(b) of this
section if the department determines that the provider has a
significant increase in load because:
  (a) The capped provider acquires a new customer that uses a
significant amount of electricity at a single site during the
customer's first year of operation; or
 
 
  (b) An existing customer of the capped provider has a
significant increase in electricity use in a single year at a
single site.
  (3) The department by rule shall determine the size of the
increase in load that will qualify a capped provider to receive
emission allowance certificates under subsection (1)(b) of this
section. The department may set different size thresholds based
on the relative size of capped providers' loads for the calendar
year.
  (4) Any emission allowance certificates set aside under this
section but not distributed at the end of the calendar year shall
be allocated to capped providers in proportion to each provider's
emissions limit for that calendar year as determined under
section 4 of this 2007 Act. + }
  SECTION 9.  { + Auction of emission allowance certificates. (1)
After setting aside a portion of the total number of emission
allowance certificates under section 8 of this 2007 Act, the
State Department of Energy shall offer for sale at auction at
least five percent of the certificates remaining for the calendar
year. The department by rule may increase the percentage of
emission allowance certificates sold at auction each year, but no
more than 10 percent of the certificates for a calendar year may
be sold at auction.
  (2) The department shall conduct two auctions each year under
this section. Only capped providers and joint operating agencies,
as defined in ORS 262.005, may bid at an auction. Electricity
providers other than electric companies shall have a right of
first refusal for a percentage, determined by the department by
rule, of the emission allowance certificates available at the
auction. The department shall cancel any emission allowance
certificates offered and not sold at an auction.
  (3) The department may direct that up to 25 percent of the
revenues from auctions conducted under this section be used for
programs that reduce carbon dioxide emissions in this state,
including:
  (a) Energy efficiency projects;
  (b) Projects for the construction of electricity generating
facilities using renewable energy sources;
  (c) Improvements to the efficiency of electricity generating
facilities that use fossil fuels; and
  (d) Energy research and demonstration projects designed to
test:
  (A) New renewable energy sources or devices; or
  (B) Processes to improve the efficiency of electricity
generating facilities.
  (4) Except as provided in subsection (5) of this section, the
department shall distribute any auction revenues not used under
subsection (3) of this section to capped providers in proportion
to each provider's emission limit for the calendar year as
determined under section 4 of this 2007 Act. Revenues distributed
to capped providers under this subsection may be used only for
the purposes specified in subsection (3) of this section.
Expenditures by electric companies under subsection (3) of this
section are subject to approval by the Public Utility Commission.
  (5) The department by rule may provide that all or part of the
auction revenues that otherwise would be distributed to
self-generators and electricity service suppliers under
subsection (4) of this section be distributed to other capped
providers or used for purposes other than those specified in
subsection (3) of this section. + }
  SECTION 10.  { + Direct distribution of emission allowance
certificates. Each calendar year, the emission allowance
certificates that are not set aside under section 8 of this 2007
Act or sold at auction or otherwise disposed of under section 9
of this 2007 Act shall be allocated by the State Department of
Energy to capped providers in proportion to each provider's
emissions limit for the calendar year as determined under section
4 of this 2007 Act. The department shall distribute certificates
to capped providers upon payment of the administrative fee
established under section 7 (3) of this 2007 Act. The department
shall cancel any certificate allocated to a capped provider if
the capped provider declines to accept the certificate. + }
  SECTION 11.  { + Banking, sale and use of emission allowance
certificates. (1) Emission allowance certificates that are not
used by a capped provider to comply with the provider's carbon
dioxide emissions limits for the calendar years of a compliance
period may be banked and carried forward indefinitely for the
purpose of complying with the provider's emissions limits in the
calendar years of a subsequent compliance period. If a capped
provider has banked emission allowance certificates, the provider
must used use the banked certificates before using other
certificates, and must used the oldest banked certificates first.
  (2) A capped provider may sell emission allowance certificates
to its customers, to other capped providers or, if authorized by
rules of the State Department of Energy under section 12 (2) of
this 2007 Act, to out-of-state entities. If a capped provider
sells emission allowance certificates to one of its customers,
the customer may sell the certificates only to another capped
provider.
  (3) A capped provider may not sell emission allowance
certificates during an extended compliance period granted to the
provider under section 18 (3) of this 2007 Act.
  (4) An emission allowance certificate that is sold by a capped
provider may not be used by the provider to comply with the
provider's emissions limit. + }
  SECTION 12.  { + Emission allowance certificates that may be
used to comply with emissions limit. (1) Except as provided in
subsection (2) of this section, a capped provider may use only
emission allowance certificates issued by the State Department of
Energy under section 7 of this 2007 Act to comply with the
provider's carbon dioxide emissions limit.
  (2) The department by rule may authorize the use of carbon
dioxide emission allowances issued by other states for the
purpose of complying with a carbon dioxide emissions limit under
sections 1 to 21 of this 2007 Act if the department determines
that the other state's system for imposing carbon dioxide
emissions limits is consistent with and comparable to the system
established under sections 1 to 21 of this 2007 Act. + }
  SECTION 13.  { + Reports by capped providers. (1) Every capped
provider shall report annually to the State Department of
Energy. The report must indicate the number of banked emission
allowance certificates held by the provider and must specify the
date of issuance of the certificates. At least once each year,
the department shall publish the information provided by each
capped provider under this subsection and the provider's annual
carbon dioxide emissions as determined by the department under
section 17 of this 2007 Act. The department also may publish the
information provided by exempt electricity providers under
section 6 of this 2007 Act.
  (2) At least once every three years, each capped provider shall
provide to the department a forecast of the provider's
anticipated carbon dioxide emissions for the subsequent 10-year
period. The forecast shall include a description of the manner in
which the capped provider intends to comply with the provider's
emissions limits, including information on the provider's use of
emission allowance certificates, greenhouse gas credits,
unbundled renewable energy certificates and alternative
compliance payments. + }
 
                               { +
GREENHOUSE GAS CREDITS + }
 
  SECTION 14.  { + Greenhouse gas credits. (1) Subject to the
limits imposed by section 15 of this 2007 Act, a capped provider
may use greenhouse gas credits that have been approved by the
State Department of Energy for the purpose of complying with the
provider's carbon dioxide emissions limit. Greenhouse gas credits
shall be approved for demonstrated reductions in greenhouse
gases.  For each greenhouse gas credit approved, the department
shall assign a value, in metric tons of carbon dioxide, that is
determined by the department to be equivalent to the amount of
greenhouse gases not emitted in the compliance period for which
credit is sought.
  (2) The department may approve a greenhouse gas credit only if
the department finds:
  (a) The claimed reduction in greenhouse gas emissions is real,
quantifiable, verified, sustainable and enforceable; and
  (b) The claimed reduction in greenhouse gas emissions is
unlikely to have occurred if the identified measures had not been
implemented.
  (3) A greenhouse gas credit may not be approved for:
  (a) Reductions in annual carbon dioxide emissions resulting
from the generation of electricity; or
  (b) Reductions in greenhouse gas emissions that are required by
reason of limitations imposed by this state or any other
government.
  (4) A greenhouse gas credit may be approved only for measures
taken before or during the compliance period for which the
provider seeks to claim the credit. A greenhouse gas credit may
not be approved for any period of time before the effective date
of this 2007 Act.
  (5) The department shall define by rule the measures that
qualify for greenhouse gas credits under subsection (2) of this
section and shall establish procedures to quantify and verify
greenhouse gas credits.
  (6) The department shall establish and collect an
administrative fee for the use of greenhouse gas credits under
this section. A fee schedule shall be established sufficient to
pay all costs incurred by the department in administering this
section. + }
  SECTION 15.  { + Limits on use of greenhouse gas credits. (1)
Except as provided in subsections (2) and (3) of this section:
  (a) For all compliance periods that include a calendar year
before 2021, a capped provider may use greenhouse gas credits
only to the extent that the metric tons of carbon dioxide
assigned to the credits does not exceed two percent of the
combined amount of carbon dioxide allowed under the provider's
emissions limits for the calendar years of the compliance period;
and
  (b) For all compliance periods subsequent to the compliance
period subject to paragraph (a) of this subsection, a capped
provider may use greenhouse gas credits only to the extent that
the metric tons of carbon dioxide assigned to the credits does
not exceed one percent of the combined amount of carbon dioxide
allowed under the provider's emissions limits for the calendar
years of the compliance period.
  (2) A consumer-owned utility subject to section 2 of this 2007
Act may use greenhouse gas credits to the extent that the metric
tons of carbon dioxide assigned to the credits is equal to or
less than the amount of carbon dioxide emissions that are
attributable to electricity acquired by the utility from the
Bonneville Power Administration for retail sales during the
compliance period.
  (3) A self-generator subject to section 2 of this 2007 Act may
use any amount of greenhouse gas credits to comply with the
emissions limits applicable to the self-generator for the
compliance period. + }
 
                               { +
RENEWABLE ENERGY CERTIFICATES + }
 
  SECTION 16.  { + Renewable energy certificates. (1) The State
Department of Energy shall establish a system of renewable energy
certificates that can be used by a capped provider to establish
compliance with the provider's carbon dioxide emissions limit.
The department shall consult with the Public Utility Commission
before establishing a system of renewable energy certificates
under this section. The department may allow use of renewable
energy certificates that are issued, monitored, accounted for or
transferred by or through a regional system or trading program,
including but not limited to the Western Renewable Energy
Generation Information System. The system of renewable energy
certificates established by the department under this section
shall allow issuance, transfer and use of certificates in
electronic form.
  (2) Except as provided in this section, a capped provider may
apply unbundled renewable energy certificates against the load of
the provider to comply with the provider's carbon dioxide
emissions limit. The department shall assign to each unbundled
renewable energy certificate a value, in metric tons of carbon
dioxide, that is determined by the department to be equivalent to
the reduction in carbon dioxide emissions attributable to the
renewable energy source used to generate the electricity for
which the certificate was issued. The department may require that
unbundled renewable energy certificates be applied first against
that portion of a capped provider's load for which the source of
electricity cannot be determined.
  (3) Except as provided in subsection (4) of this section, for
any compliance period, a capped provider may use unbundled
renewable energy certificates only to the extent that the
reduction in carbon dioxide emissions represented by those
certificates does not exceed one percent of the amount of carbon
dioxide allowed under the provider's emissions limits for the
calendar years of the compliance period.
  (4) For any compliance period, a consumer-owned utility subject
to section 2 of this 2007 Act may apply any number of unbundled
renewable energy certificates against that portion of the
utility's load:
  (a) For which the source of electricity cannot be determined;
or
  (b) That is attributable to electricity acquired by the utility
from the Bonneville Power Administration for retail sales during
the compliance period. + }
 
                               { +
COMPLIANCE + }
 
  SECTION 17.  { + Determination of actual emissions. (1) For
calendar year 2009 and subsequent calendar years, the State
Department of Energy shall calculate the amount of annual carbon
dioxide emissions of each capped provider in metric tons of
carbon dioxide. The department shall first determine the capped
provider's load for the calendar year. The department shall then
calculate the carbon dioxide emissions per megawatt-hour based on
the mix of energy sources used by the capped provider. The total
annual carbon dioxide emissions of the capped provider is equal
to the load of the provider multiplied by the carbon dioxide
emissions per megawatt-hour.
  (2) The department by rule shall establish a methodology for
determining a carbon dioxide emissions rate or rates for that
portion of a capped provider's load for which the source of
electricity cannot be determined.
  (3) The department shall calculate carbon dioxide emissions for
generation of electricity using fossil fuels based on the fossil
carbon content of the fuels. The department shall calculate
carbon dioxide emissions from waste fuels based on the carbon
content of the waste materials. To the extent practicable, the
department shall calculate carbon dioxide emissions of a capped
provider by identifying and evaluating the specific generating
facilities supplying electricity to the provider.
  (4) As part of the annual report submitted under section 13 of
this 2007 Act, a capped provider shall submit all information
required by the department relating to the mix of energy sources
used by the provider and the specific generating facilities
supplying electricity to the provider. + }
  SECTION 18.  { + Compliance period. (1) The normal compliance
period for capped providers is three calendar years. The first
compliance period commences with calendar year 2009.
  (2) A capped provider may petition the State Department of
Energy to approve an extended compliance period for the provider.
The department may approve an extended compliance period only if
the cumulative reduction in carbon dioxide emissions during the
extended period is greater than would have resulted had the
normal compliance period not been extended. The department may
not approve an extended compliance period that is longer than six
calendar years.
  (3) The normal compliance period for all capped providers, and
any extended compliance period approved under subsection (2) of
this section, shall be extended by the department by one year for
each year of exceptionally low hydroelectric generation, as
defined by department rule. + }
  SECTION 19.  { + Alternative compliance payments. (1) If, in
any compliance period, a capped provider fails to provide the
State Department of Energy with emission allowance certificates,
greenhouse gas credits and unbundled renewable energy
certificates sufficient to comply with the provider's carbon
dioxide emissions limit for the calendar years of the compliance
period, the provider must make alternative compliance payments
under this section.
  (2) Alternative compliance payments shall be made at the rate
of $40 per metric ton of carbon dioxide. The department shall
adjust the rate of alternative compliance payments every year
based on changes in the U.S. City Average Consumer Price Index
for All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor or its
successor.
  (3) Moneys paid by a capped provider under this section shall
be deposited in an escrow account established by the provider.
  (4) If an electric company makes alternative compliance
payments, the company may submit a plan to the Public Utility
Commission before the end of the compliance period next following
the period for which alternative compliance payments are made
that identifies measures for reducing the company's carbon
dioxide emissions and that shows that the company has committed
to expending funds to implement that plan. If the commission
approves the plan, the commission shall release to the company
all or part of the funds in the company's escrow account pursuant
to the terms of the plan. The commission may approve a plan under
this subsection only if funds from the escrow account will be
expended for the purposes specified in section 9 (3) of this 2007
Act.
  (5) If a capped provider other than an electric company makes
alternative compliance payments, the provider may submit a plan
to the State Department of Energy before the end of the
compliance period next following the period for which alternative
compliance payments are made that identifies measures for
reducing the provider's carbon dioxide emissions and that shows
that the provider has committed to expending funds to implement
that plan. If the department approves the plan, the department
shall release to the capped provider all or part of the funds in
the provider's escrow account pursuant to the terms of the plan.
The department may approve a plan under this subsection only if
funds from the escrow account will be expended for the purposes
specified in section 9 (3) of this 2007 Act.
  (6) If plan submitted by a capped provider is not approved
under subsection (4) or (5) of this section, funds that remain in
the provider's escrow account at the end of a compliance period
shall be distributed by the provider to a third party provider.
The commission shall designate the third party provider for funds
held in escrow accounts under subsection (4) of this section. The
department shall designate the third party provider for funds
held in escrow accounts under subsection (5) of this section. The
funds may be used only for the purpose of implementing reductions
in carbon dioxide emissions by capped providers. To the extent
practicable, the funds shall be used to implement reductions in
carbon dioxide emissions by the capped provider that made the
alternative compliance payments. + }
 
                               { +
MISCELLANEOUS PROVISIONS + }
 
  SECTION 20.  { + Rates of electric companies. In establishing
rates for electric companies, the Public Utility Commission shall
take into consideration the requirements imposed on electric
companies by sections 1 to 21 of this 2007 Act. + }
  SECTION 21.  { + Report by State Department of Energy. Not less
than one year after the end of each normal compliance period, the
State Department of Energy shall conduct a public review of the
impacts of sections 1 to 21 of this 2007 Act on annual statewide
carbon dioxide emissions. Based on the review, the department
shall prepare a report to the Governor and the Legislative
Assembly. The report to the Legislative Assembly shall be made in
the manner prescribed in ORS 192.245. + }
  SECTION 22.  { +  Rulemaking. The State Department of Energy
and the Public Utility Commission shall adopt all rules necessary
for the performance of the duties of the department and of the
commission under the provisions of sections 1 to 21 of this 2007
Act. + }
  SECTION 23.  { +  Captions. The unit and section captions used
in this 2007 Act are provided only for the convenience of the
reader and do not become part of the statutory law of this state
or express any legislative intent in the enactment of this 2007
Act. + }
                         ----------