The Commission also set the foundation for a process that will explore a range of flexible compliance options in order to minimize the cost of meeting the cap.
"If we're going to deal with the greenhouse gas issue in California, we're going to have to go down this road," said PUC President Michael R. Peevey.
The Commission will create a load-based cap that encompasses all of the greenhouse gas emissions produced in the course of generating electricity to serve utility customers. Imported energy and power produced within California will be treated equally under this system.
The PUC says a key objective will be ensuring that the system is compatible with any other GHG cap-and-trade regime that may be developed in the future, either in California, the Western Region, nationally, or internationally. Therefore, the GHG emissions allowances associated with the Commission's load-based cap will be in the form of "tons of carbon-dioxide equivalent." The Commission plans to ultimately include all six of the major GHGs under the load-based cap, as doing so becomes feasible.
In setting the cap and developing compliance mechanisms, the Commission will seek to minimize costs to ratepayers, while providing incentives to utility managers and shareholders.
The Commission says it plans to explore various approaches to flexible compliance, including banking, offsets and trading.
