California Senator Timothy Grayson has introduced Senate Bill 377 (SB-377), which aims to modify the state's renewable natural gas (RNG) procurement framework and allow utilities to recover costs associated with RNG interconnection investments. Sponsored by the RNG Coalition, this bill is considered a top priority as it directly impacts the expansion and affordability of RNG projects in California.

SB-377 includes several key aspects:

Reducing interconnection costs: The bill allows utilities to avoid a 24% tax factor that currently applies to RNG projects when developers transfer interconnection assets to the utility. This will lower overall costs for all RNG projects in California, providing savings for utility customers in meeting existing RNG goals.

Increasing RNG supply options: By lowering barriers to RNG imports, the bill diversifies RNG supply, which can help reduce gas customer costs of meeting existing RNG goals.

Adding new eligibility criteria: The bill recognizes the displacement of conventional natural gas as an environmental benefit.

California is a leader in cutting methane emissions by converting organic waste into RNG, which replaces fossil gas throughout the state's energy system. Policies like SB-377 aim to encourage growth in the state's utility market, which has been slower to develop compared to other sectors. Passage of SB-377 would create further opportunities for California to continue its leadership in RNG. Last year, the state marked a significant milestone with the commissioning of the largest operating RNG project within the most robust market for RNG in the U.S.