Accelerated RPS Bill Vetoed

Governor Arnold Schwarzenegger, considered a proponent of renewable power, has rejected a bill that would have advanced the state's 20 percent renewables portfolio standard to 2010 and created a green energy credit trading program. The bill's author, Senator Byron Sher (D-Palo Alto), attributed the veto partly to "interpersonal rivalries in the administration," asserting that the reason was not SB 1478's mandate that investor-owned utilities have one-fifth of their power supply green within six years. "The real reason the bill was vetoed is not spelled out in the veto message," Sher, who will be termed out of office this year, told participants at the annual Independent Energy Producers conference September 27-29. The governor said September 25 he refused to sign SB 1478 because its proposed renewable energy credit program (green tags) would be too restrictive and the renewables mandate mistakenly would not have been imposed on public power agencies. An earlier version of the bill would have required municipal power agencies to meet the state standard, but the provision was deleted because of strenuous opposition by munis, which vigorously oppose state attempts to tread on local territory. The bill's death knell was said to be opposition by the Alliance for Retail Choice. The legislation created an "unreasonable and unacceptable burden" on direct-access providers, said Andrea Weller, a member of the alliance. The retailers objected to the bill's provisions that would have limited nonutility providers' access to supplemental energy payments, which are set aside to cover the cost of renewables that exceed a benchmark price. Whether or not the bill will be revived next session, some expect the state's investor-owned utilities to achieve the 20 percent green mandate by 2010, instead of 2017, which is being pushed by the state's energy agencies. "We are trying to accelerate the RPS, and we're probably going to get there," said Jackie Pfannenstiel, California Energy Commission member. Others, however, say transmission shortcomings will thwart the goal. San Diego Gas & Electric insists it can't meet the 2010 goal without the green tag program because of regional transmission constraints and because it is starting off with the least amount of renewable supplies. SDG&E was less than thrilled with the green tag program, which would have limited its use to a single trade, but supported the bill as laying the foundation for a renewable energy credits market. "We thought the bill was a good start and are disappointed the governor didn't agree," said Ed Van Herik, utility spokesperson. "The governor will be talking up the issue next year, and we will be very interested to see his proposals." Who Owns the "Green" in Green Tags? Green tags represent the renewable attribute of solar, wind, geothermal, and other green power supplies. Alternative power is generally more expensive than fossil- fuel power, and delivery of renewables is also limited by transmission. Thus, green tags, or renewable energy credits (RECs), were born. Some utilities want only the cheapest generic power, which may be around 4 cents/kWh, said Jan Hamrin, executive director of Resource Solutions. Creating green tags allows a renewables producer to sell the power to a buyer and turn around and sell its green attribute to another energy provider for a premium. The attribute could, for example, bring in an additional 1.5 cents/kWh, allowing the buyer to meet a renewables portfolio standard requirement and/or keep customers happy while permitting the generator to cover its higher costs. "Green tags allow for more flexibility," Hamrin added. Southern California Edison is not, however, sold on the idea. If green tags do emerge, "many important 'devils in the details" must be addressed to ensure they support the State's ultimate goal of incentivizing the development of new renewable generation resources, not merely trading tags," said Pedro Pizarro, Edison vice president of power procurement. A bigger issue, yet unresolved, is who owns the green attribute of renewable supplies, with Edison and Pacific Gas & Electric arguing they own the renewable power they have under contract, green attribute and all. Under the law creating the original renewables portfolio standard mandate, utilities receive credit for existing renewables used to meet the 20 percent green requirement. At issue is the status of new renewables deals in light of a Federal Energy Regulatory Commission ruling. "With any standard new Public Utility Regulatory Policy Act contract, the renewable credit belongs to the developer unless the state says otherwise," said Nancy Rader, executive director of the California Wind Energy Association. A proceeding is under way at the California Public Utilities Commission that will decide that matter, she said. Elizabeth McCarthy.

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Accelerated RPS Bill Vetoed

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