CEC Integrated Energy Policy Report Still Thin on Details

Following admonishments from a state legislator to sharpen its analytical toolbox, the California Energy Commission?s recently released Integrated Energy Policy Report still lacks an edge on analysis of direct access and other key issues. The long-awaited report is meant to serve as an analytical guide for politicians? and policy makers? energy planning. ?It?s a good first attempt, but the [energy commission] needs a stronger planning role,? Susan Kennedy, California Public Utilities Commission member, said. In a September letter to the CEC, state Senator Debra Bowen (D-Redondo Beach), coauthor of legislation that required the report, said the draft report issued that month came up with recommendations or mixed in suggestions from previous work that lacked detail and analysis. ?Ambiguous recommendations to ?promote customer choice? and ?encourage distributed generation? should be deferred until the energy commission can support how and why they should be implemented as part of a comprehensive energy policy,? said Bowen. The ?draft final? report, issued late last week, will be up for a vote by the CEC on November 12. In it, recommendations for direct access and the core-noncore system in which large users can leave the grid while small users must stay with bundled utility services still have a tentative quality. ?Questions now are being asked,? noted the report, about whether direct access is still a good idea for large customers and whether suspension should be lifted. If the answers are yes, the state should examine the natural gas market as a possible model for the electricity market, advised the report. ?Conceptually, a core-noncore structure in the electricity market, with very explicit contractual conditions for customers to return to their original supplier, could allow utilities to plan with more certainty,? concluded the report, treading softly on the issue. With the natural gas core-noncore market system, large customers sign direct-access pacts, while smaller customers use investor-owned utilities? power. The report ventured that the success of distributed generation will turn largely on increasing customer awareness, offering subsidies to offset installation costs, and funding research to advance the technology. Absent from the analysis is consideration of whether DG is more reliable and efficient than renewables, observed a source from the Capitol. ?There is an active debate over what kind of DG people want in their neighborhoods. The CEC ought to be aware of that debate,? said the source. Kennedy added that the report has other problem spots too?including its call for the CEC to take over transmission permitting. Kennedy argued that this would add a step for projects in which the CPUC already has authority. Despite touting state agencies? cooperative efforts this past year, CPUC president Michael Peevey insisted in a recent letter to the energy commission that his agency is not about to relinquish its role in transmission permitting. According to a source close to policy makers, the CEC?s bid to take over transmission permitting might have a shot, but new legislation would need to be passed, with the inevitable debate over language. Pointing to utilities? big appetite for renewables, the CEC report recommended that the 2017 target for utilities to have 20 percent of their electricity provided by renewables should be accelerated to 2010. A ?more ambitious target? was suggested for 2020 but not specified. Southern California Edison reported that renewables will likely account for nearly 20 percent of its power purchases this year. Pacific Gas & Electric and San Diego Gas & Electric also said they will likely reach renewables goals before 2017. California is the nation?s second-largest consumer of natural gas, and natural gas?fired generation is expected to increase even further by 2013, found the report. In another broad assessment, the report found that demand for natural gas facilities will sharply drop if its recommendations to accelerate renewables use are adopted and current energy-efficiency and demand-side management funding is maintained. Also recommended was increased funding for natural gas efficiency programs. After the CEC votes on adoption of the report, it will be sent to the legislature and governor. The governor may accept its suppositions, but he could also reject them and rewrite parts or all of the document.

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CEC Integrated Energy Policy Report Still Thin on Details

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