CEC Warns That State Risks Green Goals Failure

California is likely to miss the mark in both its renewables portfolio standard and climate change programs unless it makes major policy changes, the California Energy Commission warned November 17 in its Draft 2007 Integrated Energy Policy Report Update. According to the agency, needed changes include revamping how the portfolio standard is administered and requiring local governments to incorporate energy-efficiency and greenhouse gas emissions reduction measures into land-use decision making. "Renewable energy in California's generation mix has remained nearly constant rather than increasing by at least one percent per year as required," stated the draft report. To meet the state's goal of 20 percent renewable power by 2010, utilities will have to build 5,353 MW of additional renewable power capacity over the next four years, it observed. When finalized, the Integrated Energy Policy Report is supposed to guide the Legislature and governor in establishing California's energy future. "Smart land use" and "intelligent transportation" are expected to serve as the cornerstones for reducing 5.5 million tons of carbon dioxide by 2010 and 18 million tons by 2020, "a major portion of the [state's] total greenhouse gas reduction goal," the commission noted. Yet, it added, "No specific mandate requires that a [local government] general plan include an energy element and only some 10 percent of California's general plans do." To help meet the state's renewable power goals of 20 percent by 2010 and 33 percent by 2020, the agency called for numerous policy changes to remove five major obstacles identified in the report. They are: • Inadequate transmission. • Complexity and lack of transparency in the contracting practices of investor-owned utilities for renewable power. • Lack of planning for contract failures and delays. • Questions about whether supplemental energy payments from the state can be used to help secure financing for renewable power projects. • A lack of progress in squeezing more energy out of wind power facilities by replacing aging turbines with more efficient models. To overcome these barriers, the Energy Commission stated, "The state needs to address these issues quickly." It recommended some short-term actions, including: • Enforcing penalties of up to $25 million a year against investor-owned utilities for failing to increase their use of renewable power on schedule. • "Requiring utilities to clarify least-cost, best-fit criteria and their application in selecting projects." • Making natural gas price forecasts used to determine baseline renewables prices consistent with forecasts used in decision making about energy efficiency and other aspects of utility operations, as differences can adversely affect renewable power compared to other options. • Requiring utilities to accept all renewable power offers under that baseline. • Allowing utilities a higher rate of return on renewable power projects. In addition, the commission recommended pushing for Federal Energy Regulatory Commission approval of the California Independent System Operator's proposal to establish a unique category for renewable transmission projects. The draft report further urged the commission's sister agency, the California Public Utilities Commission, to join it in seeking "to compel" Southern California Edison to build the transmission needed for full development of Tehachapi-area wind resources by 2010 "or allow other transmission developers to step in." The commission also recommended requiring utilities to contract for 30 percent more renewable power than they actually need to meet the 20 percent goal in 2010 to provide a cushion in case contracts fail or projects are delayed. Meanwhile, the CEC said it should establish a "green team" to assist renewable power project developers in obtaining permits and advancing construction. State incentives for wind turbine repowering should be studied too, the agency recommended. In the longer term, the commission recommended that the state consider system benefit charges or feed-in tariffs to support renewable power development. It observed that in carrying out California's climate change law, state agencies will need to sort out the relationship among renewable energy certificates, carbon emissions trading, and the renewables portfolio standard. The CEC called for "changing or eliminating the market price referent/supplemental energy payment award structure" if it would improve the "financeability" of the awards for project developers. Right now, supplemental payments are perceived as uncertain over the life of renewable energy projects since the needed money is subject to the short-term legislative appropriations process. On land use, the commission recommended that the state require cities and counties to begin including energy elements in their general plans and to develop greenhouse gas emissions reduction plans as well. The state also should broaden its definition of "smart growth" to include a focus on energy. The current smart-growth focus on reducing vehicle miles traveled must be expanded, the CEC said, to emphasize distributed generation, on-site use of renewable energy, orientation of structures toward the sun, improved shading, and use of roofing, appliances, and other building materials that are energy efficient. In addition, it recommended that utilities get involved in land-use planning and decision making at the local level to promote clean on-site generation, enhanced energy efficiency, water conservation, waste reduction, and other measures that conserve energy. - William J. Kelly

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CEC Warns That State Risks Green Goals Failure

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