33% Renewables Bill Goes to Finals

By Published On: August 20, 2010

Legislation to establish a 33 percent renewable energy portfolio requirement cleared its final committee hearing and appears destined for a gubernatorial signature flourish. The Assembly Appropriations Committee approved SB 722, which is supported by the Democratic leadership, on a 12-5 vote August 12. “There’s a lot of momentum behind the bill,” said Matt Freedman, The Utility Reform Network attorney. The Assembly may take up Senator Joe Simitian’s (D-Palo Alto) SB 722 next week. Recent amendments to the 33 percent alternative energy bill delete references to the state’s climate protection law, AB 32. That law could be undone at the ballot box this November. Eliminating ties between SB 722 and AB 32 would make the one-third renewables portfolio standard sacrosanct. Although last year the governor vetoed a bill that would have legislatively raised the renewable bar from 20 percent to 33 percent, the California Air Resources Board is pursuing the standard on a regulatory basis. As the bill heads to the finish line, key provisions remain in flux. Pacific Gas & Electric and Southern California Edison oppose the amended measure. Under the current version of the bill, SB 722 specifies that 75 percent of the 33 percent standard may be met with renewable energy imported into the state as long as the generating facility connects to the state grid. Eligible out-of-state solar, wind, and other non-fossil resources must also be delivered into California in real time—scheduled for nearly immediate delivery into the state. “A lot of folks think they can meet the requirements,” said Freedman. TURN and advocates who eye increased in-state renewable development instead of importing out-of-state alternative energy agreed to loosening the bill’s out-of-state energy supply restrictions to avoid challenges under the federal Commerce Clause. That clause prohibits interference with the flow of products across state lines. PG&E and Edison warned that the measure’s electricity deliverability requirements interfere with their ability to grow their renewable portfolio. PG&E wants only 60 percent of the power to have to comply with the non-fossil electricity deliverability limitations. The utility also continues to push to have wind and hydro from British Columbia considered eligible under SB 722. PG&E and Edison want more flexibility. PG&E seeks to push back the compliance requirement for meeting the existing 20 percent renewable mandate beyond 2013. The initial deadline was 2010 for a 20 percent renewable quotient in utility supply portfolios. Investor-owned utilities insisted they could not meet that one-fifth renewable requirement and regulators allowed them to count non-performing (not delivering) contracts until 2013. Independent power producers are calling foul. Jan Smutny Jones, Independent Energy Producers executive director, warns that the bill “sets a very dangerous precedent that will undermine the competitive market.” He said the measure puts no cost controls on utility-owned renewable generation. In addition to PG&E and Edison, the bill applies to San Diego Gas & Electric, municipal utilities, and energy service providers. Investor-owned utilities supply 68 percent of the state’s electricity; munis 24 percent; and energy service providers 8 percent. Simitian’s measure also caps the use of renewable energy credits—the green attribute of solar or wind projects—at an average 10 percent of a utility’s renewable obligation over three years. The size of the role that the credits can play is contentious. Some consumer advocates and the union representing utility employees insist energy credits should play only a small part in the one-third renewable portfolio standard. Others, including some renewable generators and investor-owned utilities, have pushed for increasing the green tags as a means of lowering the cost of meeting the 33 percent standard. The California Public Utilities Commission is to set supply cost caps and penalties for non-compliance under the bill. That hasn’t pleased everybody. The 33 percent renewable goal “cannot be solely addressed by delegating the creation of an overall cost cap to the CPUC to prevent unreasonable rate increases,” stated PG&E vice president Ed Bidwell, in an August 13 letter to Simitian. Bidwell urges weakening current targets. The extent of PG&E opposition to SB 722 riles consumer advocates. “They have taken the most regressive position,” complained Freedman.

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