Reflecting increasing political momentum behind green energy a key Assembly committee passed legislation April 1 to require that one-third of California\u2019s power come from non-fossil sources by 2020. The panel acted on the higher standard for both investor- and publicly-owned utilities just one day after the state Senate passed a bill to increase the renewable energy mandate from 20 percent to 33 percent. Democratic leadership made early passage of a 33 percent green energy mandate a priority. The governor also insists on a ratcheting up the state\u2019s renewable energy standard. In the upper chamber, a renewable energy bill by Senator Joe Simitian (D-Palo Alto), SB 14 (Circuit, March 20, 2009), passed on a 21-16 vote March 31. In the Assembly, despite significant opposition during a day-long hearing before the Utilities & Commerce Committee, the panel passed AB 64 by Paul Krekorain (D-Glendale) on an 8-5 vote. The vote came after the lawmaker agreed to drop certain provisions. Cut, at least for now, were parameters on renewable energy credits, including limits on the role they could play in reaching the higher alternative power standards. These credits reflect the green quality of a power project, not its energy output. Krekorian also agreed to drop a section to allow renewable projects with a capacity of up to 5 MW to qualify for set, long-term payments--known as \u201cfeed in tariffs\u201d--in place of the current 1.5 MW project cap. \u201cThere will be a continuing dialogue as we move to the [Assembly] Natural Resources Committee,\u201d Krekorian said of the debate over what percentage of renewable energy credits to count towards public and private utilities\u2019 33 percent alternative power mandate. Those credits are assets traded in the market, which are expected to help fulfill California utilities\u2019 33 percent renewable portfolio mandates. They represent the \u201cgreen\u201d part of an energy project. For instance, a utility may have too many fossil-fueled plants in its portfolio to meet state law. It\u2019s envisioned that the company could buy renewable credits from solar or wind projects to help satisfy the alternative power mandate. Originally, the 20 percent mandate was supposed to engender new renewable energy facilities within state boundaries. The dearth of new transmission lines to bring green power to market, plus the current lack of financing to build renewable energy plants, are opening the door to imported renewable credits. The bill sought to address how large a role these green credits attached to out-of-state \u201cgreen\u201d power should play. Some environmental and renewable energy representatives raised concerns about importing large amounts of renewable credits because in-state fossil-fueled generation is likely to increase to meet electricity demand and reliability. While the provision on imported green energy tags may be reinserted into AB 64, the feed-in tariff is expected to be addressed in a separate bill. At issue is the size of facilities that would qualify for standard offer contracts. The California Energy Commission recommended a maximum renewable project capacity of 20 MW. AB 64 raises the 20 percent renewable standard to 25 percent in 2015 and 33 percent in 2020 for all energy providers. It applies to investor-owned utilities, public power agencies, and non utility energy service providers. It seeks to lower greenhouse gas emissions, create jobs, and improve the economy and environment. AB 64 is an outgrowth of a months-long bipartisan process involving multiple stakeholders. Much of the April 1 debate generated by Krekorian\u2019s bill focused on how to contain the costs of wind, solar, geothermal, biomass and other non-fossil power projects. Regulators, utilities, as well as representatives of the commercial and industrial sectors, generally support keeping the current renewable benchmark that measures project prices. It is known as the \u201cmarket price referent\u201d and moves up and down with natural gas price estimates. The market price referent, however, does not apply across the board. \u201cIt is outrageous to use it to thwart competition, which will bring the best and lowest priced renewable projects,\u201d said Jan Smutny-Jones, executive director of the Independent Energy Producers. The benchmark, he noted, does not apply to utility-owned generation or bilateral deals and significantly impacts more expensive biomass and geothermal projects. Regulators and consumer advocates warned that changing the pricing mechanism would invite uncertainty and potential litigation. Krekorian pointed out that the prices of fossil fuel-powered projects aren\u2019t capped. Ratepayers pay the fluctuating price of natural gas used to power generating units. The decision to create a target price for a certain type of generation in a restrained market place was \u201carbitrary,\u201d the lawmaker noted. Two committee members wanted assurances that a 33 percent renewable portfolio standard wouldn\u2019t divert attention away from efforts to boost energy efficiency, which the state maintains is far more cost-effective and curbs carbon. \u201cWhat about the other 67 percent of power?\u201d asked Assemblymember Sam Blakeslee (R-San Luis Obispo). He said the 33 percent renewable mandate must be harmonized with efforts to address climate change under AB 32. A section of AB 64 that received little support would create a new agency to site transmission and act as a funding backstop for high voltage transmission projects. This new agency would be given $6.4 billion in bonding authority. Under the bill, a Renewable Infrastructure Authority would be created to site transmission in zones identified as rich in renewable resource potential by the Renewable Energy Transmission Initiative. Other areas of widespread disagreement included the bill\u2019s enforcement provisions-- specifically whether there were enough teeth in it to ensure compliance. Penalties assessed by the California Air Resources Board on munis for non-compliance was also a sore point for public power agencies. Munis warn that penalties will do little more than hurt their customers. Assembly energy committee member Felipe Fuentes (D-Sylmar) urged that regulators use penalties they levy against munis to limit the harm to their customers.