Climate Change: It’s Legacy Time for Panoche & PG&E

By Published On: October 26, 2012

Panoche Energy Center and Pacific Gas & Electric on Oct. 23 continued to argue before the California Public Utilities Commission about which company should assume greenhouse gas compliance costs under the state’s carbon cap-and-trade program. The disagreement continues just weeks before the state holds its first carbon auction under the program on Nov. 14 and Panoche may have to plunk down money to purchase rights to cover its emissions. PG&E has a power purchase agreement with Panoche that was signed before the state enacted its 2006 climate protection law, AB 32, and set up the carbon cap-and-trade program--under which the auction is being held--to enforce greenhouse gas reductions. Panoche says the contract does not address which company should cover the costs of complying with greenhouse gas rules, but PG&E maintains the generator is responsible. Panoche says it’s not alone. It notes that there are several such agreements between utilities and power producers, which have been dubbed “legacy contracts.” It claims that to level the playing field with producers under post-AB 32 contracts that the commission should require utilities to cover the compliance costs--or at least part of them. PG&E, however, has been resistant. In the latest development in the ongoing spat, PG&E moved to enforce the alternative dispute resolution provision of the power purchase agreement to settle the matter. This raised a howl from Panoche. The company claimed it’s inappropriate to settle a matter of public policy--that is legacy contracts--through alternative dispute resolution as part of an isolated disagreement over a contract. The matter remains pending before the commission. * * * * * California’s multi-agency Climate Action Team wants incentives for low-income utility customers to purchase air conditioning for their residences to protect public health during heat waves. The team is taking comments on its interim guidance for extreme heat waves. The guidance points out that 650 Californians died from heat-related causes during the heat wave of 2006. Temperatures stayed above 100 degrees through much of the state for 10 days. The team wants the Department of Health, California Public Utilities Commission, and others to work with utilities to improve access to air conditioning to head off future deaths, including through incentives for seniors and low-income groups. Heat spells are supposed to become more common due to global warming, the team notes. * * * * * Carbon dioxide emissions from burning fossil fuel are continuing to decline, according to data the Energy Information Administration released Oct. 25. In the first seven months of this year, emissions totaled 3,062 million metric tons. That’s down from 3,232 million metric tons in the first seven months of 2011 and 3,269 million metric tons the first seven months of 2010. The data show that nationwide emissions peaked in 2007 and generally have been declining since then. Previously the administration attributed the decline to lower economic activity, but also to improvements in gas mileage, energy efficiency, and more renewable energy. The trend is outlined in the administration’s latest Monthly Energy Review, which is packed with tables and graphs, but includes no narrative to explain the numbers.

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