Juice: Current’s Chronicle

By Published On: January 11, 2013

Editor’s note: Current weighs in on last year’s issues--highlights and lowlights. Some energy policy issues reshape and/or redefine our energy future, while others, including, faux pas, are best left in the wings. Exasperated efficiency--State agencies say zero-net energy buildings are impossible if standards aren’t mandatory. The apparent conflict between the grid operator and California Public Utilities Commission obstructs conservation measures. There’s a failure to incorporate efficiency into energy supply planning, including the need for developing new fossil-fueled power projects. But, the California Energy Commission hasn’t been hindered from pushing the envelope on efficiency to save money and cut greenhouse gases. Last year, it continued to award grants and make sizable efforts to curb energy waste in buildings and gadgets. The Energy Commission specifically approved groundbreaking standards to slash avoidable energy use in battery chargers used to power cell phones, laptop computers, power tools, and other devices. The agency also revamped efficiency standards for commercial and residential building lights, widows, and insulation. It set new efficiency standards too for a variety of appliances that consume significant amounts of energy and/or water. Unpredictable nuke--A year without 2,200 MW of baseload fission electricity from the San Onofre Nuclear Generating Station sent the grid operator and merchant power plant owners scrambling. The California Independent System Operator spent more time modulating the grid than replacing the power to keep the juice flowing. Independent producers jumped in to profit from the unexpected change in regional fluctuations. The outage of the biggest plant in Southern California also sent a message to a populace that suffered nuclear ennui. Suddenly, the prospect of a state without one, maybe two, nuclear plants may turn out to be an idea whose time has come. The public was reacquainted with the terribly long-lived toxic radioactive waste, which has nowhere to go but to be effectively buried on-site. Then there’s the cost--which now appears to be over $1 billion so far--with the plant shut down. There’s the state policy that discourages new nukes and bends heavily towards renewables. Primary owner Southern California Edison clings to the hope of restarting one of the San Onofre nuclear units temporarily. But, even the pro-nuke Nuclear Regulatory Commission is questioning that move. The January 2012 outage marked a sea change. NRC opened up public participation after the appointment of new commission chair Allison Macfarlane in July 2012. It has also not approved any 20-year license extensions--like the one sought by Pacific Gas & Electric for its Diablo Canyon plant--since the leadership change. The process, however, continues for Diablo. Prior to 2012, the commission rubber stamped 20-year extensions that apply to two-thirds of the nation’s operating nuclear facilities. Communities choose--A second community choice aggregation program in California emerged in 2012. Following Marin Energy Authority’s lead two years ago, San Francisco began moving to allow utility customers to obtain non-Pacific Gas & Electric distributed electricity in September. Customers may opt to stay with the utility, but if not, the counties plan on finding sources that carry more renewables and less baggage than the utility. For 99 years, San Francisco has been trying to distance itself from PG&E, which has its massive utility headquarters downtown. Prior to the launch of community choice, the county lost to the utility in every legal skirmish. Sonoma County began serious work on choice last year. Independent energy producers Shell, Constellation (now IHI), Direct Energy, ConEdison, GDF Suez, and Hess, all expressed eagerness to supply communities that offer choice in electricity providers in California. Shell has been the success story so far with its Marin contract. Sonoma, if it goes for choice, aims to use and encourage as much community-based distributed renewable energy as possible. Carbon auction in action--The year 2012 brought another one of those “let’s just see how California does and then we might consider it” moments in November with the launch of the state’s carbon credit trading market. Engineered by the California Air Resources Board, the governor signed legislation to fine-tune the market program in October 2012. At the time, the state expected credit trading to generate between $600 million and $3 billion/year. Alas, the state took in $55.8 million in the first auction. That was only the first. Income might get better considering there are two more scheduled auctions this fiscal year. California budgeted using $500 million to help fill the general fund. Another $500 million was supposed to go to greenhouse gas reduction projects. But, it looks more like $200 million than $1 billion in all for California. Meanwhile, utilities received $230 million. The utility amount is being parsed by the California Public Utilities Commission. Whatever money there is to be grabbed from the market-driven system to reduce greenhouse gases remains only partially set. A state law that requires 10 percent of auction revenue to be used to reduce emissions in “disadvantaged” communities was passed in September 2012. Unlike the California Independent System Operator’s wholesale electricity market, the carbon market simply allows trading--it does not manage it. Trades go on bilaterally or with middlemen financiers. As anyone who watches open markets will tell you, loopholes were exploited in order to make money and subvert intentions. The primary one is “resource shuffling.” Basically, a greenhouse gas-heavy source of electricity masks as a clean one on the market. The Air Board gave utilities and power suppliers temporary immunity from liability for that in October. Trades were pegged at $10.99/ton in the initial auction. Carbon trade watchers worldwide agree that the price has to reach $30/ton to dampen emissions enough to create real change. The next auction is set for Feb. 19 this year. “Smart” meters opt-out--Uncharacteristically, it was the “little people,” not lawyers, who counted. Perhaps regulators got tired of being nagged for two years by those who did not embrace the concept of digital meters--no matter how good the advertising. Kinda’ like Castor oil. They’re not going to swallow it. They don’t want to pay for it. And they threw enough tantrums to get the CPUC to create an opt-out program. In February 2012, the commission allowed PG&E to spend $113.4 million on its opt-out plan. There are 90,000 people on its waiting list to be de-digitized at a cost of an initial $75 plus $10/month extra. PG&E was accused of infiltrating an opt-out organization by using a false identity in April 2012. In Sacramento Municipal Utility District territory, as of Jan. 1, 2013, new customers are unable to decline smart meter installations. While a movement north of Santa Cruz, opt-outs proved no big deal in Southern California. There are an unknown but strong number of opt-outers who are paying their energy bills, but not the opt-out portions. So far, none have been cut off for that transgression. The opt-out movement also begs the policy question of why ratepayers are spending $6 billion for meters that are expected to be obsolete in three years, and in many cases already are obsolete. The Division of Ratepayer Advocates questioned that matter in May, warning estimated savings from the investment are overstated. Where art thou renewable storage?--How to develop a solid and cost-effective renewable energy storage policy continues to befuddle state regulators and stakeholders although it’s seen as key to a successful 33 percent or more renewables mandate in the state. Regulatory staff belatedly released an interim report on energy storage policy but made no specific recommendations--including whether to set storage procurement targets for utilities as directed by state legislation. Utilities, consumer, and environmental advocates also can’t agree on how to define “cost effectiveness” of the wide range of new and emerging storage technologies, or barriers to their advancement--be they batteries, air compressors, pumped hydro or other technologies not yet on the horizon. Also not yet agreed upon is whether to give renewable storage an advantage by making it a preferred energy resource in the state, alongside efficiency and renewable generating stations in the state’s “loading order.” Gas safety--Current’s not picking on Pacific Gas & Electric, because new controls on pipeline gas safety extend to San Diego Gas & Electric and SoCal Gas, but PG&E’s 2010 fatal San Bruno explosion prompted regulators’ keen interest in protection. In the aftermath, a red-faced CPUC did a u-turn, drilling down on utilities’ data keeping, safety procedures, and new infrastructure investments. The commission disallowed two-thirds of PG&E’s request for new rates for pipeline safety in its last meeting of the year while penalties and settlements still pend. One high-profile mediator in the settlements, former U.S. Sen. George Mitchell, was tossed. SDG&E and SoCal Gas plan to spend $11.2 billion for new pipeline infrastructure. A San Francisco Chronicle editorial calling for the governor to fire commission president Mike Peevey early in the year--calling him a “lapdog” on the gas safety issue--went without heed.

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