JUICE: Naughty & Nice

By Published On: December 19, 2008

In our final issue of the year, we here at Circuit wrap up (with a big red bow) our expert insights on key California energy events in 2008. Our analyses are gleaned from a confidential report leaked from the North Pole that details which regulators and policy makers are sleepy or awake, and naughty or nice. As independent journalists, we realize Mr. Claus may have a conflict-of-interest in his energy use. His polar home’s base continues to melt. His unionized elves are attempting to use labor laws to get their toy factory moved to higher ground. His reindeer have been targeted by the organization for the ethical treatment of animals. Still, in the leaked report, we find ol’ Saint Nick is delighted with all the ongoing advertising goosing a big boost in energy efficiency. However, top of his naughty list is the California Public Utilities Commission for making nice with the investor-owned utilities and giving them millions for questionable energy savings. The North Pole memo reveals the actual energy and cost savings investor-owned utilities claim may be exaggerated. As a result, the memo calls on independent third party elves to verify that the promised energy savings, claims of greenhouse gas reductions, and avoiding new power plants becomes reality under the CPUC. Just as Santa was finishing up his list, regulators voted to gift wrap utilities’ potential rewards under the tree. Circuit and Kris Kringle put California’s governor on the nice list for using his bully pulpit to push for a 33 percent renewables standard. Even nicer is the California Energy Commission’s effort to require utilities to pay long-term, transparent prices (as in not on the secret list) for wind, solar and other alternative energy supplies--i.e., feed-in tariffs--to make the mandate a reality. Although some think they’re naughty, big new transmission lines are expected to ship renewable energy around the state. But, power covered by feed-in tariffs uses the existing grid. That’s because the tariffs encourage building renewable projects near existing high voltage lines. Placing non-removable price tags on some of the solar, wind and other alternative power gifts helps keep the 20 percent renewable portfolio standard and Santa’s neighborhood from melting. Secret investor-owned utility deals, which place the financial onus on renewable project developers, are not cutting the plum pudding. In addition, with oil dropping from nearly $150 barrel to less than a third of that, the nation faces temptations to take the easy and cheap route of continuing dependence on fossil fuel power. The CPUC gets a big candy cane for reviewing the adequacy of its safety standards for power lines. The review comes after a CPUC investigator reported that power lines sparked tragic wildfires in San Diego County in the fall of 2007 when Santa (as in) Ana winds blew. Scientists warn that drought and global warming point to increased incidence of fires in the state, which not only can be started by power lines, but also damage transmission equipment. This fall, for instance, a wildfire in Sylmar interrupted power service by scorching a Los Angeles Department of Water & Power substation. The interconnection between fires and the power system is giving rise to questions about how to design and operate the grid, including whether to place lines underground in vulnerable areas and turn off overhead lines during high winds. Santa also wants regulators to think long and hard about the adequacy of chimney safeguards on Christmas to ensure he can get up and down without a serious mishap. A New Year’s resolution by San Diego Gas & Electric to put renewable energy on the workout tread mill resulted in the utility getting the go ahead for its Sunrise Powerlink transmission 500 kV line from the desert to San Diego. While the CPUC approved the $2 billion project in time for the holidays, it may require the utility to make good on its 2009 renewables resolutions, but then, it may not. Once at the top of the naughty list was the coal-dependent utility that resisted change. This year, however, the Los Angeles Department of Water & Power came on strong with renewable energy. It reached the 10 percent mark and fully expects to hit 20 percent by 2010, making the agency one of Santa’s early stops. The LADWP threw the switch on the first phase of its 120 MW Pine Tree Wind project in the Tehachapi Mountains. It also rolled out a massive 1.3 GW solar plan as it strives to hit a 35 percent renewable energy target by 2030. The changes at the muni stem from a pledge Los Angeles Mayor Antonio Villaraigosa made to green the city and its operations. Under Villaraigosa appointees, the department laid the financial groundwork for renewable energy and enhanced energy efficiency programs by unfreezing rates to allow the cost of the green programs to be passed through to ratepayers. The muni also won a 9 percent base rate hike this year to upgrade its aging distribution system and rejuvenate its aging staff. Liquefied Natural Gas developers may need some extra egg nog. Natural gas prices, which track oil prices, have dropped precipitously and LNG projects are looking orphaned. The single project completed in Baja California, Costa de Azul, sponsored by Sempra LNG, awaits regular shipments of frozen gas from Indonesia. LNG projects off the coast of Southern California--the Clearwater Port near Oxnard and Woodside energy off the coast of Los Angeles--have barely budged since summer. The future of LNG is further eroded as ships that may carry the compressed, frozen gas from other countries are increasingly subject to pirate attacks. There are barely enough holiday cookies to go around for non-utility generators whose plants depend on fossil fuel. In general, their profits have been sinking and they are becoming targets for hostile takeovers. Solar and wind developers need some holiday cheer too. The big contract presents they got from the utilities may hold little under the wrapping because financing is drying up as the general market hits the skids. Utilities still have their gifts, though, as the state is allowing public funding for smart meters. These gizmos are nowhere near as sophisticated as this season’s video games. Still, they aim to ease utility consumer energy use tracking by replacing meter readers with remote data sensing, and are expected to help ratepayers become more aware of fluctuating price signals. While Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric sat in the CPUC’s lap, telling it they planned to spend billions of dollars on new advanced meter infrastructure, the naughty commission gave its nod and a wink but did not require that the threesome’s meters be compatible with each other. Getting the meters to communicate in the same language is likely to cost another bundle. Regulators also have yet to put time-of-use rates in place that would reward consumers for cutting back their power use at peak periods in all those gingerbread houses. Santa’s memo notes not only the good and the bad but what is missing as well. With billions being spent on smart meters, the opportunity to have them track water use went lacking. The water sector is the largest user of electricity in the state. It takes a lot of energy to transport, filter, heat, and treat water for use and discharge, so improving water efficiency saves energy. The California Air Resources Board’s embrace of a western-wide market-based cap-and-trade system to enforce greenhouse gas reductions did little for consumers’ stockings. Santa’s memo reveals little new information about the Grinch’s problems in the market and the disappointment of Europe’s carbon cap-and-trade system. Throughout the year, the Air Board hammered away at figuring out how to implement the state’s greenhouse gas reduction mandate--AB 32. But workshops (not the toy kind) on top of workshops on top of meetings on top of hearings still didn’t bring much of a conclusion by year’s end and up against its scoping plan deadline. Two of the 10 Air Board members insisted last week that a carbon tax must be included in the event the market proves unviable. That is not a ringing endorsement of a far simpler and more reliable way to cut greenhouse gas emissions. Closed-door dealing making continued apace in 2008. Although Santa’s memo did reveal he was watching the price of the renewable and fossil-fuel power deals between investor-owned utilities and developers it was redacted from the Big White Guy’s memo. As just one of Santa’s little helpers makes the season more jolly Circuit applauds hardware stores throughout the state for ensuring all the new holiday lights and the one at the tip of Rudolph’s nose are LEDs. They’re bright, they save energy. Yet there’s something not traditional about them. How do you put a square LED on Rudolph’s round nose?

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