Legislators Comb Regulatory Energy Plans

By Published On: February 24, 2006

If the regulatory version of the Million Solar Roofs program fails to significantly increase solar power in the state, the program may be derailed, said California Public Utilities Commission president Mike Peevey. During a February 22 Senate Energy, Utilities and Commerce Committee hearing, Peevey sought to placate the committee chair, Senator Martha Escutia (D-Whittier), who raised concerns about the new program’s cost and effectiveness. The plan set out by the commission would cost about $2.55 billion over 10 years. Peevey justified the commission’s California Solar Initiative’s price tag—$750 million more than envisioned by the legislative version of the program—because it has a ”broader reach” than last year’s SB 1. The regulatory initiative will make California a leader in renewables and help make the solar industry self-sufficient, he added. SB 1 was projected to cost $1.8 billion. Bernadette Del Chiaro, clean-energy advocate for Environment California, said the regulatory solar program is more costly because it includes additional research funds, money for a pilot program for solar hot water systems, and a set-aside for public outreach. SB 1’s estimated cost also did not include $350 million earmarked from the California Energy Commission’s emerging renewables program. When that amount is added to the CPUC program, its total cost rises to $2.85 billion through 2017. The regulatory program is estimated to cost an average ratepayer about $1 a month Peevey reassured Escutia that the program included safeguards to keep it from becoming a boondoggle. That includes a “trigger” giving regulators the “flexibility to cut back or change its directions,” if needed. A program assessment is expected to be conducted in about two years. After repeated grilling, Peevey said the commission had conducted a cost-benefit analysis of the program. It is slated to add 3,000 MW of solar power over the next decade. He agreed to provide the analysis to Escutia, adding that the commission will be spending the rest of the year developing incentive standards based on actual output of a solar power system to replace controversial capacity-based incentives. What deserves the most scrutiny, said Del Chiaro, “is the amount of money the utilities or the administrator of the program will get just for handing out the rebate checks.” Escutia also wanted to know what guidance Peevey would provide to help protect ratepayers from high natural gas bills. The senator urged the development of a state master plan on natural gas to provide a clearer picture of future demand and costs, including which liquefied natural gas projects are needed and preferred. “We don’t want to be an LNG colony,” she warned. “I am concerned about fake crisis,” she said, adding that now was the time to ask questions about projected need in a growing state. Instead of developing a blueprint for natural gas policy and planning, Peevey said, he preferred to let the market decide the matter. He added, “We are not equipped to do an analysis.” A surprised Escutia shot back, “If your aren’t, who is?” The Senate committee will hold an information hearing on natural gas March 7. Escutia also asked the regulator to consider providing input on her bill SB 1059. That legislation seeks to have the California Energy Commission designate transmission corridors in the state (Circuit, Feb. 17, 2006). Dana Appling, Division of Ratepayer Advocates director, also faced questioning from the committee. Unlike Peevey, she faced little criticism. Appling pointed out that Escutia’s SB 608, passed last year, had given her agency some needed independence in the budgetary and legal areas. “Now we have a cooperative relation with the [CPUC] president’s office,” she said. The DRA director now has her own attorney, and the advocate no longer solely borrows CPUC legal staff.

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