New Laws and Dead Bills

By Published On: October 16, 2009

The governor made good on his threat to veto legislation setting a one-third alternative power portfolio mandate for private and public utilities just before midnight October 11. Rejecting SB 14 and AB 64 allows Governor Arnold Schwarzenegger’s executive order issued last month to be the vehicle for setting a higher renewable energy standard. It directs the California Air Resources Board to develop ground rules requiring utilities to provide consumers with 33 percent renewable energy by 2020. The renewable legislation’s limit on power imports from out-of-state was a key reason for the governor’s veto. Stakeholders in the renewable power community were divided. Some insisted the legislation would spur in-state renewable development and others asserted it was overly complex and would hamper alternative power development. SB 14 and AB 64 proponents included The Utility Reform Network, labor unions, some in-state renewable groups, and environmentalists. Opponents included Southern California Edison, the Sacramento Municipal Utility District, other utilities and the Independent Energy Producers, some of whom pushed for an executive order to increase the supply of renewable-powered electricity. “We look forward to working with the Air Resources Board and the Legislature on meaningful [renewable portfolio standard] reform that will actually result in new renewable development in California and the West, rather than delay such development,” said Steven Kelly, IEP policy director. The state chief signed a number of bills that make far smaller changes to the energy industry. Some legislation expands the use of a set price–or “tariff”--for small renewable project developers. Another bill eliminates price caps on low-energy users. Among the bills approved was SB 32 by Senator Gloria Negrete McLeod (D-Chino). It expands the project size cap from 1.5 MW to 3 MW for renewable generating units eligible to receive established, long term payments for their output. The California Public Utilities Commission is to set the payment under a so-called “feed-in tariff,” which also is to include standard, public contracts. The law caps the availability of the feed-in tariff to the first 750 MW of “above market” renewable energy supplies procured. “In order to meet our greenhouse gas emission reduction goals and a renewable portfolio standard of 33 percent by 2020, we will need to use all of the tools available under our existing programs to get to that goal,” states the governor’s signing message supporting the feed-in tariff expansion. It is aimed at helping bring more solar power online. The governor also signed AB 920 by Assemblymember Jared Huffman (D-San Rafael). It allows ratepayers who install solar or wind generators on their property to be paid by their utility for surplus electricity they produce over a year. The price is to be set by regulators. “Instead of writing a check to your utility company, you’ll be getting a check back,” said Bernadette Del Chiaro, clean energy advocate with Environment California, which sponsored the legislation. This “net-metering” of qualifying systems is capped at 2.5 percent of a utility’s aggregate peak demand. For instance, Southern California Edison’s estimated peak demand for this year is around 22,130 MW and Pacific Gas & Electric’s approximately 20,520 MW. Schwarzenegger signed SB 695 by Senator Christine Kehoe (D-San Diego), which eliminates the monthly bill cap on ratepayers whose energy use is within 130 percent of a set baseline. Rate increases are tied to the previous year’s consumer price index. The rate cap was put in place during the 2000-01 energy crisis to protect low energy users from high power prices. Large energy consumers insisted they bore the financial brunt of the capped rates. They eventually reached a deal with residential consumer advocates, who were concerned about rekindling “direct access,” which the bill slightly expands. Direct access was granted to consumers during the 1996 electric industry deregulation. It allows users to bypass their utilities and buy directly from other sources. Except for grandfathered contracts, the practice was discontinued after the 2000-01 energy crisis. Kehoe’s bill also prohibits regulators until 2014 from requiring residential time-of-use rates, which reflect the real-time cost of electricity. These rates are used to encourage customers to shift their energy use away from times of high demand. Also signed into law was a bill by Assemblymember Nancy Skinner (D-Oakland) expanding Title 24 energy efficiency standards set for new buildings. AB 758 is estimated to create up to 6,000 negawatts. The projected greenhouse gas reductions are forecast to be the equivalent of 12 percent of the carbon reduction mandate under AB 32, the state’s climate protection law. AB 758 is expected to conserve both power and water resources. It directs the California Energy Commission to develop a comprehensive program by March 2010, which is to include mandates and incentives for retrofitting aging commercial and residential buildings to avoid wasteful energy use. SB 17 by Senator Alex Padilla (D-Pacoima)--also signed--orders the California Public Utilities Commission to develop a “smart grid’ plan for the state by June 2011. It essentially codifies the CPUC’s ongoing smart grid proceeding. A so-called smart grid refers generally to a two-way digital flow of communications between customer “smart meters” and utilities. Other bills approved just before midnight on October 11 include: -SB 412 by Kehoe, which extends by four years, to the end of 2015, subsidies given to wind power and fuel cells. The ratepayer-funded Self Generation Incentive Program run by the California Public Utilities Program supports these no- or low-polluting energy technologies. Annual funding is $83 million, with per watt payments capped at 3 MW of installed capacity. -SB 581 by Senator Mark Leno (D-San Francisco) expands the credits Pacific Gas & Electric must give to the City and County of San Francisco for excess renewable energy San Francisco feeds into the distribution system. The net metering previously was limited to surplus power generated by San Francisco’s photovoltaic systems. AB 581 expands the net metering to wave energy and output from other alternative power units deemed “renewable” under the state’s Renewables Portfolio Standard. -SB 605 by Senator Roy Ashburn (R-Bakersfield) exempts from California Environmental Quality Act review until 2013 short pipelines in Kern, King, and Tulare counties that carry methane gas produced by cows--biogas--to natural gas distribution facilities. -AB 45 by Assemblymember Sam Blakeslee (R-San Luis Obispo) requires counties to enact wind ordinances for wind energy systems up to 50 kW to ease the local permitting process. -AB 262 by Assembly Speaker Karen Bass (D-Los Angeles) authorizes the California Energy Commission to spend federal stimulus money received for energy efficiency, renewables, and conservation. The CEC could not spend or allocate federal money--currently about $280 million--without state permission. -AB 521 by Assemblymember Hector De La Torre (D-South Gate) opens the door to allowing local agencies to lease utility properties for park purposes. -AB 696 by Skinner allows CPUC staff directors to approve investor-owned utility disposition of property valued below $5 million. Dispositions of property include creations of conservation easements. Currently, approval is sought via advice letter--a process subject to lower scrutiny than official regulatory hearings. PG&E is expected to execute numerous, “potentially hundreds,” of easements as required under its 2003 bankruptcy settlement, according to the bill analysis. -AB 1031 by Assemblymember Bob Blumenfield (D-San Fernando Valley) expands local government programs to include college campuses, allowing them to use surplus renewable energy generated from one building to lower the generation charged on other buildings -AB 1110 by Assemblymember Felipe Fuentes (D-Sylmar) allows fossil-fueled distributed generation--such as fuel cells--which emit lower carbon emissions than a co-generation facility, to get the same natural gas price discount as a cogenerator. Among bills that the governor vetoed was SB 42. This Blakeslee measure would have required a peer-review of the PG&E’s study assessing the seismic impacts of its 2,000-plus MW nuclear power plant along the central coast. Governor Arnold Schwarzenegger called the legislation “unnecessary,” saying a law on the books addressed the issue. A law passed in 2006 requires the Energy Commission to conduct a comprehensive study of multiple aspects of the Diablo Canyon power plant and its radioactive risks, including aging-related degradation, impacts of a major disruption, and implications of storing high-level nuclear waste on site.

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