Power Authority Waits on Governor, Launches Solar RFP

By Published On: May 1, 2004

Having been born in the shadow of the energy crisis, the California Power Authority (CPA) seems to have had a dark cloud lurking overhead ever since. A peaker initiative that sputtered, a $5 billion bonding capability frustrated by market dynamics, difficulty finding a role in the state?s regulatory regime?all have dogged the agency. The Authority also enjoyed its patches of blue, including a successful demand-reserve program and its work in calculating how much extra power the state should have on hand at all times. This year, the cloud metastasized with Governor Arnold Schwarzenegger?s proposal to cut the CPA?s funding, as well as two bills in the Legislature to dissolve the agency. Both legislative measures failed earlier this month. But the CPA, still anticipating the governor?s next move, is not breathing easy. Discussions will continue on whether to keep the agency or transfer its functions to another state body, said executive director Laura Doll. ?We think that the failure to move the bills forward reflects the interest there is in seeing what the governor will propose regarding energy organization and policy,? she added. The Utility Reform Network senior attorney Mike Florio agreed. Rather than picking at different energy areas, the state would be better off ?looking at the whole plate first,? he said. The ratepayer advocate opposed the recently defeated bills in the Senate and Assembly because of the perceived value of the CPA?s bonding authority. That this function might have to be incorporated into a different agency is a minor detail, he said. ?We don?t think we?re far enough out of the woods yet to say we?ll never use the state?s financing ability to support projects,? he said. Senator Denise Ducheny (D-San Diego) and Assemblymember Doug La Malfa (R-Richvale), authors of SB 1716 and AB 2967, respectively, did not return calls before press time about the demise of their bills. One Capitol observer indicated that the Senate measure got tripped up by questionable procedural moves within the Senate Energy, Utilities and Communications Committee chaired by Debra Bowen (D-Redondo Beach). Bowen and Senator John Burton (D-San Francisco) were instrumental in establishing the CPA. Despite the governor?s proposal to rub out the agency, the CPA has begun a new initiative aimed at one of Schwarzenegger?s pet energy resources: solar power. The CPA issued a request for proposals last week calling for solar photovoltaic players to consider installing assemblies at up to 12 state buildings for a total output of 4 MW. The innovation of the program, according to Doll, is that solar developers would cover the cost of the solar equipment, as well as its installation. Developers would recoup investments through a long-term contract with the state, which would pay on a per-kilowatt-hour basis for power. ?The beauty of this is that private developers can take advantage of federal tax credits where the state could not,? Doll said, explaining why private companies are better suited to finance the photovoltaic assemblies. She estimated that if the business model is successful, California could see as much as 50 MW in solar output at state agencies. The new initiative provides a perfect example of the Power Authority?s worth, said Center for Energy Efficiency and Renewable Technologies executive director V. John White. ?This suggests to those who want to get rid of the agency that maybe we should change its name to the Green Bank and have it focus on renewables and efficiency instead,? he said. White added that during Doll?s watch, the CPA has sharpened its agenda, scaled back its ambitions, and become more successful, evident in the agency?s demand-response efforts. ?They?re becoming the kind of agency even Arnold Schwarzenegger ought to love,? he said. It remains to be seen, however, whether the solar industry is willing to front the funds for the photovoltaic installations envisioned by the CPA. Of equal importance is whether the state will be willing to pay solar developers a high enough contract price to offset their costs, said John Bertolino, superintendent of renewable generation assets for the Sacramento Municipal Utility District. Bertolino said that photovoltaic business in the state appears to be progressing smoothly, including the emergence of quality and grid-interconnection standards. Incentives are still needed to lower the cost of the technology over time. Responses to the CPA?s request for proposals are due June 17. Contracts could be signed by fall, Doll said.

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