Resurfaced 33% Bill Advances

By Published On: June 25, 2010

Legislation raising the renewable energy requirement from 20 percent to 33 percent by 2020 passed the Assembly Utilities & Commerce Committee. The panel approved SB 722 on a 10-2 vote June 24. After being bogged down by ongoing disagreements over the role of out-of-state renewable energy products the renumbered bill by Senator Joe Simitian (D-Palo Alto) gained traction with a surge in interest in renewable power due to the BP spill. “We are much, much closer and more in harmony,” Simitian said of SB 722. The governor vetoed a very similar bill by Simitian last year setting a one-third renewable supply mandate for private and public utilities. The veto was blamed on renewable energy import restrictions. Simultaneously, Governor Arnold Schwarzenegger ordered the California Air Resources Board to develop a 33 percent renewable energy standard. The difference between Simitian’s bill and the rules being developed under the gubernatorial dictate is that they are legally vulnerable because they don’t have the force of law. At its first hearing of the year, SB 722 faced no opposition. Yet, stakeholders are not exactly harmonious. “We must ensure we have the correct mix of in-state and out-of-state resources for a healthy and competitive regional energy market,” noted the governor. “I cannot sign legislation mandating a higher requirement without ensuring that the necessary projects can be built.” In addition to the level of restrictions on qualifying renewable energy imports, other issues include provisions capping investor-owned utility spending on renewables, as well as the reach of ground rules for publicly owned power agencies. Southern California Edison, San Diego Gas & Electric, and union representatives emphasized their support for SB 722 is conditional. They continue to push for greater regulation of public power agencies and want private utilities excused from the measure’s mandates in the event of high costs or any unforeseen permitting or interconnection delays. At the same time, two key shareholders, a consumer advocate, and an independent power producer representative, expressed optimism about the bill although their differences remained apparent. Matt Freedman, The Utility Reform Network attorney, said the legislation was good for consumers because it caps the amount investor-owned utilities must pay for renewable energy supplies. It will displace in-state fossil plants, he said, and “promote California on its path to energy independence.” Jan Smutny-Jones, Independent Energy Producers executive director, objected to cost caps for the private monopolies, noting “competitive markets are the best cost control.” Assemblymember Felipe Fuentes (D-Sylmar) raised concerns about munis. In particular, that the Los Angeles Department of Water & Power could be penalized by both the Air Board and the California Energy Commission for non-compliance. He also wanted assurances any penalty revenue would not be used to fill the state’s massive budget deficit. “The bill is silent on how penalties will be used but we’ll make sure you’re not double dinged,” Simitian responded. Currently the bill would require 75 percent of the renewable energy imports flow directly into California--that is, have a first interconnection point with the state grid. That criterion also applies to the renewable attribute or credit linked to a solar, wind or other renewable project within the Western Electricity Coordinating Council. SB 722 also does the following: -Directs the CPUC to authorize the use of renewable energy credits; -Allows munis to count renewable energy credits toward the law’s mandate to have 20 percent of the power portfolio be renewable by 2013 and 25 percent by 2016; -Requires the California Public Utilities Commission to monitor and investigate if and when private utilities hit the cost cap; -Permits the Air Board to slap penalties on non-complying utilities; -Considers renewable projects outside the U.S., presumably wind projects in British Columbia or projects in Mexico, towards the renewables portfolio standard if they would qualify if located in California; and, -Counts landfill gas projects that power munis under contracts signed before September 2009. Next, the Senate Natural Resources Committee plans to take up SB 722.

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