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The growth in renewable supplies–home grown and imported--is making the state’s regulatory gas-based benchmark price irrelevant. As renewable competition increases, use of what is known as the Market Price Referent has dropped, Julie Fitch, California Public Utilities Commission energy division director, said Feb. 1. The referent was established several years ago as a measure of the reasonableness of the offered price of a renewable deal. Fitch told the Senate Energy Utilities & Communication Committee the benchmark was becoming obsolete largely because natural gas prices upon which the CPUC sets the referent are volatile. Also, the price of solar, wind, biomass and other alternative supplies are measured against similar renewables--i.e., one wind deal compared against another wind project--competing for utility contracts. Marc Ulrich, Southern California Edison vice president of renewable energy, added that the bureaucratic referent is a poor benchmark because it does not reflect more timely market prices. Senator Alex Padilla (D-Pacoima), committee chair, asked for specifics on the prices of utility-approved renewable contracts. “To formulate the best policy we need to know as much as we can about costs,” he said. Fitch only provided general numbers because prices under the terms of third-party CPUC-approved utility deals are confidential. Price estimates from 2007 found about a “7 percent difference” in fossil and alterative supplies. Fitch added that electricity prices are “always increasing” and consumers are reaping the benefit of dropping renewable prices. According to utility representatives, alternative energy supplies are between 10-15 cents a kWh. Part of the cost of renewable resources also depends on how much fossil-fired backup power is considered necessary to balance out intermittent solar and wind energy. Senator Rod Wright (D-Los Angeles) warned that using inefficient gas-fired plants for backup power to ensure grid reliability wipes out the greenhouse gas benefits of renewable resources. One-fifth of investor-owned utility customer demand is expected to be supplied by renewable resources within the next year. Although the 20 percent mandate set for 2010 was missed, Fitch said, “It’s largely a good news story.” Public utilities, which are not regulated by the CPUC, also are making strides in the renewable portfolios, with some meeting or exceeding the 20 percent mark, muni representatives told the committee. Los Angeles Department of Water and Power’s resources include 20 percent alternative energy supplies. The Sacramento Municipal Utility District’s resources are 24 percent renewables. The Northern California Power Agency members are above the 20 percent alternative power threshold, with several munis said to exceed the 33 percent target. In 2010, renewables supplied 18 percent of investor-owned utilities’ portfolio overall—with Southern California Edison with the highest level and San Diego Gas & Electric the lowest of the three private utilities, according to the CPUC. In 2009, renewable energy represented 15.4 percent of the state’s investor-owned utility electricity load. Edison had the largest amount of renewables, at 17.4 percent. Pacific Gas & Electric’s portfolio was 14.4 percent renewables and SDG&E’s 10.5 percent. About 68 percent of the three utilities’ renewable resources are expected to be from in-state projects, with that number expected to rise. The amount of smaller renewable projects that feed into the existing distribution lines also is expected to increase, according to utility representatives. Geothermal provides the largest amount of renewable supplies for private munis, followed by wind, biomass, small hydro, solar, and biogas. For munis, the renewable mix is predominantly geothermal resources, with wind and small hydro much of the remainder, according to the CPUC.

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