Tussle over CEC?s New Renewables Guidelines

By Published On: May 22, 2004

When revising guidelines for the renewables portfolio standard mandate, the California Energy Commission ran into controversy over including out-of-state power in the 20 percent requirement for green energy in a utility?s power portfolio. The problem, say renewables advocates, is that imported green power would cause more fossil-fuel plants to be built in the exporting states, thus exacerbating pollution in the West while serving California?s requirements. The CEC approved updates to its guidelines to the renewables portfolio standard (RPS) program on a 5-0 vote, but commissioner John Geesman insisted that staff address ongoing concerns. The California Wind Energy Association and The Utility Reform Network, which were involved in crafting the state?s RPS bill, protested the new guidelines on grounds that the change would contradict the law?s intent, which is to create new fossil-fuel-free energy. ?This could wipe out new renewable development for a long time,? warned Nancy Rader, CalWEA executive director. Rader and TURN estimated the change would allow 8,600 gigawatt-hours of existing renewable power to be imported to serve California?s ?green? power requirements. TURN attorney Matt Freedman said bringing in alternative power to meet the Golden State?s standard would result in new coal and gas plants being built in those exporting states to replace the diverted green power. Western states, other than Nevada, do not have similar renewables laws. CEC staff noted that out-of-state renewables were considered RPS-eligible because of legal concerns that a prohibition on them would violate the Commerce Clause of the U.S. Constitution. TURN said the issue was not discrimination against non-Californian green power but ensuring that the power counted toward the state?s renewables goal would not come from existing projects. CEC chair Bill Keese noted that a Western RPS goal is being considered. Rader said that would resolve the problem at hand but it is not yet a reality, and the commission is required to implement state legislation as intended. Also under challenge was the guideline modification allowing qualifying facilities that use up to 25 percent natural gas to qualify as 100 percent green. Freedman insisted that only the power produced by green resources be eligible to meet the RPS mandate. He pointed to pumped-storage facilities, such as the Helms plant and the proposed 500 MW Lake Elsinore project in San Diego. Those peaker hydro projects use energy to pump water uphill between reservoirs, which is then released to send power into the grid during peak consumption. The uphill pumping system uses a variety of power resources that includes fossil fuels. Freedman insisted that any nonrenewable power used to push water up for storage and release it during times of high load needs to be subtracted from the green power produced. He also wanted assurances that power consumed to move the water into elevated storage but not producing green megawatts not be RPS-eligible. For example, if 100 MW is used to produce 60 MW of hydropower, the 40 percent of used power should be excluded from an RPS calculation. Another concern involved allowing existing small out-of-state hydropower under contract with a utility to be counted toward the annual procurement target. Potentially 1,900 MW from hydro facilities under 30 MW could be used to bolster an investor-owned utility?s green portfolio, further undermining new renewable resource development, TURN and CalWEA warned. Southern California Edison was one of a number of supporters of the CEC guidelines, but it also had issues, primarily about compliance. Manuel Alvarez, Edison regulatory director, was concerned that documents needed to demonstrate RPS compliance may include confidential information. Subsequently the commission unanimously approved $45 million in transfers to the oversubscribed emerging renewables accounts. The discontinued customer credit account?s $15 million will be moved to the popular small photovoltaic rooftop program, and the rest of the funds would be transferred from the existing renewables program. Steven Kelly, Independent Energy Producers policy director, asked whether there would be sufficient public-goods money to fund new renewable resources down the road. The CEC?s Tim Tutt said the commission?s biannual report to the Legislature, which includes total fund reallocations, would be out at the end of the month. The commission exempted the Kings River Conservation District 97 MW peaker project from its certification process May 19. Commissioners unanimously agreed that local permitting of the small project slated for Fresno County would suffice because the unit was under 100 MW and not expected to cause significant environmental impacts. ?I wish all power plant projects went this smoothly,? said commissioner Jim Boyd. The peaker will install ?best available? control technology to reduce nitrogen oxide and carbon monoxide emissions and include a zero-liquid-discharge system. Also approved, on a 5-0 vote, was a contract with the University of California Office of the President not to exceed $4.5 million. The money will be used to continue UC?s management and administration of the Public Interest Energy Research Program?s research, development, and demonstration awards.

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