Urgency Bill Setting 33% Renewables Mandate Advances

Lawmakers are fast-tracking legislation to set a 33 percent renewable energy standard for utilities and other electricity providers by 2020. The new urgency bill limits and ranks alternative resources to avoid clashes between in- and out-of-state renewable power proponents. On an 8-2 vote, the Senate Energy Utilities & Communications Committee Feb. 15 approved SB1x-2 by Senator Joe Simitian (D-Palo Alto). It extends the current 20 percent renewables mandate from 2010 to the end of 2013, and requires that one-fourth of power portfolios be made up of alternative resources by 2016. The legislation largely mirrors a non-urgency version Simitian introduced at the end of last year, SB 23, which is still in play, and a bill that died on the final night of last year's legislative session. It is generally assumed investor-owned utilities and many Northern California munis can easily meet the one-third energy target at the end of the decade. Yet, disagreement over the path to the higher standard persists. The cost of building wind, solar, geothermal and other resources is one bone of contention. The amount of imported renewable energy to meet the legislative mandate is another. SB1x-2 allows 25 percent of the mandate to be satisfied with imported resources. It ranks resources by preference set forth in a "loading order." The bill puts in-state resources in first place. At the bottom are renewable energy credits, which are sold separately by out-of-state green energy projects. The urgency measure also gives the California Public Utilities Commission authority to cap renewable supply costs. It removes regulators' natural gas price benchmark against which renewable contract prices are measured, known as the market price referent. The legislation includes penalties for non-compliance, but waives them if the reason is beyond utilities' control, such as lack of transmission. The Energy Commission is charged with imposing fines on non-complying munis. Simitian noted that wind, solar, and other alternative energy resources are dropping in price because supplies are increasing--in contrast to fossil-fueled electricity that is subject to price volatility because of supply concerns. Consumer advocates embraced the bill's cost containment provisions. The Utility Reform Network is "hopeful" that the "legislation will lead to the establishment of overall cost caps, require that the costs of all renewable procurement be tracked, and provide more transparency on the cost of the program," said Matt Friedman, TURN attorney. The Division of Ratepayer Advocates pointed out that regulators have steadily approved high-priced investor-owned utility renewable deals. (See story on page 1). Private and public utilities, as well as energy service providers, also are allowed to count renewable resources that put them above procurement targets towards subsequent compliance periods when they fall short. The bill's provision allowing what is called &quot;banking"--or counting renewable resources that exceed the rising renewable mandate--is limited to power supplies under contract for 10 years or more. It also doesn't allow renewable energy surpluses from deals signed before this year to be banked. Pacific Gas & Electric, the Sacramento Municipal Utility District, and direct access providers objected on grounds the measure gives preference to new renewable developers, who require multi-year deals to line up financing, in place of existing alternative power providers. The parties also balked about not getting credit for signing shorter-term agreements and ones signed before last year that have or will allow them to exceed the state mandate. In addition, non-utilities that sell power to large energy users sign short-term contracts up to one year. Simitian acknowledged the "fairness issue," adding the bill's constraints also interfered with "rewarding good behavior." The legislation is supported by Southern California Edison, San Diego Gas & Electric, and renewable advocates. Representatives from public power coalitions generally support the bill, but object to the mandate requiring munis to also reach a 20 percent renewable supply mandate by 2013. PG&E also raised objections regarding the measure limiting renewable energy credits linked to out-of-state power supplies to 10 percent of power portfolios in 2020. The California Air Resources Board last year adopted rules setting a one-third renewables portfolio standard that the agency initiated after the failure of Simitian's earlier 33 percent renewables bill. However, the bill analysis for the new urgency measure notes that the Air Board lacks the budget and clear legal authority to carry them out. SB1x-2 is to be heard next in the Senate Appropriations Committee.

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Urgency Bill Setting 33% Renewables Mandate Advances

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