Current’s Top Ten California energy events for the year highlight the state’s national energy leadership, and its highs and lows in 2010. “Smart” meters--A multi-billion dollar investment in “smart” meters across the state--with $5 billion for the investor-owned utilities alone--appeared to be a good policy choice. Although expensive, the advanced meters are viewed as promising tools that can provide accurate and detailed representations of energy use that can educate consumers and lead them to energy savings. These savings, it’s hoped, will lead to wiser energy use that reduces the need for new power plants, thereby yielding financial and environmental benefits. What policy makers didn’t see coming were the technological complications of smart meters, much less that they would spur major concerns about accuracy, privacy, and electro-magnetic frequency-related health concerns. With millions of smart meters already installed in California, accompanying technologies--like home energy networks that allow consumers to automatically monitor and control their energy use--remain somewhere over the horizon. Privacy concerns also loom unexpectedly large because of the type of detailed information the meters produce about activity in homes. Also emerging, are concerns about how much it will cost to update meter software and security programs, as well as whether the new digital meters will last as long as the trusty old analog devices. Meter accuracy has been an issue. A state Senate panel delved into the issue and prompted both the California Public Utilities Commission and Pacific Gas & Electric to hire an independent analyst to evaluate the efficacy of its meters. The study showed they accurately measure energy use, even a bit better than the old analog meters. That marked progress for smart meters in allaying at least one consumer concern. Whether financial, energy, and environmental benefits promised to Californians when the commission authorized the new meters are captured remains to be seen. End of coal--Days are limited for coal-by-wire that has fueled California for decades, particularly the southern part of the state. This year, Southern California Edison moved to terminate its long-standing 720 MW interest in the giant Four Corners power plant on Navajo Nation land in New Mexico--the nation’s single biggest emitter of nitrogen oxides, which cause unhealthful levels of ozone and fine particulate. Edison plans to sell its interest to Arizona Public Service, the plant’s operator. APS, in turn, plans to simply shut down the oldest three of the plant’s five units. The Los Angeles Department of Water & Power, in a draft plan, signaled its intent to terminate its reliance on the Navajo Generating Station in Arizona in 2014, five years before its contractual interest expires. LADWP plans to replace the 477 MW of coal capacity with renewable resources and energy efficiency measures. State law SB 1368 is driving the changes. Under it, California utilities are to gradually divest their positions in out-of-state coal power plants. Big solar--Forget a million solar roofs, that was so 2008. This year it’s Big Solar. Big as in 43,800 acres, or about 63 square miles. If built out, these big projects would add over 4,500 MW to the grid--about the same amount of power that California receives from its nuclear power facilities. The California Energy Commission and Bureau of Land Management expedited permits for an unprecedented level of solar thermal projects slated for public land in the Southern California desert. Some projects were scaled back to reduce the hit to threatened critters, including the slow moving desert tortoise. Others got snagged because of seeking land considered key habitat for threatened four-legged wildlife. Get out the vote--Two well-financed measures bit the ballot box dust. In June, the PG&E-sponsored Proposition 16 faced defeat, despite a $46 million “yes” campaign. The measure would have required municipalities to garner a two-thirds vote before attempting to turn any investor-owned utility territory into public utility territory. Voters also selected their climate over their pocketbooks as Proposition 23 went to defeat Nov. 2, with 61.5 percent opposing it. Some of the biggest initiative funders were the out-of-state oil companies Tesoro and Valero. They contributed $9 million to undermine implementation of the state’s climate protection law, AB 32. Proposition 23 proponents sought in vain to pit jobs against California’s promise to reduce greenhouse gas production. PACE--A plan promoting energy efficiency and solar retrofits though municipal financing this year was thwarted by the feds in July. The Property Assessed Clean Energy program covered the upfront costs of installations in exchange for long-term property tax liens that stay with the building regardless of change of ownership. However, because the muni’s property tax lien has first dibs in the event of foreclosure, the PACE program ran afoul of federal mortgage agencies. Fanny Mae and Freddie Mac, which underwrite about half of home mortgages in the U.S., sent out warning letters and later notified property owners with PACE assessments that refinancing would be foreclosed. Since federal mortgage agencies undermined the PACE programs, regional entities have scrambled to fill the renewable financing gap. Their strategies include developing a PACE program without the senior lien, as well as a pilot program offering solar subsidies via a long-term, transparent price, known as a feed-in tariff. Cap & trade--After surviving the Proposition 23 voter referendum, the state’s global warming law is on the front burner, with the California Air Resources Board set to adopt a state carbon cap-and-trade program later this month. Years in the making, cap-and-trade represents the capstone program under the state law, AB 32, and perhaps the crowning legacy of outgoing Governor Arnold Schwarzenegger. At first, the program largely would focus on the state’s power industry. Emissions would be capped and then gradually decline through 2020. Tradable emissions rights would be distributed for free initially to utilities and other businesses subject to the program. An advisory committee had urged that carbon allowances be auctioned to generate revenue to reduce consumer impacts and fund alternative technologies, as well avoiding excess allocation. Companies that cannot meet their declining emissions limits could buy rights to cover their excess from other companies that keep their greenhouse gases below their limits. Companies also could meet emissions reduction requirements through offset projects. An Air Board vote is expected Dec. 16-17. The program would take effect in 2012. Electric vehicles premier--With GM selling the Chevy Volt plug-in hybrid and Nissan promoting the all electric LEAF, utilities are gearing up their distribution grids for an onslaught of electric vehicles. Utilities also are working to streamline the permitting process for installing home electric vehicle chargers and offering discounted off-peak electric vehicle charging rates. Looking years ahead when hundreds of thousands of electric vehicles could hit the road, the CPUC is putting in place a larger policy framework. It would cover rates to encourage off peak charging, which would absorb wind power flowing into the grid when demand drops, helping reduce power surges, and increase stability. Regulators are also working to refine metering, as well as a variety of other issues. Utilities’ financial stability--As with all recessions, there are “haves” and “have nots.” The former includes the state’s investor-owned utilities. Two of California’s four, SoCal Gas and Southern California Edison, posted higher profits recently. PG&E and its utility brethren continue to make heavy capital infrastructure plans. Investments to the tune of more than $46 billion are expected over the next few years in transmission, distribution, advanced meters, and generation--traditional and renewable--with Southern California Edison in the lead. Equity investments are set to produce about an 11 percent-plus rate of return--making utilities a solid bet for potential lenders. Utilities triennial rate cases are also expected to increase the utilities’ rate bases and profitability. FERC & CA--What a difference a decade makes. During the 2000-01 energy crisis, federal regulators and the state traded lawsuits and barbed sound bites. Fast forward to 2010. Now FERC’s policies are helping California achieve its energy policy objectives. Or, from the California Independent System Operator’s perspective--vice versa. OK, there’s still a bit of one-upmanship going on. Despite which agency thought of it first, the state and federal regulators are reaching some alignment. In November, for instance, FERC proposed integrating renewables through scheduling changes--on a schedule a bit longer than what CAISO currently offers. In August, FERC proposed to tie transmission to renewables portfolio standards--also a CAISO move. The two have also been promoting the expansion of demand response to alleviate the stress to the grid from high demand. Renewables storage--What good is a 33 percent renewables policy when California has to keep old fossil fuel plants operating to manage the transmission grid? Policymakers and entrepreneurs wrapped their brains around the gap between gaining renewable electricity sources and the state’s transmission grid stability this year. Enter the real possibility for renewables storage, from pumped hydro to flywheels. Those can be fueled by renewables then used to keep the grid steady, allowing fossil-fueled plants to play a lesser role.
