JUICE: Nowhere for Gov. to Hide

The dog days of summer cause temperatures to rise and tempers to flare. When lawmakers return to the sweltering state capital on August 15, they will face not only the heat but also a ticking clock requiring them to either passively accept or actively block Governor Arnold Schwarzenegger's energy agency reorganization plan. Will lawmakers shoot down the governor's plan in a barrage of fiery rhetoric about energy prices and the threat of rolling blackouts as the demand for power reaches new highs this summer? Or will they stay cool in their deep-freeze offices, which never seem subject to power problems, and let the plan take effect? One top aide boldly predicts that legislators will give the plan "the boot" because it is legally flawed and does nothing to address "the real problems" of energy supply and prices in California. Legislators are concerned that California has some of the highest prices for electricity in the nation. After being an initial skeptic, as I scratched the surface, I found that the plan has the germ of a good idea—creating a clear focal point of accountability on crucial energy issues. Right now, the California Energy Commission cannot carry out its big-picture plans for making the state an oasis of conservation and renewable power because the administration isn't paying the agency much attention. The CEC also doesn't have to face ratepayers and tell them how much their schemes will cost. The California Public Utilities Commission, on the other hand, is caught in the squeeze between utilities that want ratepayers to pay for big new investments, such as transmission lines and smart meters, and ratepayers who, if anything, want to pay less for electricity, although they may not understand the long-term consequences. Schwarzenegger's plan would change all of that, but unfortunately his strong-man tactic of trying to ram through the proposal without a consultative process with the Legislature leaves little likelihood that the plan will ever take effect. Its only chance is that it will fall through the cracks of the Capitol and then go unchallenged in court. That's because the governor chose to use an inflexible process that does not allow the Legislature to alter the legally flawed plan. The procedure, known as the governor's reorganization plan, provides only that the proposal will take effect 60 days after being submitted to the Legislature on June 13 unless lawmakers vote it down. It's also because the Little Hoover Commission, which reviews government reorganization, has pinpointed the plan's unlawful grab of power expressly granted to the CPUC by the state constitution. That acknowledgment forced the panel to recommend against the plan. California attorney general Bill Lockyer agrees that the governor cannot reassign CPUC regulatory power over new electric transmission lines and gas pipelines to a new Department of Energy with anything less than a constitutional change. However, the Little Hoover Commission supports the aims of the governor's plan, opposing it solely because of its legal flaws. Little Hoover chair Michael Alpert recommended that "central elements" of the plan "be advanced as soon as possible." Even the same legislators who have denounced the reorganization plan acknowledge through aides that they are discussing potential reforms because of concerns about the reliability and cost of electricity and natural gas supplies. Meanwhile, the clock on the 60 days has stopped while the Legislature is in recess. There has been relative silence on the proposal since the marathon Little Hoover Commission hearing on May 25 and its vote to oppose the plan on June 23. While not overtly pushing for the plan, the CEC has kept up a steady drum roll of criticism of its sister commission in San Francisco for reputed delays in approving transmission lines and the slow pace in meeting the state's renewables portfolio standard goal. The implication is that the CPUC should change its ways or let the CEC take over some of its turf. The CEC backs its criticisms with data being developed for its 2005 Integrated Energy Policy Report that have created growing unease in the corridors of Sacramento over the state's tight electricity supply situation. A recent CEC report shows that state utilities are not meeting their demand-response goals, falling 324 MW short this year. In addition, because of what the Energy Commission calls "time-consuming and cumbersome" procedures for "soliciting, selecting, and contracting with renewable energy developers," utilities are not expected to meet the state's 20 percent renewable energy goal by 2010. Moreover, there is insufficient transmission to bring renewable power to California businesses and households. The shortfalls come as demand for power reached an all-time high July 21 in Southern California Edison territory of 21,800 MW—up from the previous record of 20,762 MW set last year' and as the California Independent System Operator called a Stage 2 electrical emergency in the southern part of the state on July 21. To ease the way for more conservation, more supplies, and more transmission, politicians might start with plans by the CEC, one of a number of comprehensive energy-planning agencies at the state level. The CEC's plans are full of ideas, but they tend to land on the beach with a dull thud as legislators remain in recess and instead pick up the latest pulp fiction novel. The commission's bright ideas often seem to just gather dust on the shelves. That's one thing that might change under Schwarzenegger's plan to make the Energy Commission the chief body for siting energy facilities in California under a new Department of Energy that retains planning authority and gains some market oversight authority—all under a cabinet-level secretary. A high-profile secretary serving at the pleasure of the governor in Sacramento just might be able to turn those dull-reading energy plans into reality, even when legislation is needed. A look at other states reveals myriad ways to organize the energy policy function. In some, siting authorities wholly separate from the public utilities commission issue permits to build new power plants, electric transmission lines, and natural gas pipelines, according to Diane Shea, executive director of the National Association of State Energy Officials. In others, energy agencies are part of cabinet-level departments. Looking across the nation too, other states are beginning to catch up with California in deploying renewable power. Texas, for instance, where the energy office is under the comptroller, has 759 MW of planned wind energy projects, compared to 673 MW of planned projects in California. CEC member John Geesman has taken note, calling for the CPUC and utilities to take their cue from other states and relax their standards for deliverability of renewable power to individual utility service territories as a condition for procuring wind, geothermal, and other forms of green energy. Geesman also criticizes delays in constructing transmission lines to bring electricity, including renewable power, to where it is needed. In fairness to the CPUC, observed one legislative aide, it's easy for planners to take shots, particularly when they are not required to consider the cost for ratepayers of new lines and renewable energy projects. Others point out that California is not alone when it comes to transmission constraints. The backlog in transmission construction is national and largely unrelated to state public utility commission policies, according to Shea. Instead, delays often are related to competitive issues. Witness, for instance, the dispute between Edison and the Los Angeles Department of Water & Power over which utility should build the Devers-Palo Verde 2 line. Delays also occur because lines must pass through land managed by multiple federal agencies, such as the Bureau of Land Management, the Bureau of Reclamation, and the U.S. Forest Service. The CPUC is quick to point out that it has approved numerous transmission projects since the energy crisis. Legislators and public-interest groups also maintain that the CPUC's public participation process is better than the CEC's because it has an Office of Ratepayer Advocates and reimburses public-interest groups for intervenor costs. Critics of the plan also charge that having an energy secretary serve on the Energy Commission, as well as in the cabinet, will politicize decisions on regulations, facility siting, and policy matters-although, as the CEC counters, the precedent already is somewhat established in state government. The resources secretary and other cabinet members, for instance, serve on the Coastal Commission, although in a nonvoting capacity. The ultimate question is whether moving the boxes will address the key market issues of energy supply and price, as well as continuing to advance environmental protection and economic sustainability. Perhaps not, but it could build pressure for the state to do more to deal with these key issues by creating a focal point of accountability for energy issues. A cabinet-level energy secretary would eliminate the ability of the governor to hide behind today's quasi-independent energy agencies if blackouts return or the snowcaps melt. It would be abundantly clear to voters whom to "boot."

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JUICE: Nowhere for Gov. to Hide

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