Power Authority Shows Resilience

After surviving two bills that would have spelled its demise, the California Power Authority managed to get a Senate Committee on Budget and Fiscal Review subcommittee to continue its funding. The May 19 vote came despite Governor Arnold Schwarzenegger?s recommendation that the agency created during the energy crisis be eliminated. ?We will reject [the governor?s proposal] until we have more information on all the energy agencies? in the overall discussion of energy agency consolidation, subcommittee chair Byron Sher (D-Stanford) said. The governor?s proposal would cut $3.4 million in special funds for the agency. Schwarzenegger?s budget would have the CPA halt current work, including a new request for proposals for 4 MW of photovoltaic installations on state buildings and peaking projects in the San Diego area. ?The power authority has no purpose,? said an unimpressed administration representative during the hearing. ?Ouch,? CPA chief executive officer Laura Doll replied. The authority is set to sunset in any event in 2007. Two bills that would have abolished the CPA legislatively?SB 1716 and AB 2967?died in April. The CPA had the authority to issue $5 billion in bonds to get new power built to prevent blackouts. Originally, the plan was to fund peaking plants, but the position finally adopted was to promote cleaner energy sources. However, the $5 billion authority was never invoked. The Electricity Oversight Board also escaped the chopping block, but the Senate committee was less comfortable with keeping the board intact as is. It proposed spinning off most of the board?s staff to other agencies. The EOB?s original mission has changed since it was initiated to oversee the California Independent System Operator and the now-defunct California Power Exchange. Lately it?s been a go-between for the Federal Energy Regulatory Commission and the state on settlements with alleged market manipulators during the energy crisis. The governor?s budget would give the EOB $3.6 million to continue. However, the state budget committee agreed that the agency?s board structure should be changed. The board also faces a bill by Senator Debra Bowen that would kill it. The board has only one voting member at present and has not met in more than a year, according to the committee. Most of the board?s litigation work would be transferred to the Attorney General?s Office. Technical staff would be transferred to the governor?s Office of Planning and Research. Erik Saltmarsh, Electricity Oversight Board director, agreed that the board structure could be replaced but said it has to have some structure that would satisfy FERC for its market-monitoring role. Sher said that because the issue is going to conference committee, the details of the recommended changes will be worked out there. The committee approved the governor?s 16 percent increase for the California Energy Commission, to $355 million, primarily for renewables subsidies. But what the budget giveth, the budget taketh away. The Energy Resources Programs Account, funded by a per-kilowatt-hour charge, supports the commission. The budget transfers $12 million to the state?s general fund. The account now is funded with a .03 cent/kWh surcharge. That charge is supposed to decline to .02 cent/kWh in 2005. Under the CEC?s budget was a small item for the California Climate Action Registry. Although some climate change activists have never heard of it, the greenhouse gas registration program won $200,000 out of the budget committee. Its board of directors reflects a who?s who in the Schwarzenegger administration, including Terry Tamminen, state Environmental Protection Agency director, Michael Chrisman, secretary of resources, and Jan Schori, Sacramento Municipal Utility District general manager. The Department of Finance expressed concern that there is no oversight or accountability for the registry. The California Public Utilities Commission didn?t have much change on the energy side of its budget. The administration?s proposal is to reduce the agency?s funding by $74 million from the current year, primarily because of lower expenditures for telecommunications programs. With the Department of Water Resources, politicians are still steaming over the high cost of long-term electricity contracts the state entered into during the energy crisis. Part of that cost is the use of consultants by DWR?s California Energy Resources Scheduling Division (CERS). ?Why do you need to keep entering into expensive contracts for ongoing work instead of peak work?? asked subcommittee member Sheila Kuehl (D-Santa Monica), who added she?d rather hire a pirate for the same duties if deregulation continues. Pete Garris, who oversees the power-buying division, said the department needs consultants to oversee ongoing contracts because it cannot hire civil servants. The budget would reduce CERS funding by 21 percent, reflecting less electricity purchased under contract and lower prices for the contracts remaining. However, with concerns about contractors, the budget committee reduced that amount by $1 million and recommended bill language requiring CERS to notify the Legislature one month ahead of entering into new contracts. While the budget subcommittee is a good indication of what the final budget numbers will be, the funds are still subject to final approvals.

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Power Authority Shows Resilience

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