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Alternative energy: Popular, but devil is in the details

A dramatic expansion in California of the use of power generated from wind, solar and other "renewable" energy faces the Legislature in the waning days of the 2009 session, with a complex debate that is targeting money and logistics as much as the power itself.

Boosting the utilities' "Renewable Portfolio Standard" is backed by environmentalists, Gov. Arnold Schwarzenegger and, generally, by the legislative leadership. The ultimate goal is to cut the use of fossil fuels in a systematic, enforceable way and improve the existing. "This is a real good bill, trying to fix the RPS program that we have now," said Jim Metropulos of the Sierra Club.

The proposal, which has general support from the leadership in both houses, requires California's utilities to acquire 33 percent of their power from renewable energy sources within the next 11 years. Currently, the law requires 20 percent by next year.

Renewable means power derived from solar, wind, geothermal, biomass, landfill gas, and some hydro power, instead of from generating plants power by fossil fuels, including natural gas, oil or coal.

Statewide, the current level of renewable energy use is about 13 percent – sharply below the target set by existing law. The new plan, then, offers a carrot and a stick – it allows more time to meet the goal, but it increases the level that has to be met. The legislation also includes the municipal utilities – the publicly owned entities such as the L.A. Department of Water and Power and the Sacramento Municipal Utilities District, for example – that were all but ignored in the earlier legislation.

The latest bills are AB 64 by Assemblyman Paul Krekorian, D-Glendale and SB 14 by Sen. Joe Simitian, D-Palo Alto. Although different, both contain the 33 percent benchmark. Capitol sources say the two measures may be merged, with the final bill likely to be the Senate version.

Estimates of the dollar impact of the legislation varied dramatically, but all involved billions of dollars. By one stimate, California's large investor-owned utilities alone – Southern California Edison, Pacific Gas and Electric and San Diego Gas and Electric – sell about $25 billion worth of electricity annually.

By Tuesday afternoon, the package remained a work in progress, four days before the end of the legislative session. Negotiators included representatives of business, manufacturing, the investor-owned utilities, the public utilities, the environmentalists and regulators, among others.

The sticking points included details of renewable energy credits, which could be bought and sold on the open market, and the delivery and timing of out-of-state power coming into California. There also were questions of whether existing power contracts can be grandfathered in, and the extent of provisions that would ease the rules on utilities if they were forced to buy renewable power at 6 percent of more above a market benchmark.

There also were provisions to boost the level of in-state renewable energy generation, a move sought by the unions

Capitol sources said at least two of the three big private utilities – PG&E and Sempra, owners of San Diego Gas and Electric – were in support of the plan.

By Tuesday evening, however, Edison was not in support. Sources said Assemblyman Felipe Fuentes, D-Sylmar, the chairman of the Assembly Utilities and Commerce Committee was playing a major role in the negotiations

The sharpest opposition came from the manufacturers, who purchase large amounts of electricity. Aside from the cost, they note that the state Air Resources Board, which enforces the state's landmark greenhouse gas emissions law, also has authority to the renewables to 33 percent, according to a scoping plan adopted by the board.

"But our primary concern is cost," said Gino DiCaro, a spokesman for the California Manufacturers and Technology Association. "The best-case scenario shows that there will be a 7 percent increase in the cost of electricity. Obviously, this creates a burden."

"We've lost 580,000 jobs since January 2001 – that's 30 percent of our industrial-base jobs. If you compare that to other western states, it's definitely the worst," DiCaro said, adding that Arizona, Nevada and Texas have attracted California businesses in part because of the state's higher energy costs.

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