Drive over renewable energy picks up steam

So close, yet so far.

A landmark agreement requiring California’s utilities to get a third of their power from solar, wind and other forms of renewable power is within striking distance. Negotiations have been under way in the Capitol for months between the Schwarzenegger administration and an array of interests – energy generators, utilities, organized labor, environmentalists. Participants say they are close. At stake are billions of dollars worth of energy production and perhaps 240,000 jobs.

But close can be far in the Capitol.

“There has been progress, substantive progress,” said Sen. Joe Simitian, the legislator at the center of the debate over renewable energy. Simitian, D-Palo Alto, wants the utilities to get 33 percent of their power from renewable sources by 2020. Current law requires 20 percent. If Simitian’s proposal targeting the Renewable Portfolio Standard ultimately was approved, it would rank in importance with AB 32, the state’s anti-greenhouse gas emissions statute, and likely would serve as a national model.

His earlier bill to do just that was vetoed last year by Schwarzenegger amid a tangle of politics and policy. This year, Simitian’s new RPS bill, SB 722, is at the crux of the negotiations.

The fight isn’t over 33 percent. The fight is over whether that energy – and how much – can be produced from out-of-state sources, how it can be verified as green and whether the movement of energy violates federal commerce restrictions. Environmentalists and labor generally want it in-state as much as possible. The governor has favored out of state, as have a number of energy companies, citing the need for regional economic development, a smoother marketplace and compliance with federal rules. The big investor-owned utilities have been divided.

“We’re making progress, but it would be premature to declare victory and say everything is resolved. There is a genuine interest in moving this forward,” said Jan Smutny-Jones of the Independent Energy Producers association. “I am cautiously optimistic but it would be premature to declare victory and sing ‘Kumbaya.’” Smutny-Jones group members include renewable energy and out-of-state power providers.

Just how much progress is unclear. But new factors are pushing the negotiations, factors that were absent last year.

First, the governor appears to have signaled that he is open to compromise on the thorny in-state vs. out-of-state issue.

“The governor, to his credit, has moved a long way. In his outline a month ago, he said he would support a provision that guarantees that no less than 50 percent of the generation be in California. That’s a huge shift,” said Sacramento lobbyist Scott Wetch, who represents an array of energy workers.

Second, the content of the new bill incorporates some changes sought by the administration and addresses issues raised by the governor in his veto message of Simitian’s earlier bill, SB 14, such as easing the path for solar energy development. It also leaves open the issues of pricing and in-state vs. out-of-state procurement.

Third, the governor views environmental policy as a key element of his political legacy, and an agreement over the renewable portfolio would add to that dramatically. He leaves office in January and the Legislature finishes for the year on Aug. 31 – deadlines that are pushing both sides to resolve differences.

The presence of Schwarzenegger’s successor – whether Jerry Brown or Meg Whitman – already is being felt. Participants generally want a new law in place by the time the new governor arrives. “It’s unstated, but at this juncture of the year that is something that any stakeholder group is thinking about. If you’re considering an agreement on any issue, you’ve got to weigh what the next administration will do. You’ve got to know which way the political winds are blowing,” Wetch said.

The assumption in the Capitol is that Whitman – who has called for the suspension of AB 32 – would throw out the RPS  executive order that Schwarzenegger signed after he vetoed the Simitian bill last year. Whitman also supports the 33 percent level, but she has not taken a position on the mix of in-state vs. out-of-state generation.

Brown, meanwhile, waded directly into the Capitol debate with his own RPS plan, a detailed proposal that includes getting 20,000 megawatts of power from renewable sources, a sharp expansion of solar power, the creation of an energy-jobs czar, tighter energy efficiency standards on new homes and buildings, and encourage in-state jobs and development.

Brown suggested a half-million jobs could flow from a green economy, while in the Capitol, the estimates are bit lower, from 240,000 to 300,000. But whatever the number, the potential financial impact of the RPS is considerable.

The governor’s earlier executive order required the 33 percent benchmark, but the order has had limited effect. For one thing, it  directed the Air Resources Board to develop an RPS standard – an unusual move that even surprised people at the ARB, which typically doesn’t handled RPS issues. The ARB is in the midst of putting together the regulation, but the rule likely won’t be completed until after Schwarzenegger leaves office. So if the executive order is rescinded, what happens to the regulation?

Meanwhile, the Public Utilities Commission, under pressure from the administration, changed its mind and halted its own earlier RPS decision – a 33 percent standard that limited out-of-state procurement, pleased environmentalists but angered the Schwarzenegger administration. The PUC’s move left that body implementing the 20 percent level in current law, at the same time the ARB was working on a 33 percent standard.

Not surprisingly, the conflicting levels and agencies led to some confusion in the Capitol.

But both the administration and others in the negotiations are increasingly disposed to putting the RPS rule into a statute, which would insulate it against any actions by a future governor.

“The governor has publicly and repeatedly said that he supports a 33 percent renewable requirement. I hold the same view, and I hope we can find common ground,” Simitian said.

“For me, the concern here is 33 percent by 2020. If we send a clear signal to the market that California is serious about 33 percent by 2020, then those investment dollars and tax revenues will flow to California. If not, then they will flow to other states, other nations. It’s really that simple,” Simitian said.