Legislature approves dramatic boost in renewable energy use

Environmentalists claimed victory as the Legislature approved a plan to dramatically boost the use in California of electricity generated by wind, solar and other renewable sources over the next 11 years. The legislation includes provisions similar to an executive order issued earlier by the governor.

The legislation requires utilities to obtain 33 percent of their power from renewable energy sources, which include solar, geothermal, wind, biomass, landfill gas. Currently, the law says the utilities must meet a 20 percent benchmark by next year, but thus far they have been only able to reach 13 percent. The goal of increasing the use of renewable energy is to reduce reliance on natural gas, coal and oil.

But the latest twin-bill legislation, pushed by Sen. Joe Simitian, D-Palo Alto, and Assemblyman Paul Krekorian, D- Glendale, emerged from the Legislature only after hotly contested changes that allow some hydroelectric power produced in Canada to be counted as renewable, as well as thousands of megawatts of power generated from fossil fuels.

Hours after the legislation was approved, Gov. Schwarzenegger's handlers issued a statement listing the opponents of the bill and their contact information — an odd action for a governor who has repeatedly described himself as an environmentalist — and included more than a dozen industry and business groups opposed to the bills. The action appeared to signal the governor's intention to veto the legislation.

The package would  "create additional regulatory hurdles for renewable energy development to surmount, adding new procedures to the already-complicated (state) procurement process…," said Jan Smutny-Jones of the Independent Energy Producers Association. 

A leading proponent of the legislation said the measures would set a national benchmark for renewable energy use.

"Leaving it up to the state's electric utilities to shift away from fossil fuels is fool-hardy. And waiting another year cheats California of the tremendous clean air and green job benefits that come from an immediate investment in renewable energy resources such as wind and solar power," said Bernadette del Chiarro of Environment California.

"While there was much controversy over amendments to the bill that add in language for (Pacific Gas & Electric Co.) to potentially build large hydroelectric dams in British Columbia and call it renewable energy, as well as amendments pushed by British Petroleum and Chevron that put 7,000 MW of fossil fuel burning combined heat and power plants ahead of renewable energy, the two bills still stand to become the biggest renewable energy mandate in the country," she said.

The opponents included the Farm Bureau, the manufacturers' trade group, the business property owners' group, the building owners and managers, Shell Energy of North America and several others, including alternative energy companies.  

Environmentalists note that the new legislation represents the most advanced Renewable Portfolio Standard in the nation. As in all legislation – especially California's environmental legislation — the final form and impact of the new plan will be determined by the regulations that put it into effect.

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 current law.

Estimates of the dollar impact of the legislation varied dramatically, but all involved billions of dollars. 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 or more above a market benchmark.

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."