PUC, shifting postion, blocks rule on renewable energy

The state Public Utilities Commission, in an abrupt and dramatic shift of position, voted Thursday to block its rule limiting to 25 percent the level of out-of-state renewable power that utilities can use to count toward their California-imposed renewable energy goals.

The 4-1 decision was viewed as a defeat for environmentalists and labor, who argued that a greater the level of in-state credits would be more beneficial to the environment and provide jobs within the state.

The state’s major investor-owned utilties and out-of-state energy providers had sought Thursday’s move, contending the ability to count out-of-state renewable power would spark economic development and lead to competitively priced energy.

The PUC’s action Thursday halts a March 11 decision in which the commission voted unanimously to limit the out-of-state level to 25 percent.

In the latest vote, all the PUC commissioners but one — Dian Grueneich — changed position and voted to stay, or block, the earlier decision. Those who changed included PUC President Michael Peevey and Commissioner Nancy Ryan.

In a sharply worded dissent, Grueneich rebuked the utilities for seeking the new decision. “Nothing has changed in the intervening weeks except relentless lobbying by the utilities at this commission and in Sacramento to overturn a decision they dislike.”

Grueneich added that Thursday’s action “is bad policy that runs counter to every action of this commission on renewable energy and counter to every promise of building a renewable economy in California.”

The PUC’s March 11 action had pleased environmentalists, who favored limiting the out-of-state tradeable renewable energy credits, or TRECs (“T-Rex”). Ranking Senate Democrats, including Senate Leader Darrell Steinberg, wrote the PUC on Tuesday to “express strong support for the recent decision.”

The issue generated intense negotiations in the Capitol, in part because the Schwarzenegger administration was opposed to the PUC’s March 11 action.

Potentially, the TRECs could be worth hundreds of millions of dollars.

Critics of the governor said the administration directly pressured Peevey and other board members to rescind or delay the rule. The administration denied the allegations — including one that Peevey had been threatened with a demotion.

“It never happened,” Dan Pellissier, the administration’s energy coordination expert, earlier told Capitol Weekly. “Categorically, we have never told Mike Peevey that he would not be president.”

Meanwhile, the Air Resources Board, acting under the governor’s executive order, is considering its own TRECs rule, which includes an option that does not limit out-of-state credits.

Bureaucratic turf wars are not unknown in the Capitol, but the dispute between the ARB and PUC is unusual because of the intensity of the fight and the stakes involved.

TRECs are important because they can be used to help satisfy the state law requiring utilities to get an increasing portion of their energy mix from renewable sources, such as wind, solar, geothermal and some forms of hydro power, among others. That law, called the Renewable Portfolio Standard, or RPS, requires 20 percent of renewables by this year, although none of the state’s major utilities has yet reached that goal.

The governor’s executive order calls for a 33 percent benchmark.

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