A renewables hope

The state’s major energy utilities won’t be penalized for failing to meet their deadline to use 20 percent renewable energy by the year’s end. Despite the power companies’ shortfalls, new state laws could require them to double-down on their green-energy commitment.

A California Public Utilities Commission quarterly report released last week confirms that investor-owned utilities PG&E, Southern California Edison and San Diego Gas & Electric, which account for 68 percent of the state’s electrical retail sales, have only transitioned to 15.4 percent renewables, up from 13 percent in 2008.

“No one thinks they will make 20 percent by this year. The utilities aren’t saying that. The [CPUC] isn’t saying that,” explained Jim Metropulos, a Sierra Club California senior advocate who specializes in energy issues.

The “20 percent by 2010” goal is an important part the state’s landmark 2006 Global Warming Solutions Act, or Assembly Bill 32, which aims to reduce greenhouse-gas emissions to below-1990 levels by year 2020.

But in spite of the shortcomings, the CPUC likely won’t fine the utilities. “They’ve never been penalized,” Metropulos said, noting that the CPUC did not crack down when the big three were unable to grow renewable-energy portfolios by 1 percent annually, beginning in 2002.

Still, lawmakers and environmentalists say the IOUs eventually will meet their “20 percent by 2010” target—but not until 2012, at the earliest.

But now, new deadlines loom. A proposed state law making gains at the Capitol would require utilities to double their efforts: 33 percent renewables by 2020.

Democrat state Sen. Joe Simitian’s bill, Senate Bill 722, would bind most utilities, including public-power agencies such as SMUD, to grow their renewables portfolio to 33 percent in 10 years.

Simitian proposed a similar bill last year, Senate Bill 14, which The Utility Reform Network, Sierra Club, labor and even PG&E and the Los Angeles Department of Water and Power supported. But Gov. Arnold Schwarzenegger vetoed it, calling it too restrictive, especially regarding out-of-state power sources. He issued an executive order, under the authority of A.B. 32, for the California Air Resources Board to adopt “33 percent by 2020” regulations.

This made waves in the energy industry. Some utilities weren’t fond of the idea that CARB would be crafting regulations affecting them, among other concerns. And so, in February, Simitian introduced S.B. 722, a similar bill but with concessions that allow out-of-state energy via renewable energy credits, or RECs. It has garnered broader support than his 2009 bill.

Environmentalists see this year’s bill as a last hope: It would make “33 percent by 2020” state law, as opposed to Schwarzenegger’s executive order, which is nonbinding and could be overturned by his successor, possibly Meg Whitman.

But RECs are a hot-button issue. Global warming doesn’t end at California’s border, the saying goes, and state environmentalists are mixed on out-of-state power.

“If you buy a REC from a wind farm in Wyoming … how has that benefited California?” Sierra Club’s Metropulos asked.

Lawmakers must approve Simitian’s bill by August 31 to make it to the governor’s desk and possibly become law this year. Insiders at the Capitol are confident it will pass, yet battles remain, including a battle over Schwarzenegger’s wish to eliminate the CPUC’s oversight of future transmission infrastructure projects, which he wants amended into Simitian’s bill.

“The Legislature can’t just put any bill on [Schwarzenegger’s] desk and think that the governor wants a legacy, because he vetoed that [similar] bill last year,” Metropulos warned.

Still, last week’s CPUC report contains reasons for optimism.

An increase in renewable-energy investment—especially by PG&E, who accounts for 32 of 36 new alternative-energy, or “feed-in tariff” contracts, which Sierra Club supports—shows that major utilities are at least exploring larger-scale, green-energy growth.

These new contracts allow major utilities to purchase smaller, less than 1.5 megawatt facilities. PG&E’s alternative-energy contracts over the past couple years has amounted to nearly 3 percent of new renewable energy to come online.

Metropulos says these types of contracts could equal “over half” of California’s 33 percent by 2020 renewables target.

PG&E isn’t alone in developing its alternative-energy portfolio. This past January, SMUD launched a program that allows homeowners who produce more energy than they use to sell the surplus back to SMUD. This has brought more than 100 megawatts of renewable energy to Sacramento.

And SMUD soon will accomplish what PG&E couldn’t: The utility met 19.5 of its electricity needs with renewable-energy sources in 2008, and likely will be the first in California to achieve the “20 percent by 2010” goal.