The 50 percent solution

You would think promoting green power would be an easy sell in California. Yet Proposition 7, the November ballot measure forcing utilities to dramatically increase their use of renewable-energy sources, is begging for friends among California’s environmental groups.

The law would require all electric utilities to generate 50 percent of their electricity using solar, wind and other renewable sources by the year 2025. Current state law requires utilities to produce 20 percent of their mix using renewable sources by the year 2010. There are no requirements beyond that.

Prop. 7 would change all of that, requiring utilities to increase their share of renewable power by 2 percent every year from 2010 to 2025. That’s another 30 percent on top of the 2010 goal of 20 percent, which some utilities are already having difficulty meeting.

So it’s not surprising that major utilities like PG&E and Southern California Edison are spending $27 million to try and stop the measure. They’re joined by some decidedly odd bedfellows: Major environmental groups, including the Natural Resources Defense Council, the League of Conservation Voters, the Sierra Club and the Union of Concerned Scientists, also oppose the measure. All agree the measure wasn’t properly vetted, and as a result would be a poorly written law costing ratepayers millions and actually hurting the cause of renewable power.

“You’d think in California a major environmental initiative would have huge support up and down the state, but this one doesn’t,” says Dan Kalb, with the Union of Concerned Scientists.

But David Freeman, the former director of SMUD, and the man who has become the unofficial public face for Prop. 7, says the big environmental groups are more interested in protecting their political turf than in protecting the planet.

“They got teed off because the proponents of Prop. 7 didn’t come and kiss the ring,” Freeman, who now serves as president of the Los Angeles Harbor Commission, told SN&R. The main backers of Prop. 7 are Peter Sperling, the Arizona billionaire whose family founded University of Phoenix, and former San Francisco Supervisor Jim Gonzales.

Kalb says the proponents didn’t bother seeking feedback from major environmental groups and didn’t seem interested in making changes when that feedback was offered.

“They weren’t rude about it,” explained Kalb. “They just said no.”

Opponents argue that Proposition 7 would “force small wind and solar companies out of the market.” That’s because in one section of the proposed law, the authors define a “clean energy plant” as a facility that generates more than 30 megawatts of electricity. The implication, says Kalb, is that hundreds of small-scale renewable-energy projects won’t count toward meeting the new clean-energy requirements.

“It creates uncertainty,” Kalb said. “No one will invest if they know the utility has no reason to buy what they produce.”

In other words, utilities won’t buy power from small renewable projects because, according to this reading of Prop. 7, it wouldn’t count against their total.

“That’s ridiculous,” countered Freeman, who as SMUD director oversaw the creation of SMUD’s solar-rooftop program back in the early 1990s. He says the opponents are exaggerating the meaning of one small section of text. He flatly dismissed the notion that the law would shut out small renewable projects.

“I’ll concede that a bright Harvard lawyer could say it’s ambiguous,” Freeman said. “But it’s clearly not what the authors intended.”

For clarification, SN&R contacted attorney Steve Weissman with the UC Berkeley Center for Environmental Law & Policy. Last week, Weissman published an analysis of Prop. 7, and while he says the proposed law is not well-written, the author’s intentions are clear.

“Although the language is far from clean, there are very convincing arguments to suggest the proponents intended to embrace renewable-energy facilities of all sizes,” Weissman said.

Prop. 7 critics also claim it will put more financial pressure on ratepayers, because it would require electric utilities to buy renewable power at prices up to 10 percent higher than market rates to meet the renewable-energy quota.

However, Weissman’s analysis suggests this worry may be overblown as well. A cap on wholesale rate increases should adequately protect consumers.

“Power is only part of the cost of utility service, and only part of the power would be renewable,” he said. “The 110 percent cap ought to hold rate increases down to a modest level.”

Nearly everyone agrees that the measure is a sprawling and messy document, and that it could have been written much more precisely. The fact that the new law would also require a two-thirds vote of the Legislature to undo any portion of it hasn’t endeared it with potential supporters. Bill Slaton, an elected member of SMUD’s board of directors, said that’s why he and his colleagues on the board are officially opposing the measure.

“Using the initiative process to write energy policy is a very bad idea,” said Slaton.

He explained that under Prop. 7, a utility which doesn’t meet its renewable-power goals has to pay a penalty. But the proposed law would also stipulate that such fines can’t be passed on to ratepayers. “If you’re SMUD, where else does revenue come from except from ratepayers?” he asked.

The law would grant public power utilities like SMUD some leeway if they have a good reason for not meeting the targets. But Freeman says there’s no reason SMUD should miss the goals.

“SMUD has nothing to be afraid of,” Freeman argued. “They ought to be out there leading the way to 50 percent.”

Gov. Arnold Schwarzenegger, legislative leaders and the California Air Resources Board appear to be in agreement that the standards should be raised to 33 percent by the year 2020. But legislation raising the standard died in the Capitol earlier this year.

Some of the anxiety about Proposition 7 seems to flow from the fact that California’s environmental and political establishment have spent so much time and heartache on global-warming laws—and there’s considerable momentum there—they just don’t want outsiders coming in and upsetting the apple cart. “It’s too bad. It’s a missed opportunity,” said Kalb. “It’s not often that a billionaire comes along and says let’s do something about renewable energy.”

Freeman isn’t arguing that the initiative is the most elegantly written piece of public policy. He just thinks it doesn’t matter.

“Al Gore is out there telling people its time for civil disobedience, and we’re talking about whether this measure is well-written,” said Freeman. The dangers of global warming and the need to take immediate action, he said, far outweigh the problems with Prop. 7. “We’re in the fight of our lives. What are the risks of passing this vs. the risks of not passing it? To me, it’s not even close.”