Utilities, Groups at Odds Over Sources for Renewable Energy
Aug 24, 2009 - The Sacramento Bee
California's electric utilities have accepted that they'll be required to get a third of their power from renewable sources by 2020.
Now, they are battling environmental and labor groups over where it's going to come from.
Utilities say they can't meet the 2020 goal unless the state allows them relatively free access to renewable power generated far beyond the state's borders, in places like Wyoming and British Columbia.
Tapping a broader range of sources would cut costs, they say. And they argue it would reduce the need for new long-distance transmission lines within the state to deliver, for instance, solar power from remote deserts.
"We're not saying renewables won't get developed in California; we just need the flexibility" to look for power out of state as well, said Jim Shetler, assistant general manager for energy supply at the Sacramento Municipal Utility District.
Labor and environmental groups accept the need for some of the power to come from out of state, but they're pushing for legislation that encourages production capacity to be built in California. That, they say, would foster a more robust green economy and spur development of more small-scale, local power sources like rooftop solar panels that don't need new transmission lines.
Pacific Gas and Electric Co.'s interest in some day buying huge amounts of hydroelectric power generated on rivers in British Columbia, in particular, is drawing fire from environmentalists.
"What would that do to the solar and wind industry in California?" said Laura Wisland, clean energy analyst with the Union of Concerned Scientists in Berkeley. "It totally takes the focus off building our green-tech economy."
Legislators and lobbyists are now haggling over two proposals, Senate Bill 14 and Assembly Bill 64, that would set the ground rules on what counts as renewable energy. Getting the legislation passed is a priority for Senate and Assembly leaders, and both sides in the debate expect a compromise deal in coming weeks.
State regulators are counting on the big increase in renewables to deliver 13 percent of the greenhouse-gas emissions cuts required under the 2006 law that launched California's war on global warming. Gov. Arnold Schwarzenegger issued an executive order setting the 33 percent renewable energy target in November.
Regardless of how much imported renewable power the state allows, the target is daunting. Nearly all of the state's utilities -- SMUD is a notable exception -- now deliver well below 20 percent of their power from renewable sources. Meeting the goal will require nearly tripling renewable power deliveries, to 75 billion kilowatt-hours a year.
The state's definition of renewable energy includes solar, wind, geothermal and biomass sources. Hydroelectric power is allowed, but the state counts as renewable only dams producing less than 30 megawatts or so-called "run of the river" projects that don't require dams.
A June report from the California Public Utilities Commission estimates the infrastructure costs to meet the 33 percent goal at $115 billion and calls the buildup "immense and unprecedented." The PUC analysis supports the utilities' argument that more out-of-state power would reduce costs -- though the difference per kilowatt-hour is relatively small.
Even without the 33 percent mandate, average costs for power would be expected to rise nearly 20 percent -- to 15.8 cents per kilowatt-hour -- by 2020 because of rising maintenance and infrastructure expenses. That doesn't include inflationary increases.
Getting to 33 percent renewable power on the state's current path -- with a big focus on rapid expansion of desert-based solar power -- would bump up costs an additional 7 percent, or 1.1 cents per kilowatt-hour. Using more out-of-state power might cut that premium to 0.6 cents per kilowatt-hour, while building more small-scale projects that don't need long-distance transmission might increase it to 2.3 cents, the PUC estimated.
Importantly for the Sacramento region, it's likely that the new 33 percent legislative mandate would cover public utilities, including SMUD and Roseville Electric.
California's existing renewable energy mandate, which sets a goal of 20 percent renewables by 2010, applies only to big investor-owned utilities, including PG&E and Southern California Edison. Public utilities are currently allowed to set and enforce their own renewable-energy targets.
The new rules stand to hit Roseville Electric particularly hard. The small municipal utility currently gets 12 percent of its power from renewable sources. About 40 percent of that, though, comes from out-of-state and other contracts for renewable energy "credits" that Roseville Electric Director Tom Habashi said likely could not be counted toward the 33 percent mandate.
It's possible the contracts could be restructured to comply, Habashi said. For now, he's waiting for the Legislature to act before looking for any more renewables.
"We've been on a freeze," he said.
SMUD also faces a tough climb to 33 percent. While the utility will deliver about 20 percent of its energy this year from renewable sources, many of its power contracts will expire soon and renewal may not be an option.
"We have a cliff coming up," energy supply chief Shetler said.
SMUD recently lost a large geothermal contract that once provided roughly one-fifth of its renewable energy.
Demand for renewable power is high, so generators are shopping their energy around to the highest bidder, said Mike DeAngelis, who manages the utility's renewable energy programs. Houston-based Calpine Corp., which owns several geothermal power plants near Calistoga, sold off the contract to another utility without giving SMUD a chance to renew, he said.
The collapse last month of a transmission-line project that would have linked Sacramento to major wind and geothermal resources in northeastern California has further clouded SMUD's prospects.
One key uncertainty in the legislative debate is how strictly the 33 percent mandate will be enforced. Utilities are looking for escape hatches that would suspend the mandate if it proves too difficult or costly to meet. Environmental groups say they don't want the rules to be too lenient.
Call The Bee's Jim Downing, (916) 321-1065.
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.
Copyright (c) 2009, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services.
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