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CA Governor Brown's Renewable-Energy Plan One of the Most Ambitious in Country

Source: WSJ

Posted on 13 Apr 2011

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Giving the state of California the most ambitious U.S. alternative-energy mandate, Governor Jerry Brown signed in legislation on Tuesday that would require California utilities to get one-third of their power from renewable sources.

The law under the bill requires that California get 33% of its electricity from renewable sources, such as wind and solar energy, by the year 2020.

Supporters said the increase from the current 20% target will reassure investors that demand for renewable energy will grow, fueling a field that hasbeen one of the few growth spots for California's economy during the recession.

U.S. Energy Secretary Steven Chu was expected to attend the bill-signing ceremony at the SunPower-Flextronics solar manufacturing plant in the San Francisco Bay area city of Milpitas.

"Instead of watching from the sidelines, America needs to get back in the clean-energy race, and that's exactly what California is doing," said Stephanie Mueller, spokeswoman for the U.S. Department of Energy.

Critics of the legislation said sticking with traditional energy sources such as coal and natural gas would be cheaper, keeping costs down for business and residential ratepayers. Business groups point to estimates that the higher standard could drive up electricity costs for California ratepayers by more than 7%, despite language in the legislation to limit cost increases.

"Industry in California already pays electricity rates about 50% higher than the rest of the country," said Gino DiCaro, spokesman for the California Manufacturers and Technology Association. "With 33%, those rates are going to go up even more."

Brown said Monday he would look carefully at whether the new standard will drive up electricity costs but said increasing use of renewable sources makes sense for California and the country.

"I know one thing: Being dependent on foreign fossil fuel is not good for our economy, it's not good for our security and it's not good for our climate," the Democratic governor said in a telephone interview. "We have to be bold."

Making California less reliant on fossil fuels will benefit the state's air quality and make oil supply a smaller factor in America's foreign policy, said state Sen. Joe Simitian, who carried the legislation. The Democrat from Palo Alto was instrumental in setting the current renewable-power standard at 20% and has been working for four years to get the increase to 33%.

Republican Gov. Arnold Schwarzenegger vetoed an earlier version of the bill but issued an executive order that called for 33% renewable power by 2020. Mr. Simitian kept pushing to get the higher standard written into state law, which is harder to undo than an executive order.

When his bill died on the Senate floor as the 2010 legislative session ended, he said the action sent a chill through the renewable-power-generation market. Supporters said the new bill sends a clear signal to financial backers that demand for renewable power will keep growing.

"It really comes down to whether a bank will loan you money to build a facility," said Jan Smutny-Jones, executive director of the Independent Energy Producers, a coalition of electricity generators that produce about 80% of California's renewable power.

California power generation is just short of receiving 20% from renewable sources. About 57% of in-state generation in 2009 came from natural gas, with about 15% from nuclear-power plants and 12% from large hydroelectric generators.

Meeting the higher standard is expected to require tens of billions of dollars in capital investment for generation equipment and transmission lines, with expenses ultimately passed along to ratepayers of the state's investor-owned and municipal utilities.

The bill includes language that would require the California Public Utilities Commission to set reasonable limits for what utilities should have to pay and allows the standards to be relaxed if not enough renewable-power or transmission capacity is available to meet them.

California's largest utility, Pacific Gas & Electric Co., has supported higher renewable standards but opposed Mr. Simitian's bill, saying the legislation doesn't include adequate safeguards against excessive costs. PG&E wants to work with the Brown administration to put specific measures in follow-up legislation, company spokeswoman Lynsey Paulo said.