Current Legislation:
An Independent Analysis of AB 64 - Krekorian
The Renewable Energy Accountability Project’s
2009
Like a wolf in sheep’s clothing, AB 64 (Krekorian) appears benign, but in fact is a clever ruse to avoid fair regulations on the utilities.
First the bad news:
AB 64 (Krekorian) provides no clear direction to the Public Utilities Commission (or other appropriate body) to establish and adopt a benchmark price for renewable energy which reflects the significant benefits and urgent requirements for carbon reduction to address the global warming and the climate change crisis. AB 64 (Krekorian) references the goal of carbon reduction, without providing any specific timetables for actual reductions which would contribute to setting the benchmark price.
AB 64 (Krekorian) contains no statutory requirement to impose fines on utilities for non-compliance with RPS standards.
AB 64 (Krekorian) contains no statutory requirement expressing the preference for long-term contracts for all renewable facilities in order to incentivize private investment in new renewable energy facilities.
Without these key provisions, AB 64 (Krekorian) can be viewed as a toothless attempt at good public relations for the utilities and the coal-dependent municipalities which have opposed real attempts to limit carbon emissions.
In addition, AB 64 (Krekorian) contains the potential poison pill of a $6.4 billion bond measure -- in the midst of California’s greatest financial crisis -- through the creation of a California Consumer Power and Conservation Financing Authority for the purpose of issuing revenue bonds to finance renewable energy facilities.
AB 64 (Krekorian) misses the point. Bond funding should be viewed as complementary to renewable energy facility development, not as a predicate or precondition. Saddling already burdened taxpayers with the prospect of billions in new debt is a sure way to appear renewable friendly while assuring renewable energy growth doesn’t really happen.
Rather than relying on real incentives for private industry, coupled with real technology forcing factors, AB 64 is more of the same soothing policy rhetoric without the pressure to make it work.
That being said, there are some good news imbedded in AB 64.
What's good about AB 64 (Krekorian):
Requiring local publicly owned electric utilities to be included in the renewable portfolio standard (RPS) program.
Requiring all utilities, including local publicly owned electric utilities to procure at least 20% of electricity delivered from renewable energy resources by December 31, 2010; 25% by December 31, 2015; 35% by December 31, 2010; and creating the goal of procuring at least 50% by December 31, 2035.
Changing the established tariff requirements for renewable facilities to include facilities up to 5 megawatts, instead of the current 1.5 megawatts.
Requiring that established tariffs for small renewable facilities be allowed for a period of 10, 15, or 20 years as provided by the Public Utilities Commission (although 20 year contracts for all renewable facilities is clearly preferable).
What’s Still Bad About AB 64 (Krekorian)
Retaining in the Public Utilities Commission, and in local publicly owned utility government boards, the responsibility for implementing the requirements of the RPS program for retail sellers – the equivalent of the fox guarding the hen house.
Retaining in the Public Utilities Commission the sole responsibility to establish and adopt a benchmark price for electricity (Market Price Referent- MPR)- instead of locating this authority in an agency that has proven expertise in climate change policy, such as the California Energy Commission.
Allowing the Public Utility Commission to limit the requirements for a utility to purchase renewable energy to those resources available at or below the established benchmark price, instead of providing above-market incentives.
Transferring from the California Energy Commission to the newly created Renewable Infrastructure Authority the power to designate transmission corridor zones. This represents a potential duplication of work already underway, since California Energy Commission already has completed significant work in this area; and the Governor’s Executive Order requires that the California Energy Commission to designate potential renewable energy zones and potential transmission routes and interconnection points by March 31, 2009.
In sum, AB 64 (Krekorian) comes up short, and contains several serious drafting errors that could retard significantly the growth in renewable energy in California.
In view of AB 64’s (Krekorian) obvious flaws, all who are really serious about renewable energy will continue to demand the passage of legislation that actually fights global warming with the urgent speed demanded by Californians.
UPDATES
AB 64 UpdateApril 1, 2009
Sacramento, CA
– Today the Assembly Committee on Utilities and Commerce voted in favor of advancing AB 64 from the Committee on Utilities and Commerce to the Assembly Natural Resources Committee for consideration (Ayes 8, Noes 5). This Committee vote comes on the heels of the Senate’s passage of SB 14 (Simitian), a competing renewable energy measure. AB 64 is now one step closer to coming up for a vote on the Assembly floor.However, before sending AB 64 out of the Utilities and Commerce Committee a number of substantive amendments were made:
• The original Renewable Portfolio Standard (RPS) of 50% by 2035 was reduced to 33% by December 31, 2020.
• Electric utilities are now allowed to meet up to 10% of their RPS requirement from “non-deliverable renewable energy resources,” such as purchased Renewable Energy Credits from any renewable facility in the Western Electricity Coordinating Council.
• Grants the California Public Utilities Commission (CPUC) the authority to waive any penalties an Investor Owned Utility (IOU) may incur for not meeting the current 20% RPS, if the CPUC finds the IOU made “commercially reasonable efforts to procure eligible renewable energy resources.” Ayes included: Felipe Fuentes (D- Arleta), Wilmer Carter (D- Rialto), Paul Fong (D- Mountain View), Warren Furutani (D- Long Beach), Jared Huffman (D- San Rafael), Paul Krekorian (D- Burbank), Nancy Skinner (D- Oakland), Sandre Swanson (D- Oakland)
Noes included: Michael Duvall (R- Brea), Tom Berryhill (R- Modesto), Sam Blakeslee (R- San Luis Obispo), Jean Fuller (R- Bakersfield), Cameron Smyth (R- Santa Clarita)
Follow the progress of AB 64 by navigating to: http://legislature.ca.gov/cgi-bin/port-postquery?bill_number=ab_64&sess=CUR&house=B&author=krekorian
We are confident that legislation will be introduced that assures the success of renewable electricity and advances the fight against global warming. However, AB 64 (Krekorian) is not that legislation.