FERC Denied Brown's Green Tax Hike

OCT. 25, 2010


Back on July 15, in a story mainly reported in only trade journals and Web sites, the Federal Energy Regulatory Commission (FERC) denied Attorney General Jerry Brown’s appeal to put the cost of renewable power directly on the backs of California’s electricity ratepayers through what are called “Feed-In Tariffs.”

A tariff is a rate paid, not a tax.  A Feed-In Tariff is a state requirement imposed on a utility to buy wholesale renewable power at an above market price under a fixed-price long-term contract. A Feed-In Tariff is like the rate you get paid by your local electrical company to “feed” the excess power generated from rooftop solar panels on your roof into the electric lines serving your home. If a premium is added to the rate your local utility will credit you for your excess power as a subsidy.

FERC didn’t rule out that other mechanisms could be used to subsidize green power such as tradable Renewable Energy Certificates, tax credits, grants, loans, subsidies, etc.

Previous to FERC’s ruling, Jerry Brown’s Attorney General’s Office had filed a legal brief supporting electricity rate premiums for co-generation power plants as provided in California Assembly Bill 1613 – the Energy Waste Heat Carbon Reduction Act – which had passed through the state Legislature and was signed by the governor on Oct. 14, 2007.  Although co-generating heat-energy plants are technically not renewable power, AB1613 would have allowed states to solely set wholesale electricity rates. This would have eventually compelled regulated public utilities such as Edison and PG&E to pay above-market prices for renewable power and pass the added cost on to the ratepayers.

Renewable power companies only sell wholesale energy to retail electrical utilities, not directly to customers. But only FERC, not the CPUC, can set wholesale power rates to prevent energy wholesalers from setting their own price for the power they produce.

FERC seems to prefer direct subsidies for green power that are open, clear, and undisguised to ratepayers rather than mandated premiums for selling wholesale power that are buried within the price per kilowatt hour on electricity bills.

In California, the California Public Utilities Commission (CPUC) regulates retail electricity rates, while wholesale rates are regulated by FERC. The California Energy Commission issues permits for new power plants. Wholesale electricity is delivered to the grid for resale to other utility purveyors, not directly to customers. Retail power is electricity distributed for use by on-site customers.

Support for above-market prices for green power under AB1613 came from the state Attorney General’s Office, the Division of Rate Payer Advocates of the California Public Utilities Commission (CPUC), the California Energy Commission and various environmental and renewable energy special interest groups. The union-controlled The Utility Reform Network (TURN) of California, a consumer group partly funded by electricity ratepayer funds through the CPUC, filed a brief in support of the rate hike

Opposing the rate hike for green power were the California Municipal Utilities Association and the Edison Electric Institute.

Jerry Brown’s attempt to make green wind and solar power economically feasible by shifting price premiums onto ratepayers is reminiscent of his “green legacy” when he previously served as governor in the 1970s. Brown built the Bottle Rock Geothermal Power Plant in northern California that ended up economically infeasible and was eventually mothballed (but since re-opened with generous subsidies).  The $283 million in bonds on the plant were assumed by The Metropolitan Water District of Southern California in 1990.  Water ratepayers in Southern California are still paying off the bonds for a geothermal power plant that serves those in Northern California.

It remains to be seen if “green power” mandated under AB32 – The Global Warming Solutions Act – in California will work. While huge wind farm and solar projects are being rolled out California oddly still doesn’t seem to fully know the financing package for them yet. But FERC has put a stop to paying for green power with covert premiums in customer’s electricity bills.


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  1. Tylerle13
    Tylerle13 25 October, 2010, 11:47

    They just love to make decisions with other peoples money. People are scraping bottom to survive in this mess they have created in California, and now they want us to pay unneeded exponential increases for something as essential as electricity, all so they can advance their own agenda and pay off their biggest contributers.

    This is a complete joke. Unfortunately these unethical politicians were so desperate for votes, they have latched onto anything “Green” and mixed it with their “Global Warming” the sky is falling policies. They have politicized technological advances in energy generation & efficiency, and since these politicians are viewed in such an unfavorable way, they automatically create stong resistance against anything they favor. The whole Alarmist “Global Warming” cause should not be intertwined with advances in energy production(“Green Tech”) because they create a built in resistance to something that would otherwise be embraced & eventually adopted almost universally, as soon as it is reliable & cost efficient. New energy production methods would still be valuable whether or not “Global Warming/Cooling/Change/whatever the hell they changed it to this week” is real or not, but they are not doing themselves any favors by forcing people to adopt one in the name of the other. If they force us to over pay to use technology that is in its infancy, then we will get fed up with the lack of reliability and will revert back to the old, dirty, reliable methods of generating power.

    Reply this comment
  2. YJ Draiman
    YJ Draiman 16 January, 2011, 00:15

    Rebuilding Trust in Our Government (R)
    One of Americas statesmen stated “government is not the solution to our problem; government is the problem.” His presidency ushered in an era of disdain for government and a widespread cynicism that government could be effective in addressing our challenges.
    Today, as we confront a crisis that has shaken confidence in our financial system and economy, we have an opportunity to restore public trust and confidence in the legitimate role of government. Indeed, to effectively tackle our economic challenges and to implement the reforms we need in our healthcare, education, energy, and environmental policies, our government will need to garner strong public support.
    However, rebuilding public trust will not happen in the face of a pervasive perception that government is not transparent and accountable, cronyism is rampant, and public officials are more interested in helping themselves than in serving the public good.
    Taking strong, swift, and decisive action to address abuses and begin to rebuild public trust should be the first priority for our city, state and federal government in the new legislative session.
    Create a Task Force on Public Integrity with a mission to develop a comprehensive proposal for ethics and lobbying reform in our city and state. Which addresses reforms in three areas: (1) strengthening enforcement of ethics, campaign finance, and lobbying laws; (2) strengthening civil and criminal penalties for abuses; and (3) improving awareness and education for public officials.
    Reinforce honesty, integrity and transparency by government officials as the core requirement to be and stay in office, any violations of these core tenets will cause the removal of the public official and the loss of “all benefits” retroactive. I think we should consider putting public official on a base salary plus commission based on performance.
    While the many of our elected officials and government employees are honest, dedicated public servants, the actions of a few create a dark cloud over all.
    Taking strong, swift, and decisive action to address these abuses and begin to rebuild public trust should be the first priority for our city, state and federal government in the new legislative session.
    “The benchmark of a civilized society is the quality of its justice”
    Compiled by: YJ Draiman


    We need honest government with integrity.
    “Good leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion”

    Public confidence in the integrity of the Government is indispensable to faith in democracy; and when we lose faith in the system, we have lost faith in everything we fight and spend for.
    As citizens of this democracy, you are the rulers and the ruled, the law-givers and the law-abiding, the beginning and the end.

    Change is inevitable. Change for the better is a full-time job.

    Action speaks louder than words.

    Every age needs men who will redeem the time by living with a vision of the things that are to be.

    Freedom is not an ideal; it is not even a protection, if it means nothing more than the freedom to stagnate.

    Action speaks louder than words.

    An Independent is someone who wants to take the politics out of politics, a person with principles.

    “The benchmark of a civilized society is the quality of its justice”

    Reply this comment
  3. YJ Draiman
    YJ Draiman 13 February, 2011, 12:00

    A polluted society

    The paradox of our time in history is that we have taller buildings, but shorter tempers; wider freeways, but narrower viewpoints.

    We spend more, but have less; we buy more, but enjoy it less.

    We have bigger houses and smaller families; more conveniences, but less time;

    We have more degrees, but less sense; more knowledge, but less judgment; more experts, but more problems; more medicine, but less wellness.

    We drink too much, smoke too much, spend too recklessly, laugh too little, drive too fast, get too angry too quickly, stay up too late, get up too tired, read too seldom, watch TV too much, and pray too seldom.

    We have multiplied our possessions, but reduced our values.

    We talk too much, love too seldom, and hate too often.

    We’ve learned how to make a living, but not a life; we’ve added years to life, not life to years.

    We’ve been all the way to the moon and back, but have trouble crossing the street to meet the new neighbor.

    We’ve conquered outer space, but not inner space.

    We’ve done larger things, but not better things.

    We’ve cleaned up the air, but polluted the soul.

    We’ve split the atom, but not our prejudice.

    We write more, but learn less.

    We plan more, but accomplish less.

    We’ve learned to rush, but not to wait.

    We build more computers to hold more information to produce more copies than ever, but have less communication.

    These are the times of fast foods and slow digestion; tall men, and short character; steep profits, and shallow relationships.

    These are the times of world peace, but domestic warfare; more leisure, but less fun; more kinds of food, but less nutrition.

    These are days of two incomes, but more divorce; of fancier houses, but broken homes.

    These are days of quick trips, disposable diapers, throw-away morality, one-night stands, overweight bodies, and pills that do everything from cheer to quiet, to kill.

    It is a time when there is much in the show window and nothing in the stockroom; a time when technology can bring this letter to you, and a time when you can choose either to share this insight, or to just ignore it.

    Reply this comment

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