Energy Prices Are Going Up

MAR. 4, 2011


Renewable energy standards are increasing from 20 percent to 33 percent, “whether you like it or not.” Borrowing  a phrase used by California’s Lt. Gov. Gavin Newsom, back when he was mayor,  seems the only way to describe what is occurring in the renewable energy debate. It is going to happen regardless of the devastating economic impact it will have on the already economically suffering state.

Democratic Senators Joe Simitian, (Palo Alto), Christine Kehoe (San Diego) and Darrell Steinberg, (Sacramento) have authored another bill to accomplish this: SB X1 2 requires Investor Owned Utilities, Publicly Owned Utilities and Energy Service Providers to increase purchases of renewable energy so that at least 33 percent of retail sales are from renewable energy resources. And this must be accomplished by December 31, 2020.

In the interim, each entity would be required to procure an average of 20 percent of renewable energy for the period of January 1, 2011 through December 31, 2013; 25 percent by December 31, 2016, and 33 percent by 2020.

Simitian, who has taken lead on the bill, was complimented by fellow legislators for his years of work on the renewable energy legislation, and was told that this could be his legacy.

However, no one at the hearing discussed the economics of achieving this level of renewable energy – in a state where we cannot even produce enough electricity for our own use.

In the entire history of energy in California, the state has never been able to create enough electricity to keep up with our own usage. This means that California buys 20 to 30 percent of its energy on the energy market from out-of-state energy sources, which leads to criticism of the stringent renewable energy standards. Many in the state say that increasing renewable energy standards will kill private business, as well as investor owned utilities.

The other catch is that California legislators have imposed regulations on how much of the renewable energy is purchased outside the state, leaving many in the energy business to say that it can’t be done given how much energy we already purchase from other out-of-state sources, and because wind and solar power are not reliable.

At the joint hearing on Thursday of the Assembly committees on Accountability & Administrative Review, and Local Government, Simitian offered his latest bill, after having previous similar bills killed or vetoed by former Gov. Arnold Schwarzenegger.

But not everyone on the committee was buying the strict renewable standard.  Said Assemblyman Brian Nestande, R-Palm Desert, “The high standard will make it even harder to manufacture the materials needed for clean energy in the state. The jobs manufacturing windmill blades, and solar panels are already going out of state or to China. And AB 32 is the same….”

“If Californians are going to pay for the cost of energy and cleaner air, it should be in California – not the rest of the country,” Simitian said. During the hearing, Simitian said that California is going to be the first state in the country to reach the 33 percent renewable energy standard, and insisted that the new standard will create jobs.

Senate staff analysis even said that proponents are in favor of increasing the renewable energy standard because it will “create the necessary pressure to build out the California renewable energy market place, thus creating new jobs.”

But Assemblyman Jeff Gorell, R-Camarillo, said that in his district, that just is not the case. Gorell said that the rate cap offered in the bill only helps those in the California Alternate Rates for Energy (CARE) program, which is a self-certifying, low-rate energy program that ratepayers not in the program have to pay for.

“Californians pay 11 cents per kilowatt hour. Other states pay 4 to 7 cents per kilowatt hour,” said Dorothy Rothrock of the California Manufacturers and Technology Association. “And renewable energy will be even more expensive.”

One energy expert who asked to remain off the record, explained that the 11 cents that Californians pay per kilowatt hour is the “blended” price, the price that is made up of long term energy purchases, short term energy purchases and the costly immediate energy purchases. He analogized California’s out-of-state energy purchases to purchasing a plane ticket to London:  If it can be purchased months in advance, it costs much less than a ticket purchase the day before the flight. He said energy purchases are the same way, and California makes s a great deal of last minute out-of-state energy purchases, leading up to the 11-cent price.

Renewables Unrealistic

Several other opponents testified that the increased renewable standard was unrealistic, and even retroactively puts the renewable standards into place, ultimately penalizing energy producers.

And with the restrictions in the bill on how much renewable energy can be purchased out-of-state, several energy company representatives said that it is a violation of the commerce clause of the U.S. Constitution, which gives Congress, not the state governments, control over interstate commerce; that violation could cause the need for a judicial remedy.

The energy expert I spoke with said that California’s electricity plants are like old machinery: they still run, but are not as efficient as the new technology. Most electricity plants in the state were built between 1947 and 1978. He said it’s like an old car needing to be warmed up before driving, where a new car can be started right up and driven immediately.

But new plant start-ups are difficult and in California, take exorbitant amounts of time with built in timetables and extra costs for litigation, California Environmental Quality Act (CEQA) restrictions, and permitting for every layer of government (local, state and federal).

And he said we know that wind and solar doesn’t always work, and cannot be counted on. For every megawatt of wind or solar power, there needs to be traditional electrical backup.

Apparently the California condor is also an impediment to wind power as well. The protected condors live near many of California’s wind farms. The same environmentalists who for decades pushed for solar and wind power, are trying to stop wind farms from operating because the condor and several other raptors are killed in the big turbines.

A recent San Francisco Examiner story reported, “At Altamont Pass, where nearly 7000 prop wind turbines choke the landscape, over 1000 birds of prey die each year. One of the most commonly killed species at the Altamont pass wind farm is the turkey vulture.”

So while environmentalists prevent wind and solar farms from operating at full capacity, or prevent new wind and solar farms from being built, legislators are still pushing higher renewable energy standards on energy producers.

And an even bigger danger, say energy experts, is that publicly owned utilities don’t face the same threat as investor owned utilities, which have to make the very expensive investments into plant infrastructure out of profits and operating costs, while public utilities just keep coming back to the Public Utilities Commission to ask for more taxpayer money.

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