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State’s deadline for renewable power in peril

California’s big electrical utilities may miss the state’s deadline for increasing their use of renewable power if Congress doesn’t extend tax credits for new solar plants and wind farms, the head of Pacific Gas and Electric Co. said Friday.

Like all California utilities, San Francisco’s PG&E has been scrambling to sign contracts with renewable-power developers. State law requires that by the end of 2010, 20 percent of the electricity each utility sells must come from renewable sources.

But Peter Darbee, PG&E’s chief executive officer, said many developers have already warned him that their projects may fall through if Congress doesn’t extend tax credits due to expire at the end of the year.

“Many of the people we’ve signed agreements with, the counterparties, have informed us they may not be able to complete these projects,” Darbee said Friday at an energy conference at Stanford University.

Darbee said he didn’t know how many projects backed by PG&E would fall through without the credits.

“It’s significant enough that we’re worried about it,” he said.

The tax credits have broad, bipartisan support. But so far, congressional Democrats and Republicans have been unable to agree on how to pay for them. California’s growing green-tech industry has become increasingly alarmed that the credits may expire, and Silicon Valley companies have thrown their lobbying clout into winning an extension.

The topic surfaced often at Friday’s conference, organized by the Silicon Valley Leadership Group and Stanford’s Precourt Institute for Energy Efficiency. While most of the conference focused on California’s energy and climate-change policies, several speakers said congressional inaction on the tax credits could hamper the state’s progress.

“We need to get the renewable-energy tax credits extended – Congress needs to act now,” said San Jose Mayor Chuck Reed, drawing loud applause from the nearly 400 people attending.

Darbee also warned that the price of electricity throughout the country will rise substantially in the coming years.

Part of the increase will come from the growing use of renewable energy, which still costs more than electricity generated from burning fossil fuels. More of the increase, however, will be due to soaring natural gas prices, because most California power plants burn natural gas. Finally, China’s rapid economic rise has pushed up the price of steel, copper and other materials needed to build power plants and transmission lines.

Darbee said electricity prices in some parts of the country will jump 20 percent or more in the next few years. California won’t experience such steep increases, he said, but the rise will be significant.

“You’re looking at on the order of single-digit increases in the coming years,” Darbee said.

David R. Baker, Chronicle Staff Writer

San Francisco Chronicle

12 July 2008