California’s push toward clean and renewable energy will likely translate into higher electric bills for both businesses and consumers, according to a newly released report.
The Little Hoover Commission, an independent state oversight agency, included that finding in its report, “Rewiring California: Integrating Agendas for Energy Reform.”
The commission is concerned that too many green policies are being implemented at the same time, including the Renewable Portfolio Standard, greenhouse gas reduction (along with the associated cap-and- trade program) and regulations to reduce the use of coastal water to cool power plants.
Carole D’Elia, the commission’s deputy executive director, said the mandates are coming from all directions.
“We have all of these different entities and not one central point to prioritize it,” D’Elia said Tuesday. “So how do we get there? What’s the road map?”
The report doesn’t say how much electric bills might increase.
“That’s what the commission would like to know and that’s what’s so frustrating,” D’Elia said. “We would ask different people but no one really had an estimate.”
D’Elia noted, however, that Joe Como, acting director for the California Public Utilities Commission’s Division of Ratepayer Advocates, did offer a kind of estimate at a public hearing held in February.
“He had a back-of-the-envelope guesstimate that it would be a 5 to 7 percent increase,” she said. “But that’s just for the contracts – not for connecting to transmission or for any other backup that might be needed.”
That raises another of the commission’s concerns. Wind and solar are weather-dependent, so those power sources can be intermittent. As the sun sets and the wind dies, those generating resources require back-up power, which typically comes in the form of gas-fired plants that can ramp up quickly to replace the renewable energy on short notice.
“California’s energy policy- makers face significant complexity in balancing the state’s portfolio so that electricity remains reliable and affordable and utilities do not over- invest in new fossil-fuel powered back-up plants,” the report said.
Some of the commission’s greatest concerns are reliability and a lack of clarity regarding “the aggregated cost of implementing California’s consolidated energy policy goals.”
The Renewable Portfolio Standard requires California’s investor-owned utilities to get 33 percent of their power through renewable energy sources by 2020.
Southern California Edison has already achieved an earlier target of 20 percent. Katie Sloan, manager of regulatory and legislative affairs for SCE’s alternative power department, said the utility is feeling it.
“We are starting to see some impacts on our customer rates, but it’s hard to say what percentage of that is coming from the cost of renewables,” she said. “We’ll have to see what the impact of 20 percent will be – and what 33 percent will be.”
Sloan couldn’t quantify how much of an increase has occurred with customer rates.
The California Public Utilities Commission just gave Edison the go-ahead to hike its rates by more than 5 percent, a move that will boost monthly residential electric bills by an average of about $7 a month.
The Rosemead-based utility, a division of Edison International, had sought an increase of 16 percent.
The 5.04 rate increase is retroactive to January of this year, although the changes won’t go into effect until early 2013.
Long Beach Mayor Bob Foster, who also serves as chairman of the California Independent System Operator (CAL ISO), has some thoughts about California’s green energy policies.
CAL ISO manages the flow of electricity across the high- voltage, long-distance power lines that make up 80 percent of California’s power grid.
“I am an advocate of energy efficiency and alternative energy policies,” he said. “But there are always unexpected or unintended consequences. We need to make sure the system will operate effectively with that many renewables on it. The system right now is probably less stable than it was 10 years ago.”
Foster agreed that the intermittent nature of wind- and solar-generated power can pose a problem.
“The electric system has to be balanced every four seconds according to demands on the system,” he said. “So if you get a drop in wind or solar something has to back it up.”
That requires gas-fired backup plants to ramp up quickly, he said, which means they are operating in the least efficient manner.
“They are the dirtiest when you ramp them up and down like that,” he said. “And that could defeat the purpose.”
The Little Hoover Commission and Foster agree that California’s green energy policies should be centralized.
“We recognize that we need cleaner air,” said Stuart Down, the commission’s executive director. “We want to achieve all of the goals that the state has laid out for itself, but we have to know how much the pieces are going to cost so we can achieve our goals at the lowest possible cost.”
The commission’s report recommends that Gov. Jerry Brown, through a public process, establish a comprehensive plan to prioritize current and future energy goals.
Foster said a lot is riding on California’s energy policies.
“We’re the only state that has done this,” he said. “If we fail … it will set back implementation of renewable energy by a decade. We need to be successful.”
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