Californians are paying high price for renewable energy

By CMTA Staff

Capitol Update, Feb. 25, 2011 Share this on FacebookTweet thisEmail this to a friend

A new report by the Division of Ratepayer Advocates found that the price of electricity for 59 percent of renewable energy contracts signed by the State's three biggest utilities (PG&E, Southern California Edison, and Sempra) exceeded the market price referent (MPR).  The MPR is a benchmark to gauge the competitiveness of solar power plants, wind farms, and other renewable energy projects.

There is some concern, however, that the MPR assumes that fuel prices are fixed for the life of the power plant and does not take into account the cost of carbon that may be imposed on greenhouse-gas-intense power plants in the years to come.  This suggests even further cost increases above the already high contract rates.

Furthermore, the contracts do not account for cheaper technologies that may come along that would leave ratepayers paying higher prices under the current contracts than might be necessary.

The report also noted that of the 184 renewable energy contracts presented to the California Public Utilities Commission for approval since 2002, only two have been rejected.

The ratepayers advocate group looked at contracts signed by California's three biggest investor-owned utilities – which supply 68 percent of the State's electricity – since the legislature imposed a 20 percent renewable portfolio standard in 2002.  According to the report, 77 percent of the contracts from one utility alone were above the MPR.

Based on this report, the ratepayers advocate is arguing for more transparency in the approval of renewable energy contracts, which they believe may spur more competition for solar and other contracts.

CMTA opposes SBx1 2 (Joe Simitian, D-Palo Alto) to increase the renewable portfolio standard to 33 percent by 2020 because it would greatly increase the already high cost of electricity in California.

For more information: www.dra.ca.gov/NR/rdonlyres/0CB0B986-E93B-462A-BA62-804EDAE43B82/0/DRAReportPUBLICVERSIONFeb2011.pdf.

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