Renewable power increases allowed in amended bill

By CMTA Staff

Capitol Update, Aug. 29, 2013 Share this on FacebookTweet thisEmail this to a friend

AB 327 (Henry Perea, D-Fresno) began as a bill that would lower electric rates for residential customers who use large volumes of electricity - usually in the summer months for air conditioning. High rates for such customers are supposed to encourage conservation, but ever-higher rates in the top "tiers" of usage are higher than can be reasonably absorbed. The utilities need this fix to avoid a customer rate-revolt during hot summer months. 

Now AB 327 has been amended to also include provisions to allow the California Public Utility Commission (CPUC) to order utilities to purchase renewable electricity beyond the current "renewable portfolio standard" (RPS) limit of 33 percent by 2020. 

CMTA opposes this amendment. Raising the level of the RPS will likely lead to increased costs for ratepayers. Current rates for industry are 50 percent higher than the national average. The California Energy Commission estimates electricity rates will increase between 26 to 42 percent from 2012 to 2020. We need affordable energy to restore a vibrant California economy. 

There is also no environmental justification to expand the RPS beyond 33 percent. All electricity generators are now subject to a cap and trade regulation under AB 32, the Global Warming Solutions Act (2006), which is putting an extra carbon cost on generators with greenhouse gas emissions. This is the most effective way to encourage the purchase of clean generation at the appropriate cost.

Many other state policies to support clean energy, including electricity, natural gas and transportation fuels, have been adopted in recent years. A recent report notes that: 

    "There is not a single, credible source of analytics and data that can inform companies and policymakers regarding the cumulative costs of recent energy-related policies and regulations. However, energy costs in California are increasing over the next several years. This is due to several factors, not the least of which are the costs of implementing a series of state-adopted policies and regulations that have been passed by the legislature and various state regulatory agencies in the last five to seven years. It is essential that total costs including the costs to specific energy consumers of the current policies and regulations are determined and understood." Preliminary Assessment of Regulatory Cost Drivers in California’s Energy Market, Navigant Consulting Inc., August 16, 2013.

By January 1, 2016, current law requires the CPUC to determine a cost limitation for the 33 percent RPS to avoid "disproportionate rate impacts." This cost analysis has barely begun. It is not prudent for the legislature to impose or grant additional RPS purchasing authority prior to understanding the cost implications under the current standard.

Watch Dorothy Rothrock’s testimony on AB 327 at Monday’s Senate Appropriations Hearing: http://www.youtube.com/watch?v=LyPxeBIXpUA

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