CPUC Draft Decision Favors 'Ultra-Clean' Over Gas-Fired Generators

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, March 21, 2003 Share this on FacebookTweet thisEmail this to a friend

In the California Public Utilities Commission (CPUC) proceeding to determine the cost responsibility of departing load, "ultra-clean" technologies are on the verge of a major victory, thanks in part to not-so-subtle lobbying by Senate leaders.

A proposed decision by CPUC President Michael R. Peevey and Commissioner Susan Kennedy establishing a "Cost Responsibility Charge" or exit fee for DL (customers installing on-site generators on or after January 17, 2001) would grant generous exemptions to "clean" and "ultra-clean" technologies - mainly solar, fuel cells, and wind power - and provide only a modest exemption to gas-fired technologies and co-generation.

The Peevey-Kennedy proposal would exempt "clean" and "ultra-clean" (as defined under Public Utilities Code section 353.2) from any DL charges or exit fees. Non "clean" and "ultra-clean" would receive only a partial exemption. The latter would be exempt from paying DWR's ongoing power costs (up to a 3,000 MW cap statewide) but would still be on the hook for the DWR bond charge of approximately .05 cents per kilowatt hour (to cover DWR's historical power costs incurred during 2001).

The draft order also includes a full exemption for gas-powered generating units one MW and smaller but it is unlikely anyone will qualify for the exemption given that the generators would also be required to meet the especially stringent California Air Resources Board 2007 standards for NOX emissions.

There are two other proposed decisions in the DL proceeding but the general consensus is that the Peevey-Kennedy proposal is the only one receiving serious consideration at this point.

The CPUC was scheduled to consider the three competing proposals at their March 13 meeting but postponed the vote at the request of Senate President Pro Tempore John Burton (D-San Francisco) and Senators Debra Bowen (D-Marina del Rey) and Byron Sher (D-Stanford). Bowen chairs the Senate Energy, Utilities, and Commerce Committee and Sher is a leading environmental advocate. All three have pushed hard in recent months to exempt renewable and "ultra-clean" projects from DL charges.

The three proposals impose an unnecessary barrier to entry for new gas-powered generation and co-generation (also known as combined heat and power technologies) at a time when state policymakers should be doing all that they can to encourage new electric generation.
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